Other tax measures

Federal Budget Tax | analysis and insights

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Federal Budget | Tax

Analysis and insights 2022-23

Quarterly Tax Briefing | Federal Budget Special

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More funding for ATO compliance programs

The Government has proposed to provide additional funding of approximately $1.9 billion over four years from 1 July 2022, to extend and boost existing tax compliance and enforcement programs run by the Australian Taxation Office (ATO).

The additional funding will be specifically deployed in extending the duration of compliance programs involving:

the ATO Shadow Economy Program for a further three years from 1 July 2023
the ATO Tax Avoidance Taskforce for an additional year from 1 July 2025, and
the Personal Income Taxation Compliance Program for an additional two years from 1 July 2023.

This is expected to raise approximately $5.5 billion over the four years from the 2022-23 financial year.

Increase in penalties

The current Government is increasing the amount of a penalty unit from its current amount of $222 to $275 applicable from 1 January 2023. Following this, penalty unit values will be indexed by inflation and based on the current three-year indexation cycle, the next of which is due on 1 July 2023. A penalty unit is relevant for fines imposed under Commonwealth laws, and from a tax perspective it is particularly relevant when determining the penalty amounts imposed for making false or misleading statements or failing to lodge returns and other documents with the ATO on time.

Whilst an increase from $222 to $275 per penalty unit may not seem much, it can amount to a very substantial financial cost for Significant Global Entities (SGEs). For example, the maximum failure to lodge penalty which can apply to a SGE that lodges its income tax return more than 16 weeks after the due date will increase from $555,000 to $687,500.

With the potential for increased penalties being applied to affected entities, it is imperative that taxpayers ensure that they have adequate processes and procedures in place to ensure that their tax obligations are satisfied on time.