Reasonable Arguable Position

In circumstances where the rules are unclear and there is more than one way that the application of the rule to the Taxpayers circumstances can be interpreted, then even if the Taxpayer is found to be incorrect during a later assessment, fines and penalties can be avoided if the Taxpayer was determined to have intended to do the right thing. That determination is whether they took a reasonably arguable position (a position that a court would determine is as much likely to be correct as incorrect using the facts available).

A reasonably arguable position must set out the circumstances of the position being taken and should provide an assessment of the alternative position and why it is deemed that the position taken is reasonably arguable in that context. Set out both arguments, and then the reasons why the position taken is defensible.

The documentation of a reasonably arguable position is not a guarantee that the position will be accepted by the ATO, its purpose is to show that reasonable care was taken, the taxpayer was neither reckless, nor intentionally disregarding the law.

Under the safe harbour provisions, you may not be penalised if the incorrect statement was made by your agent when you provided them with the relevant, correct information (i.e. the mistake was theirs not yours). However, you will still be expected to pay any shortfall, and potentially any interest arising from having not paid the correct amount at the correct time.

We will advise you if there are circumstances where the law is unclear and you may want to seek a private binding ruling (a determination from the ATO around calculations of or eligibility of expenditure), an advance finding (from AusIndustry around eligibility of activities) or whether a reasonably arguable position is recorded in case it is required to be explained during an audit.