ATCO GAS AUSTRALIA PTY LTD (NOW KNOWN AS ATCO GAS AUSTRALIA HOLDINGS PTY LTD) and COMMISSIONER OF STATE REVENUE
[2021] WASAT 167
•24 DECEMBER 2021
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: TAXATION ADMINISTRATION ACT 2003 (WA)
CITATION: ATCO GAS AUSTRALIA PTY LTD (NOW KNOWN AS ATCO GAS AUSTRALIA HOLDINGS PTY LTD) and COMMISSIONER OF STATE REVENUE [2021] WASAT 167
MEMBER: JUDGE D R PARRY, DEPUTY PRESIDENT
HEARD: 6 OCTOBER 2021
DELIVERED : 24 DECEMBER 2021
FILE NO/S: VR 83 of 2020
BETWEEN: ATCO GAS AUSTRALIA PTY LTD (NOW KNOWN AS ATCO GAS AUSTRALIA HOLDINGS PTY LTD)
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Taxation Stamp duty Interest on overpaid tax during reassessment period Prescribed rate or rates of interest to be applied Prescribed rate of interest fell from 2.7% per annum to 0.2% per annum during reassessment period Whether interest rate to be applied to overpaid tax during reassessment period is each rate prescribed during reassessment period, for specific period for which each rate is prescribed (applicant's contention) or rate prescribed at date on which Commissioner approved refunding of overpayment (respondent's contention) Words & phrases: 'during', 'interest'
Legislation:
Duties Act 2008 (WA), Ch 3
Interpretation Act 1984 (WA), s 10(c), s 43(8)
State Administrative Tribunal Act 2004 (WA), s 73(1)
Taxation (Interest on Overpayments) Act 1983 (Cth), s 9
Taxation Administration Act 2003 (WA), s 40(1), s 43(3), s 43(3)(b), s 43(4), s 43(4A), s 47(3), s 126(1), Pt 3
Taxation Administration Regulations 2003 (WA), reg 4, reg 5
Result:
Interest rate to be applied to overpaid tax during reassessment period is each rate prescribed during reassessment period, for specific period for which each rate is prescribed
Respondent required to pay interest to applicant under s 43(3)(b) of Taxation Administration Act 2003 (WA) in amount of $246,881.18
Category: B
Representation:
Counsel:
| Applicant | : | Mr S Grimley and Ms J Rosair |
| Respondent | : | Ms R Panetta |
Solicitors:
| Applicant | : | Ernst & Young |
| Respondent | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2013] WASAT 107; (2013) 84 SR (WA) 226
Commissioner of State Revenue (WA) v Placer Dome Inc [2018] HCA 59; (2018) 265 CLR 585
Consolidated Fertilizers Ltd v Commissioner of Taxation (1992) 36 FCR 1
Interchase Corporation Ltd (in Liq) v Commissioner of Stamp Duties (Qld) [1993] QCA 485; (1993) 27 ATR 154
MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (19901991) 171 CLR 657
Mohammadi v Bethune [2018] WASCA 98
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
ATCO Gas Australia Pty Ltd (now known as ATCO Gas Australia Holdings Pty Ltd) (ATCO or applicant) and the Commissioner of State Revenue (Commissioner or respondent) jointly seek a determination by the Tribunal as to the amount of interest that is payable to ATCO, pursuant to s 43(3)(b) of the Taxation Administration Act 2003 (WA) (TA Act), following the final reassessment of ATCO's liability as directed by the Tribunal following mediation between the parties. More particularly, the parties are in dispute as to the relevant prescribed rate or rates of interest to be applied to the overpaid amount of tax.
The relevant background facts are agreed between the parties.[1] On 2 April 2014, the Commissioner issued a taxation assessment to ATCO under Ch 3 of the Duties Act 2008 (WA) (Duties Act) and Pt 3 of the TA Act. On 2 May 2014, ATCO paid the assessment and, on 30 May 2014, it lodged an objection against the assessment. ATCO requested the Commissioner to defer consideration of its objection until the determination of the High Court of Australia[2] in Commissioner of State Revenue (WA) v Placer Dome Inc [2018] HCA 59; (2018) 265 CLR 585. Ultimately, on 24 August 2020, the Commissioner disallowed ATCO's objection.
[1] The background facts set out below are taken from the Statement of Agreed Facts and Issues dated 25 May 2021 (document 1 in Joint Bundle for Hearing dated 4 October 2021 (Exhibit 1)) (agreed facts) and para 7 of the Applicant's Submissions dated 8 June 2021 (ATCO's submissions) (document 2 in Exhibit 1) and the Commissioner's oral submissions in relation to the calculation of interest in the table at para 7 of ATCO's submissions (ts 82, 6 October 2021).
[2] Kiefel CJ, Bell, Gageler, Nettle and Gordon JJ.
On 22 October 2020, ATCO lodged an application for review by the Tribunal, under s 40(1) of the TA Act, of the Commissioner's decision to disallow its objection against the assessment of taxation. On 19 April 2021, following mediation, and at the request of the parties, the Tribunal directed the Commissioner to do all things necessary to make a reassessment of primary tax in the amount of $1,761,300. On 22 April 2021, the Commissioner issued a reassessment as directed by the Tribunal, which was 'the final reassessment of the taxpayer's liability', for the purposes of subsections (3) and (4) of s 43 of the TA Act. Those provisions state as follows:
(3)If the final reassessment of the taxpayer's liability indicates that tax has been overpaid, the taxpayer is entitled to a refund or credit of the overpaid amount and the following amounts —
(a)any amount paid by the taxpayer for the lodging of a memorial under section 76, 77 or 77A, if the Commissioner has lodged a withdrawal of the memorial as a result of the final reassessment;
(b)interest during the reassessment period, calculated at the prescribed rate, on the amount to be refunded or credited, including any amount referred to in paragraph (a).
…
(4)For the purposes of subsection (3) —
(a)the final reassessment of a taxpayer's liability is the last assessment to have been made as directed in the course of review proceedings at the time that the case is discontinued or otherwise finally determined; and
(b)a refund or credit of an amount referred to in that subsection need not be made until rights to take review proceedings (including any right that may exist to seek special leave to appeal to the High Court) have been exhausted or have expired, and no further reassessment can be made.
On 28 April 2021, a refund of the amount of the overpaid tax of $1,761,300 was approved by the Commissioner and has subsequently been paid to ATCO. As the final reassessment of ATCO's liability indicated that tax had been overpaid, it is also entitled, pursuant to s 43(3)(b) of the TA Act, to 'interest during the reassessment period, calculated at the prescribed rate, on the amount to be refunded … '. The expression 'reassessment period' is defined in s 43(4A) of the TA Act as follows:[3]
[3] Original emphasis.
In subsection (3)(b) —
reassessment period, in relation to the payment of interest on an amount, means the period —
(a)beginning on whichever is the later of —
(i)the date on which the overpaid amount was paid by the taxpayer; or
(ii)the date on which the assessment or decision the subject of the Commissioner's decision to which the review proceedings relate, was made;
and
(b)ending on the date, on or after the date the Commissioner made the final reassessment, on which the Commissioner approves the refunding or crediting of the amount.
It is common ground between the parties that the 'reassessment period', under s 43(4A) of the TA Act, relevantly:
•begins on 2 May 2014, which was 'the date on which the overpaid amount was paid by the taxpayer', for the purposes of s 43(4A)(a)(i) of the TA Act; and
•ends on 28 April 2021, which was 'the date … on which the Commissioner approves the refunding … of the amount', for the purposes of s 43(4A)(b) of the TA Act.
Section 126(1) of the TA Act authorises the Governor to make regulations 'prescribing all matters that are required or permitted by this Act to be prescribed or are necessary or convenient to be prescribed for giving effect to this Act'. Pursuant to s 126(1) of the TA Act, a rate of interest payable for the purposes of s 43(3) of the TA Act is prescribed by reg 4 of the Taxation Administration Regulations 2003 (WA) (TA Regs). During the 'reassessment period' between 2 May 2014 and 28 April 2021, five different interest rates were prescribed by reg 4 of the TA Regs, as follows:[4]
[4] Agreed facts, para 13(a) (original emphasis).
Period
Prescribed interest rate
(% per annum)
2 May 2014 to 30 June 2015
2.7%
1 July 2015 to 31 December 2015
2.6%
1 January 2016 to 30 June 2019
2.2%
1 July 2019 to 30 June 2020
1.7%
1 July 2020 to present
0.2%
The parties are in dispute as to the prescribed rate or rates of interest to be applied for the calculation of interest to which ATCO is entitled under s 43(3)(b) of the TA Act and, consequently, as to the amount of interest payable to ATCO on the overpaid tax. The parties' dispute turns on the proper interpretation of s 43(3)(b) of the TA Act, in particular the words 'interest during the reassessment period, calculated at the prescribed rate, … '. ATCO submits that, on the proper interpretation of s 43(3)(b) of the TA Act, the interest rate to be applied to the overpaid tax is 'each of the rates that were prescribed during the reassessment period, and for the specific period that each of the respective rates were prescribed'.[5] ATCO therefore submits that interest during the reassessment period should be calculated on the overpaid tax of $1,761,300 in accordance with the following table:[6]
[5] ATCO's submissions, para 2.
[6] ATCO's submissions, para 7 (original emphasis) and ts 82, 6 October 2021. During her oral submissions, Ms R Panetta, counsel for the Commissioner, said that when ATCO's calculations of interest set out in the fourth column of the table where checked by the Commissioner, it was found that ATCO had made small mathematical errors in calculating the interest for three of the periods, and consequently for the whole reassessment period, and that the correct calculations are as set out in the fifth column of the table. Mr S Grimley, who appeared with Ms J Rosair on behalf of ATCO, did not contest the correctness of the Commissioner's recalculation of interest in the fifth column of the table. I therefore accept the accuracy of the calculations in the fifth column of the table.
In contrast, the Commissioner submits that, on the proper interpretation of s 43(3)(b) of the TA Act, 'the right to interest is a right to interest at the prescribed rate at the time of the making of the final reassessment', which in this case is 0.2%.[7] The Commissioner therefore submits that '[ATCO] is entitled to interest payable on the overpaid tax of $1,761,300 from 2 May 2014 to 28 April 2021 calculated at the prescribed rate of 0.2% per annum'.[8]
[7] Respondent's submissions dated 29 June 2021 (document 3 in Exhibit 1) (Commissioner's submissions), para 71.
[8] Commissioner's submissions, para 72.
In an application for review of the Commissioner's decision on an objection under s 40(1) of the TA Act, the Tribunal has power to determine the applicable interest rate or rates under s 43(3)(b) of the TA Act in respect of overpaid tax under that section, and to require the payment to the taxpayer of interest in a particular sum calculated in accordance with the applicable interest rate or rates in respect of overpaid tax under that section, under s 73(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), because 'the application of s 43(3) [of the TA Act] is … correctly described as ancillary to the primary purpose for which the Tribunal exercise[s] its power [in the application for review]'.[9] Section 73(1) of the SAT Act states as follows:[10]
A power of the Tribunal to make an order or give a direction (the primary power) includes the power to make the order subject to conditions and the power to make any ancillary order or direction the Tribunal considers appropriate for achieving the purpose for which it may exercise the primary power.
Principles of statutory interpretation
[9] Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2013] WASAT 107; (2013) 84 SR (WA) 226 (Justice Chaney P) [19].
[10] Original emphasis.
The principles of statutory interpretation are not in dispute and were helpfully summarised by the Court of Appeal of Western Australia[11] in Mohammadi v Bethune [2018] WASCA 98 at [31] [36] as follows:[12]
[11] Martin CJ and Mazza and Beech JJA.
[12] Footnotes omitted.
31The principles of statutory construction are well known and do not require detailed exposition. Statutory construction requires attention to the text, context and purpose of the Act. While the task of construction begins and ends with the statutory text, throughout the process the text is construed in its context. Statutory construction, like any process of construction of an instrument, has regard to context. As Kiefel CJ, Nettle and Gordon JJ recently explained in [SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 91 ALJR 936 at [14]]:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
32The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.
33The objective discernment of the statutory purpose is integral to contextual construction. The statutory purpose may be discerned from an express statement of purpose in the statute, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose must be discerned from what the legislation says, as distinct from any assumptions about the desired or desirable reach or operation of relevant provisions.
34Discernment of statutory purpose is particularly significant in cases, commonly encountered, where the constructional choice presented is from 'a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural'. In such a case, the choice 'turns less on linguistic fit than on evaluation of the relevant coherence of the alternatives with identified statutory objects or policies'. As we will explain later in these reasons, we think this is such a case.
35Thus, the material provisions of the Act must be understood, if possible, as parts of a coherent whole.
36Statutory texts enacted by the same legislature are to be construed, so far as possible, to operate in harmony and not in conflict. Where two or more statutory enactments comprise the overlapping legislative scheme, the enactments should be construed accordingly, and the court should endeavour to produce a rational, sensible, efficient and just operation in preference to an inefficient, conflicting or unjust operation.
What is the applicable interest rate or rates on the overpaid tax?
For the reasons which follow, ATCO is correct, and the Commissioner is incorrect, in their respective contentions as to the proper interpretation of s 43(3)(b) of the TA Act and, consequently, in their respective submissions as to the applicable rate or rates of interest to be applied to the overpaid tax and as to the amount of interest to which ATCO is entitled under that provision.
The grammatical meaning of s 43(3)(b) of the TA Act is clear on its face and is as ATCO suggests, not as the Commissioner suggests. The section states that the taxpayer's entitlement relevantly includes 'interest during the reassessment period, calculated at the prescribed rate, on the amount to be refunded or credited …'. It is plain from the expression of the provision that, because the entitlement is to 'interest during the reassessment period', 'the prescribed rate' of 'interest' that is applicable is the prescribed rate (or rates) of interest 'during the reassessment period', that is, each rate that is prescribed, for the specific period for which it is prescribed, during the reassessment period.
Section 43(3)(b) does not provide that interest is to be calculated at the prescribed rate applicable at the end of the reassessment period, when the Commissioner approves the refunding or crediting of the amount of overpaid tax (as the Commissioner contends), but rather that interest is to be calculated at the prescribed rate 'during the reassessment period'. As is common ground between the parties, the word 'during' means 'throughout the continuance of' and 'in the course of'.[13] As ATCO in effect submits, the word 'during' in s 43(3)(b) of the TA Act has a dual and related purpose on the proper interpretation of the provision. First, 'during' indicates the period in respect of which interest is paid on overpaid tax, namely 'during', that is throughout the continuance of, the reassessment period. Secondly, the word 'during' indicates the prescribed rate or rates to be applied to calculate the interest to which the taxpayer is entitled, namely the rate or rates of interest prescribed 'during', that is throughout the continuance of, the reassessment period. Thus, ATCO's suggested interpretation of the meaning of s 43(3)(b) of the TA Act follows from the grammatical expression of the provision. In contrast, for the Commissioner's suggestion as to the proper interpretation of s 43(3)(b) of the TA Act to be correct, the words 'at the end of the reassessment period' would have to be read into the section after the words 'calculated at the prescribed rate'. However, there is no warrant to do so, when the meaning of the provision is clear on its face.
[13] Macquarie Dictionary Online.
Furthermore, the use of the definite article 'the' in the expression 'the prescribed rate'[14] in s 43(3)(b) of the TA Act does not indicate or require a different interpretation, for two reasons advanced by ATCO in its oral submissions. First, as Mr S Grimley, who appeared with Ms J Rosair on behalf of ATCO, submits, the expression 'the prescribed rate' is used in s 43(3)(b) of the TA Act because 'there are various rates which the [TA Act] provides need to be prescribed' for the purposes of the Duties Act, namely '[s] 20A for interest in a compromise assessment, interest under [or in consequence of reassessment determination of] an objection under [s] 39, interest under [s] 43 [that is, the present case], interest in relation to interim assessment overpayments under [s] 54, and interest in relation to tax payment arrangements [for instalments and extensions of time] … [under] [s] 47', and, consequently, the definite article 'the' is used before 'prescribed rate' in s 43(3)(b) 'as a tool to ensure that we're referring to the prescribed rate relevant to [s] 43, subsection (3)'.[15] Secondly, under s 10(c) of the Interpretation Act 1984 (WA) (Interpretation Act), as Mr Grimley submits, 'the singular includes the plural'.[16] Section 10(c) of the Interpretation Act states as follows:
In any written law —
…
(c)words in the singular number include the plural and words in the plural number include the singular.
[14] Emphasis added.
[15] ts 13, 6 October 2021.
[16] ts 13, 6 October 2021.
Thus, in consequence of s 10(c) of the Interpretation Act, the words 'calculated at the prescribed rate' in s 43(3)(b) of the TA Act mean 'calculated at the prescribed rate or rates' applicable during the reassessment period.
Ms R Panetta, who appeared on behalf of the Commissioner, submits 'that because the entitlement to interest arises at the time of the final [reassessment] which reveals that there has been an overpayment of tax, … the prescribed rate to be applied is the prescribed rate that applies as at that date'.[17] However, although the entitlement to interest only arises at the time of the final reassessment, the entitlement is to 'interest during the reassessment period'. During the reassessment period, there may have been one, or more than one, rate of interest prescribed under reg 4 of the TA Regs. In the present case, because the reassessment period spanned over six years and three months, there were five different rates of interest prescribed at various points during that period.
[17] ts 46, 6 October 2021.
The Commissioner also submits as follows:[18]
… [T]he rate at which interest is payable is the rate prescribed at the time that the entitlement to interest arises as is evident from:
(I)the words "interest … calculated at the prescribed rate" in [s 43(3)(b)] of the TA Act. Relevant here, is the principle that a statute is to be interpreted as "always speaking" meaning that "the text of the statute is ordinarily to be read as speaking continuously in the present" [Commissioner of Police for New South Wales v Eaton (2013) 252 CLR 1, 32 [97]]. Section 43(3) of the TA Act does not provide that interest is to be "calculated at the prescribed rates applicable during the reassessment period" or the like; and
(II)the way in which the rate is prescribed in reg 4 of the TA Regs, namely, as a rate per se and not a rate for a defined period.
[18] Commissioner's submissions, para 37(c) (original emphasis).
I do not accept these submissions. In relation to submission (I), as indicated earlier, under s 10(c) of the Interpretation Act, the words 'calculated at the prescribed rate' in s 43(3)(b) of the TA Act mean 'calculated at the prescribed rate or rates' applicable during the reassessment period. In relation to submission (II), the prescribed rate of interest in reg 4 of the TA Regs, for the purposes of s 43(3)(b) of the TA Act, does in effect apply for a specified time or period. Regulation 4 of the TA Regs currently states as follows:
The rate of interest payable for the purposes of section 43(3) of the [TA] Act is 0.2% per annum.
However, as ATCO submits, reg 4 of the TA Regs has been amended by five amendment regulations (four of which are relevant for the reassessment period in question), which each deleted the then existing interest rate prescribed in reg 4 and inserted a new prescribed interest rate in reg 4. As ATCO submits, each amendment regulation was stated to come into operation on a particular date and, therefore, 'the regulations that specify the interest rates for the purposes of s 43(3)(b) apply for specified periods, in this instance from a date of operation until the regulation is next amended [by deleting the existing interest rate prescribed in reg 4 and inserting a new prescribed interest rate in reg 4]'.[19] As ATCO also submits, this 'is consistent with the power of subsidiary legislation to apply for a specific period of time'.[20] In particular, s 43(8) of the Interpretation Act states, in part, as follows:
Subsidiary legislation may be made —
(a)so as to apply —
(i)at all times or at a specified time[.]
[19] Applicant's submissions in response dated 13 July 2021 (document 4 in Exhibit 1) (ATCO's reply submissions), para 17.
[20] ATCO's reply submissions, para 17.
Thus, as ATCO submits, it is 'incorrect to assert that the Regulations prescribing interest rates for the purposes of s 43(3)(b) [of the TA Act] are not rates for a defined period'.[21]
[21] ATCO's reply submissions, para 18.
Ms Panetta also made the following submission on behalf of the Commissioner:[22]
… [W]e say that it [that is, s 43(3)(b) of the TA Act] can't be read as "at the prescribed rates" because there's only ever one prescribed rate for the purposes of [s] 43, subsection (3), paragraph (b) on the statute books at any one time, because all the previous prescribed rates have been deleted to make way for that newest one.
[22] ts 52, 6 October 2021.
However, as Mr Grimley submits in reply:[23]
… The use of the word deleted – to suggest that it's a deletion [from] the statutory [sic - statute] books, your Honour, we would say is a step far too far. The use of the word deleted is simply a word used in the amending legislation to direct that the existing or the rate it stands today should no longer be regarded as the rate and going forward the rate should be X percent.
…
It's incorrect to say that the prescribed rate has been removed from the statute books, in our submission. It applied for a period of time. And it did say pursuant to [s] 43, subsection (8), paragraph (a) of the Interpretation Act.
[23] ts 91 92, 6 October 2021.
Just because a previously prescribed interest rate has been deleted from reg 4 of the TA Regs, and replaced by a new prescribed interest rate in reg 4, by an amending regulation, does not mean that the deleted percentage is not 'the prescribed rate', for the purposes of s 43(3)(b) of the TA Act, 'during the reassessment period'. It remains the fact that it was 'the prescribed rate' for the period for which it was prescribed, that is the period between when it replaced the previous prescribed rate in reg 4 of the TA Regs and when it was, in turn, deleted and replaced by a subsequent prescribed rate.
Finally, in relation to the grammatical meaning of s 43(3)(b) of the TA Act, Ms Panetta submits:[24]
… The words "during the [reassessment] period", significantly, do not follow "at the prescribed rate" and so, as a matter of grammar, the respondent says that the words "during the [reassessment] period" in [s] 43, subsection (3), subparagraph (b), do not qualify the rate of interest applicable … .
[24] ts 44, 6 October 2021.
However, on the natural and ordinary meaning of the text of s 43(3)(b) of the TA Act, the words 'during the reassessment period' also qualify the words 'calculated at the prescribed rate', without the need to follow those words. The words 'the prescribed rate' clearly refer to the prescribed rate of 'interest' and the section expressly states that the taxpayer's entitlement is to 'interest during the reassessment period, calculated at the prescribed rate', that is, interest throughout the continuance of the reassessment period, calculated at each rate prescribed throughout the continuance of the reassessment period, for the specific period for which each rate is prescribed.
The clear grammatical meaning of s 43(3)(b) of the TA Act referred to earlier also derives contextual support from the terms of s 47(3) of the TA Act and is consistent with a purposive interpretation of s 43(3)(b).
Section 47 of the TA Act enables a taxpayer to propose, and the Commissioner to approve, a tax payment arrangement extending the time for paying tax or providing for the payment of tax in specified instalments. Section 47(3) of the TA Act states as follows:
A tax payment arrangement may include —
(a)conditions agreed with the taxpayer providing for the payment (and allowing for the remission) of interest at the prescribed rate or at some other rate fixed by or under the arrangement with the agreement of the taxpayer; and
(b)any other conditions the Commissioner considers appropriate.
'The prescribed rate', for the purposes of s 47(3)(a) of the TA Act, is prescribed in reg 5 of the TA Regs. Reg 5 of the TA Regs currently states as follows:
The rate of interest payable for the purposes of section 47(3) of the [TA Act] is 8.2% per annum.
The prescribed rate in reg 5 of the TA Regs has been deleted and replaced by amending regulations on eight occasions, most recently, in terms of the current prescribed rate, on 28 June 2019. As ATCO submits, the fact that a taxpayer and the Commissioner may agree to 'some other rate fixed by or under the arrangement', under s 47(3) of the TA Act, indicates a legislative expectation that 'the prescribed rate' may change during the period of a tax payment arrangement under s 47 of the TA Act and, contextually, the same legislative expectation in s 43(3)(b) of the TA Act during the reassessment period. However, whereas s 47(3) of the TA Act enables the taxpayer and the Commissioner to agree to a single rate to be fixed (so as to avoid changes in the prescribed rate), s 43(3)(b) of the TA Act does not provide for a single rate, but rather provides for 'the prescribed rate' (or rates) during the reassessment period to be applied to determine the interest to which a taxpayer is entitled on overpaid tax under that provision.
A purposive interpretation of s 43(3)(b) of the TA Act is consistent with the textual interpretation referred to earlier. It is common ground between the parties that, as the Commissioner submits, 'case law suggests that interest in the context of a refund of overpaid tax represents a return on the money refunded or compensation for the loss of its use for the period it was held by the Commissioner'.[25] In support of this position, both parties cite the statement of Cooper J in Consolidated Fertilizers Ltd v Commissioner of Taxation (1992) 36 FCR 1 at 6, referring to the calculation of interest payable under s 9 of the Taxation (Interest on Overpayments) Act 1983 (Cth),[26] that '[t]he term "interest" is used in section 9(1) of the Act in its widest sense and includes both the concept of a return on the money represented by the overpaid tax or compensation for the loss of its use for such period as it has been held by the revenue'. Although, as the Commissioner also submits, referring to the decision of the High Court in MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (19901991) 171 CLR 657 at 666, '[t]his return or compensation is not necessarily equivalent precisely to what the taxpayer could have earned if he or she had invested his or her money during the relevant period instead',[27] I accept the following submissions made by ATCO in relation to a purposive interpretation of s 43(3)(b) of the TA Act:[28]
21.The [a]pplicant submitted in [ATCO's submissions] that the phrase "interest during the reassessment period", calculated at rates that are more regularly amended, reflects a purpose that the return or compensation by way of interest should be calculated at rates that reflect commercial realities more precisely from time to time (which is likely different to what [the] taxpayer could have earned, depending on their particular circumstances).
22.The objective or purpose of s 43(3)(b) of the TA Act is best achieved if the taxpayer is compensated for the loss of the use of money at the rates prescribed during the period of that loss and not simply at a rate fixed at some arbitrary point in the reassessment period when the entitlement to a refund becomes clear.
[25] Commissioner's submissions, para 43(a) (original emphasis).
[26] Now titled Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth).
[27] Commissioner's submissions, para 43(a) (emphasis added).
[28] ATCO's reply submissions, paras 21 22.
In my view, the evident purpose of s 43(3)(b) of the TA Act, namely to provide a return to the taxpayer on the money represented by the overpaid tax or compensation to the taxpayer for the loss of its use for such period as it has been held by the Commissioner, is achieved by the interpretation contended for by ATCO (to which I have arrived on a textual interpretation of the provision), and is not achieved by the interpretation contended for by the Commissioner. A return on the money represented by the overpaid tax or compensation for the loss of its use for such period as it has been held by the Commissioner is achieved by applying each interest rate prescribed during the reassessment period, for the specific period for which each rate is prescribed, and is not achieved by simply applying the prescribed rate at the very end of the reassessment period, because the prescribed rate to achieve the purpose of s 43(3)(b) can change during the reassessment period, when the money has been held by the Commissioner, and the prescribed rate when the entitlement to a refund becomes clear is, as ATCO submits, 'at some arbitrary point in the reassessment period'. Thus, to provide a return to the taxpayer on the money represented by the overpaid tax or compensation to the taxpayer for the loss of its use for such period as it has been held by the Commissioner requires application of each interest rate prescribed during the reassessment period, for the specific period for which each rate is prescribed.
Finally, I note that the Commissioner submits that there is support for the interpretation of s 43(3)(b) of the TA Act for which it contends in the decision of the Court of Appeal of Queensland[29] in Interchase Corporation Ltd (in Liq) v Commissioner of Stamp Duties (Qld) [1993] QCA 485; (1993) 27 ATR 154.[30] However, as ATCO submits in reply, that decision 'consider[ed] differently worded legislation to the TA Act [and] so [is] of limited assistance'.[31] It is dangerous to apply observations made in interpreting differently expressed legislation, other than statements of general principle.
Conclusion
[29] Davies JA and Ambrose and White JJ.
[30] Commissioner's submissions, paras 55 62.
[31] ATCO's reply submissions, para 41.
On its proper interpretation, the interest rate to be applied under s 43(3)(b) of the TA Act to overpaid tax during the reassessment period is each rate prescribed during the reassessment period, for the specific period for which each rate is prescribed, and not the prescribed rate at the date on which the Commissioner approves refunding of overpayment. It follows that ATCO is entitled to interest during the reassessment period in the sum of $246,881.18 pursuant to s 43(3)(b) of the TA Act.
I make the following order:
The respondent is to pay the applicant interest during the reassessment period in the sum of $246,881.18 pursuant to s 43(3)(b) of the Taxation Administration Act 2003 (WA).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
JUDGE D R PARRY, DEPUTY PRESIDENT
24 DECEMBER 2021
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