41Amount of penalty tax

41 Amount of penalty tax (1) As a general rule, the amount of penalty tax is 25% of the amount of the tax default. (2) The general rule is subject to the following exceptions: (a) no penalty tax is to be imposed if the Commissioner is satisfied that the tax default arose from circumstances beyond the taxpayer's control (other than the taxpayer's financial incapacity to meet the tax liability) and that the taxpayer, having discovered the default, took all reasonable steps to rectify it; (b) the amount of the penalty tax is 10% of the amount of the tax default if the Commissioner is satisfied that the taxpayer took reasonable care to comply with the relevant taxation law; (c) the amount of the penalty tax is 75% of the amount of the tax default if the Commissioner is satisfied as to one of the following, and 95% of the amount of the tax default if the Commissioner is satisfied as to both of the following: (i) that the tax default arose wholly or partly from the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a taxation law;

Taxation Administration Act 2007 21 (ii) that the taxpayer (or a person acting on behalf of the taxpayer) deliberately concealed or suppressed information from the Commissioner relevant to the assessment of the tax liability (or the investigation of the tax default) or hindered the assessment of the tax liability (or the investigation of the tax default) in any other way. (3) The Commissioner has a discretion to reduce penalty tax in the following circumstances: (a) the Commissioner may reduce the amount of penalty tax by up to 20% of the amount otherwise payable if the Commissioner conducts an investigation of the tax default and the taxpayer cooperates fully with the investigation; (b) the Commissioner may reduce the amount of penalty tax by up to 80% of the amount otherwise payable if the Commissioner has not commenced an investigation of the tax default and the taxpayer's full and immediate disclosure of the extent of the tax default avoids the need for an investigation; (but if the taxpayer is liable to penalty tax because of deliberate concealment or suppression of information, there is to be no discretionary reduction of penalty tax imposed on that or any other ground). (4) A person hinders the investigation of a tax default if the person: (a) deliberately falsifies, damages, conceals or destroys tax records to which the investigation relates; or (b) refuses or fails (without reasonable excuse) to comply with a requirement lawfully made in connection with the investigation; or (c) hinders or obstructs an authorised officer exercising functions in the course of, or in connection with, the investigation; or (d) does anything else to hinder or obstruct the investigation.