The review found that 35 per cent of total penalties handed down by the ATO were later reduced, prompting Mr Noroozi to recommend that ATO officers demonstrate additional evidence and fact-checking ability, as well as develop a “penalty decision making tool” that allows them to manage that evidence.

In addition, the review addresses concerns over “the use of penalties to influence primary tax disputes”, calling on the ATO to only require taxpayers to pay penalty amounts when a primary tax dispute is resolved or relevant position papers are issued, as well as calling for more “clear and concise” communications to taxpayers.

The clarity and practicality of the ATO’s penalty guidance was also addressed, with improved “guidance on voluntary disclosure and penalty remission” recommended.

The SMSF Academy's managing director Aaron Dunn told SMSF Adviser that while the Inspector-General’s recommendations will not have any bearing on the new penalty regime for SMSF trustees, that SMSF practitioners should be keeping a close eye on any changes to ATO taxpayer penalties.

“Whether it’s an individual taxpayer or a company taxpayer or a super fund taxpayer they all fall under the jurisdiction of the administrative penalties that govern this area so in terms of penalties that will apply around late lodgements, making false or misleading statements, applying for remissions etc. these are all relevant to the SMSF sector,” Mr Dunn said.