De Tarle v Chief Commissioner of State Revenue

[2021] NSWCATAD 270

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

De Tarle v Chief Commissioner of State Revenue [2021] NSWCATAD 270

Hearing dates:

10 September 2021

Date of orders:

17 September 2021

Decision date:

17 September 2021

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S Goodman SC, Senior Member

Decision:

Duties Notice of Assessment No. 9125472 is remitted to the respondent for determination in accordance with these Reasons

Catchwords:

TAXES AND DUTIES – administration – interest - remission

Legislation Cited:

Administrative Decisions Review Act 1997

Civil and Administrative Tribunal Act 2013

Duties Act 1997

Taxation Administration Act 1996

Cases Cited:

Adams Bidco Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 702

Chief Commissioner of State Revenue (NSW) v Incise Technologies Pty Ltd [2004] NSWADTAP 19; 56 ATR 82

Downer EDI Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 743

Singh v Chief Commissioner of State Revenue [2016] NSWCATAD 9

Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Benoit de Tarle (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Applicant (Self Represented)
Crown Solicitor (Respondent)

File Number(s):

2021/00109730

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. In March 2017, the applicant purchased a property at Neutral Bay and became liable under the Duties Act 1997 (“Duties Act”) to pay duty by 9 June 2017.

2. The applicant did not pay the duty in full until March 2020, and by a Notice of Assessment dated 11 June 2020, the respondent assessed the applicant as liable to pay interest calculated on the duty outstanding from time to time. On 5 October 2020, the applicant lodged an objection to the Notice of Assessment and on 3 February 2021, the respondent disallowed that objection.

3. The applicant seeks a review of the Tribunal of the respondent’s decision to assess the applicant for interest. For the reasons set out below, that decision is remitted to the respondent for determination on the basis that interest did not commence to run until 1 July 2017.

Jurisdiction

4. The Tribunal has jurisdiction to review the Notice of Assessment, pursuant to s 96 of the Taxation Administration Act1996 (“TA Act”), s 9 of the Administrative Decisions Review Act 1997 (“ADR Act”) and s 28 of the Civil and Administrative Tribunal Act 2013. It is the decision to issue the assessment, not the decision on the objection, which is the subject of the review: see Singh v Chief Commissioner of State Revenue [2016] NSWCATAD 9 at [10] – [13] and the authorities there cited.

5. In conducting the review, the Tribunal is required to determine the correct and preferable decision having regard to the materials before it and the applicable law: s 63 of the ADR Act.

Findings of Fact

6. The underlying facts are not the subject of serious dispute and the Tribunal makes the following findings of fact.

7. On 9 March 2017, the applicant, as purchaser, entered into a contract for the sale and purchase of land at Neutral Bay (“Contract”). The Contract recorded that the applicant’s solicitor was Paul Denny Conveyancing (“PDC”).

8. On 3 April 2017, the applicant sent an email to the Office of State Revenue (“OSR”) in which he suggested that he had received conflicting information from the OSR on the one hand and PDC on the other as to when duty was to be paid. In that email, the applicant indicated that it was his understanding that duty must be paid within three months of the exchange of signed contracts.

9. On 4 April 2017, the OSR replied, confirming that the applicant’s understanding was correct.

10. As at June 2017, the OSR’s website set out various options for the payment of duty, including electronic transfer, cheque and money order.

11. On 5 June 2017, PDC wrote to the applicant reminding him that duty was due on 9 June 2017 and inviting him to place PDC in funds so that PDC could attend to payment of that duty.

12. Later on 5 June 2017, the applicant sent an email to the OSR in which he wrote:

I am writing regarding the requirement to pay stamp duty on a property I have purchased. I understand that the due date is this Friday, 9 June 2017.

Due to issues with my health it is unlikely that I will be able to pay the full amount this Friday. The amount I need to pay is $28,585.00. The amount I can currently pay is approximately $18,000. The address of the property purchased is…

Separately I am unclear about what references I need to provide when I make an electronic payment so that the OSR may reconcile the payment, as well as any other documents I may need to provide.

13. The OSR’s email system produced and sent to the applicant an email acknowledging receipt of his 5 June 2017 email and indicating that the OSR would endeavour to respond within 10 working days.

14. On 7 June 2017, the applicant indicated in an email to PDC that he proposed to attend to the payment of the duty himself. PDC responded in terms which included advice that he should attend the Parramatta office of the OSR on 9 June 2017.

15. On 8 June 2017, the applicant contacted the OSR by telephone. During that call, the applicant was told to attend the OSR’s Parramatta office to lodge his documents for stamping.

16. On 9 June 2017, the applicant attended the OSR’s Parramatta office. He had sufficient funds in his bank account to make a payment of $18,000. The OSR declined to accept the applicant’s documents and his intended payment of $18,000 on the basis that the documents and payment had to be submitted electronically via a third party as an Electronic Duties Return (“EDR”) with an OSR settlement room. On that day, the applicant was given an OSR publication which recorded that since 1 July 2016 it had been a policy of the OSR to not accept documents at its counter that could be processed via EDR; and he was given the names of some third parties who could assist him with an EDR lodgment.

17. On 11 June 2017, the applicant contacted one of the third parties suggested by the OSR as capable of submitting an EDR to Revenue NSW but that third party referred him back to the OSR.

18. On 14 June 2017, the applicant sent an email to the OSR in the following form:

“I am following up on my query below [the applicant’s 5 June 2017 email].

Last Thursday 8 June 2017 I called and spoke with a representative of the OSR regarding this matter who advised me to attend the Parramatta office of the OSR with my documents and the payment of stamp duty. However on attending the counter of the OSR the following days (sic) my documents and payment were not accepted on the basis that these must be submitted electronically, and cited a change of policy effective 1 July 2016. The representative referred me to several companies (OSR approved Settlement Rooms) now in charge of this process. On contacting one of these companies, I have been referred back to the OSR for my particular matter.

At this stage it is really unclear who should be managing this process and how I can pay my stamp duty. I am concerned I will be penalised for non-payment despite my attempts to do so. I would be grateful for clarification.”

19. On 19 June 2017, an OSR employee sent an email to the applicant in the following terms in response to the applicant’s email dated 14 June 2017:

“Thank you for your email. If you wish to make a part payment the documents cannot be assessed by an agent.

If this is the case you will need to attend the Parramatta office, please ask for Rosalie…- she is aware of your situation. Please note you will not be able to have the documents stamped until the duty is paid in full.

In addition, you must provide a completed Purchaser Declaration… and relevant certified identification. Payment must also be by way of bank cheque or money order.

…

I apologise that you have been given incorrect information previously.”

20. On 14 July 2017, the applicant attended the OSR’s Parramatta office. The applicant says that: (1) he asked to speak with Rosalie but was told that she was available, following which he dealt with someone else; (2) his attempt to pay approximately $18,000 was rejected on the basis that a payment code needed to be generated by the OSR to reconcile the payment with assessment; and (3) he was told that the payment code would appear on a notice of assessment which would be issued in the following week.

21. A note made by the applicant on that day records:

“OSR 14/7/17

-[Rosalie] not there (in back somewhere)

-need Payment Code to make transfer

= with assessment

-assessment done next week

-can’t prepay”

22. Notes taken by an OSR employee on that day record:

“Documents received over the counter as per Rosalie’s advice. Contract and Transfer require assessment. Customer wishing to only pay part of the assessment due to current financial situation. Customer doesn’t want to pay via bank cheque, so he will wait for the assessment to make the part payment.”

23. An OSR document titled “Confirmation of Document Lodgement” issued on that day records that two documents were lodged and that no payment was made. It also records a “Client ID” number and PDC as the “Client Name”.

24. On 31 July 2017, the OSR changed its name to Revenue NSW, and is referred to by its new title in the remainder of these Reasons.

25. On 2 August 2017, the applicant sent an email to Revenue NSW in the following form:

“I am just following up on this. I attended the Parramatta office on 15 July (sic) to lodge and was advised that a notice of assessment would be sent. However I am yet to receive the notice of assessment so am worried as I need to pay the duties.”

26. There appears to have been no response to this email.

27. On 15 August 2017, Revenue NSW issued a Notice of Assessment addressed to PDC. The Notice of Assessment was for an amount of $28,585 in duty, together with $511.01 in interest, a total of $29,096.01. The Notice of Assessment had a due date of 5 September 2017 and included details for various methods of payment of the amount assessed.

28. On 23 August 2017, the applicant sent a further email to Revenue NSW, in which he wrote:

“…just a reminder as I have not received the notice of assessment.”

29. On 24 August 2017, Revenue NSW sent an email to the applicant attaching a copy of the Notice of Assessment.

30. On 5 or 6 September 2017, the applicant paid $10,000 to the respondent.

31. After 6 September 2017:

1. the applicant made a series of further payments of duty and the final payment was made in March 2020; and

2. there was extensive correspondence between the applicant and the respondent on topics which included the outstanding duty, interest payable by the applicant and a payment plan.

32. It is not necessary to describe that correspondence in detail, however the following points are relevant:

1. the applicant took the position in that correspondence that he was not liable for any interest because of the manner in which Revenue NSW had dealt with his attempts to pay part of the duty during the period June to August 2017;

2. the parties are at issue as to whether they agreed upon a payment plan. Whilst the contemporaneous correspondence suggests that there was such an agreement, the applicant’s position is that he did not agree to such a plan for reasons including his inability to pay the instalments proposed in that plan; and

3. the payment plan envisaged monthly payments of $2155 on 2 January, 2 February, 2 March, 3 April, 2 May and 4 June 2018, and a final payment of $1089.93 on 8 June 2018. The final payment was a payment of interest which would be waived if all of the earlier payments were made on time. None of the monthly payments were made in full.

33. On 11 June 2020, the respondent issued the Notice of Assessment addressed the subject of this review. The Notice of Assessment recorded that the previously assessed duty had been paid in full and that interest of $3350.36 was due.

34. On 19 July 2020, the applicant lodged with the respondent a request for remission of interest. That request included:

“…please be advised that my initial attempts to pay stamp duties were rejected by the Parramatta office of NSW Revenue. Payment was rejected on the basis that payment could only be made to an “OSR approved Settlement Room” and not directly to Revenue NSW. When contacted however the OSR Settlement Room referred me back to Revenue Australia.

There has been substantial communication on this matter as well as concerns of immediate charging of interest by Revenue Australia despite the errors, lack of assistance and provision of information, and intransigence of the department in accepting payments.

When Revenue Australia finally allowed me to pay stamp duty the majority was immediately settled. Unfortunately, some of the funds set aside for that payment had since been taken up as a consequence of my illness. I remain unable to work and receive Centrelink payments as a pension cardholder.

Regardless, I did pay as much as I could at possible at opportunity (sic) and the balance was fully settled on receipt of a reconciliation from Revenue NSW. The reconciliation however did not detail the interest amounts. After chasing up Revenue NSW again the department advised to request a remission of interest instead.”

35. On 1 September 2020, the respondent notified the applicant that his request for remission of interest had not been accepted.

36. On 5 October 2020, the applicant sent an email to the respondent which the respondent treated as an objection to the Notice of Assessment.

37. On 3 February 2021, the respondent disallowed the applicant’s objection. The respondent’s reasoning for the disallowance included the proposition that the applicant first approached Revenue NSW on 14 July 2017, some five weeks after the last day for payment of the duty, and that the applicant had not exercised reasonable care. In other words, the chronology of events considered by the respondent in its determination of the objection appears to have commenced on 14 July 2017 and did not include the events described at paragraphs [8] to [19] above.

Applicable law

38. In undertaking this review, it is necessary to consider the operation of various provisions of the Duties Act and the TA Act.

Duties Act

39. The following sections of the Duties Act are relevant:

8 Imposition of duty on certain transactions concerning dutiable property

1. This Chapter charges duty on—

   (a)   a transfer of dutiable property, and

   (b)   the following transactions—

   (i)   an agreement for the sale or transfer of dutiable property,

2. Such a transfer or transaction is a "dutiable transaction" for the purposes of this Act.

9 Imposition of duty on dutiable transactions that are not transfers

1. The duty charged by this Chapter on a dutiable transaction referred to in section 8 (1) (b) is to be charged as if each such dutiable transaction were a transfer of dutiable property.

2. Accordingly, for the purpose of charging duty under this Chapter, in relation to a dutiable transaction specified in Column 1 of the following Table—

   (a)   the property specified opposite the dutiable transaction in Column 2 is taken to be the property transferred (and a reference in this Act to property transferred includes a reference to such property), and

   (b)   the person specified opposite the dutiable transaction in Column 3 is taken to be the transferee of the dutiable property (and a reference in this Act to a transferee includes a reference to such a person), and

   (c)   the transfer of the dutiable property is taken to have occurred at the time specified opposite the dutiable transaction in Column 4 (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time).

Table

Column 1	Column 2	Column 3	Column 4
Dutiable transaction	Property transferred	Transferee	When transfer occurs
agreement for sale or transfer	the property agreed to be sold or transferred	the purchaser or transferee	when the agreement is entered into

11 What is “dutiable property”?

1. "Dutiable property" is any of the following—

   (a)   land in New South Wales,

12 When does a liability for duty arise?

1. A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs.

…

13 Who is liable to pay the duty?

Duty charged by this Chapter is payable by the transferee, unless this Chapter requires another person to pay the duty.

17 When must duty be paid?

1. A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises.

TA Act

40. The following provisions of the TA Act are relevant:

3 Definitions

1. In this Act:

…

"tax" means a tax, duty, contribution or levy under a taxation law, and includes:

(a) interest and penalty tax under Part 5, and

(b)   any other amount paid or payable by a taxpayer to the Chief Commissioner under a taxation law.

…

"tax default" means a failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of tax that the taxpayer is liable to pay.

…

4 Meaning of “taxation laws”

The following are taxation laws for the purposes of this Act:

this Act:

…

Duties Act 1997

…

21 Interest in respect of tax defaults

1. If a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate from time to time applying under this Division.

…

22 Interest rate

1. The interest rate is the sum of:

   (a)   the market rate component, and

   (b)   the premium component.

2. The "market rate component" is:

   (a)   unless an order is in force under paragraph (b), the Bank Accepted Bill rate rounded to the second decimal place (rounding 0.005 upwards), or

   (b)   the rate specified for the time being by order of the Minister published in the Gazette.

3. The "premium component" is 8% per annum.

…

25 Remission of interest

The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount.

…

101 Powers of court or tribunal on review

1. The court or tribunal dealing with the application for review may do any one or more of the following:

   (a)   confirm or revoke the assessment or other decision to which the application relates,

   (b)   make an assessment or other decision in place of the assessment or other decision to which the application relates,

   (c)   make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid,

   (d)   remit the matter to the Chief Commissioner for determination in accordance with its finding or decision,

   (e)   make any further order as to costs or otherwise as it thinks fit.

…

107 Means and time of payment

1. Tax may be paid to the Chief Commissioner:

   (a)   by a cash payment made at, or a bank cheque or postal money order delivered to, an office of the Chief Commissioner, or

   (b)   by any other means approved by the Chief Commissioner.

…

Tax default and the starting date for the calculation of interest

41. Section 21 of the TA Act provides that if a “tax default” occurs, then the taxpayer is liable to pay interest, at the rates specified on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid. Thus, it is necessary to consider whether and if so when a “tax default” has occurred.

Submissions

42. The applicant submitted that:

1. he was not liable to pay duty until there was an assessment; and

2. finalisation of the assessment did not occur until 15 August 2017, despite his efforts to have this occur earlier.

43. The respondent submitted that:

1. the effect of ss 9, 12 and 17 of the Duties Act was to require that duty on the Contract be paid within three months of the date on which it was entered into;

2. as the Contract was entered into on 9 March 2017, the duty was to be paid by 9 June 2017; and

3. the failure to pay the duty constituted a tax default.

Consideration

44. Section 3 of the TA Act provides that a “tax default” is “a failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of the tax that the taxpayer is liable to pay”.

45. The Duties Act is a “taxation law” for the purposes of the TA Act (s 4 of the TA Act) and the duty is a “tax” (s 3 of the TA Act). The applicant was liable to pay the duty by 9 June 2017 because:

1. the land the subject of the Contract was “dutiable property” (s 11 of the Duties Act);

2. the Contract, being an agreement for the sale of dutiable property, was a “dutiable transaction” s 8(1)(b)(i) and (2) of the Duties Act);

3. s 9 of the Duties Act operates upon that “dutiable transaction” so as to deem it to have been a transfer of the land the subject of the Contract on the date the agreement was entered into, namely 9 March 2017;

4. that transfer of the land (i.e. the “dutiable property”) gave rise to a liability for duty when it occurred (i.e. 9 March 2017), under s 12(1) of the Duties Act; and

5. there was no tax default with respect to that liability if the duty was paid within three months after the liability to pay the duty arose (s 17 of the Duties Act). In other words, there would be a tax default if the duty was not paid within three months of 9 March 2017, or 9 June 2017.

46. As the above analysis illustrates and contrary to the applicant’s argument, the issuance of an assessment is not necessary step in the creation of a liability for duty.

47. It is common ground that the applicant did not pay any part of the duty by 9 June 2017. It follows that there was a tax default from that date.

Calculation of interest

48. As a tax default occurred, the applicant is liable under s 21 of the TA Act to pay interest on the amount of tax unpaid calculated on a daily basis:

1. from the end of the “last day for payment” until it is paid; and

2. at the interest rate from time to time applying to Div 1 of Pt 5 of the TA Act.

49. The “last day for payment” was 9 June 2017, for the reasons set out above. Thus, subject to any exercise of discretion, the applicant is liable to pay interest in accordance with s 21 of the TA Act, and at the rates specified by s 22 of the TA Act, from 9 June 2017, on the amount of the unpaid duty.

Exercise of discretion

50. The applicant asks the Tribunal to exercise the discretion that it has under s 25 of the TA Act to remit interest.

Submissions

51. The applicant’s submissions may be summarised as follows:

1. he has never disputed that he had a liability to pay duty in the sum of $25,585;

2. he was in a position as at 9 June 2017 to pay $18,000 of the $25,585 owing, and had taken steps to enable him to do so. In particular, the applicant relies upon his communications with Revenue NSW between April 2017 and 8 June 2017;

3. he was prevented from doing so by an employee of Revenue NSW, who refused to accept his documents for stamping and his intended payment of $18,000 when he attended the Parramatta office of Revenue NSW on 9 June 2017. He says that this was a mistake made by Revenue NSW, which it acknowledged in subsequent emails;

4. after 9 June 2017, he continued to attempt to pay part of the $25,585 owing, but he was not in a position to make a payment until he was given a reference number or payment code that he could use for an electronic transfer of funds and this did not occur until the Notice of Assessment was issued;

5. on 14 July 2017, during his second visit to the Parramatta office of Revenue NSW, an employee of Revenue NSW indicated that payment could not be accepted because an electronic payment code needed to be generated to reconcile the payment with the assessment and that the Notice of Assessment would be issued within about a week of 14 July 2017;

6. when the Notice of Assessment was not received, the applicant wrote again to the respondent but he did not receive the Notice of Assessment until 24 August 2017;

7. the Notice of Assessment required payment by 5 September 2017;

8. in these circumstances, the only interest that should be charged is interest calculated:

1. from 6 September 2017; and

2. on the basis that as at that date the balance owing was $25,585 less $18,000, or $7585; and

9. alternatively, there should be a remission of interest in the amount of $670.92, being interest up to and including 5 September 2017 on the basis that this had been promised by the respondent.

52. The respondent’s submissions may be summarised as follows:

1. the relevant principles are set out in Chief Commissioner of State Revenue (NSW) v Incise Technologies Pty Ltd [2004] NSWADTAP 19; 56 ATR 82 (“Incise”);

2. the market component is rarely waived and this is not a case where there should be a waiver and in particular, there was no fault on the part of the respondent that contributed to the tax default; and

3. as to the premium component, the criteria identified in Incise are not satisfied.

Consideration

53. The discretion conferred by s 25 of the TA Act is broad and is to be exercised by reference to the particular facts of the case: Downer EDI Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 743 at [185]. As to the principles which inform the exercise of the discretion:

1. in Incise, an Appeal Panel of the Administrative Decisions Tribunal said at [60]-[63]:

“60    In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank’s Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The Tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation.

61 On the other hand, the premium rate is a form of penalty. Its purpose, as we see it, is to provide an additional economic deterrent against taxpayers failing to meet their obligations on time. The ‘market rate’ component approximates ordinary lending interest rates. Taxpayers may withhold tax simply to invest the money in schemes and projects that have a higher potential earnings; and may be content to carry the late payment surcharge were it only at the market rate. The ‘premium rate’ is intended as we see it to operate as the key disincentive to delaying tax payments. For that reason, the TA Act imposes both the market rate component and the premium rate component in respect of late payment. The Commissioner is then given a discretion to remit the market rate component or the premium rate component or both by any amount (s 25).

62 The Tribunal did not have the benefit of a detailed statement of the considerations relevant to the s 25 discretion as seen by the Commissioner. Moreover, the Commissioner has not developed any public guidelines going to the exercise of this discretion, in contrast to the position that applies in Victoria. Before the Appeal Panel, the Commissioner nominated four cumulative criteria for the circumstances where the premium component of interest should be remitted, namely:

(1)    all principal tax that is owing and not in dispute has been fully paid;

(2)   there has been co-operation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;

(3)   such co-operation by the taxpayer has occurred prior to any investigation being commenced by the Commissioner (voluntary disclosure) or, at the very least, within reasonable time after requests for information have been made by the Commissioner – i.e. the taxpayer has taken reasonable care; and

(4)   there has been no wilful default by the taxpayer in not paying tax on time.

63   The first of these criteria could be clarified to ‘all principal tax that has been assessed and is not in dispute has been fully paid at the time of the request for remission of interest’. With this change, we agree that these four cumulative criteria are relevant and appropriate to the question of the circumstances in which the Commissioner should remit the premium component of interest. There may also be other circumstances where it could be appropriate to remit the premium component such as, as previously noted, where the Commissioner has in some way contributed to the tax default.”

2. in Adams Bidco Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 702 Ward CJ in Eq. said at [163]:

“As to the market rate component, I accept that the purpose of this is to compensate the revenue for the loss of the duty…”.

3. the four criteria identified by the Appeal Panel in Incise were applied by Emmett AJA in Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773.

54. The evidence summarised above gives rise to the following considerations which inform the exercise of the discretion.

55. First, from early April 2017 and at least until his 2 August 2017 email, the applicant was actively seeking to pay a substantial part of duty for which he was liable. This is apparent from his proactive email correspondence with Revenue NSW; his prompt engagement with one of the third parties suggested by Revenue NSW as able to assist him with an electronic lodgement; and his attendance at the Parramatta office of Revenue NSW on 9 June 2017 and 14 July 2017.

56. Secondly, as at 9 June 2017, the applicant had the capacity to pay $18,000 of the duty owing.

57. Thirdly, on 9 June 2017, an employee of Revenue NSW mistakenly informed the applicant that his documents could not be lodged over the counter. This mistake was corrected in the Revenue NSW email to the applicant dated 19 June 2017, in which he was invited to lodge his documents over the counter at the Parramatta office of Revenue NSW.

58. Fourthly, the applicant wished to make an electronic transfer of funds in part payment of the duty owing.

59. Fifthly, the applicant did not have the payment code required to make the electronic transfer until 24 August 2017, when the Notice of Assessment was sent to him by email. Whilst the respondent submitted that the receipt provided by Revenue NSW on 14 July 2017 contained a “Client ID” and that this enabled the applicant to make a payment by electronic transfer, the receipt does not indicate that the “Client ID” could be used in this way.

60. Sixthly, the applicant did not make any payment until 5 or 6 September 2017, when he paid $10,000 to the respondent.

61. Seventhly, whilst the applicant wished to make his payment using an electronic transfer of funds, this was not the only means of payment available to him. In particular:

1. s 107(1) of the TA Act provided:

Tax may be paid to the Chief Commissioner:

(a)   by a cash payment made at, or a bank cheque or postal money order delivered to, an office of the Chief Commissioner, or

(b)   by any other means approved by the Chief Commissioner;

2. the Revenue NSW website as at June 2017 indicated that payments could be made by various means including cheque or money order;

3. on 19 June 2017, Revenue NSW advised the applicant that because he wished to make a part payment it would be necessary for him to attend the Parramatta office of Revenue NSW and that “Payment must also be by way of bank cheque or money order”;

4. the note taken by the Revenue NSW employee when the applicant went to the Parramatta office on 14 July 2017 included: “Customer doesn’t want to pay via bank cheque, so he will wait for the assessment to make the part payment”; and

5. no references or payment codes were necessary for payment by cheque or money order, with the result that such a payment could have been made at any time.

62. Thus, whilst the applicant was told during his attendance at the Parramatta office of Revenue NSW on 9 June 2017 that his documents and payment needed to be lodged electronically (a matter which Revenue NSW later acknowledged was a mistake), it was open to applicant to have paid the duty by cheque or money order and this was a matter expressly pointed out to him by Revenue NSW on 19 June 2017.

63. Further, the applicant chose on 14 July 2017 not to pay by bank cheque and instead to wait for an assessment to issue so that he could pay by electronic transfer. The applicant has provided no explanation as to why he did not pay the duty using a bank cheque or money order.

64. Taking all of the above into account, the appropriate exercise of the discretion is to excuse the applicant from the obligation to pay interest whilst the mistake made by Revenue NSW (i.e. that the applicant’s documents and payment of duty had to be lodged electronically) was operative. This accords with the observations in Incise at [60] and [63] that it may be appropriate to remit the market and premium components respectively of the interest rate where the respondent has in some way contributed to the tax default.

65. Thus, interest should be calculated as commencing from the date that the mistake made by Revenue NSW ceased to be operative. On one view, that date was shortly after 19 June 2017 when the applicant received the email of that date from Revenue NSW indicating that the applicant’s documents could in fact be lodged at the Parramatta office of Revenue NSW, and that payment was to be made by bank cheque or money order. However, it is appropriate to allow a further short period of time for the applicant to have acted upon the corrected advice and with this in mind the Tribunal will direct that interest should be calculated from 1 July 2017.

66. It is not appropriate to order that any calculation of interest be made on the basis of a reduced principal amount, such reduction arising from a notional deduction of the amount that the applicant was prevented from paying. This is because the effect of the Tribunal’s reasoning above is that: (1) prior to 1 July 2017 no interest is payable at all; (2) from 1 July 2017, the applicant was not prevented from paying the duty.

67. In view of the applicant’s submission, as noted at paragraph [51(8)] above, that only interest calculated from 6 September 2017 should be charged, it is not necessary to consider the events which occurred after that date. Nevertheless, for completeness, the Tribunal notes that the evidence subsequent to 6 September 2017 does not provide a basis for an exercise of the discretion in favour of the applicant.

68. The applicant’s alternative submission, as noted at paragraph [51(9)] above, was that there should be a remission of interest in the amount of $670.92, being interest up to and including 5 September 2017 on the basis that this had been promised by the respondent. That submission is rejected, as the only basis for such an agreement on the evidence is in the payment plan and: (1) the applicant’s position is that no such plan was agreed; and (2) the agreement in the payment plan to waive interest was conditional upon the applicant having paid each of the six monthly instalments and that condition was not fulfilled.

69. For all of the above reasons, the amount of interest owed by the applicant to the respondent should be recalculated, on the basis that interest did not commence to run until 1 July 2017.

Order

70. The order of the Tribunal is:

1. Duties Notice of Assessment No. 9125472 is remitted to the respondent for determination in accordance with these Reasons.

**********

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 17 September 2021