Penalties and interest: Shortfall penalties
Shortfall penalties apply to most taxes and duties. The exceptions are student loan repayments and child support repayments by liable parents. A shortfall penalty is one imposed as a percentage of a tax shortfall (a deficit or understatement of tax), resulting from certain actions on the part of a taxpayer. The law divides these actions into five categories of fault or breach, with a specified penalty rate for each category.
The five categories are:
- lack of reasonable care
- unacceptable tax position
- gross carelessness
- adopting an abusive tax position
The penalty increases in proportion to the seriousness of the breach.
(% of tax shortfall)
|Lack of reasonable care||20%|
|Unacceptable tax position||20%|
|Abusive tax position||100%|
These breaches are described in more detail on the following data.
Date published: 30 Aug 2006
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