Tax Penalties (ATO Penalties) can be removed fully or partly if you have the right reason to argue. 

The Commissioner of the Australian Taxation Office has the discretion to remit full or part of an administrative penalty imposed including a penalty for not making a statement required for a “tax-related liability” under the taxation law.

The relevant factor for the Commissioner exercising his discretional power to remit the penalties would be whether the Commissioner is satisfied, having regard to the taxpayer’s particular circumstances that it is appropriate to remit the penalty in whole or in part. It may be appropriate to remit any part of the penalty on the basis that the outcome is harsh, having regard to the particular circumstances of the taxpayer.

If the Commissioner refuses to remit some or all of the penalty, written notice of the decision and the reasons for the decision must be given to the entity.

A taxpayer that is dissatisfied with the Commissioner’s refusal to remit all or part of a penalty may object against the decision (see Tax Dispute Resolution).

An entity that is dissatisfied with the Commissioner’s decision on the objection may either apply to the AAT for a review of the decision or appeal to the Federal Court against the decision (see Tax Dispute Resolution). It is generally advisable to apply to the AAT rather than appeal to the Federal Court as the AAT can substitute its own opinion, whereas generally, the Federal Court can only intervene if the Commissioner has erred in law.

Note that Administrative Appeals Tribunal Act 1975 (AAT Act) requires the Commissioner to take such steps as are reasonable in the circumstances to notify an entity of its right to object against a penalty remission decision and, where the Commissioner makes a decision on an objection, its right to have the objection decision reviewed by the AAT. In fulfilling his obligations under the law, the Commissioner is required by the AAT Act to have regard to the Code of Practice issued under that section. The Commissioner could incorporate notice of an entity’s right of objection or review in the notice of penalty or the notice of the remission decision or objection decision, as appropriate.

Sometimes, the tax penalties are substantial for simple mistakes and negligence. Request of remission of penalties requires expert knowledge and experiences in tax law.