Devine v Chief Commissioner of State Revenue

[2012] NSWADT 209

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Devine v Chief Commissioner of State Revenue [2012] NSWADT 209
Hearing dates:	19 September 2012
Decision date:	15 October 2012
Jurisdiction:	Revenue Division
Before:	A Verick, Judicial Member
Decision:	The reassessment for the 2007 to 2011 land tax years is confirmed.
Catchwords:	Whether taxpayer entitled to a financial set- off for delay in issuing the proper land tax liability - whether the Chief Commissioner is estopped from issuing the reassessment - whether review before Tribunal is confined to the original decision of the Chief Commissioner and not the objection decision
Legislation Cited:	Land Tax Management Act 1956 Taxation Administration Act 1996
Cases Cited:	Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 AGC (Investments) Ltd v Federal Commissioner of Taxation 91 ATC 4180 Federal Commissioner of Taxation v Australia & New Zealand Savings Bank Ltd (1994) 181 CLR 466 Bellinz v Federal Commissioner of Taxation (1998) 84 FCR 154 Oamington Pty Ltd (Receiver & Manager Appointed) v Commissioner of Land Tax 98 ATC 5051
Category:	Principal judgment
Parties:	Trevor J Devine (Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Counsel AH Rider (Respondent) T J Devine (Applicant in person) Crown Solicitor (Respondent)
File Number(s):	116099

REASONS FOR DECISION

1. The Applicant seeks a review of a reassessment issued by the Chief Commissioner for land tax years 2007 to 2011 under s 9 of the Taxation Administration Act 1996 ("the TA Act").

1. The Applicant has been reassessed because his total land holdings, in his own name and jointly with his wife, were not included in his original individual land tax assessment for each year under review. The Applicant is not disputing his liability to the land tax as reassessed by the Chief Commissioner but claims that he is entitled to a set-off of an amount of $13,743.04 what he describes as a "financial loss" incurred as a result of the failure of the Chief Commissioner to properly assess him when making the original assessments against him.

1. In the years under review, the Applicant owned three properties in his own name and two jointly with his wife.

1. Land tax is levied under s 7 of the Land Tax Management Act 1956 ("the LTM Act") "on the taxable value of all land situated in New South Wales which is owned by the taxpayers (other than land which is exempt from taxation under this Act)".

1. In the case of joint owners of land, they are assessed and liable for land tax in accordance with the provisions of s 27 of the LTM Act. The Chief Commissioner has issued a ruling and also a very helpful explanation on his website as to how the provisions operate.

1. Under s 27(1) joint owners together are called the "primary taxpayer" and are assessed as if they are a single owner. All joint owners are jointly liable for the land tax payable by the primary taxpayer.

1. Each joint owner is called a "secondary taxpayer" and in addition is under s 27(2) separately assessed and liable in respect of:

(a) his or her individual interest in the land (as if he or she were the owner of a part of the land in proportion to his or her interest), together with

(b) any other land owned by him or her in severalty, and

(c) his or her individual interests in any other land.

1. To prevent double taxation on land included in assessments for both a primary taxpayer and a secondary taxpayer, a secondary taxpayer is entitled under s 33 of the LTM Act to a deduction, which relates to the taxpayer's interest in the jointly owned land. Section 33 provides as follows:

33 Deductions to prevent double taxation

Where under this Act:

(a) any person is deemed to be the secondary taxpayer in respect of any land or interest, and

(b) it is provided that there shall be deducted from the land tax payable by the secondary taxpayer, in respect of the land or interest, such amount (if any) as is necessary to prevent double taxation,

the amount of the deduction (if any) shall be the lesser of the following amounts:

(i) the amount of land tax payable in respect of the land or interest by the secondary taxpayer, or

(ii) the amount of land tax (if any) payable in respect of the land or interest by the primary taxpayer aggregated with the amount of land tax (if any) payable in respect of the land or interest by a precedent secondary taxpayer (if any):

Provided that the secondary taxpayer shall be assessed and liable in respect of the land or interest, notwithstanding that the primary taxpayer is exempt from taxation in respect of the land or interest, or that there is no primary taxpayer in respect of the land or interest.

1. It is also convenient to mention that the TA Act, which operates in tandem with the LTM Act, provides procedures including assessing powers applicable to various State revenue laws including land tax laws. Section 9 of the TA Act relevantly, provides that the "Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer". Subject to certain exceptions, not relevant for present purposes, under s 9(3) of the TA Act "the Chief Commissioner cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability".

1. In this matter, the Applicant in respect of the years 2005 to 2011 lodged two land tax registration forms in each year. In one he disclosed land solely owned by him and in the other land jointly owned by the Applicant and his wife. On the basis of these forms, the Chief Commissioner assessed the Applicant as an individual owner in respect of the land owned by him and issued a separate assessment in respect of land owned jointly with his wife. The assessing procedure adopted by the Chief Commissioner did not, as required by s 27 of the LTM Act, include the Applicant's liability in respect of the land jointly owned with his wife in his individual assessment. Therefore, there was an understatement of the Applicant's land tax liability by the Chief Commissioner.

1. Sometime in August 2011, the Chief Commissioner discovered the understatement and proceeded to reassess the Applicant under s 9 of the TA Act. Because of the provisions of s 9(3) of the TA Act only the Applicant's 2007-2011 land tax assessments were amended to include the Applicant's proportion of the jointly owned land in his individual reassessment for each of these years.

1. The Applicant's case was that -

9. The OSR failed in its duty of care to me as a taxpayer by failing to have in place procedure manuals, staff instructions or similar documents relating to the receipt and handling of Land Tax Registration Forms and failing to contact me and with any concerns about the information I had in good faith provided.

10. Had I been aware in 2005 of my liability to pay secondary land tax I had the opportunity between 2005 and 2007 of transferring my 50% interest in an unencumbered property at 7 Golden Grove Bligh Park to my wife Pauline Daniels thereby minimising my land tax liability.

11. Had this transfer taken place during this period of time then $7827.84 of the land tax arrears now claimed by the OSR would not form a part of the assessment now in dispute.

12. Further, had I been given the opportunity in 2005 to transfer this interest to my wife then an amount of $1212.50 being the 50% difference in stamp duty between the 2005 property value of $295000 and the 2011 value of $350000 would not have been paid.

13. On the 19th December 2011 I transferred my 50% interest in 7 Golden Grove to Pauline Daniels. I submit that this action taken in a period of 4 months proves my claims are genuine and must be preferred ahead of the OSR's nearly 7 years of inaction.

14. I acknowledge that section 9 of the Taxation Administration Act provides the Chief Commissioner with the opportunity of making one or more reassessments of a tax liability, but I contend that s 13 of the Act also provides the Chief Commissioner with an opportunity to withdraw an assessment, and it seems reasonable to believe that this part is incorporated into the Act to provide the opportunity to correct assessments when an injustice has occurred.

1. The Applicant quantified his claim as follows -

Although my financial loss is greater I ask that the tribunal adjust the Assessment as follows:

Original Assessment $19443.40

Less Penalty interest $4702.70

Less Land Tax charged

Re: 7 Golden Grove $7827.84

Less difference in stamp

Duty charges between

2005 and 2011 valuation $1212.50

$13743.04

REVISED ASSESSMENT $5700.36

1. The Chief Commissioner's case was that "the Tribunal is empowered to review" only the reassessment issued to the Applicant. Reliance was placed on the decision of the Court of Appeal in Chief Commissioner of State Revenue v Paspaley 92008] NSWCA 184 at [28]. Mr Rider, counsel for the Chief Commissioner, submitted that "while being sympathetic to the Applicant's situation, the Respondent's case is that all owners of land in New South Wales are liable to land tax in accordance with the provisions of the Act and that the Assessment was correctly issued under the Act".

1. It was also submitted, that "as the Act required the Respondent to issue the Assessment and he issued the Assessment in accordance with the Act, the Respondent's previous assessment of the Applicant to land tax based on land he owned in his own name only did not estop the respondent from issuing the Assessment (BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 at [111]."

1. I agree with the submission made by the Chief Commissioner that in an application for review, the Tribunal is only entitled to review the assessment the subject of the objection decision and not the objection decision made by the Chief Commissioner. This was made clear by the Court of Appeal in Paspaley. Basten JA handed down the principal judgment and his Honour at [28] said -

It is also important to note that the right of review under s 97 is given by reference to the operative decision of the Chief Commissioner and not to ruling made on an objection.

1. His Honour was, of course, speaking of s 97 of the TA Act, which deals with reviews by the Supreme Court. However, s 96, in similar terms provides for review by the Tribunal of a decision of the Chief Commissioner that has been the subject of an objection. In this matter the decision was the reassessment issued to the Applicant for the relevant years. The review before the Tribunal had to be in those circumstances essentially a review of the reassessment. The Tribunal has no jurisdiction to consider any other matter, notwithstanding that the matter may have any merit.

1. Some reliance was placed by the Applicant on s 13 of the TA Act which relevantly provides -

13 Withdrawal of assessment

The Chief Commissioner may withdraw an assessment (being an assessment for which a notice of assessment has been issued) at any time within 5 years after the date of issue of the notice, whether or not the amount of tax specified in the assessment has been paid.

1. Section 13 is a power given to the Chief Commissioner to withdraw an assessment within 5 years for any reason that the Chief Commissioner considers relevant. For example, if the Chief Commissioner has issued an assessment to the incorrect entity or wrong person the Chief Commissioner is entitled to withdraw the assessment under this section. A withdrawal of an assessment in respect of any land tax year under s 13 also allows the Chief Commissioner to use his general power found in s 8 to make an assessment in respect of the relevant tax year without any time constraint. But unfortunately, the applicant is not seeking the withdrawal of an assessment. The Applicant seeks a set-off of an amount against the reassessment. Section 13 has little relevance to his claim and does not assist him.

1. I also agree with the submission made by counsel for the Chief Commissioner that the Chief Commissioner, in issuing the reassessment, was acting in accordance with the LTM Act and that the Chief Commissioner's conduct in not initially assessing the Applicant properly "did not estop" the Chief Commissioner from issuing the reassessment. As noted by Gzell J in BBLT Pty Ltd "that with few exceptions the courts have concluded that estoppel does not lie against a fiscal authority on the basis that the authority cannot be prevented from carrying out the public duties cast upon it by the legislation (Federal Commissioner of Taxation v Wade 91951) 84 CLR 105, AGC (Investments) Ltd v Federal Commissioner of Taxation 91 ATC 4180, Federal Commissioner of Taxation v Australia & New Zealand Savings Bank Ltd (1994) 181 CLR 466, Bellinz v Federal Commissioner of Taxation (1998) 84 FCR 154, Oamington Pty Ltd (Receiver & Manager Appointed v Commissioner of Land Tax 98 ATC 5051)".

1. In passing, I should also mention that the Chief Commissioner has been considerate in this matter by not imposing any interest or penalties in respect of the understated tax for the relevant years. The Applicant has also had the use of the understated tax amount in respect of the years under review. And years outside the five-year period have also not been adjusted with some monetary gain to the Applicant.

1. But in all circumstances of this matter, the reassessment for the land tax years 2007 to 2011 has to be affirmed.

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Decision last updated: 15 October 2012