Insert:

The shortfall interest charge applies to shortfalls of income tax that are revealed when the Commissioner amends your assessment.
The charge is applied at a uniform rate that is lower than the general interest charge rate.
The Commissioner has a discretion to remit shortfall interest charge.

The object of this Division is to neutralise benefits that taxpayers could otherwise receive from shortfalls of income tax, so that they do not receive an advantage in the form of a free loan over those who assess correctly.

(1)

You are liable to pay ^* shortfall interest charge on an additional amount of income tax that you are liable to pay because the Commissioner amends your assessment for an income year.

(2)

The liability is for each day in the period:

(a) beginning at the start of the day on which income tax under your first assessment for that income year was due to be paid, or would have been due to be paid if there had been any; and
(b) ending at the end of the day before the day on which the Commissioner gave you notice of the amended assessment.

(3)

However, if an amended assessment reinstates all or part of a liability in relation to a particular that had been reduced by an earlier amended assessment, the period for the reinstated liability begins at the start of the day on which income tax under the earlier amended assessment was due to be paid, or would have been due to be paid if there had been any.

Note: See section 204 of the Income Tax Assessment Act 1936 for when the amount of income tax and shortfall interest charge becomes due and payable. That section also provides for general interest charge on any part of the additional amount (plus any shortfall interest charge) that remains unpaid after the additional amount is due and payable.

(4)

Your liability to pay ^* shortfall interest charge exists whether or not you are liable to any penalty under this Act.

(5)

Neither the Commonwealth nor an authority of the Commonwealth is liable to pay ^* shortfall interest charge.

(1)

The ^* shortfall interest charge for a day is worked out by multiplying the rate worked out under subsection (2) for that day by the sum of these amounts:

(a) the additional amount of income tax; and
(b) the shortfall interest charge on that amount from previous days.

(2)

The rate is:

(1)

The Commissioner must give you a notice stating the amount of the ^* shortfall interest charge you are liable to pay for the period applicable under section 280-100.

(2)

The notice may be included in any other notice given to you by the Commissioner.

(3)

A notice given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.

(1)

The Commissioner may remit all or a part of an amount of ^* shortfall interest charge you are liable to pay if the Commissioner considers it fair and reasonable to do so.

(2)

Without limiting subsection (1), in deciding whether to remit, the Commissioner must have regard to:

(a) the principle that remission should not occur just because the benefit you received from the temporary use of the shortfall amount is less than the ^* shortfall interest charge; and
(b) the principle that remission should occur where the circumstances justify the Commonwealth bearing part or all of the cost of delayed payments.

The Commissioner must give you a written statement of the reasons for a decision not to remit an amount of ^* shortfall interest charge you are liable to pay if you requested the Commissioner, in the ^* approved form, to remit the amount.

Note: Section 25D of the Acts Interpretation Act 1901 sets out rules about the contents of a statement of reasons.

You may object, in the manner set out in Part IVC, against a decision of the Commissioner not to remit an amount of ^* shortfall interest charge you are liable to pay on an additional amount of income tax if the amount of the charge that was not remitted is more than 20% of the additional amount of income tax.

Insert:

After "liability to tax", insert "(the earlier liability )".

Repeal the paragraph, substitute:

(a) the amount by which the tax is so reduced is taken never to have been payable for the purposes of:
(i) provisions of this Act that apply the general interest charge; and
(ii) Division 280 in Schedule 1 to the Taxation Administration Act 1953 (which applies the shortfall interest charge); and

Insert:

(1A)

However, if a later amendment of an assessment is made and all or some of the person's earlier liability in relation to a particular is reinstated, paragraph (1)(a) is taken not to have applied, or not to have applied to the extent that the earlier liability is reinstated.

Omit "and additional tax under Part VII", substitute ", additional tax under Part VII and shortfall interest charge".

Repeal the subsection (including the notes), substitute:

(2)

An amount of tax that a taxpayer is liable to pay because the Commissioner amends the taxpayer's assessment is due and payable on the 21st day after the day on which the Commissioner gives the taxpayer notice of the amended assessment.

(2A)

An amount of shortfall interest charge that a taxpayer is liable to pay is due and payable on the 21st day after the day on which the Commissioner gives the taxpayer notice of the amount of the charge.

(3)

If any of the tax or shortfall interest charge which a person is liable to pay remains unpaid after the time by which the tax or charge is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(a) started at the beginning of the day by which the tax or shortfall interest charge was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the tax or shortfall interest charge;
(ii) general interest charge on any of the tax or shortfall interest charge.

Note 1: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 , and the shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.

Note 2: For provisions about collection and recovery of income tax and related amounts, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .

After "provision of this Act", insert ", or to pay shortfall interest charge".

Omit "or general interest charge", substitute ", general interest charge or shortfall interest charge".

Add "and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act".

Before "charge", insert "general interest".

Omit "and additional tax under Part VII", substitute ", additional tax under Part VII and shortfall interest charge".

Add "and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act".

Before "charge", insert "general interest".

Omit "and additional tax under Part VII", substitute ", additional tax under Part VII and shortfall interest charge".

Add "and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act".

Before "charge", insert "general interest".

Income Tax Assessment Act 1997

Repeal the heading, substitute:

Remission of general interest charge or shortfall interest charge

Repeal the paragraph, substitute:

(a) you have incurred expenditure that consists of ^* general interest charge or ^* shortfall interest charge; and

Repeal the paragraph, substitute:

(c) the ^* general interest charge or the ^* shortfall interest charge; or

Add:

Insert:

Insert:

After "tax assessed", insert "and shortfall interest charge on that tax".

Insert:

Insert:

Taxation (Interest on Overpayments and Early Payments) Act 1983

Insert:

(iiia) shortfall interest charge under Division 280 in Schedule 1 to the Taxation Administration Act 1953 ;

Omit "that Act", substitute "the Tax Act".

Insert:

(ia) shortfall interest charge under Division 280 in Schedule 1 to the Taxation Administration Act 1953 ; or

Insert:

(ia) remits, under section 280-160 in Schedule 1 to the Taxation Administration Act 1953 , the whole or part of an amount that has been paid to the Commissioner in respect of shortfall interest charge payable under Division 280 in that Schedule; or

The amendments made by this Schedule apply to amendments of assessments for the 2004-05 income year and later income years.