ACT NURSING SERVICES PTY LTD AND COMMISSIONER FOR ACT REVENUE
[2008] ACTAAT 29
•3 November 2008
AUSTRALIAN CAPITAL TERRITORY
ADMINISTRATIVE APPEALS TRIBUNAL
CITATION:ACT NURSING SERVICES PTY LTD AND COMMISSIONER FOR ACT REVENUE [2008] ACTAAT 29 (3 NOVEMBER 2008)
AT08/54
Catchwords: Payroll tax – review of decision disallowing objection to assessment of payroll tax, penalty and interest – exemption from tax where wages paid for work for “not more than 8 days in any month” – whether “day” is 8 hour working day or calendar day – purposive interpretation of legislation – use of extrinsic aids to interpretation – remission of penalty and interest.
Legislation Act 2001, ss 138, 139, 140, 141, 142
Payroll Tax Act 1987, ss 6, 9, 14, 16, 32
Payroll Tax (Amendment) Act 1999Taxation Administration Act 1999, ss 4, 25, 26, 29, 30, 31, 37, 104, 107
Burt v Federal Commissioner of Taxation (1912) 15 CLR 469
CPS Credit Union Co-operative (ACT) Ltd and Commissioner for ACT Revenue [1994] ACTAAT 87 (12 September 1994))
Federal Commissioner of Taxation v Murry (1998) 155 ALR 67
Khoury (Mrs) v Government Insurance Office of NSW (1984) 54 ALR 639
State Chamber of Commerce and Industry & Ors v The Commonwealth of Australia (1987) 163 CLR 329
Tracy v Repatriation Commission (2000) 61 ALD 361
Tribunal:Mr M H Peedom, President
Date:3 November 2008
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT08/54
GENERAL DIVISION )
RE: ACT NURSING
SERVICES PTY LTD
Applicant
AND: COMMISSIONER FOR
ACT REVENUE
Respondent
DECISION
Tribunal : Mr M H Peedom, President
Date : 3 November 2008
Decision :
The decision under review is varied:
by remitting 50% of the penalty payable by the applicant pursuant to section 31(1) of the Taxation Administration Act 1999; and
by remitting 50% of the premium component of interest payable pursuant to section 25(1) of the Taxation Administration Act 1999.
……………………………
President
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT08/54
GENERAL DIVISION )
RE: ACT NURSING
SERVICES PTY LTD
Applicant
AND: COMMISSIONER FOR
ACT REVENUE
Respondent
REASONS FOR DECISION
3 November 2008 Mr M H Peedom, President
The decision under review
This is an application for review of a decision made by a delegate of the respondent to disallow an objection made by the applicant to an assessment of payroll tax levied on the applicant for the period 1 July 2000 to 30 June 2006. The decision, dated 26 May 2008, was made pursuant to section 104(1) of the Taxation Administration Act 1999 (“the TAA”). Jurisdiction to review the decision is conferred on the Tribunal by section 107(1)(a) of the TAA.
Background
2. The applicant carries on a business in the ACT which involves the placement of nurses and carers with persons who require their services. The services are provided to persons who are clients of the applicant’s business in both the private and public sectors. The applicant has individual contracts with each person procured to provide the relevant part of the services to the clients of the applicant’s business.
3. Some of the services of the applicant may be delivered to each end user of the services for only a handful of hours per day. This is particularly the case where the end user is in the private sector and the people to whom the services are provided are disabled, convalescing or are aged and, as a result, may only require limited care but do not require care for a whole day. Where only a handful hours of service are delivered the client is not charged for a whole day. Rather the client is charged by the applicant for the services on an hourly basis. After procuring the person, and assigning the person that requisite part of the services, the applicant does not generally supervise or control the activities of that person.
4. Provision of the relevant services between 1 July 2000 and 30 June 2006 involved the performance of work by individuals who worked and provided the services for 64 hours per month or less per individual in any month in which the services were provided. In some instances provision of the relevant services involved the performance of work by the individuals on less than 8 dates in any given month in the relevant tax years. However, regardless of the number of dates in any given month in which the services were provided, the provision of the services in every case involved the performance of work by the individuals for 64 hours per month or less in any given month in which the services were provided.
5. In respect of the period 1 July 2000 to 30 June 2006 the applicant did not lodge a monthly return pursuant to section 16 of the Payroll Tax Act 1987 (“the PTA”) in relation to those individual employees who worked for 64 hours per month or less in any given month.
The respondent’s assessment
6. On or about 26 November 2007 the respondent issued an assessment to the applicant in respect of the applicant’s alleged payroll tax liability (“the assessment”) under section 14 of the TAA.
7. In the assessment the respondent assessed payroll tax on “wages” (as that term is defined in section 32(2)(h) of the PTA in its application to payments made for services rendered under an employment agency contract) paid to the subcontractors by the applicant in the 6 financial years commencing on 1 July 2000 and ending on 30 June 2006.
8. The payroll tax assessed in the assessment related only to wages paid to individuals who provided the services under the employment contracts for no more than 64 hours in any one month in the relevant tax years. Some of the individuals who provided the services in respect of which wages were paid by the applicant which are the subject of the assessment worked on fewer than 8 dates per month whilst other individuals worked on more than 8 dates per month but none of the individuals concerned worked for more than 64 hours in any month. The respondent excluded from the assessment of taxable wages all of the wages paid to individuals who worked on 8 dates or less per month regardless of the number of hours worked on each of those dates.
9. In addition to making an assessment of the tax payable in respect of the applicant’s employees, the respondent imposed a penalty tax of 25% of the amount assessed and unpaid pursuant to section 31(1) of the TAA and interest at the rate calculated in accordance with section 26 of the TAA, pursuant to section 25 of the TAA.
The legislation
10. The PTA is a tax law for the purposes of the TAA and therefore falls under its provisions relating to the payment of tax and the imposition of interest and penalty tax (see section 4(h) TAA).
11. Section 6 of the PTA imposes a liability to pay tax “in respect of wages to which this Act applies”.
12. A number of exemptions from the liability imposed by section 6 are specified in section 9 of the PTA. Relevantly to the circumstances of this case, section 9(3)(f) provides:
(3)Section 6 does not apply to wages paid or payable by an employment agent to a person (the subcontractor) under a contract between the agent and the subcontractor for work performed by the subcontractor for a client of the agent in any of the following cases:
………..
(f)the individuals who perform the work for which the wages are paid or payable together work for not more than 8 days in any month under a contract with the agent;
13. Section 25(1) of the TAA provides for the payment of interest in relation to a default.
14. A “tax default” is defined by the Dictionary of the TAA to mean:
tax default means a failure by a taxpayer to pay, in accordance with a tax law, the whole or part of tax that the taxpayer is liable to pay.
15. Section 25(1) of the TAA provides:
25 Interest in relation to tax defaults
(1)If a tax default happens, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate from time to time applying under this division.
16. Section 26 of the TAA contains a formula for the calculation of the rate of interest payable pursuant to section 25.
17.Section 29 provides for the remission of interest in certain circumstances.
18. Section 30 of the TAA imposes a penalty tax in relation to certain tax defaults as follows:
30 Penalty tax in relation to certain tax defaults
(1)If a tax default happens, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.
Note A taxpayer may also be liable to pay penalty tax under the Land Tax Act 2004, s 19A (5) (Interest and penalty tax payable on land tax if no disclosure).
(2) Penalty tax imposed under this division is in addition to interest.
(3) Penalty tax is not payable in relation to a tax default that consists of a failure to pay—
(a) interest under division 5.1; or
(b) penalty tax previously imposed under this division.
19. Division 5.2 of the TAA contains provisions which specify the amount of penalty tax payable; the circumstances in which the penalty tax may be increased or reduced; the time for payment of penalty tax and the remission of penalty tax.
The issue
20. In a notice of determination of the objection which provided an explanation for disallowing the applicant’s objection, the respondent gave consideration as to whether section 9(3)(f) applied to wages paid or payable to subcontractors where they performed work together for not more than 8 days in any month. The respondent concluded that section 9(3)(f) did so apply. At the hearing of the appeal, however, Mr D Mossop, of counsel, who represented the respondent, informed the Tribunal that the respondent’s assessment was made on an individual rather than an aggregated basis and, accordingly, it was unnecessary for that issue to be resolved by the Tribunal.
21. On behalf of the applicant, Mr C Bevan, of counsel, submitted that the applicant was not liable for the payroll tax assessed by the respondent on the ground that the wages paid to the contractors satisfied the terms of the exemption from payroll tax in section 9(3)(f). He contended that the words in section 9(3)(f) “not more than 8 days in any month” meant not more than 8 working days each, of 48 hours, in any month, that is, 64 hours in any month. As the wages in respect of which the assessment was made were paid to the contractors who worked for less than this period they were exempt pursuant to section 9(3)(f).
22. Mr Mossop submitted that the term “not more than 8 days in any month” meant not more than 8 calendar days in any month irrespective as to the period of time worked on any of those days. Accordingly, he submitted the exemption did not apply.
23. It was agreed by the parties that the primary issue to be resolved by the Tribunal is what is the correct interpretation of the expression “not more than 8 days in any month”.
Reasons for decision
24. In support of his submission Mr Bevan referred to the definition of “day” in the Macquarie Dictionary (Third Edition). One of its defined means is:
“4. the portion of a day allotted to working: an eight-hour day.”
25. He also referred to the definition of the word “date” in the Macquarie Dictionary as:
“1. a particular point or period of time when something happens or happened.”
26. Had the meaning contended for by the respondent been intended, he contended, the word “date” would have been used in section 9(3)(f) rather than the word “day”, so as to make it clear that work on a particular day was to be included in any calculation of the number of days worked without regard to the duration of time worked on that particular day.
27. Mr Bevan relied upon the decision of the High Court of Australia in State Chamber of Commerce and Industry & Ors v The Commonwealth of Australia (1987) 163 CLR 329 in support of his submission that, in the absence of a statutory definition, the use of the Macquarie Dictionary was an appropriate source by reference to which the ordinary meaning of a word in Australia could be ascertained.
28. The Legislation Act 2001 contains provisions as to the approach to be taken in resolving any ambiguity or obscurity of meaning of a provision in legislation. Those provisions also have broader scope of application than merely resolving issues of ambiguity or obscurity. They are to be applied in circumstances where it becomes necessary to work out the meaning of an Act. The expression “working out the meaning of an Act” is defined in section 138 of the Legislation Act as follows:
138 Meaning of working out the meaning of an Act
In this part:
working out the meaning of an Act means—
(a) resolving an ambiguous or obscure provision of the Act; or
(b) confirming or displacing the apparent meaning of the Act; or
(c)finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable; or
(d) finding the meaning of the Act in any other case.
29. Sections 139 to 141 of the Legislation Act provide:
139 Interpretation best achieving Act’s purpose
(1)In working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation.
(2)This section applies whether or not the Act’s purpose is expressly stated in the Act.
Note The Human Rights Act 2004, s 30 (1) (which is about interpreting legislation to be consistent with human rights) is also relevant to interpreting territory laws.
140 Legislative context
In working out the meaning of an Act, the provisions of the Act
must be read in the context of the Act as a whole.
Examples
1The long title of an Act provides that it is an Act to give certain benefits to the holders of pensioner cards. Section 4 provides ‘This Act applies to a holder of a pensioner card’. Section 22 provides that the commissioner may grant ‘a person’ an exemption from payment of rates. The Act does not contain a definition of ‘person’. Section 22 must be read in the context of the Act as a whole so that the commissioner may only grant exemptions to people who are holders of pensioner cards.
2The Drug Testing Regulation 2001 (made under the Drug Testing Act 2000 (hypothetical)), section 6 contains the following heading:
6 Corresponding law—Act, s 100, def corresponding law
The heading indicates that the section has been made for the definition of corresponding law in the Drug Testing Act 2000, section 100.
3Section 12 (1) of a subordinate law refers to ‘a non-conviction order under the Crimes (Sentencing) Act 2005’. No other kind of order is mentioned in the section and the word ‘order’ is not otherwise defined in the subordinate law. Subsections (2), (4), (7) and (9) of the same section, which only refer to ‘the order’, are to be understood as referring to the order mentioned in subsection (1).
Note 1See s 126 and s 127 for material that is, or is not, part of an Act or statutory instrument.
Note 2An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see s 126 and s 132).
141 Non-legislative context generally
(1)In working out the meaning of an Act, material not forming part of the Act may be considered.
Note 1 See s 146 for the meaning of may and must.
Note 2 See s 126 and s 127 for material that is, or is not, part of an Act or statutory instrument.
Note 3 See s 142 for material that may be considered in working out the meaning of an Act or statutory instrument.
(2)In deciding whether material not forming part of an Act should be considered in working out the meaning of the Act, and the weight to be given to the material, the following matters must be taken into account:
(a)the desirability of being able to rely on the ordinary meaning of the Act, having regard to the purpose of the Act and the provisions of the Act read in the context of the Act as a whole;
(b)the undesirability of prolonging proceedings without compensating advantage;
(c) the accessibility of the material to the public.
(3)Subsection (2) does not limit the matters that may be taken into account.
(4) For subsection (2) (c), material in the register is taken to be accessible to the public.
Note The register is the ACT legislation register (see dict, pt 2, def register).
30. Section 142 of the Legislation Act further provides that in working out the meaning of an Act certain specified materials may be considered. Those materials include:
4any explanatory statement (however described) for the bill that became the Act, or any other relevant document, that was presented to the Legislative Assembly before the Act was passed.
5the presentation speech made to the Legislative Assembly during the passage of the bill that became the Act.
31. In her presentation of the Payroll Tax (Amendment) Bill 1999 (“the Bill”) which included, inter alia, the current exemptions from payroll tax, the Chief Minister and Treasurer stated:
Mr Speaker, this Bill amends the Payroll Tax Act 1987 to provide ACT employment agencies with a more objective regime of exemptions to determine their liability for payroll tax purposes.
The current legislation provides certain exemptions from payroll tax for employment agents. These include an exemption requiring the Commissioner for ACT Revenue to be satisfied that the agent has procured the services of a person who is bona fide rendering services to the public generally. Under current arrangements, Mr Speaker, employment agents have often expressed their concern at the difficulties they face in obtaining information to satisfy these exemptions and/or complying with the requirements of the tests, particularly in relation to the aggregation of 90 days employment in a financial year.
Following recent Victorian Supreme Court decisions, most recently in 1998, the scope of the exemption has been broadened to such an extent that it could undermine the entire employment agent provisions. In addition, the commissioner is burdened in determining exemptions in each individual case.
Mr Speaker, this Bill moves the guidelines currently contained in the relevant revenue circulars into the Payroll Tax Act itself and makes further amendment to clarify other exemption provisions for employment agents. Essentially, Mr Speaker, the Bill makes wages paid by employment agents to their contractors exempt from ACT payroll tax where the supply of goods or equipment is more than 50 per cent of the value of the contract; the person engaged to perform the work provides services which are not of a type ordinarily offered by the agent, and those services are provided by persons who normally render those services to the general public; the person engaged to perform the work is an employer in their own right; and the person engaged to perform the work does so for less than eight days in each month.
Mr Speaker, in response to the Victorian Supreme Court decision, both New South Wales and Victoria will provide for employment agent exemptions separate from their service contractor provisions. This reflects more closely the current ACT payroll tax guidelines and the provisions to be included in the Act. The New South Wales and Victorian employment agent regimes provide an exemption for employment agents who contract to exempt bodies such as the Commonwealth. This exemption is not included in existing ACT legislation and is not contemplated because of the significant loss of revenue to the ACT.
In conclusion, Mr Speaker, I wish to point out that the Bill imposes no overall additional regulatory or financial burden on the ACT’s employment agents. If this Bill is not introduced, however, the ACT could potentially be exposed to substantial revenue loss. This Bill will address the Victorian Supreme Court decision, provide greater certainty for ACT taxpayers, and will also reduce the cost of compliance to business.
32. The Explanatory Memorandum to the Bill contained the following summary:
Summary
The Payroll Tax (Amendment) Bill 1999 provides ACT employment agents with a more objective regime of exemptions to determine their liability for payroll tax purposes.
2 From 1 November 1989 the Payroll Tax Act 1987 provided that all payments made to a person engaged under an agency arrangement through an employment agent, irrespective of who makes the payments (ie. employment agent or client) were subject to payroll tax. This is the case whether or not the person supplying the services or labour does so as a natural person, a partnership or through a company or trust.
3 In 1993 amendments were made to the Act effective from 17 September 1991, to provide certain exemptions from payroll tax including an exemption requiring the Commissioner for ACT Revenue to be satisfied that the agent has procured the services of a person who is bona fide rendering services to the public generally.
4 To assist employment agents to determine whether or not particular contracts would satisfy the exemption criteria, including those granted under the commissioner’s discretion, Revenue Circular No. 39 (RC 39) was issued on 27 August 1993.
5 Despite RC 39, employment agents have often expressed their concern at the difficulties they face in obtaining information to satisfy these exemptions and/or complying with the requirements of the tests, particularly in relation to the aggregation of 90 days employment in a financial year.
7 In addition, the Commissioner is burdened in determining exemptions in each individual case. Accordingly it is proposed to move the guidelines from RC 39 into the Act, making amendments as appropriate to clarify provisions. This will provide greater certainty for taxpayers and reduce the cost of compliance to business and government.
33. Revenue Circular 39 (“RC 39”) dated 27 August 1993, which was referred to in the Explanatory Memorandum, contained the explanation that the provisions of the PTA then in force would:
allow employment agents to exclude from payroll tax payments made to persons supplying the services where it can be established that the contractor is truly independent.
34. It contained the following outline of the exemptions then applicable:
Outline of Exemptions
12. Where an employment agent engages a person for the performance of work in order to satisfy a contract between the agent and a client, the payments to the person engaged to perform the work would be exempt from payroll tax where:
·the work is ancillary to the goods or equipment supplied by the person under the contract;
·the work performed by the person for the client are not ordinarily the type of services that would be provided by the agent to a client in the course of the mainstream of the agent’s business and the person supplying the services is bona fide rendering services of that type to the public generally.
·the Commissioner is satisfied that the agent has procured the services of a person who is bona fide rendering services to the public generally.
13. Only one of the foregoing provisions has to be satisfied in order for the exemption to apply.
35. RC 39 also contained the following statement:
To assist employment agents in determining whether such arrangements would be excluded, payments made to the person performing the work, irrespective of who makes the payments, need not be included by the employment agent for the purposes of payroll tax where:
…………..
·the nature of the agreement or agreements between the person/s engaged to perform the work and the employment agent does not require the person to perform the work, which is the object of the agreement/s, for a period in excess of an aggregate of 90 working days or 120 calendar days in any financial year.
36. RC 39 contained the following explanation of the 90/120 day rule:
26. Paragraph 14(a) of revenue circular No. 8 of 22 March 1990 provided that payments made to a contractor by the taxpayer in respect of services provided for a period of 90 days or less on any financial year need not be included for the purposes of payroll tax.
27. By way of clarification:
(a)the 90 day period means 90 working days and is the aggregate of days a contractor is engaged by the taxpayer in a financial year, irrespective of the number of individual contracts under which he or she is engaged, and
(b)it is accepted that 90 working days may be interpreted as 120 calendar days where it is a more appropriate method of recording a contractors time.
37. Mr Bevan submitted that the new test for exemption introduced by section 9(3)(f) would, if the interpretation for which he contended was accepted, amount to a test of not more than 96 working days per year, which was the nearest approximation to the former 90 working days per year test simply because 90 days was not readily divisible by 12 months in a year but 96 days was. The adoption of an 8 hour working day test would most nearly approximate the former 90 working day test and was supported, in his submission, by the absence of any suggestion in the extrinsic material that the amendments were intended to change the amount of revenue payable in consequence of the amendments.
38. Mr Bevan also relied upon the principle of interpretation of legislation that a liberal approach is to be taken to the interpretation of legislation particularly amendments that extended benefits conferred by remedial legislation (see Tracy v Repatriation Commission (2000) 61 ALD 361 at 368) and that an Act intended to benefit a person or class of persons should preferably resolve any ambiguity in favour of the intended beneficiary (see Khoury (Mrs) v Government Insurance Office of NSW (1984) 54 ALR 639). He also relied upon the approach of courts to the interpretation of exemption and exception sections of taxing Acts where doubts about the interpretation of such Acts should be resolved by favouring those whose claims were based on the exceptions (see Burt v Federal Commissioner of Taxation (1912) 15 CLR 469 at 482 and Federal Commissioner of Taxation v Murry (1998) 155 ALR 67 at 87).
39. I also note that in enacting similar amendments to those contained in section 9 of the PTA the Victorian Legislature adopted a formula of words in the equivalent provision to section 9(3)(f) that referred to “on not more than 8 days per month” as distinct from section 9(3)(f) which referred to “for not more than 8 days per month” (emphasis added).
40. The word “for” includes within its ordinary meanings “during the continuance of: for a long time” (see Macquarie Dictionary). It more readily connotes a continuation of activity during the period of a day whereas an event occurring “on” a particular day does not necessarily entail any period of duration of the event.
41. There is, it seems to me, considerable force in the submissions made on behalf of the applicant. There are difficulties, however, in accepting the interpretation propounded by the applicant.
42. While it is to be accepted that the context of the section (section 9(3)(f)) is the performance of work and that the defined meaning identified in the Macquarie Dictionary is apposite, it does not follow that that defined meaning requires the adoption of a day which is fixed at a specified duration of work of 8 hours. As Mr Mossop’s submission pointed out, the explanatory notes for the explanation of terms contained in the Key to Structure of Entries in the Macquarie Dictionary identifies that italicised words following a defined meaning of a word are illustrative of that meaning and not part of the defined meaning.
43. Mr Bevan submitted that the 90/120 day rule gave recognition to the fact that a working day is longer than a calendar day. Accepting that is so such recognition does not, by itself, resolve what is the period of time that is required to be worked on any particular day or cumulatively over a number of days to satisfy the definition of “day” relied upon by the applicant. Contrary to the suggested objective of the Payroll Tax (Amendment) Act 1999 of codifying the existing (RC 39) guidelines into the PTA, the interpretation propounded by the applicant would require the making of an assumption about a matter external to the PTA.
44. No basis, other than the illustration of the defined meaning of the word “day” was identified for confining its meaning to an 8 hour period. Although it is to be accepted that 8 hours is not an uncommon period for a work day, there is no reason that I can find to justify the exclusion from the calculation of a day some portion of a day allotted to working other than an 8 hour period. Irrespective as to the length of the time worked on a particular day, whether it is greater, equal to or less than 8 hours, the work performed is that portion of the day allotted to working.
45. In the application of the purposive test required by section 139(1) of the Legislation Act, I accept that the extrinsic material shows that section 9(3)(f) was enacted to reduce the difficulties for employment agents in obtaining information; to reduce the scope of exemptions; to avoid the necessity of the respondent to determine individual cases; and to provide greater certainty for taxpayers. Those objectives would be achieved by the interpretation contended for by the respondent. Nor, does it seem to me, that a person working up to 64 hours per month is, as Mr Bevan contended, more likely to be independent of the person by whom he/she was engaged to perform the work than a person who works for a shorter period of time so as to achieve the expressed objective of confining the application of the exemption to persons who are truly independent.
46. I conclude that, when correctly interpreted, the word “day” in section 9(3)(f) of the PTA is not confined to a period of 8 hours but that it applies to any day on which a particular worker works, irrespective as to the length of time worked. I therefore conclude that, in relation to the assessment of payroll tax, the decision of the respondent should be affirmed.
Penalty tax
47. Section 31(1) of the TAA specifies the amount of tax payable in relation to a tax default as 25% of the amount of tax unpaid. Section 31(1) is also expressed to operate subject to Division 5.2 of the TAA. Section 37, contained within Division 5.2, provides for remission of penalty tax as follows:
37 Remission of penalty tax
The commissioner may remit all or part of an amount of penalty tax
payable by a person if satisfied that—(a) either—
(i)the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; or
(ii)the circumstances that resulted in the liability for penalty tax were exceptional; and
(b)it would be fair and reasonable to remit all or part of the penalty tax.
48. It was submitted on behalf of the applicant that, in the event that the Tribunal found that a tax default had happened, it should remit all or part of the penalty tax imposed by section 31(1).
49. There are, as I have outlined above, strong arguments in support of the interpretation of section 9(3)(f) for which the applicant contended. The fact that the section was ambiguous was acknowledged by the respondent’s officer who investigated the applicant’s tax default according to a record of his conversation with the applicant’s representative on 26 September 2007. Account should also be taken of the fact that no further Revenue Circular or other publication was provided to explain the position taken by the respondent in relation to the interpretation of section 9(3)(f) until the publication of a circular on 30 June 2008. The publication of that circular (No. PTX014) gives some recognition of the need for it, albeit belatedly.
50. Against the background of this uncertainty of meaning of the relevant statutory provision and the absence of any attempt to clarify an acknowledged ambiguity, the circumstances that resulted in the liability to a penalty tax were unusual and to be regarded as exceptional within the meaning of section 37(a)(ii).
51. The Tribunal has previously taken the view that although problems of interpretation of the PTA would not ordinarily justify remitting all of the penalty tax involved except perhaps where the taxpayer had acted in good faith upon competent legal advice, the failure of a relevant Revenue Circular to make clear the respondent’s view of the scope of the legislation is a mitigating circumstance that justified remission of the penalty tax involved (see CPS Credit Union Co-operative (ACT) Ltd and Commissioner for ACT Revenue [1994] ACTAAT 87 (12 September 1994)).
52. In this case the applicant’s representative accepted that he had not taken advice about section 9(3)(f) but had made his own “common sense” interpretation of it. In circumstances where lack of clarity in tax legislation exists there is a burden imposed upon taxpayers, including a financial burden, in obtaining professional legal advice. In some cases that may be an unavoidable burden due to the complexity of the issue involved. This, however, is not such a case.
53. In my opinion, the lack of clarity of the obligation imposed by section 9(3)(f) of the PTA and the absence of any information being made available to enable it to be resolved are matters that are to be taken into account in determining whether the penalty tax or part of it should be remitted. In my view, it would be fair and reasonable to remit 50% of the penalty tax.
Interest
54. Section 29(1)(c) and section 29(2) of the TAA provides:
29 Remission of interest
(1)The commissioner may remit all or part of the market rate component or the premium component of interest, or both, if—
……….
(c)penalty tax has been remitted in whole or in part under section 37.
(2)The commissioner must not remit the market rate component unless the commissioner is also satisfied that the circumstances are exceptional and justify the remission.
55. During the period of the tax default the applicant has had the use of the money that should have been paid to the respondent. The circumstances, in my view, although exceptional do not justify remission of the market rate component of interest. In view of the conclusion which I have reached in relation to the penalty, I consider that 50% of the premium component of interest should be remitted.
FORM 33
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Member's Staff
________________________________________________________________________
PART A FILE NO: AT08/54
APPLICANT: ACT NURSING SERVICES PTY LTD
RESPONDENT: COMMISSIONER FOR ACT REVENUE
PARTY JOINED: N/A
COUNSEL APPEARING: APPLICANT: MR C J BEVAN
RESPONDENT: MR D MOSSOP
PARTY JOINED:
SOLICITORS: APPLICANT: TRINITY LAW
RESPONDENT: ACT GOVERNMENT
SOLICITOR
PARTY JOINED:
OTHER:APPLICANT:
RESPONDENT:
PARTY JOINED:
TRIBUNAL MEMBER/S: MR M H PEEDOM, PRESIDENT
DATE/S OF HEARING: 28 OCTOBER 2008 PLACE:CANBERRA
DATE OF DECISION: 3 NOVEMBER 2008 PLACE: CANBERRA
_______________________________________________________________________
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION (X)
COMMENT:
6
0