| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : CHAMBER OF COMMERCE AND INDUSTRY OF WESTERN AUSTRALIA (Inc) and COMMISSIONER OF STATE REVENUE [2013] WASAT 107 MEMBER : JUSTICE J A CHANEY (PRESIDENT) HEARD : 15 MAY 2013 DELIVERED : 10 JULY 2013 FILE NO/S : CC 1561 of 2011 BETWEEN : CHAMBER OF COMMERCE AND INDUSTRY OF WESTERN AUSTRALIA (Inc) Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords: Practice and procedure - Ancillary orders - Whether Tribunal functus officio
Taxation - Payroll tax - Refund - Commencement date of reassessment period Legislation: Payroll Tax Assessment Act 2002 (WA), s 41(2), s 42(2)
Revenue Laws Amendment and Repeal Act 2010 (WA)
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State Administrative Tribunal Act 2004 (WA), s 17(1), s 29(3), s 29(5), s 73, s 83, s 91
Taxation Administration Act 2003 (WA), s 13(1), s 16, s 34(1), s 36, s 39, s 39(3), s 40, s 43, s 54 Result: Commencement of reassessment period determined
Summary of Tribunal's decision: Following orders made by the Tribunal to the effect that the applicant was exempt from the payment of payroll tax, the applicant was entitled to a refund of tax. It was also entitled to interest on the amount refunded during the period which the Taxation Administration Act 2003 (WA) calls the 'reassessment period'. A dispute arose between the parties as to the commencement date of the reassessment period, a question which turned upon the proper construction of the relevant section of the Taxation Administration Act 2003 (WA). The applicant applied to have the Tribunal determine that issue and make an order under s 73 of the State Administrative Tribunal Act 2004 (WA) resolving the issue.
The Commissioner of State Revenue argued that the Tribunal was functus officio and had no power to deal with the application in relation to interest.
The Tribunal concluded that it was open to it to deal with the matter, but upheld the Commissioner's contentions as to the commencement of the reassessment period.
Category: B
Representation: Counsel:
Applicant : Ms JJ Batrouney SC and Mr CM Sievers
Respondent : Ms R Panetta
Solicitors:
Applicant : PricewaterhouseCoopers
Respondent : State Solicitor for Western Australia
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Case(s) referred to in decision(s):
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27
Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257
Federal Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16
Makro Warehouse Pty Ltd and City of Mandurah [2005] WASAT 51
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REASONS FOR DECISION OF THE TRIBUNAL:
Introduction 1 On 18 July 2012, I delivered reasons for decision on the substantive issues between the parties in these proceedings see Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146. 2 Subsequently I made the following orders: 3 An issue dealt with in the original application concerned whether, if the Chamber of Commerce and Industry of Western Australia (Inc) (CCI) were found to be a charitable organisation, it should receive a refund of tax pursuant to s 54 of the Taxation Administration Act 2003 (WA) (TA Act) for a period of five years from the date of its application for exemption, namely 9 October 2009. I concluded that there is no reason to deprive CCI of the entitlement to an exemption for the whole period in respect of which the exemption was sought. 4 In August 2012, the respondent's solicitor advised the applicant's representative that it had made the determination, pursuant to order 3(i) of 18 July 2012, that 100% of the applicant's wages were exempt for doing work ordinarily performed in connection with the charitable purpose which had been established. There was then an exchange of email (Page 5)
correspondence concerning the calculation of interest on the refund of payroll tax. The parties were unable to agree as to that basis. The applicant threatened to refer the matter to the Tribunal to resolve that issue, but the respondent expressed the view that it was not open to the applicant to refer the issue to the Tribunal. 5 Eventually, on 5 October 2012, the respondent gave notice to the applicant pursuant to s 41(2) of the Payroll Tax Assessment Act 2002 (WA) (PTA Act) stating that the applicant is exempt from liability to payroll tax as and from 9 October 2004. 6 On 26 February 2013, the applicant applied to the State Administrative Tribunal for an order to be made under s 73 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) to resolve the dispute between the parties regarding the calculation of the applicant's entitlement to interest under s 43(3) of the TA Act. 7 When the matter came before the Tribunal, the respondent submitted that it was not open to the Tribunal to resolve the dispute as to how interest is to be calculated and in particular as to the determination of the 'reassessment period' as defined in s 43(4A) of the TA Act. That question was dealt with at the same time as the Tribunal heard argument as to the correct approach to the calculation of interest. 8 There are accordingly two issues which arise for determination. The first is whether it is open to the Tribunal pursuant to s 73 of the SAT Act, to resolve the dispute as to interest. The second issue arises if the Tribunal has that jurisdiction and requires the determination of the reassessment period for the purposes of s 43(4A) of the TA Act. Expressed more fully, the second issue is as follows: Where: A On 18 July 2012 the Tribunal made orders in this proceeding that, inter alia, the applicant was declared to be a charitable body for the purpose of the Pay-roll Tax Assessment Act 2002 (WA); B Pursuant to the direction of the Tribunal made on 18 July 2012, on 5 October 2012 the Commissioner of State Revenue (the Commissioner) issued a notice to the applicant pursuant to s 41(2) of the Payroll Tax Assessment Act 2002 (WA) specifying a commencement date of 9 October 2004; and C The final reassessment of the applicant's liability indicates that payroll tax has been overpaid and the applicant is entitled to a refund of overpaid pay-roll tax from 9 October 2004 pursuant to (Page 6)
s 43(3) of the Taxation Administration Act 2003 (WA), plus interest during the 'reassessment period' pursuant to paragraph 43(3)(b), whether, to the extent that the applicant is entitled to a refund of pay-roll tax paid prior to 10 June 2010 (being the date the Commissioner rejected the Applicant's application for exemption from payroll tax), the 'reassessment period' for the purposes of s 43(4A) of the Taxation Administration Act 2003 (WA) commences on: (i) the later of the date on which the payroll tax was paid and the date the applicant lodged its assessment of payroll tax; or (ii) 10 June 2010.
The context of the balance of issues 9 Section 43 of the TA Act is entitled 'Proceedings before State Administrative Tribunal'. The first six subsections, being s 43(1) to s 43(2b), deal with the constitution of the Tribunal. When dealing with matters under the TA Act, subsections 43(3), (4A) and (4) then provide: (Page 7)
(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. (4) For the purposes of subsection (3) - 10 'Final reassessment', as referred to in s 43(3) and defined in s 43(4), is thus a product of proceedings before the Tribunal. Provisions in relation to the payment of interest on a reassessment following successful objection to the Commissioner are dealt with in s 39 of the TA Act. That section provides that where tax is to be refunded as a result of a successful objection, interest 'during the reassessment period' is payable to the taxpayer. For the purposes of s 39, 'reassessment period' is defined in s 39(3) as follows: 11 The specific provision relating to the entitlement to interest on refunded tax within the section dealing with 'Proceedings before State (Page 8)
Administrative Tribunal' needs to be borne in mind in the consideration of the scope of s 73 of the SAT Act.
Can orders be made under s 73 of the SAT Act? 12 Section 73 of the SAT Act provides: 13 The power under s 73 relevantly includes 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'. Thus, the order must be 'ancillary' and must be directed to achieving the purpose of the 'primary power'. The starting point is thus to ascertain the primary power exercised in this case. 14 The right of review exercised by CCI in this case is found in s 40 of the TA Act, which permits a person dissatisfied with the respondent's decision on an objection to apply to the Tribunal for a review of the decision. The application to the Tribunal falls within the Tribunal's review jurisdiction - SAT Act s 17(1). Section 29(3) of the SAT Act provides that in its review jurisdiction, the Tribunal may affirm or vary the decision being reviewed, or may set aside the decision and either substitute its own decision or send the matter back to the decisionmaker for reconsideration in accordance with any directions or recommendations that it considers appropriate. In addition the Tribunal can 'make any order the Tribunal considers appropriate'. 15 In its original application to the Tribunal, the applicant identified the decision sought from the Tribunal as follows: That: (a) the Chamber of Commerce and Industry of Western Australia (Inc) ('CCI') is a 'charitable body or organisation' within the meaning of that term in section 41 of the Payroll Tax Assessment Act 2002 (the 'Act') as defined in section 4 of the Act and clause 1 of the Glossary at the end of the Act; and (b) that its employees are engaged to do work of the kind (Page 9)
ordinarily performed in connection with the charitable purpose for which the CCI is established or carried on; and (c) as such, the wages paid or payable by CCI are exempt from payroll tax pursuant to section 40(1)(a) and section 40(2)(n) of the Act; and (d) the Commissioner must give to CCI a notice under section 41(2) of the Act exempting it from liability to payroll tax; and (e) the Commissioner must pay a refund of payroll tax to CCI of all payroll tax paid by it from the date that is 5 years from the date of the private ruling application dated 9 October 2009 in accordance with section 54 of the Taxation Administration Act 2003. 16 It can be noted that the request for a refund of tax for a period of five years prior to the request for exemption was based on s 54 of the TA Act. That section requires the Commissioner to refund tax to a taxpayer where the Commissioner is satisfied that an overpayment of tax has been made. There is no provision in the TA Act for the payment of interest on refunds paid under s 54. Nor, I note, is there an provision in relation to interest contained in s 16 of the TA Act which permits the Commissioner to make reassessments in certain circumstances. 17 Based on the applicant's application, the primary purpose of the proceedings was to review the decision of the Commissioner not to exempt CCI from liability to pay payroll tax and to obtain a refund in relation to payroll tax paid in the five years leading up to the application for exemption pursuant to s 54 of the TA Act. 18 The applicant contends that the orders in relation to its entitlement to interest are 'ancillary' to the primary power exercised by the Tribunal. Reference is made to the observations of the Tribunal in Makro Warehouse Pty Ltd and City of Mandurah [2005] WASAT 51 at [15] - [17] where the Tribunal said: 15 In Koala Motels Pty Ltd v Chief Licensing Inspector (1977) 18 ALR 12 at 14 Muirhead J said: 'It is important to note that the word 'ancillary' has a special meaning. It means less than supplementary or supplemental to it means ''subservient' or 'subordinate" the derivation being from the Latin ''ancillaris'' ''ancilla'' being a handmaid a person who in the good old days was regarded as subservient to her mistress and perhaps even to her master.' 16 With respect to Mr Burke, the Tribunal cannot see how an order in effect delaying compliance with a cessation direction can be viewed, as a matter of logic, as subservient or subordinate to the purpose identified, namely the cessation (ie, an obligation to 'stop') which is required to be effected now of unlawful development. (Page 10)
17 And, the same result would follow even if 'ancillary' were to be regarded as meaning 'supplementary' or 'incidental' or some other related term (cf McCleary v Commonwealth Director of Public Prosecutions(1998) 20 WAR 288 at 320, where Ipp J discusses Koala Motels and notes, in addition, that '[a]ccording to the Macquarie Dictionary, ''ancillary'' means ''accessory; auxiliary'', and ''ancillary relief'' means ''supplementary or incidental relief sought in addition to the main relief …''.'). 19 Because the entitlement to interest under s 43 of the TA Act arises as a consequence of a final reassessment following a determination by the Tribunal on review, the application of s 43(3) is, in my view, correctly described as ancillary to the primary purpose for which the Tribunal exercised its power. The point can be illustrated by considering whether the Tribunal would have been entitled to give a specific direction as to the precise terms, including the quantum of interest, of any reassessment to be issued by the Commissioner following the Tribunal's determination. In my view it could have done so, and in doing so would have been giving a direction ancillary to the primary purpose of the exercise of the power, namely to specifically identify the consequences of the determination, or alternatively, to effect the implementation of the decision to grant exemption. 20 That conclusion is reinforced by the fact that the provision which creates the entitlement to interest following 'final assessment' is found within the section (s 43 of the TA Act) which deals with proceedings before the Tribunal. In that sense the entitlement to interest can be catagorised as incidental relief concerned with the implementation of the order of the Tribunal, and in that sense is ancillary to the primary relief. 21 The proposed orders must therefore fall within the jurisdiction of the Tribunal under s 73. The respondent argues, however, that the jurisdiction under s 73 is no longer available because the Tribunal is functusofficio. 22 The TA Act contemplates that, where an application for review of a Commissioner's decision on an objection is successful, a direction will be given to the Commissioner to issue a final reassessment - see s 43(4)(a) of the TA Act. That is consistent with the scheme of the Act which requires the Commissioner to make a reassessment where he allows an objection wholly or in part - TA Act s 39. It is not uncommon that a review under the TA Act in the Tribunal will involve consideration of some question of law or fact, the outcome which will provide the basis upon which liability to taxation is to be assessed. The actual reassessment will not (Page 11)
uncommonly be left to the Commissioner to be undertaken in accordance with the determination on the question of law or fact made by the Tribunal. The point can be illustrated in this case by the fact that the proportion of wages payable by the applicant 'for doing work ordinarily performed in connection with a charitable purpose' was not a matter dealt with at the hearing of the review, but was left for later determination by the Commissioner in the context of the reassessment. Recognition was given to the possibility that a dispute may arise in the determination of that question by the express grant of liberty to apply on the point. To that extent at least, the Tribunal recognised that it might have a further role to play in the proceedings in the ultimate assessment of the applicant's entitlement to a refund of duty. 23 The entitlement to interest under the final reassessment is an issue of similar character to the proportion of wages paid for charitable work. The question that arises is, therefore, whether the absence of liberty to apply on that question (the question to which, it is safe to assume, the parties had not addressed their minds for the purpose of the review proceedings) means that a question which could have been the subject of an order under s 29(3) of the SAT Act (an order the Tribunal considers appropriate) or s 73 (ancillary order) cannot now be dealt with. 24 Because the issue arises in the context of the reassessment which the Commissioner is obliged to issue as a consequence of the directions of the Tribunal, and goes to the content of that reassessment, I consider that it is open to the Tribunal to make an ancillary order to resolve the issue of interest. That is because the question is directly related to the primary purpose of the proceedings which included the obtaining of a refund of payroll tax, and is ancillary to that purpose. This case can be distinguished from those where the Tribunal's decision on review becomes the operative instrument in place of the original decisionmaker's decision, such as a planning approval or grant of a licence. In those latter cases, the approval or licence is deemed to be a decision of the original decisionmaker - see SAT Act s 29(5). The scheme of the TA Act, where a review is successful, is rather to have the Tribunal give directions to the original decisionmaker as to the decision to be made. In those circumstances, it is open to a party to seek an ancillary order pursuant to s 73 of the SAT Act notwithstanding that the substantive orders have been made following determination of the review. I do not accept, therefore, that the Tribunal's powers were exhausted upon the making of its orders. (Page 12)
The reassessment period 25 The issue for determination is as to the commencement date for the reassessment period for the purposes of s 43(4A) of the TA Act. That section specifies that the calculation of interest commences on the later of the date on which the overpaid amount of tax was paid by the taxpayer, or the date on which the assessment or decision subject of the Commissioner's decision to which the review proceedings relate was made. 26 In this case, there is no issue that the payroll tax paid by the applicant from 9 October 2004 onwards was paid pursuant to monthy selfassessments by the applicant, and was paid on the respective dates on which the selfassessments were made. 27 Section 13(1) of the TA Act defines an assssessment as follows: (1) An assessment is a determination - (a) of the amount of tax payable under a taxation Act; or (b) that no tax is payable; or (c) that a person is liable to pay tax or is exempt from liability to pay tax; or (d) that an instrument, event or transaction is liable to tax or is exempt from tax. 28 The glossary to the TA Act further defines assessment by explaining that: assessmentmeans a determination of a kind referred to in section 13(1), whether the determination is made by way of a selfassessment, an official assessment, a reassessment or a compromise assessment; 29 The applicant argues that 'the assessment … the subject of the Commissioner's decision to which the review proceedings relate', in the context of this case, is the selfassessment by the taxpayer for the relevant years after 9 October 2004. Thus, it argues, the dates referred to in s 43(4A)(a)(i) and s 43(4A)(a)(ii) are the same. 30 The Commissioner argues that the 'decision the subject of the Commissioner's decision to which the review proceedings relate' is the decision by a delegate of the Commissioner not to give a notice pursuant to s 41(2) of the PTA Act exempting CCI's liability to pay payroll tax. (Page 13)
31 To understand that contention, it is helpful to set out the facts which were agreed by the parties as to the background to the proceedings. They were as follows. 32 On 9 October 2009, the applicant applied to the respondent for an exemption from payroll tax pursuant to s 41(1) of the PTA Act. 33 On 10 June 2010, the Commissioner's delegate, Mr Tucker, determined that the applicant did not satisfy the criteria for a charitable body or organisation under the PTA Act (Tucker decision). 34 On 11 August 2010, the applicant lodged an objection to the Tucker decision and also requested the Commissioner, pursuant to s 54 of the TA Act to refund any payroll tax paid by the applicant in the previous five years from the date of its application, namely 9 October 2009. 35 On 11 August 2011, the respondent disallowed the objection on the basis that the applicant was not a charitable body or organisation (Objection decision). The present proceedings were commenced on 7 October 2011. 36 The respondent argues that 'the Commissioner's decision to which the review proceedings relate' is the Objection decision. He argues that 'the decision the subject of' the objection decision is the Tucker decision. Thus, the Commissioner argues, the relevant date for the purposes of s 43(4A)(a)(ii) is 10 June 2010, being a date later than the date on which the overpaid tax was paid. 37 In my view, the Commissioner's contention is correct. 38 The right to object under the TA Act is found in s 34(1) which provides: 34. Right to object
(1) A taxpayer may object to - (a) an assessment, other than a compromise assessment; or (b) another decision under a taxation Act that affects the taxpayer’s liability to taxation; or (c) a decision made on a pre-transaction decision request made under the Duties Act 2008 section 261, unless any exemption granted under that Act for the transaction to which the request relates has been revoked; or
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(d) a decision made on a pre-section 270 decision request made under the Duties Act 2008 section 269, unless the Commissioner has already decided under the Duties Act 2008 section 270(1) to disregard the scheme that was the subject of the request; 39 Section 36(2) provides that an objection to a selfassessment must be lodged within 60 days after the due date for lodging the return related to the assessment. Section 36(3) provides that an objection 'to another decision' must be lodged within 60 days after the day on which the person affected by the decision was notified of the decision. It is clear that the applicant's objection lodged on 11 August 2010 was an objection to the disallowance of the application for exemption which had occurred on 10 June 2010 by the Tucker decision. It was not, in its terms, an objection to the selfassessments which had previously been lodged, and could not have been without an extension of time for lodgement of an objection (pursuant to 36(4) of the TA Act) which in any event could only have been made in relation to assessments less than 12 months before the date objection could have been made - s 36(5) of the TA Act. 40 On the plain reading of the words of s 43(4A) the relevant date is the date on which the Tucker decision was made, namely 10 June 2010. 41 The applicant argues that s 43 of the TA Act should be construed so as to require the refund of overpaid tax to taxpayers who are successful in review proceedings together with the payment of interest to fully compensate the taxpayer from being out of pocket by reason of the overpaid tax. In urging that construction of s 43, the applicant relies upon the legislative history of s 43, and various extrinsic materials including the Explanatory Memorandum which led to s 43 being enacted in its present form. 42 Based on that construction, the applicant argues that the 'reassessment period' operates as follows: a) Where an 'assessment' or a 'decision' is made by the Commissioner but the taxpayer pays money at a later date, the taxpayer is only entitled to interest from the date upon which money was paid. b) Where money is paid by the taxpayer under self-assessment (being an 'assessment' as defined in the TAA), and the taxpayer is ultimately successful in obtaining a reassessment of the assessment (either by way of a successful objection or a successful review), the taxpayer is entitled to interest from the later of the date of payment and the date of the assessment. In this context, the Beginning Paragraph effectively reads as follows: (Page 15)
The date on which the assessment … was made. c) That part of the Beginning Paragraph which refers to 'or decision', is engaged ONLY in the following circumstances: i) where duty has been properly assessed on a dutiable transaction under the Duties Act (eg upon the entry into a contract of sale of real property) but 'subsequent events' cause that transaction to be cancelled and the taxpayer is successful in review proceedings with regard to a decision by the Commissioner to not to cancel the transaction. In these circumstances the taxpayer is only entitled to interest calculated from the date the decision of the Commissioner was made, rather than the date the duty was paid, ensuring the taxpayer does not benefit from receiving interest for a period where the tax was properly payable. ii) where there is a 'decision' made by the Commissioner which can be objected to but no 'assessment' has been made. For example, a decision made on a pre-transaction decision request made under the Duties Act 2008 section 261, to which s 34(l)(c) of the TAA expressly grants rights of objection. 43 It is now well settled that the starting point of statutory construction is the consideration of the text itself. Historical considerations and extrinsic materials cannot be relied upon to displace the clear meaning of the text - Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47]. 44 As the applicant noted, the statutory text must be considered in its context. In Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257 at [39] the Court said: This court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself. 45 My attention was drawn to the recent statement by the High Court in Federal Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 where the Court observed at [47]: (Page 16)
As French CJ, Hayne, Crennan, Bell and Gageler JJ said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd: 'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text'. Context and purpose are also important. In Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v CrossFrench CJ and Hayne J said: 'The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority,"[t]he 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" … That is, statutory construction requires deciding what is the legal meaning of the relevant provision "by reference to the language of the instrument viewed as a whole", and "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed".' (emphasis of French CJ and Hayne J) 46 The applicant also relies on the observations of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 where it was said, in the context of statutory interpretation, 'context' is used in its widest sense to include such things as the existing state of the law and the mischief which the statute was intended to remedy. 47 From that basis, the applicant's counsel traced through the history of the TA Act and the statutory regime for objection. She noted that, in its original form, s 34(1) provided that a taxpayer may object to an assessment, or another decision under a taxation Act that affects the taxpayer's liability to taxation, but did not include reference to the decisions identified in s 34(c) and s 34(d), being 'decisions made on a pretransaction decision request', or 'a decision on a presection 270 decision request', made under the Duties Act 2008 (WA) (Duties Act). Counsel noted that s 39 originally provided that where, as a result of an objection, an amount is to be refunded to the taxpayer, interest was payable from the date of payment to the date of determination of the objection. Section 43 in its original form also provided that interest payable on a refunded amount following an appeal against the Commissioner's decision on an objection also was to be calculated from the date that the tax was overpaid to the date on which the amount is refunded. Section 43(3) as originally introduced did not include the concept of a 'reassessment period'. (Page 17)
48 The TA Act was amended in 2008 after the introduction of the Duties Act 2008 (WA) (Duties Act). Section 34(1) was amended into its current form, that is by adding para (c) and para (d). 49 The TA Act was further amended in 2010 by the Revenue Laws Amendment and Repeal Act 2010 (WA) (2010 Amendment Act) when amendments were made to both s 39 and s 43 to introduce the concept of a 'reassessment period' and to reformulate the provision dealing with interest on a refund of tax following successful objection or review. 50 The applicant argues that the construction of s 43(3) and s 43(4A) should not be accepted because it would result in the 2010 Amendment Act effecting a significant departure from the purpose of the original TA Act which was to ensure that taxpayers received interest to the extent they were out of pocket by reason of overpaying tax, and because the Commissioner's construction would impose a significant financial disadvantage on taxpayers who have overpaid tax as compared with the position under the original TA Act. 51 To support those contentions, Counsel for the applicant referred to the explanatory memorandum in relation to the 2010 Amendment Act. In particular, she noted that the explanatory memorandum refers to 'minor amendments' to the Act, and an intention to align the interest provisions relating to refunds under the TA Act with the provisions concerning payments to taxpayers under the First Home Owner Grant Act 2000 (WA) (FHOG Act). She noted that the interest provisions under the FHOG Act are essentially directed to the payment of interest for the period that the grant recipient has effectively been 'out of pocket'. 52 In support of its construction of the word 'decision' in s 43(4A)(a)(ii) of the TA Act, which confines the meaning of the word to decisions as to the cancellation of a dutiable transaction for the purposes of the Duties Act, the applicant relies upon cl 24 of the Explanatory Memorandum dealing with the amendment to s 39 of the TA Act, where it is said in relation to subsection (3): Subsection (3) specifies the period in respect of which interest on an amount to be refunded or credited to the taxpayer is calculated. This is referred to as the reassessment period. The reassessment period begins on the later of the date that the taxpayer paid the amount to be credited or refunded or the date on which the decision the subject of the objection was made, and ends on the date that the Commissioner approves the refunding or crediting of the amount. (Page 18)
53 The Explanatory Memorandum says, in relation to s 43(4A) that: The reassessment period begins on the later of the date that the taxpayer paid the amount to be credited or refunded or the date on which the decision the subject of the review proceedings was made … . 54 Based on those materials, the applicant argues that: i. The intention of the TA Act is that taxpayers receiving a refund of overpaid tax should be compensated with interest for the period that they have been 'out of pocket'; ii. That position was reflected in the provisions of the TA Act prior to its amendment in 2010, and what had been described as 'minor amendments' should not be construed as effecting a significant change to an interest entitlement; iii. That the mischief which the amendments were designed to overcome was the possibility of a taxpayer receiving interest in respect of a cancelled dutiable transaction for the period where the tax was properly payable on the contract. It is the same mischief to which, the applicant contends, s 43(4A) is directed. 55 There are several reasons why the applicant's contentions should not be upheld. The first is that the construction for which the applicant contends involves the reading of the expression 'decision' in s 43(4A) in a very narrow and specific way which finds no support in the text of the TA Act. Section 34(1) gives a right to object to 'another decision under a taxation Act that affects a taxpayer's liability to taxation'. There is no (Page 19)
reason to read decision in s 43(4A) as some subset of the word 'decision' in s 34(1)(b). To do so would be to ignore the clear statements of the High Court in the cases referred to above, in particular the statement that 'legislative history cannot displace the meaning of the statutory text'. 56 Secondly, to read the reference to cancelled contracts in the explanatory memorandum dealing with the amendment to s 39(3) as prescribing the entirety of the operation of that subsection is not justified. The capture of interest entitlements in relation to cancelled contracts may well have been a reason for introducing the amendment, but that is not a reason to conclude that the provision should be limited to only that situation. 57 Thirdly, if the legislative intent was that interest would not be payable in respect to amounts of tax paid at a time when the tax was properly payable (as in the cancelled contract scenario), the nonpayment of interest on payroll tax paid when the applicant did not enjoy exempt status as a charitable organisation is consistent with that intent. Exemption as a charitable organisation arises when an organisation applies for exemption, and the Commissioner gives notice exempting the organisation from liability pursuant to s 41(2) of the PTA Act. In this case, the applicant made no application for exemption until 9 October 2009. Up until that time, payroll tax was properly payable by the applicant. Once found to be exempt, it was entitled to apply for a refund under s 54 of the TA Act, as indeed it did in anticipation of its objection being successful. A refund under s 54 does not attract any entitlement to interest. There is no reason to conclude that the legislature intended that interest not be paid on a dutiable transaction for the period up until the transaction is cancelled, but intended that interest would be paid in respect to payroll tax during the period that the tax was properly payable notwithstanding that subsequent events led to a refund. 58 Fourthly, I do not consider that the plain meaning of the words in s 43(4A) should be given the narrow construction urged by the applicant simply because the explanatory memorandum referred to 'minor amendments'. The applicant accepts that the amendments altered the entitlement to interest in relation to cancelled contracts. I do not accept that that change is any more or less 'minor' than a change to the entitlement to interest on payroll tax refunded in the context of the present case. 59 For those reasons, I conclude that the construction contended for by the respondent is to be preferred, and that the date upon which the (Page 20)
calculation of interest on refunded payroll tax is to be calculated at the date upon which the Tucker decision was made, namely 10 June 2010.
Order 1. There is a finding that the commencement date of the reassessment period in relation to the payment of interest on the refund of payroll tax as a result of the applicant's exemption from payroll tax liability is 10 June 2010. |