It says that if it finds inadvertent errors in your client\u2019s tax return or activity statement, it will fix the error and contact the practitioner who lodged to make sure the client is informed about how to get it right next time.<\/p>\n The ATO says its penalty relief applies to eligible individuals as well as entities with a turnover of less than $10\u00a0million. These entities can be:<\/p>\n Those not eligible for penalty relief include:<\/p>\n The ATO points out that practitioners cannot\u00a0apply<\/em>\u00a0for penalty relief for their clients \u2014 it will provide this during an audit if clients are eligible. If the ATO audits your clients for periods earlier than 1\u00a0July 2018, it says it will also apply penalty relief for those periods.<\/p>\n Relief from penalties also comes with a \u201creset\u201d period, which means penalty relief will be available once every three years at most. Penalty relief is not available for example where, in the past three years, your client has:<\/p>\n Penalty relief does not apply to other taxes such as fringe benefits tax (FBT) or the super guarantee (SG).<\/p>\n What is a reasonably arguable position? A Treasury\u00a0review of income tax self assessment<\/a>\u00a0found that \u201creasonably arguable\u201d is only defined in general terms. This includes that \u201ca position is reasonably arguable if it would be concluded in the circumstances, having regard to relevant authorities, that it is at least as likely to be correct as incorrect\u201d.<\/p>\n![\"\"](\"https:\/\/cruzandco.com.au\/wp-content\/uploads\/2018\/07\/Tax-Compliance.jpg\")
<\/a>From 1\u00a0July 2018 the ATO says it will not apply penalties to tax returns and activity statements where your clients have made an inadvertent error by failing to take reasonable care or due to the fact that they have not taken a \u201creasonably arguable\u201d position (more below).<\/p>\n\n
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\n<\/strong>The process for determining whether a position is \u201creasonably arguable\u201d is explained to some degree in\u00a0miscellaneous taxation ruling MT 2008\/2<\/a>. The ATO, in\u00a0taxation ruling TR 94\/5<\/a>, states that: \u201cWhether the taxpayer\u2019s treatment was reasonably arguable would depend on its relative strength when compared with the Commissioner\u2019s and other possible treatments. In other words, taxpayers should take particular note of the Commissioner\u2019s views on the correct operation of the law as expressed in a public ruling, but may adopt alternative treatments provided there are sound reasons for doing so.\u201d<\/p>\n