ANZ Banking Group v Chief Commissioner of State Revenue

[2005] NSWSC 960

Reported Decision: 61 ATR 154
64 NSWLR 347
[2007] ALMD 2262
[2007] ALMD 2263

New South Wales

Supreme Court

CITATION:	ANZ Banking Group v Chief Commissioner of State Revenue [2005] NSWSC 960
HEARING DATE(S):	08/03/05
JUDGMENT DATE :	19 October 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
DECISION:	See para 46 of judgment.

CATCHWORDS:	TAXATION AND REVENUE - Financial institutions duty - Certificate of exemption - Extent of Chief Commissioner's power to backdate certificate - Whether Chief Commissioner can relieve taxpayer from a liability already accrued under the Act - Stamp Duties Act NSW 1920, ss 4, 98A, 98J, 98T, 98U, 98W - Held that power to "exempt" encompasses exempting taxpayer from duty due and payable. - STATUTORY INTERPRETATION - Retrospectivity - Where provision expressly confers power to backdate - Backdating necessary to avoid multiplier effect - Held that power to backdate extended beyond one tax period.
LEGISLATION CITED:	Stamp Duties Act 1920 (NSW)Duties Act 1997 (NSW) Stamp Duties (Financial Institutions Duty) Amendment Act 1982, No. 133 Intergovernmental Agreement Implementation (GST) Act 2000 (NSW) Taxation Administration Act 1996 (NSW)
CASES CITED:	Miller v Miller (1995) 16 ACSR 73 Tefonu Pty Ltd v Insurance & Superannuation Commissioner (1993) 30 ALD 455 Plewa v Chief Adjudication Officer [1995] 1 AC 249 Hill on Stamp Duties Stamp Duties (Financial Institutions Duty) Bill, (Hansard, 1/12/1982, pp 3732ff)
PARTIES:	ANZ Banking Group v Chief Commissioner of State Revenue
FILE NUMBER(S):	SC 5075/02
COUNSEL:	Plaintiff: A Sullivan QC Defendant: H R Sorenson, R L Seiden
SOLICITORS:	Plaintiff: Blake Dawson Waldron Defendant: I V Knight, Crown Solicitor

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 19 October 2005

5075/02 ANZ Banking Group Ltd v Chief Commissioner of State Revenue

JUDGMENT

1 HIS HONOUR: The ANZ Bank seeks to recover a sum of $1,810,398.27 which it paid as financial institutions duty (“FID”) and interest to the Chief Commissioner. The Chief Commissioner claimed that the duty was payable on receipts from March to July 2000 to nine bank accounts which BT Custodial Services Pty Ltd and BT Funds Management Ltd (together “BT”) had with ANZ.

2 On or about 22 August 2000, the Commissioner of State Revenue approved the accounts as being exempt accounts from 27 March, 2000. ANZ refunded to BT the FID which it had already paid, and passed on to BT. It offset the amount against its September 2000 FID return.

3 In 2001, the Chief Commissioner took the view that notwithstanding that the certificates of approval were backdated to 27 March 2000, FID was still payable for the period of 27 March 2000 to 31 July 2000. The Chief Commissioner says he had no power to backdate the certificates to 27 March, 2000, so as to exempt ANZ from liability to pay tax once it was due and payable. He says that although the certificates are expressed to operate from 27 March, 2000, they should be treated as being operative from 1 August, 2000. According to the Chief Commissioner, that is the earliest date he could lawfully have specified as the date from which the certificates would operate.

Requests for Exemption

4 On 9 and 10 February 2000, BT Custodial Services Pty Ltd opened eight accounts with the ANZ Bank at 68 Pitt Street, Sydney. On 10 February 2000, BT Funds Management Ltd also opened an account with ANZ at that branch. On 7 March 2000, BT Funds Management requested exemption from 27 March 2000 in respect of designated receipts, including the account with the ANZ.

5 I infer that on 20 June 2000, BT Custodial Services Pty Ltd applied for exemption as from 27 March 2000 for the eight accounts which it had opened with the ANZ on 8 and 9 February.

6 On or about 22 August 2000, the Commissioner of State Revenue issued nine certificates to BT Custodial Services Pty Ltd and BT Funds Management Ltd. A certificate was issued for each account. Each certificate was in the same form. One example will suffice:

“ Mr Michael Brown
BT Custodial Services Pty Ltd
PO Box H193
AUSTRALIA SQUARE 1215
22 August 2000
Dear Mr Brown
Financial Institutions Duty
Certificate of Approval of Exempt Account in Accordance With Section 98U of the Stamp Duties Act 1920
Applicant/Registered Person: BT Custodial Services Pty Ltd
Title of Account: BT Custodial Services Pty Ltd A/C Sub Custody - GEMI
Name of Bank/Institution: ANZ Banking Group Ltd
Location/Branch: 68 Pitt Street, Sydney
Account Number: 8420-75172 (BSB 012-003)
Date of Approval: 27 March 2000
Class or description of receipts: Designated receipts
NOTE : This certificate must be produced to the bank at which the account is kept. The effect of this certificate is that receipts credited to the above account are not liable to financial institutions duty in the hands of the bank.
Robert McGarn
For the Commissioner of State Revenue
Our reference SFI 2116950 ”

7 Of course, the “date of approval” of 27 March 2000 was not the date the Chief Commissioner approved of each account being an exempt account. It was not disputed by the Chief Commissioner that 27 March 2000 was the date purportedly specified as the date on and from which each account should be an exempt account. Subsection 98U(2) of the Stamp Duties Act 1920 (NSW) provided:

“( 2) The Chief Commissioner shall, in a certificate issued under subsection (1), specify the date on and from which the account to which the certificate relates shall be an exempt account, being the date of the certificate or a date which is before or after the date of the certificate .”

Payment of FID

8 During the period from 27 March to 31 August 2000, ANZ remitted FID totalling $1,861,292.71 in respect of receipts into the accounts of BT. Pursuant to s 98W, it charged BT with the amount of duty which it paid. On or about 30 August 2000, BT produced to ANZ the certificates received from the Office of State Revenue. In September 2000, ANZ refunded to BT $1,860,061.23 in respect of the FID which it had remitted from the period from 27 March to 31 August 2000. It then set off that amount against the FID otherwise payable by it for the month of September 2000.

Demand for Payment and Notices of Assessment

9 On 9 April 2001, the Commissioner cancelled the exemptions in respect of the accounts pursuant to s 98U(5) of the Act with effect from 1 April 2001. There is no issue in these proceedings about that cancellation.

10 There were discussions and correspondence between the Office of State Revenue and the legal representatives of the ANZ in August and September 2001. On 16 October 2001, the Office of State Revenue said:

“ … I have determined that the bank is entitled to a refund of $293,034-13. This amount represents the duty on the BT accounts for the month of August 2000 (and includes duty of $14,730-11 for the Perpetual Trustees account, number 834990207, originally included in the total).
The bank’s liability to FID each month falls to be determined by, at the latest, the last day of that month. As the bank received the certificates on 30 August 2000 the accounts can be designated as exempt for the whole of that month (ie. from the 1 August 2000).
None of the BT accounts was an exempt account before this date. This fact is not changed and the liability is not negatived by the backdating of the certificates.
Consequently, the bank correctly remitted the self-assessed duty for the periods March to July 2000. As there was no overpayment of FID in respect of these months no refund is available.
As a consequence of this decision, the bank’s return for the month of September 2000 is short paid to the extent of $1,581,757-21. A remittance for this amount would be appreciated within 14 days. ”

11 On 19 November, 2001, the Commissioner issued a notice of assessment to ANZ for the month of September, 2000 showing an amount due at $1,810,398.27. This sum was paid on 10 December, 2001.

12 On 14 May, 2002, the Chief Commissioner issued notices of reassessment for the months of March to September, 2000, showing a liability for FID, but a nil balance payable. ANZ objected to the assessments. The Chief Commissioner rejected the ANZ’s objection. On 16 August 2002, the Chief Commissioner said:

“ Following a review of the submissions, it is considered that section 98J of the Stamp Duties Act requires a registered person to make out a return specifying the total amount of dutiable receipts received during month [sic] and pay to the Chief Commissioner, as stamp duty, the amount of stamp duty payable in respect to the dutiable receipts to which the return related.
Consequently, we consider that section 98J of the Act precludes the ability to offset amounts from other months against the dutiable receipts of a particular month.
In respect to the ground that the assessments for March to July 2000 include receipts which were not dutiable receipts and consequently, a refund was due, we consider that section 98U(3) of the Act provides that the relevant date for designating an account as an exempt account is the date of production of the certificate to the bank. Consequently, at the date of liability in the months of March to July 2000 there was no certificate ‘in force’ and the receipts as assessed, were correctly included as dutiable receipts.
Accordingly, the objections have been disallowed. ”

13 The Chief Commissioner did not rely on the ground upon which he had rejected ANZ’s notice of objection, namely, that the relevant date for designating an account as an exempt account was the date of production of the certificate to the bank. Nor did he persist with a contention that the certificates of exemption were invalid because the person who signed them lacked delegated authority to do so. ANZ did not maintain that it was entitled to set off the amounts which it says were refundable to it for FID paid for the months of March to August 2000 against its liability to pay duty for the month of September 2000.

The Legislative Scheme

14 Financial institutions duty was regulated by Part 3 Division 29 of the Stamp Duties Act 1920. Duty was imposed by a combination of ss 4, 98J(3)(b) and the Second Schedule to the Stamp Duties Act. Section 4 charged duties on the instruments and matters described or mentioned in the Act and in the Second and Third Schedules. Section 98J provided:

“98J Return to be made out in respect of dutiable receipts

(1) A registered person and a designated person who, pursuant to section 98I, is required to apply to the Chief Commissioner for registration under this Division shall, within 21 days after the end of:
(a) except as provided by paragraph (b), each month, or
(b) where, in relation to a registered person, the Chief Commissioner approves a period longer than a month, each such longer period, make out a return.
(2) For the purposes of subsection (1), a return:
(a) shall be in a form approved by the Chief Commissioner, and
(b) shall, in addition to such other matters as may be required to be specified in the form, specify:
(i) the total amount of dutiable receipts, not being dutiable receipts referred to in subparagraph (ii), and
(ii) the number of dutiable receipts, the amount of which was a single amount of not less than $2,000,000 (or, where some other amount is prescribed, the prescribed amount), received during the month or longer period, as the case may be, to which the return relates, by the person required to make out the return.
(3) A person who is required under subsection (1) to make out a return shall, within 21 days after the end of the month or the longer period, as the case may be, to which the return relates:
(a) lodge the return with the Chief Commissioner, and
(b) pay to the Chief Commissioner, as stamp duty, the amount of stamp duty payable in respect of the dutiable receipts to which the return relates.
…”

15 Failure to comply with s 98J was an offence.

16 The Second Schedule imposed duty upon “the dutiable receipts required to be specified in a receipts return”.

17 Section 98A specified receipts to which Division 29 did not apply. Subsection 98A(1) provided:

“(1) This Division does not apply to or in respect of a receipt of a designated person, being:
…
(c) a receipt comprising the crediting of an exempt account,
…”

Numerous other receipts were also specified as being receipts to which Division 29 did not apply.

18 A “designated person” included a “financial institution”. A “financial institution” included a bank, a trustee company and a credit provider. The ANZ Bank was a designated person.

19 The expression “exempt account” was defined as follows:

“ Exempt Account means an account in respect of which a certificate issued under s 98U is in force.”

20 Section 98T provided that a person could apply to the Chief Commissioner for approval of an account as an exempt account. An applicant was required to give “full particulars of the receipts which are or are proposed to be deposited to the credit of the account”.

21 Section 98U(1) provided:

“ (1) On receipt of an application under section 98T, the Chief Commissioner, if he is satisfied that the account is:
…

[here followed 27 paragraphs specifying which accounts could qualify as exempt accounts.]

…
may issue to the applicant a certificate of approval of the account as an exempt account and specify, in the certificate, the receipts, or the receipts of a class or description of receipts, which may be deposited to the credit of the account. ”

22 The Chief Commissioner did not specify which paragraph he was satisfied applied. Senior counsel for ANZ submitted that it was probably paragraph (a), namely:

“(1) On receipt of an application under section 98T, the Chief Commissioner, if he is satisfied that the account is:
(a) an account with a bank that is a registered person, being an account of a registered person into which only receipts of that registered person are deposited, …”

23 A “registered person” was a person who, pursuant to s 98I, was registered under Division 29. Section 98I provided for the registration of designated persons who had “designated receipts”. Subsection 98U(1) allowed the Chief Commissioner to issue certificates of approval for accounts as exempt including accounts held by financial institutions with banks to which only receipts of the financial institutions were deposited, accounts of short term dealers and brokers, and clearing and settlement accounts. The purpose of such exemptions was to limit the double or multiple imposition of duty. The operation of s 98A(c) and 98U was described in Hill on Stamp Duties (at 3.14520) as follows:

“ Critical to understanding the duty and in particular the manner in which some aspects, at least, of multiple duty on the same transaction are sought to be alleviated in s 98A which excludes from the application of the Division certain receipts and in particular s 98A(c) which includes from the duty ‘a receipt comprising the crediting of an exempt account’. An exempt account is one which satisfies one or other of the criteria set out in s 98U(a) to (g) and in respect of which a certificate of approval is issued by the Commissioner. That certificate will specify the receipts or class of receipts which may be deposited to the credit of the account. Generally speaking all non-bank financial institutions operate exempt bank accounts with their bankers into which they may bank free of further duty their receipts in respect of which they are or will be required to pay duty.
The comments which follow illustrate the general operation of the provisions as they relate to the dealings of financial institutions vis-È-vis their customers and bankers.
Let it be supposed that a New South Wales financial institution has agreed to advance the sum of $120,000 for a term of 12 months to a customer at a flat rate of interest of 10 per cent per annum payable monthly with equal monthly instalments of $1,000 on account of principal and interest.
When the money is advanced it is, let it be also supposed, paid to the credit of the customer’s account with the customer’s bank. The amount received by the customer’s banker and credited to the customer’s account will be required to be included in that bank’s receipts return and will attract duty at the rate of .06 per cent.
As each repayment of $1,100 is made by the customer to the finance company, the finance company (being a registered person) will be required to include the amount received by it of $1,100 in its receipts return for that month and to pay the duty at the rate of 0.06 per cent on the amount received by it.
The finance company may then determine to deposit the funds received by it, for present purposes the instalment of $1,100, with its bankers. There will be a payment received by the bank and a crediting of the account of the finance company by the bank, either or both of which would, but for s 98A(c) cause a further liability to arise in the finance company’s bankers. However, the finance company will operate an exempt account with its bankers so that the Division will not apply to or in respect of the receipt by its bankers comprising the crediting of that exempt account. Thus further duty is avoided. ”

24 In his Second Reading Speech on the introduction of the Stamp Duties (Financial Institutions Duty) Bill, (Hansard, 1/12/1982, p 3732ff), the Treasurer said (at 3733):

“ … the recognition that has been given from the outset to the rapid turnover of funds in money markets should remove the incentive which might otherwise exist to move transactions out of the State. Measures are incorporated in the bill to overcome duty avoidance practices but I should hope that the positive steps the Government has taken to limit the multiplier and other effects will result in the full co-operation of the business and finance community. An important feature of the bill is that bankings by financial institutions other than banks and liable for duty will be exempt from the duty. This is designed to achieve equity in the application of the legislation to different classes of financial institutions. ”

25 The critical provision is subs 98U(2), quoted in paragraph 7. The subsection expressly permitted the Chief Commissioner to specify a date, before the date of the certificate, as being the date on and from which the account to which the certificate relates should be an exempt account.

26 As the Chief Commissioner was required to specify such a date, it is clear that the date of 27 March 2000 which was described as the “date of approval”, was the date which the Commissioner purportedly specified as the date from which the accounts should be exempt accounts. Counsel for the Chief Commissioner accepted that this was so.

27 Although Part 3 Division 29 has not been repealed, amendments made by s 8 and Schedule 10 to the Intergovernmental Agreement Implementation (GST) Act 2000 (NSW) have the effect that a person was not required to make out a return for periods after 1 July, 2001, (s 98MA).

Chief Commissioner’s Contentions

28 ANZ incurred a liability to pay FID in respect of the receipts to the accounts for the months of March, April, May, June and July 2000 before the certificates of exemption were issued. It was only by virtue of s 98A(1)(c) that receipts credited to an exempt account were not subject to duty. An “exempt account” meant an account in respect of which a certificate issued under s 98U was in force. No certificate under s 98U was in force at the time the liability to pay duty in respect of the receipts for the months of March to July 2000 arose. The Chief Commissioner submitted that it was beyond his power to later specify 27 March 2000 as the date from which the accounts were to be exempt accounts. The Chief Commissioner submitted that he could not, by his administrative act, render a receipt not to be chargeable to duty, where the Act had already imposed the duty, which was due and payable.

29 A further argument was that to specify a date before the date of the certificate as the date from which the account was to be exempt, could not change the fact that no certificate, issued under s 98U, was in force when the liability to duty arose. Hence, so it was said, the liability to pay was unaffected by the certificate, as it was never in force when the liability fell due. Backdating the certificates could not make the accounts “exempt accounts” for the months of March to July 2000, as they were not then “in force”. These arguments were supported by reference to the terms of s 98T and s 98U(1) and (4), which, it was said, contemplated that an application for exemption would be made prospectively.

30 A possible third argument was that although s 98U(2) contemplated that a certificate might be issued with some retrospective effect, the presumption against retrospectivity limited the Chief Commissioner’s power under s 98U(2). Although this argument was anticipated by ANZ, the Chief Commissioner did not expressly rely on a presumption against retrospectivity.

31 Finally, the Chief Commissioner contended that the transitional provisions on the introduction of Division 29 supported his construction. As I understood the submission, it was that the transitional provisions made express provision for the granting of exempt status to an account for the whole of the period during which an application for exemption was being processed, and those provisions would have been unnecessary if s 98U(2) operated as widely as ANZ contended.

Relief Against an Accrued Liability

32 The Chief Commissioner contended that his power to certify an account as an exempt account could only permit him to free a taxpayer prospectively from a liability to pay tax before that liability had been incurred, and did not extend to releasing a taxpayer from liability to pay tax which had already been imposed. However, as the Chief Commissioner was acting under Parliamentary authority, there could be no objection to his relieving a taxpayer from an accrued liability. Parliament frequently confers such a power. For example, s 163ZB(2) of the Duties Act 1997 (NSW) provides that an acquisition or disposal by a person of an interest in a landholder is an exempt transaction if the Chief Commissioner, being satisfied that the application of Chapter 4A to the acquisition or disposal in the particular case would not be just or reasonable, so determines. The question is whether such a power was conferred by s 98U(2).

33 There is nothing in the concept of “exempting” an account which indicates that the power should be so limited. The Macquarie Dictionary defines the verb “exempt” to include “to free from an obligation or liability to which others are subject; release”. In Miller v Miller (1995) 16 ACSR 73, Santow J (as his Honour then was) said (at 88) that the notion of “exempt” is to “free from an obligation or liability”, citing the Australian Concise Oxford Dictionary.

34 Subsection 98U(2) expressly provides that the Chief Commissioner may specify a date which is before the date of the certificate as being the date on and from which the account to which the certificate relates shall be an exempt account. Paragraph 98A(1)(c) provides that Division 29 does not apply to a receipt of a designated person comprising the crediting of an exempt account. Subject to the argument about what is meant by a certificate issued under s 98U being “in force”, I see no reason why the power to issue a retrospective certificate of exemption should not extend to releasing a taxpayer from a liability which has already been incurred. That would be consistent with the ordinary concept of an exemption.

The Meaning of “In Force”

35 Paragraph 98A(1)(c) only rendered Division 29 inapplicable to the receipts to the nine bank accounts if the receipts comprised the crediting of an account in respect of which a certificate issued under s 98U was in force. No certificates were in force when the receipts were credited to the accounts. However, as s 98U(2) allowed the Chief Commissioner to specify a date before the date of the certificate as the date from which the account was to be an exempt account, where the power was exercised, the certificate was to be taken to be in force from the date so specified. The words “in force” in the definition of “exempt account” mean “in operation” rather than “in existence”. (Tefonu Pty Ltd v Insurance & Superannuation Commissioner (1993) 30 ALD 455 at 470).

36 The natural reading of s 98A(1)(c) is that the exempt account must be, or be taken to be, an exempt account when the receipt is credited. Unless a certificate of exemption is, or is taken to be, in force at the time the receipt is credited, Division 29 applies to the receipt. Unless s 98U(2) and the definition of “exempt account” are interpreted as referring to an account for which a certificate is to be taken to have been in operation, the power in s 98U(2) for the Chief Commissioner to specify an earlier date as the date from which the account should be an exempt account, would be illusory. As the certificate may have a retrospective operation, it is to be taken to have been in force from 27 March 2000.

Prospective Operation of Section 98T

37 The Chief Commissioner submitted that s 98T, and s 98U(1) and (4), contemplated that a certificate was to apply in respect of present and future receipts deposited to the subject account, and not to past receipts in respect of which a liability to FID had already accrued. Section 98T required an applicant for exemption to give full particulars of the receipts “which are or are proposed to be deposited to the credit of the account”. It was submitted that that section referred to future deposits, that is, receipts which “are … to be deposited” or which “are proposed to be deposited”. I do not accept that construction of s 98T. There would be no difference between the two expressions. In my view, the section referred to receipts “which are … deposited” and those which “are proposed to be deposited”. The former phrase shows that an application for exemption could be made after an account had been opened and receipts had started to be credited to the account.

38 Section 98U(1) also spoke in the present tense. Section 98U(4) spoke prospectively. It prohibited a person from directing the payment of an amount to the credit of an exempt account unless it comprised a receipt, or a receipt of a class or description of receipts, specified in the certificate.

39 Whilst these provisions provide part of the context in which s 98U(2) is to be construed, they do not dictate, or even suggest, the meaning to be given to that provision. They are neutral. None of them is inconsistent with the Chief Commissioner having the power to backdate the certificates of exemption to 27 March, 2000. The accounts had been opened when the application for exemption was made and money was being deposited in the accounts. That is consistent with s 98T and s 98U(1). Whilst the backdating of a certificate could conceivably put a person in unwitting breach of s 98U(4), that is the inevitable theoretical consequence of any backdating under s 98U(2). It neither negates the express power in s 98U(2), nor implies that the power should be limited to the backdating of a certificate to a time immediately after a tax had become due and payable. There is nothing in s 98T, or in s 98U(1) or (4) which limited the Chief Commissioner’s power to specify the date from which an account was to be exempt.

Presumption Against Retrospectivity Rebutted

40 The presumption against retrospectivity does not apply as Parliament has made express provision that a certificate may be given retrospective effect. In any event, to give the certificates retrospective effect is to confer a benefit on the taxpayer without inflicting a corresponding detriment on another person, or on the public generally. In other words, to allow the Chief Commissioner to issue a certificate with retrospective effect so as to relieve a taxpayer from a liability to tax which has already been incurred, would not be unfair. (Plewa v Chief Adjudication Officer [1995] 1 AC 249 at 257). In those circumstances, the presumption against retrospectivity does not apply.

Purposive Construction

41 The principal purpose of conferring on the Chief Commissioner a wide power of exemption was to limit what would otherwise be the multiplier effects of imposing FID on bankings by financial institutions other than banks. If the Chief Commissioner’s power to backdate the operation of certificates of exemption were limited as he now contends, the only way in which a double imposition of duty would be avoided on bankings by financial institutions would be if the Chief Commissioner could process the applications for exemption before a liability to duty accrued. I think it unlikely that Parliament would have expected the Office of State Revenue to be able to deal with applications in that way. It would impose an onerous and unnecessary burden on the Chief Commissioner. To give effect to the Chief Commissioner’s contention that he could give a certificate only a limited retrospective operation, would make limiting the multiplier effect of the Act on bankings by financial institutions, other than banks, depend on the vagaries of the efficiency with which the Office of State Revenue was able to process applications for exemption.

Transitional Arrangements

42 Division 29 of Part 3 commenced on 1 December 1982. The transitional provisions were contained in Schedule 3 to the Stamp Duties (Financial Institutions Duty) Amendment Act 1982, No. 133. By clause 3 of Schedule 3, no person was required to lodge a return with the Commissioner before 25 January 1983. Clause 5(1) provided that a person to whom the Commissioner might issue a certificate of approval under s 98U, could give notice to the bank where its account was kept of its intention to apply to the Commissioner under s 98T for the issue of a certificate of approval of the account as an exempt account. A person could request the bank to designate the account as an interim exempt account. Thus, under the transitional arrangements, accounts were designated as interim exempt accounts, not by the Commissioner, but by a person who was entitled to apply for such an exemption giving notice of its intention to do so to the bank. A person who did so was required by clause 5(2) to apply to the Commissioner under s 98T for approval of the account as an exempt account. Where a bank received notice under subclause 5(1) it was required to designate the account as an interim exempt account. Subclause 5(4) provided that where a certificate of approval was issued under s 98U, the account should be an exempt account and should be deemed to have become an exempt account on the date on which the notice was given to the bank. Subclause 5(5) provided that an interim exempt account was deemed to be an exempt account until it became an exempt account as referred to in subclause (4), that is, by the issue of a certificate of approval under s 98U, or the Commissioner gave notice to the bank directing that the designation of the account as an interim exempt account be cancelled.

43 As I understood the Chief Commissioner’s submission, these arrangements would have been unnecessary if he had the power under s 98U(2) to backdate a certificate of exemption to a date before a liability to pay duty accrued.

44 However, the transitional provisions operated wholly differently from Division 29. The person who claimed to be entitled to an exemption did not have to bear the burden of FID whilst its application was being considered. Its own notice to the bank was effective to designate the account as an interim exempt account. If the transitional provisions had not been in force, the bank would have been required to make out a return and pay the FID until the application under s 98T was determined. The transitional provisions provide no assistance in the construction of s 98U(2).

Conclusion

45 For these reasons, I do not accept the Chief Commissioner’s contention as to the limit upon his power to backdate a certificate of exemption. The effect of the certificates was that the receipts from the months of March to July 2000, in respect of which duty had been paid, were to be taken not to have been subject to FID. ANZ’s objection to the assessments for FID should be upheld. ANZ is entitled to a refund of the duty paid and to interest in accordance with s 105 of the Taxation Administration Act 1996 (NSW).

Declarations and Orders

46 I make the following declarations and orders:

1. Declare that the certificates of approval of exempt account issued by the defendant in relation to the accounts specified in paragraph 3 of the summons pursuant to s 98U of the Stamp Duties Act 1920 (NSW) were in force from 27 March 2000;

2. Declare that the defendant erred in law in making the assessments dated 14 May 2002 of the financial institutions duty payable by the plaintiff for the following periods:

(a) 1 April 2000 to 30 April 2000;
(b) 1 May 2000 to 31 May 2000;
(c) 1 June 2000 to 30 June 2000; and
(d) 1 July 2000 to 31 July 2000.

3. Declare that the defendant erred in law in making the reassessments dated 14 May 2002 of the financial institutions duty payable by the plaintiff for the period from 1 March 2000 to 31 March 2000;

4. Order that the defendant refund to the plaintiff the financial institutions duty of $1,581,757.21 and interest on this amount of $228,641.06, paid by the plaintiff on 10 December 2001;

5. Order that the defendant pay the plaintiff interest on $1,810,398.27 in accordance with s 105 of the Taxation Administration Act 1996 (NSW) from 10 December 2001;

6. Remit to the defendant his amended notice of reassessment dated 14 May 2002 of the financial institutions duty payable by the plaintiff for the period 1 September 2000 to 30 September 2000, to exclude therefrom the assessment of interest.

7. The exhibits may be returned after 28 days.

47 I will hear the parties on costs.

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