Power to amend fraud and evasion under

The Commissioner of Taxation has been granted power to modify the time limit for assessments and testing of fraud and evasion, which normally varies between two and four years.
Under subsection 170 (1), (2) and (3) of the Income Tax Assessment Act 1936 (ITAA),
the Commissioner can adjust the assessment of an individual or small business entity
within two years of the day they were given notice of the assessment.

A small business entity is an entity which carries on a business and has turnover of
less than $2 million. A four year period of assessment still applies for other entities.

The Commissioner may revise an assessment under section 170 (5) when they believe
there has been fraud or evasion. Fraud is not limited by a time period and is evaluated
on the absence of veracity in a statement or carelessness to its truths.

Evasion is gauged from the avoidance or withholding of information in a statement.

Lower penalties are imposed for carelessness and recklessness. Carelessness attracts a
penalty of 25 per cent of the tax avoided, recklessness 50 per cent and intentional
disregard 75 percent. An additional uplift penalty of 20 per cent will be issued for
fraudulent misstatement in a tax return.

The time period applicable for fraud and evasion commences when the assessment is
made or any time afterwards.

BUDGET 2015_3

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