This paper explains how the penalty system works and tests the correctness of the following propositions:
- the purpose of penalties is to punish bad behaviour
- the Commissioner does not impose penalties
- if it's not my fault or I don't get a benefit, I will not be penalised
- the Commissioner's remission power should be exercised only in exceptional circumstances
- the penalty "safe harbour" under the Tax Agents regime is safe
- the chances of the AAT or the Court overturning the Commissioner's penalty decision is high.