Shortfall penalties apply to most taxes and duties, except child support repayments by liable parents.
A shortfall penalty is one applied 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.
|If the breach is ...||then the standard penalty (% of tax shortfall) is ...|
|lack of reasonable care||20%|
|unacceptable tax position||20%|
|abusive tax position||100%|
The penalty increases in proportion to the seriousness of the breach.
Read more information on shortfall penalties or see Part 8 of the booklet Taxpayer obligations, interest and penalties (IR240).
Date published: 03 Sep 2013