| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : BETTISON and COMMISSIONER OF STATE REVENUE [2011] WASAT 183 MEMBER : JUDGE T SHARP (DEPUTY PRESIDENT) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 16 NOVEMBER 2011 FILE NO/S : CC 766 of 2011 BETWEEN : ADAM GARY BETTISON ANNE ROWENA BETTISON
Applicants
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords: Land tax - Penalty tax - Late payment - Remission - Application of Commissioner's Practice TAA 20.1 - Whether exceptional circumstances Legislation: Land Tax Act 2002 (WA), s 17
Land Tax Assessment Act 2002 (WA), s 2, s 5, s 6(1), s 7(1), s 9A(1), s 11(2)
Land Tax Assessment Regulations 2003 (WA), reg 5, reg 6, reg 8, reg 8(2), reg 8(3), reg 8(4), reg 11
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Taxation Administration Act 2003 (WA), s 26(1), s 27, s 27(1), s 28, s 29, s 30, s 45(1) Result: Decision of the Commissioner of State Revenue affirmed
Application dismissed Category: B
Representation: Counsel:
Applicants : Self-represented
Respondent : Ms K Dodd
Solicitors:
Applicants : N/A
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Anderson v Commissioner of State Revenue [2008] WASAT 11
Miller v Commissioner of State Revenue [2006] WASAT 336
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 The applicants sought a revision of penalty tax that had been imposed by reason of late payment of land tax. The Commissioner of State Taxation had already remitted the penalty tax to 5% of the amount due in accordance with his published practice in relation to the remission of penalty tax. The practice provided that further remission would only be made in exceptional circumstances. 2 The Tribunal concluded that there were sound policy reasons to follow the published practice and that no exceptional circumstances existed in this case. 3 Accordingly, it upheld the Commissioner's assessment.
Background 4 The applicants (Mr and Mrs Bettison) own certain real property in the State in their joint names. The first named applicant (Mr Bettison) also owns real property in the State in his own name and, until 2009, owned a property in his name as trustee of the Bettison Family Trust. 5 The parties have agreed an extensive and detailed statement of facts for the purpose of the determination of the issue the subject of the applicants' application, which includes the following details of Mr and Mrs Bettison's and Mr Bettison's land tax payment history: 1) Mr and Mrs Bettison have been assessed for land tax since the 2002/2003 financial year to the present. The tax has generally been paid on or around its due date. Any payments which were made late could often be explained by Mr and Mrs Bettison's practice of making payments through the 'BPay' payment method, on the actual due dates for payment, with payments therefore not being actually received by the respondent until a day or so after the due date. 2) In respect of the financial years 2003/2004, 2004/2005 and 2005/2006, the respondent had to issue a reassessment notice to include a property not previously included in the assessments for those years. The balance of the reassessed land tax was due on 18 October 2006 but not paid until 9 November 2006. (Page 4)
3) In the financial year 2007/2008, Mr and Mrs Bettison opted to pay land tax by instalments. In respect of both the second and third instalments, Mr and Mrs Bettison sought an extension of time to pay the tax. The second instalment was paid on or shortly after its amended due date, but the third instalment, due on 3 August 2008, was not fully paid until 12 January 2009. 4) Mr Bettison, in respect of land owned in his own name, has been assessed for land tax since the 2005/2006 financial year to the present. He generally elected to pay land tax by instalments. His payment history largely follows the same pattern as that for the assessments for Mr and Mrs Bettison, namely that payments were received on or shortly after the due dates, with reminders occasionally being required. On some occasions, late payments could be attributed to errors in assessments by the respondent, although even after extensions of time for payment were given, Mr Bettison's payments were made sometimes week or so after the due date. 5) In the financial year 2007/2008, each instalment was paid sufficiently late that penalty tax was charged by the respondent, although it was subsequently remitted. 6) In the 2008/2009 financial year, one of the instalments was paid sufficiently late that a penalty tax was charged, although it was subsequently remitted on the basis that penalties would not be remitted in future years. 7) Mr Bettison as trustee of the Bettison Family Trust has been assessed for land tax for the financial years 1997/1998 to 2003/2004 inclusive. Land tax was paid in full and on time. Mr Bettison did not receive assessments for subsequent years because the taxable value of the property in question was below the relevant threshold. The property in question was sold in 2009.
The assessment under review 6 On 13 October 2010, the respondent issued a Notice of Assessment to Mr and Mrs Bettison forthe 2010/2011 financial year. Mr and Mrs Bettison elected to pay the tax by three instalments. The first instalment was $14,788.70 and each subsequent instalment was (Page 5)
$14,788.60. The first instalment was due on 1 December 2010 and was paid on time. The second instalment was due on 11 April 2011. 7 On 28 March 2011, the respondent issued a reminder notice that the second instalment was due on 11 April 2011 and the respondent accepts that, on 21 April 2011, Mr and Mrs Bettison's property manager posted a cheque to the respondent for $14,788.60. 8 The following day, 22 April 2011, was a public holiday. 25 April 2011 and 26 April 2011 were also public holidays forthe Easter long weekend. 9 The respondent accepts that on 27 April 2011, it received a cheque for $14,788.60. The respondent issued a Notice of Revocation of Instalment bearing the date 28 April 2011, revoking the instalment arrangement and requesting that Mr and Mrs Bettison pay $1,478.86, being 5% of the outstanding amount. 10 On 9 May 2011, Mr Bettison wrote to the respondent seeking 'a bit of leeway' and, requesting that the Notice of Revocation and the late payment penalty be withdrawn. 11 On 12 May 2011, the respondent wrote to Mr Bettison, informing him that his request had been considered and that the respondent had made a decision not to remit the penalty or withdraw the Notice of Revocation. 12 In a letter dated 9 May 2011 but received by the respondent on 25 May 2011, Mr Bettison provided further details in relation to his request that the late payment penalty be remitted. The parties agree that this letter sets out fully and in detail the grounds upon which the applicants objected to the late payment penalty. These grounds are discussed later in these reasons but, in short, the applicants advised the respondent of financial difficulties which they were experiencing and also pointed out that the delay in payment of the second instalment could at least in part be explained by the Easter public holidays. 13 On31 May 2011, the respondent wrote to Mr Bettison, informing him that the applicants' request for remission of penalty tax had been further considered and rejected. The letter addressed each of Mr Bettison's grounds of objection. 14 On2 June 2011, Mr Bettison wrote again to the respondent, with a further request that the penalty tax should be remitted to nil. (Page 6)
The application to the Tribunal 15 On 10 June 2011, the respondent informed Mr Bettison by email that his further request for reconsideration had been rejected. On the same date, Mr and Mrs Bettison applied to the State Administrative Tribunal for review of the respondent's decision not to remit wholly the late payment penalty tax.
The statutory framework 1. Land tax is payable, under the Land Tax Assessment Act 2002 (WA) (LTA Act) and Land Tax Act 2002 (WA), for each financia1 year for all land in the State except land that is exempt under s 17of the LTA Act; LTA Act s 5. 2. Land tax payable on an original assessment is due for payment on the 49th day after the date of the assessment notice; LTA Act s 6(1); Taxation Administration Act 2003 (WA) (TA Act) s 45(1). 3. Land tax payable on a reassessment is due for payment on the date specified in the assessment notice in accordance with the TA Act; LTA Act s 6(2). 4. Land tax payable on land for an assessment year is payable by the person who is or was the owner of the land at midnight on 30 June in the previous financia1 year; LTA Act s 7(1). 5. If a person owns two or more lots or parcels of taxable land, land tax is payable on the aggregated taxable value of all the taxable land owned by the person; LTA Act s 11(1). 6. Under s 9A(1) of the LTA Act, a person identified as being liable to pay land tax by a land tax assessment notice must notify the Commissioner of any material error or omission in the notice that is relevant to the assessment, in relation to: a) any land owned by the person, whether or not the land is specified in the assessment notice; or (Page 7)
7. Notice of the error or omission must be given to the Commissioner on or before the date specified in the assessment notice as the due date for payment of the land tax; LTA Act 9A(2).
Payment by instalments 1. The regulations governing options for the payment of land tax are set out in the Land Tax Assessment Regulations 2003 (WA) (Regulations). 2. Regulation 5 of the Regulations provides that a taxpayer may discharge a liability to pay an assessed amount by paying in accordance with, relevantly, reg 6, or 8 of the Regulations. 3. Regulation 6 of the Regulations provides that a taxpayer may discharge a liability to pay an assessed amount by making one payment of the amount, due and payable within 49 days after the date of the assessment notice, calculated at a discount using the formula set out in that regulation. The Regulations refer to this as Option 1. 4. Regulation 8 of the Regulations sets out the option of payment by three instalments (Option 3). The first instalment is payable within 49 days after the date of the assessment notice, at the rate calculated in reg 8(2). The second instalment is payable within 175 days of the assessment notice, payable at the rate set out in reg 8(3). The third instalment is payable within 240 days of the assessment notice, payable at the rate set out in reg 8(4). 5.If the amount of land tax paid within 49 days after the date of the assessment notice is less than the first instalment due and payable under Option 3, or an instalment under the Regulations is not paid when it is due and payable, the full amount of unpaid land tax is (Page 8)
immediately due and payable by the taxpayer; reg 11 of the Regulations.
Penalty Tax 1. If tax is not paid by the due date, the taxpayer is liable to pay an amount of penalty tax for late payment equal to 20% of the amount outstanding on the due date; TA Act s 27(1). 2. The respondent may remit penalty tax wholly or in part; TA Act s 29. 3. The respondent must publish the policy followed by the respondent when deciding whether or not to remit penalty tax; TA Act s 30.
Commissioner's practices 16 The respondent has published a document entitled Commissioner's Practice TAA 20.1 (Commissioner's Practice). This practice is valid from 1 March 2011 to the present. 17 The Commissioner's Practice provides for a policy on remission of penalty tax under s 29 of the TA Act that, in the submission of the respondent: 18 Under [2.1] of the Commissioner's Practice, if land tax is not paid within seven days after its due date, a penalty tax assessment notice will (Page 9)
be issued. It is understood that seven days is allowed for the respondent to process payments received by the due date. 19 In respect of payment of land tax, the penalty tax of 20% under s 27(1) of the TA Act will be remitted to 5% of the amount outstanding; [2.2] of the Commissioner's Practice. 20 The Commissioner's Practice also provides that the respondent will only consider a remission of penalty tax to nil in exceptional circumstances. These circumstances are set out in [3] of the Commissioner's Practice as follows: 3.1 payment of tax is received on the same day as the penalty tax assessment notice was issued, and a check of the taxpayer's history shows a good payment record; 3.2 genuine financial difficulties caused payment to be delayed by up to seven days after the date specified in the assessment advice and a check of the taxpayer's history shows a good payment record; 3.3 payment is made within seven days after the date specified in the assessment advice and the taxpayer was overseas, away on holiday, sick, hospitalized, etc. and a check of the taxpayer's history shows a good payment record; 3.4 late payment of tax was caused by postal system delays (e.g. Christmas/Easter), payment is made within seven days after the date specified in the assessment advice and a check of the taxpayer's history shows a good payment record; 3.5 the taxpayer is deceased and assets of the estate are frozen due to probate; 3.6 payment was inadvertently directed to the wrong Authority (e.g. Australian Taxation Office, Landgate or another State or Territory revenue office) and such payment was made within the required time; 3.7 the lodging party has misappropriated client funds held on trust for the payment of an assessment. 21 Each of the exceptional circumstances set out in [3.1] to [3.4] requires that the taxpayer's history shows a good payment record.
The Tribunal's findings and conclusion 22 As the Tribunal has noted earlier in these reasons, on 13 October 2010 the respondent issued a Notice of Assessment to the (Page 10)
applicants for the 2010/2011 financial year. The applicants elected Option 3 (to pay by three instalments). 23 The first instalment was paid on time by 1 December 2010. The second instalment was due on 11 April 2011. Payment was received on 27 April 2011, some 10 days after the end of the seven day grace period. 24 On 28 April 2011, the respondent issued its Notice of Revocation of Instalment Arrangement which included notice of the imposition of a late payment penalty. The penalty tax of 20% of the outstanding amount imposed by s 27 of the TA Act was remitted to 5% under [2.2] of the Commissioner's Practice and the amount of the penalty tax is $1,478.86. 25 The applicants, however, contend that the penalty tax should, in accordance with the Commissioner's Practice, be wholly remitted. They contend that their failure to pay the tax instalment on or within seven days after its due date was due to the exceptional circumstances contemplated by [3.1], [3.2] and [3.4] of the Commissioner's Practice. In particular, they say that the payment of the second instalment was received by the respondent on the same day as the penalty tax assessment notice was issued, that they were experiencing genuine financial difficulties and that the late payment of tax was caused by postal system delays due to the Easter public holidays. 26 Certainly, it is common ground between the parties that the payment of the second instalment was received on or before the date when the penalty tax assessment notice was issued. However, [3.1] of the Commissioner's Practice also requires that the taxpayer's history shows a good payment record. The agreed facts in this matter demonstrate that the applicants do not have a good payment record. While the applicants have no outstanding land tax payments, it is clear from the agreed facts that there have been a number of occasions when instalments have been paid after the expiration of the seven day grace period. 27 The financial difficulties to which the applicants refer would appear to be cash flow difficulties, Mr Bettison stating that he was not 'fully aware of where my property manager's rent is up to'. However, the applicants have not established that this amounts to a genuine financial difficulty. The Tribunal notes in this regard that the property manager, HouseSmart Real Estate Pty Ltd is a firm operated by the applicants. 28 Paragraph [3.4] of the Commissioner's Practice, relating to postal system delays, only applies when payment is made within seven days of the payment being due, and therefore has no application in this case. In (Page 11)
any event, given that the Easter public holidays occurred more than 10 days after payment was due, it is difficult to see how those public holidays could be a cause for the late payment. 29 The Tribunal has previously acknowledged the appropriateness of having a policy concerning the remission of penalty; Miller v Commissioner of State Revenue [2006] WASAT 336 at [16], Anderson v Commissioner of State Revenue [2008] WASAT 11 at [49]. This ensures fairness and transparency in the respondent's application of remission of penalty tax under s 29 of the TA Act and it is important that the respondent adheres to this policy so as to provide consistency in the manner in which it is applied. The policy itself provides a degree of flexibility in its application, but it would not be appropriate to extend that flexibility beyond what is contained within the policy. That would lead to an unevenness in the way in which individual taxpayers are treated. 30 The Tribunal considers that the policy must be adhered to and applied in accordance with its terms. 31 The applicants have not demonstrated that any of the exceptional circumstances listed in the Commissioner's Practice exist. Therefore the Tribunal finds that the respondent was correct not to remit the penalty tax to nil.
Orders |