Giunta v Chief Commissioner of State Revenue

[2005] NSWADTAP 19

Appeal Panel - Internal

CITATION:	Giunta Chief Commissioner of State Revenue (RD) [2005] NSWADTAP 19
PARTIES:	APPELLANT Phil Giunta RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	059008
HEARING DATES:	7/4/2005
SUBMISSIONS CLOSED:	04/07/2005
DATE OF DECISION:	04/07/2005
DECISION UNDER APPEAL:	Giunta v Chief Commissioner of State Revenue [2005] NSWADT 20
BEFORE:	O'Connor K - DCJ (President); Seve J - Judicial Member; Bennett C - Non Judicial Member
CATCHWORDS:	no question of law identified
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	046038
DATE OF DECISION UNDER APPEAL:	02/09/2005
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Land Tax Act 1956 Land Tax Management Act 1956 Taxation Administration Act 1996
CASES CITED:
REPRESENTATION:	APPELLANT In person RESPONDENT S Benjamin, solicitor
ORDERS:	Appeal dismissed

1 The Appeal Panel dismissed this appeal at the close of submissions, giving oral reasons. The unsuccessful appellant, Mr Giunta, has requested reasons in writing. The following reasons are provided. They commence with some background, and a slightly revised version of the oral reasons then follows.

2 The Chief Commissioner of State Revenue (the Commissioner) assessed (determination, 4 August 2004) the appellant for land tax for the years ending 30 June 2000 to 2004 in respect of three investment properties. The obligation to pay land tax is imposed by s 7(1) of the Land Tax Management Act 1956 (the LTM Act), read in conjunction with the Land Tax Act 1956. There are a series of provisions in this legislation dealing with what land is covered and what land is exempt. Once the land value crosses the threshold for land tax, the land owner is required to lodge an initial return: LTM Act, s 12(1A). As the Commissioner has noted, this is a self-assessment approach. The Commissioner has referred in his submissions to the advertising and public information strategies used by his Office to keep landowners informed of their obligation.

3 The Taxation Administration Act 1996 deals with the general administrative responsibilities of the Commissioner. That Act, s 3, defines a ‘tax default’ as meaning ‘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’. A taxpayer is liable to pay interest on unpaid tax once it falls due to the extent that it is unpaid: s 21. Interest has two components: the market rate component; and the premium component: s 22. In this case the Commissioner required the appellant to pay the market rate component, but exercising the discretion granted by s 25 did not require payment of the premium component (an additional 8 per cent per annum). Section 22(2) provides that 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’.

4 The appellant applied to the Commissioner unsuccessfully for remission of the whole or part of the market rate component. Section 25 provides:

‘ 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.’

5 There is no doubt in this case that the appellant’s properties had by 1 July 1999 crossed the threshold. He has given various explanations as to why he was not familiar with the impact of land tax requirements on his properties; and why he only become aware of the situation once he consulted officers of the Office of State Revenue in January 2004.

6 He has asserted, emphatically, that he is an honourable person and, had he known, he would have, as he has always done, paid any bill on time. He met the assessments ultimately issued by the Commissioner promptly. He blames the Commissioner for not ensuring that he was informed that the Valuer-General’s valuations meant that his property was now exposed to land tax. Therefore, he asserted, he should be relieved of the market rate component, and pay no interest in respect of his late payments.

7 The Tribunal rejected the application, affirming the decision of the Commissioner: see Giunta v Chief Commissioner of State Revenue [2005] NSWADT 20 (9 February 2005). The appellant now appeals. An appeal may be made as of right on questions of law, and with the leave of the Appeal Panel may extend to the merits: Administrative Decisions Tribunal Act 1997, ss 112 and 113.

8 The appellant represented himself in these proceedings. The notice of appeal including the following statements: ‘the issue is not the legislation, the issue is the OSR sending me a bill to pay land tax and interest four years after the due date of payment without notice, even though the OSR had all my details, land values and thresholds for every year, but did nothing about it until I went to see them in January 2004’; ‘I am not guilty of avoiding land tax and want my name cleared and 70% of what I’ve already paid refunded’. He also claimed in the notice of appeal that the transcript of the Tribunal proceedings was not a true and accurate account of his words, and that he was only given a copy of the relevant legislation about 5 minutes before the Tribunal’s first directions hearing on 21 September 2004, which ‘was about four and a half years too late’.

9 The Appeal Panel gave the following oral reasons for dismissing the appeal. (As noted they have been slightly edited.)

10 PRESIDENT: The appeal before the Tribunal today is from Mr Giunta whose application for review of a decision of the Office of State Revenue was the subject of a decision in the Tribunal on 9 February, 2005.

11 Mr Giunta has made several submissions to us today which really come down to I think two points. One is that he believes that, in being charged the market interest rate in relation to the land tax that has been levied for the years to 2004, he has been unjustly dealt with.

12 The other point that he makes is that he believes that the Office of State Revenue has an obligation to inform taxpayers if in the Office of State Revenue’s opinion the taxpayer is liable to pay land tax before a taxpayer should be called on to pay the tax.

13 As to the second point, despite repeated requests from the Tribunal Mr Giunta was unable to take us to any provision which required the Commissioner as a matter of law to follow the procedure of notifying people in advance of their liability to pay tax before the tax would become due. The matter has been addressed in other decisions of the Tribunal; and it was adequately addressed by Mrs Hole in her decision in this case.

14 It is clear law in New South Wales that in this area the obligation falls on the taxpayer in the first instance to furnish a return to the Chief Commissioner on or before 31 January in the relevant year. The obligation is found in s 12 of the LTM Act: see further, Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP 50.

15 As to the first point - the question of whether the market interest rate should have been attached to the liability, Mr Giunta, I think with some force, complains that the word ‘failed’ should not be used to describe the way in which he attended to his obligations. He has asserted consistently before the Tribunal, and now before the Appeal Panel, that as soon as he became aware that he might be liable he made full disclosure to the Office of State Revenue; and the Office has accepted that.

16 We did try to explain in the course of the proceedings that in the law the word ‘fail’ is often used in legislation simply to mean ‘did not do’ something. Now it may well be that if nothing else comes out of this case, that some thought might be given to the way in which the word ‘failed’ is used in correspondence from the Office of State Revenue. There will be many instances where an ordinary member of the community would attach to the word ‘fail’ an element of stigma that, I guess, we lawyers tend not to attach to it. We use the word in a different way and often legislation uses the word in the way lawyers do - to simply mean did not do something, omitted to do something. But the Appeal Panel can understand that at least some people in the community would see the word ‘fail’ as involving some allegation of misconduct on their part. That is not the position here.

17 The position, unfortunately for Mr Giunta and for many taxpayers, is that this law, like many tax laws, imposes the obligation to pay tax without making any concession to the argument that there is any duty on the tax collector to inform the taxpayer of the liability in advance. As I said in the course of argument, it would be very rare indeed for a tax law to work on the basis that the onus was on the tax collector to let the taxpayer know first before the liability attaches.

18 How tax law deals with the kind of problem that Mr Giunta faced is through the relief provisions. In this instance s 72 of the LT Act treats the failure to pay tax (and I am using failure now in the lawyer’s way, not as suggesting any wrong doing on the part of the taxpayer) or, to put it in a more neutral way, the omission to pay tax as a ‘tax default’. Various amounts of interest may be attached to the tax that should have been paid in the first place. Then the Commissioner has a discretion to relieve the taxpayer from some or all of that extra payment.

19 In this instance, as Mr Benjamin (who appeared for the Commissioner) has tried to explain that the Office did accept that you, Mr Giunta, were a taxpayer who had acted in good faith and accepts that you had not realised that you had certain obligations and interest was attached at what is called the ‘market rate’. Now you, Mr Giunta, I accept, have objected strenuously to having interest imposed at the market rate.

20 The reasons why that was considered appropriate in the eyes of the Tribunal that first heard this matter are set out by Mrs Hole in her decision. The Appeal Panel of the Tribunal has, has in the past, also looked at this question.

21 The view that has been expressed by Mrs Hole is similar to the view that has been expressed in the past by the Appeal Panel: see, for example, Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor [2004] NSWADTAP 19 at [60]. That is that in ordinary circumstances of an omission to pay tax which is then made up later, the Government is entitled to ask for some interest in order to compensate for the fact that that money had not been paid over at the time, even though it was not due in any way to the taxpayer conniving at that.

22 This approach is also appropriate to take account of the fact that the value of money changes over time and usually erodes. So the interest that the taxpayer pays three or four years later may well not even be equal to the loss in value of the money as against the time at which it was due. Certainly the market rate that was applied in this case is not onerous in terms of the usual interest rates that have applied over the relevant period.

23 So whilst it is a matter that you do not agree with, and obviously strongly disagree with Mr Giunta, it is our view that no errors of law have been identified in the decision under appeal. In fact we would adopt the basic reasons given by Mrs Hole for her decision. The appeal is dismissed.

24 The oral reasons concluded at that point.

25 We reiterate the view expressed by the Appeal Panel in Incise at [60]:

‘This [the market rate component], 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. …’.

26 It remains the case, of course, that this observation of the Appeal Panel should, as Gzell J recently noted when considering the indications given by the Commissioner in a Revenue Ruling, ‘not be used as a fetter upon the discretion which is couched in general terms and must be exercised according to its language and depending on the facts of each case’: McDonald's Australia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6 at [100].

27 So far as the circumstances of this case are concerned, it is important, we consider that late-complying taxpayers not be treated more favourably than taxpayers who report and pay on time.

Order

1. Appeal dismissed.