From 1 March 2010, the Tax Agent Services laws take effect. The new laws make sure that services that registered tax agents provide to the public are of an appropriate ethical and professional standard. They also provide taxpayers with a safe harbour from some administrative penalties.

Under the safe harbour provisions, taxpayers who use a registered tax agent or BAS agent, and provide them with all relevant information, will not be liable for a penalty for:

  • making a false or misleading statement that results in a shortfall amount if the shortfall amount occurred because their agent didn’t take reasonable care
  • not lodging a document on time where they provided the agent with the information soon enough for their agent to lodge on time.

The taxpayer must provide proof to show that they provided all relevant information as required and within enough time to allow the agent to prepare and lodge the document on time. The Tax Office will look at the individual facts and circumstances of each case to work out whether the taxpayer must pay the administrative penalties. The safe harbour provisions will apply to:

  • statements given on or after 1 March 2010 for a false or misleading statement penalty
  • a return, notice or statement that had to be lodged on or after 1 March 2010 for a failure to lodge on time penalty.

The safe harbour provisions will not apply where the shortfall amount or the failure to lodge on time penalty came about because the agent or the taxpayer:

  • applied a tax law recklessly
  • intentionally disregarded a tax law.

Also, there is no safe harbour if a scheme is involved.

The safe harbour provisions will not affect taxpayers’ ability to seek remission of administrative penalties from the ATO.