The Australian Taxation Office has announced a proposed legislative change for the application of significant global entity penalties to subsidiary entities.
Proposed application of SGE penalties to subsidiary entities
Significant global entities (SGE) are:
- a 'global parent entity' whose 'annual global income' is A$1 billion or more
- a member of a group of entities consolidated (for accounting purposes) where the global parent entity has an annual global income of A$1 billion or more.
Proposed legislative change
Amendments have been introduced into Parliament to address an unintended consequence in the law. The amendments will result in SGE subsidiary members of tax consolidated or multiple entry consolidated (MEC) groups becoming liable for penalties at the SGE rates.
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Proposed changes for SGE subsidiaries
Failure to lodge on time (FTL) penalties
Under the proposed legislation, subsidiary members of SGE consolidated or MEC groups would be subject to the same increased penalties (up to $525,000) as their head company for failing to lodge any form (return, notice, statement, or other document) by the due date in the approved form.
Under the proposed legislation, subsidiary members of SGE consolidated or MEC groups would be subject to the same increased penalties (doubled) as their head company for:
- making false or misleading statements
- failing to have a reasonably arguable position
- failing to provide a document to us where it is necessary to determine a tax-related liability accurately.
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