Gunasti v Chief Commissioner of State Revenue
[2012] NSWADT 218
•29 October 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 Hearing dates: 22 October 2012 Decision date: 29 October 2012 Jurisdiction: Revenue Division Before: J Block, Judicial member Decision: The decision under review is affirmed.
Catchwords: Failure to issue an assessment punctually - estoppel- unfair or unjust- primary taxpayer and secondary taxpayer- assessments and reassessments Legislation Cited: Land Tax Management Act 1956
Taxation Administration Act 1996Cases Cited: Hollinworth v Commissioner of Land Tax (1968) 118 CLR 45;
BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003;
Commissioner of Taxation v Ryan (2000) 201 CLR 109;
Greenish v Chief Commissioner of State Revenue [2007] NSWADT 282;
Julius v Bishop of Oxford (1880) 5 App Cas 214;
Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106;
Chief Commissioner of State Revenue v Aldridge and anor (RD) [2003] NSWADTAP 50;
Grunwick Processing Laboratories Ltd v Advisory, Conciliation and Arbitration Service [1978] AC 655;
Gupta v Chief Commissioner of State Revenue [2006] NSWADT 187;Category: Principal judgment Parties: Hakan Gunasti (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel
M Bennett (Respondent)
Hakan Gunasti (Applicant in person)
Crown Solicitors Office (Respondent)
File Number(s): 126031
REasons for decision
Part A Introduction and preliminary
The Applicant seeks the review of the decision by the Respondent (who is usually referred to in these reasons as "the Chief Commissioner") to disallow his objection dated 16 November 2011 against a land tax assessment made on 7 November 2011 ("the Assessment") as a secondary taxpayer in respect of the 2007, 2008, 2009, 2010 and 2011 land tax years (collectively referred to as "the relevant years", although an individual relevant year is referred to simply by reference to its actual year.)
The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997; it was also furnished with detailed written submissions by each of the parties. The submissions filed by the Chief Commissioner are particularly comprehensive and the Tribunal has drawn on them for the purposes of this decision...
There is no dispute of fact of any kind between the parties and there was accordingly no need for any oral evidence. Put in brief terms, the Applicant was during the relevant years an owner of parcels of real property in New South Wales alone, jointly with his wife Brooke Gunasti ("Brooke"), jointly with his brother Erkan Gunasti ("Erkan"), and jointly with both of Brooke and Erkan. On 4 October 2005 the Applicant submitted a Land Tax Questionnaire ("the Questionnaire") detailing his ownership of the relevant parcels of real property; he subsequently paid land tax due in respect of a period which preceded the Questionnaire. Although there is no question before the Tribunal as to the correctness of the Questionnaire the Applicant was subsequently, and in respect of the relevant years, assessed to land tax in respect of his primary taxpayer liability in accordance with section 27(2) of the Land Tax Management Act 1956 ("the Act"); he was not however assessed in respect of his secondary taxpayer liability in accordance with section 27(3) of the Act. In accordance with the Assessment the Chief Commissioner assessed the Applicant in respect of his secondary liability under section 27(3) of the Act.
It is convenient in the first instance to draw on the submissions by the Chief Commissioner and to include its content under the head of Background contained in Part A (clauses 5 to 22) omitting footnotes (although the footnotes have been checked) as follows:
5. On 14 September 2005 the Chief Commissioner issued to the Applicant a letter, headed Notice of investigation for potential land tax liability, enclosing a land tax questionnaire.
6. The Applicant completed the land tax questionnaire. The Applicant signed the land tax questionnaire and dated it 4 October 2005. It provided information of properties he then owned. These details are set out in the table annexed to these submissions at Annexure A.
7. In the land tax questionnaire the Applicant described the Koolewong property as his "intended principal place of residence" - it was intended because the Applicant's family were then 'living in Dundas and have tenanted the Koolewong property because we cannot afford to move in as yet' - and the other properties as investment properties.
8. Following his receipt of the completed land tax questionnaire the Chief Commissioner issued the Applicant with a land tax assessment dated 14 October 2005 in the amount of $8,310.25. This related to the 2002 to 2005 land tax years for which the Applicant had not been registered and, consequentially, had not paid applicable land tax.
9. The 2005 assessment was issued 'Gunasti BD & Gunasti H', with a client ID 62787758, and was assessed to them as "primary taxpayers" for the purposes of s 27 of the Act.
10. From this time the Applicant was assessed to, and paid the, land tax as a primary taxpayer with Brooke Gunasti under client ID 62787758.
11. On 28 May 2010 the Applicant acquired, as the sole registered proprietor, the property at 73 Alfred Street, Narraweena 2099 in New South Wales. This purchase caused the Chief Commissioner to enquire as to what other properties the Applicant owned.
12. On 30 September 2011 the Chief Commissioner issued to the Applicant a New Land Tax Client letter. On receipt of that letter the Applicant telephoned the Chief Commissioner's office on 21 October 2011 where he was informed as to the primary and secondary calculations of land tax. Further, in response to the Applicant's question, would land tax be backdated, he was told:
... it may be backdated up to 5 years depending on [your] secondary calculations, for each year.
13. On 27 October 2011 the Applicant completed a Land Tax 2011 Registration Form under client ID 117532305.1
14. On 7 November 2011 the Chief Commissioner issued the Assessment assessing the Applicant to $14,356.75 land tax for the 2007 to 2011 land tax years. The Assessment comprised the Applicant's secondary liability for land of which was a part owner that had not previously been assessed for land tax.
15. The Assessment was issued to the Applicant under client ID 117532305.
16. On 16 November 2011 the Applicant telephoned the Chief Commissioner's offices advising he intended to object to the Assessment on the basis it should not "go back" five years. The Applicant was advised that 'under legislation [the] OSR can do this'.
17. On 16 November 2011 the Applicant objected to the Assessment. Specifically the Applicant objected to the primary and secondary calculation on the following grounds:
(a) That he had provided all relevant land holdings facts to the Chief Commissioner in 2005;
the Chief Commissioner did not advise the Applicant of his liability as a "secondary taxpayer"; and
(b) in these circumstances it is 'unjust and unlawful' to issue the Assessment.
18. On 30 November 2011 the Applicant telephoned the Chief Commissioner's office advising the principal place of residence exemption was not applied to his property at Merrylands despite his having occupied as such since 8 July 2008. The Applicant was advised to lodge a Variation Form indicating the move. The Applicant did so on 1 December 2011.
19. At various times the Chief Commissioner's office has confirmed with the Applicant that a "generous instalment" plan would be agreed, due to the retrospective nature of the Assessment, to enable the Applicant to pay the land tax liability of the Assessment.
20. On 23 March 2012 the Chief Commissioner disallowed the objection The letter made clear that the Assessment is based on the Applicant's secondary taxpayer liability and that:
We advise that once a secondary liability is identified by the Chief Commissioner, albeit late, the Chief Commissioner is required to issue an assessment in accordance with the legislation. ...
As this assessment has been validly raised under section 8 of the TA Act and the provisions of the LTM Act, the Chief Commissioner cannot revoke the liability upon objection.
21. The Applicant filed an application for review with the Administrative Decisions Tribunal (the 'Tribunal') on 18 November 2011 on the following grounds:
Being asked to pay a secondary land tax liability in 2011 that back dates to 2007 when I declared all the relevant facts to OSR in 2005, for which the OSR had failed to correctly assess my total land tax liability.
22. Following the Tribunal's order to do so, the Applicant provided submissions dated 29 August 2012.
As I have noted there was no need for oral evidence and the matter proceeded to submissions. After about an hour a brief adjournment was allowed to enable the parties to discuss certain matters. After the adjournment the parties advised the Tribunal that there was no dispute whatever as to the Assessment. However the Applicant persisted with his objection to the Assessment on the basis that it was late, that the Chief Commissioner was obliged to assess him both correctly and punctually, and in particular having regard to the fact that he had furnished the Questionnaire, and had subsequently and in consequence made expenditures which he would not have made had assessments been made correctly and punctually. The Applicant's contentions in this context do not differ in any material respects from clause 23 of the Chief Commissioner's submissions which described the Applicant's contentions in the following manner:
23. The Applicant does not challenge the valuations attributed to his properties or the Chief Commissioner's calculations of the secondary taxpayer liability. Instead, the Applicant submits that he is not liable at all for the land tax underlying the Assessment on three bases:
(a) First, and said to be the 'fundamental basis of my objection', that the Chief Commissioner was "late" in issuing the Assessment;
(b) Secondly, the onus of responsibility for correctly assessing the Applicant's land tax liability (both primary and secondary) falls to the Chief Commissioner.
(c) Thirdly, although not specifically articulated as such, that the Chief Commissioner is estopped from issuing the Assessment to the Applicant. These are based on certain decisions the Applicant made, but says he would not have made, had the relevant assessments been promptly issued.
Part B. Primary and secondary liability
Given that the Applicant admitted the correctness of the Assessment the content of this Part B is included for the sake of completeness, and simply because the Assessment relates to an assessment against the Applicant as a secondary taxpayer.
Section 3(1) of the Act defines an "owner" of land for land tax purposes. So far as is relevant it provides:
owner includes:
(a) in relation to land, every person who jointly or severally, whether at law or in equity:
(i) is entitled to the land for any estate of freehold in possession, or
(ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise,
... and
(d) a person who, by virtue of this Act, is deemed to be the owner.
The Applicant (in the percentages set out in Annexure A to the Chief Commissioner's submissions but subject to one correction set out later in these reasons in clause 15) is the registered proprietor of the properties therein referred to) and is entitled to the estate of freehold in possession or, if not in possession due to their being subject to a lease, is entitled to receive, and is in receipt of, the rents of those properties. That is, the Applicant (in the percentages aforesaid) is the "owner" of the properties for purposes of the Act.
Where more than one owner owns a parcel of land the Act imposes a layered regime of assessment. Section 27 of the Act provides that regime. Section 27 was amended in 2006 and 2009.
During the relevant years, up to 25 June 2009 section 27 provided:
(1) Joint owners of land shall be assessed and liable for land tax in accordance with the provisions of this section.
(2) Joint owners (except those of them whose interests are exempt from taxation under section 10) shall be jointly assessed and liable in respect of the land (exclusive of the interest of any joint owner so exempt) as if it were owned by one person, without regard to their respective interests therein and without taking into account any land owned by any one of them in severalty or as joint owner with any other person.
...
(3) Each joint owner of land shall in addition be 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.
(4) The joint owners in respect of their joint assessment shall be deemed to be the primary taxpayer, and each joint owner in respect of his or her separate assessment to be a secondary taxpayer; and from the land tax payable in respect of his or her interest in the land by each joint owner under subsection (3) there shall be deducted such amount (if any) as is necessary to prevent double taxation.
During the relevant years and from 26 June 2009 section 27 of the Act provided:
(1) Joint owners of land shall be assessed and liable for land tax in accordance with the provisions of this section.
(2) Joint owners (except those of them whose interests are exempt from taxation under this Act) are to be jointly assessed and liable in respect of the aggregate value of their proportionate interests in the land as if the land were owned by one person, without regard to their respective interests therein and without taking into account any land owned by any one of them in severalty or as joint owner with any other person (but by excluding the proportionate value of the interest of any joint owner so exempt).
...
(3) Each joint owner of land shall in addition be 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.
...
(4) The joint owners in respect of their joint assessment shall be deemed to be the primary taxpayer, and each joint owner in respect of his or her separate assessment to be a secondary taxpayer; and from the land tax payable in respect of his or her interest in the land by each joint owner under subsection (3) there shall be deducted such amount (if any) as is necessary to prevent double taxation.
The operation of section 27 of the Act, in its form at that time, was described as follows by Barwick CJ, Kitto & Menzies JJ in Hollinworth v Commissioner of Land Tax (1968) 118 CLR 45 at 51-52:
As to joint owners the plan adopted (in s 27) is to make the joint owners jointly liable for land tax in respect of the land as if it were owned by a single person, and to make each of them separately liable in respect of his individual interest together with any other land owned by him in severalty and his individual interests in any other land. The joint owners in respect of their joint assessment are deemed to be the primary taxpayer, and each joint owner in respect of his separate assessment to be a secondary taxpayer - presumably meaning so far as the jointly owned land is concerned; and then follows a provision to prevent double taxation of the secondary taxpayer, namely that the necessary deduction shall be made "from the land tax payable in respect of his interest in the land by each joint owner".
The 'provision to prevent double taxation of the secondary taxpayer' which Barwick CJ, Kitto & Menzies JJ referred to is section 33 of the Act. During the relevant years it provided:
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.
Part C. Miscellaneous
The Chief Commissioner's submissions contain (as indicated previously in these reasons) an annexure marked A which contains information as to the relevant parcels of real property and including the respective ownership interests of the Applicant, Brooke and Erkan. It indicates that all of the relevant parcels of real property (save one) were acquired by the Applicant either jointly with Erkan, or jointly with Brooke, or jointly with both of them, the exception relates to a parcel of real property in Narraweena (73 Alfred Street Narraweena) which was acquired by the Applicant alone in May 2010; the Tribunal was informed that it was intended that it would become his principal place of residence ("PPR") at some time in the future.
The Tribunal does not think it necessary to include the content of Annexure A in these reasons. It notes however that in respect of the property in Umina (61 Veron Road Umina) Annexure A records that during the relevant years the Applicant's ownership percentage interest was 20% whereas in fact it was one third. Mr. Bennett informed the Tribunal that the Chief Commissioner would not seek to increase the Assessment in consequence.
The Tribunal was informed that following the delivery of the Questionnaire in 2005 land tax was paid by reference to client ID 62787758 (referable to the Applicant and Brooke jointly) but was not paid in respect of client ID 45978548 (referable to the Applicant and Erkan jointly) or in respect of client ID 84890718 (referable to the Applicant and Brooke and Erkan jointly). Accordingly land tax was not assessed and paid in respect of the property in Merrylands (7 Kenyon Street Merrylands) acquired jointly with Erkan in 1994 or the property in Umina referred to in the preceding clause acquired jointly with Brooke and Erkan in 2001. (This is also so in respect of the property at Narraweena acquired by the Applicant alone and in respect of whom there is yet another client ID). Mr. Bennett informed the Tribunal that the Chief Commissioner does not intend to seek payment of land tax referable to any of such properties (and Narraweena is not relevant for this purpose) for any period prior to the relevant years.
It is also relevant to note that the property in Merrylands referred to in the preceding clause acquired in 1994 became the Applicant's PPR in July 2008. The Applicant was granted a retroactive exemption going back to the 2009 year pursuant to a variation filed by the Applicant in 2011.
Part D Estoppel
The Applicant did not in so many words raise as an issue the question of estoppel. It may perhaps be implicit having regard to the following statement in his submissions:
Had I been correctly assessed for total land tax liability in the first place (both primary and secondary) I would not have purchased the Narraweena property under the current property holding arrangement, knowing that it is going to significantly increase out total liability from an average of $1500-$2000 per annum to over $10,000 per annum. Had I known about the secondary liability, I would have made different decisions....
Estoppel does not lie against the Chief Commissioner in the discharge of his duty to administer the taxation law. See BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003 at [111] per Gzell J (and the cases) there cited; and Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 124, [22] per the majority and the cases there cited. See also Greenish v Chief Commissioner of State Revenue [2007] NSWADT 282 at [22]-[23] where Verick JM held that estoppel does not apply to prevent the Chief Commissioner from making reassessments.
The Applicant's argument, if it were available at all (and it is not), would be available only for the 2011 year, as the Applicant did not purchase the Narraweena property until 28 May 2010. It would not be relevant in respect of Narraweena in respect of any prior time. Annexure A to the Chief Commissioner's submissions establishes that all other parcels of real property were purchased between 1994 and 2005.
In order to establish an estoppel it must be shown that the Applicant has suffered loss. No loss has been demonstrated and there were no such contentions.
Part F Assessments and Reassessments.
Mention was made during the hearing of the fact that there is a difference between an assessment and a reassessment in that in respect of the latter there is a statutory time limit of 5 years but no time limit in respect of the former. As to whether a secondary taxpayer assessment is a reassessment or an assessment is of academic interest only. This is so because the Assessment was issued in point of time in 2011 and prior to the expiry of 5 years from the earliest assessment referable to the relevant years and made in 2007.
It is not necessary for me to deal with the manner in which the Assessment was calculated more particularly because the Applicant conceded its correctness. It is perhaps relevant to note that it included the deduction provided by section 33 of the Act.
Part G. Relevant statutory law and case law
It is also relevant to note that it is the Act which imposes the land tax liability on the Applicant for the relevant years. The Chief Commissioner administers the Act (which renders the Applicant liable); the Chief Commissioner does not impose the liability himself.
It is equally relevant to note that a taxpayer cannot be exonerated from such liability by virtue of the Chief Commissioner's actions. In Chief Commissioner of State Revenue v Aldridge and anor (RD) [2003] NSWADTAP 50 at [23] the Appeal Panel noted:
As such, the Respondents cannot be exonerated from liability to land tax by virtue of any reliance on a Revenue Ruling published by the Chief Commissioner that is misleading or incorrect. Reliance on a misleading or incorrect Revenue Ruling might be reasonable grounds for waiver of interest or penalties for late payment of land tax, but not the land tax itself.
The onus is on the Applicant to pay his land tax liability. In Gupta v Chief Commissioner of State Revenue [2006] NSWADT 187 at [33] the Tribunal said:
The impression that the applicants had that they were entitled to an exemption was ill founded and ... as the onus is on the tax payer to ascertain the position, further enquiries ought to have been made as to their liability or whether they were entitled to an exemption.'
The Applicant was liable to land tax by virtue of the Act; it was his obligation to ascertain what that liability was; the fact that the Chief Commissioner did not issue the relevant "secondary taxpayer" assessment (and which is the Assessment) punctually cannot provide him with an exemption. By section 4 of the Act, the Act is to be read together with the Taxation Administration Act 1996("TAA"), section 61 of which provides:
The Chief Commissioner has the general administration of this Act and the other taxation laws and may do all such things as are necessary or convenient to give effect to this Act and the other taxation laws.
The Act is a "taxation law" for the purposes of TAA: see section 4 of TAA.
It is clear that the Chief Commissioner is obliged, by virtue of sections 8(1) and 9(1) of the Act, to make an assessment of a taxpayer's land tax liability. The word "may" in both of those subsections is obligatory rather than discretionary. In Julius v Bishop of Oxford (1880) 5 App Cas 214 at 222-223, Earl Cairns LC spoke of the words 'it shall be lawful' but the statement is equally applicable to any other words appearing to invest a person with a discretion:
They are words merely making that legal and possible which there would otherwise be no right or authority to do. They confer a faculty or power and they do not of themselves do more than confer a faculty or a power. But there may be something in the nature of the thing empower to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so.
Accordingly an apparent discretion to act can often be obligatory. In a revenue context the High Court in Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106 held that section 46(3) of the Income Tax Assessment Act 1936 (Cth) (the '1936 Act'), which provided that the Commissioner of Taxation 'may allow' a private company a rebate of taxation if satisfied that the shareholder would not pay a dividend to another private company during a specified period, was obligatory. Justice Windeyer said at 134-135:
This [question] does not depend on the abstract meaning of the word 'may' but [on] whether the particular context of words and circumstances make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'.
His Honour went on to cite Jervis CJ in Macdougall v Paterson (1851) 138 ER 672 at 677: The word "may" is merely used to confer the authority: and the authority must be exercised, if the circumstances are such as to call for its exercise.'
It is clear that this is the correct situation in respect of the Applicant's liability to land tax in the relevant years. Once the Act rendered the Applicant liable to "tax" - defined as 'a tax, duty or levy under a taxation law - the circumstances required the Chief Commissioner to act. To do otherwise would cause the Chief Commissioner to fail in giving effect to ... the taxation law'.
That the issue of an assessment or reassessment is a matter of machinery, rather than a matter of substance, also confirms the obligatory nature of the "discretion". In Grunwick Processing Laboratories Ltd v Advisory, Conciliation and Arbitration Service [1978] AC 655 at 690 Lord Diplock said in relation to the word "shall" (but equally applicable to "may"):
Prima facie this expression appearing in a statute is used as a term of art to impose a duty to do what is prescribed, not a discretion to do it or not according to whether it is reasonably practicable to do it, nor a discretion to do something like it instead. This is particularly so where, as in section 14(1), the imposition of the duty upon Acas is followed by an express grant of a discretion which does not derogate from the duty itself but is limited to determining the means by which the duty is to be carried out. This service to point the contrast between what are matters of substance in a statute and what are matters of machinery. A court is less reluctant to treat "shall" as being directory rather than mandatory in a provision in which all that is involved is a mere matter of machinery for carrying out the undoubted purposes of the Act.
The issue of an assessment, or reassessment, is a matter of machinery by which the matter of substance (the liability to land tax) is given effect. The Chief Commissioner is obliged to issue the assessment, or reassessment, where a land tax liability exists.
The Applicant contends that the delay in issuing the Assessment prohibits the Chief Commissioner from reliance on it. This was pressed on the basis of such reliance being "unjust and unlawful"; it was either.
That the Chief Commissioner was entitled to issue the Assessment is made clear by Part 3 of TAA and Commissioner of Taxation v Ryan (2000) 201 CLR 109 which raised the same issue in the Federal context.
As to the "unlawful" aspect of the argument, there was no impediment to the Assessment's issue. There is no time constraint in section 8(1) of TAA; if the Assessment was an "assessment" there was therefore no restriction. There is a limit on issuing reassessments (assuming that the Assessment could be so categorised although this itself is open to doubt) to 5 years from the initial assessment unless the requirements of section 9(3) are satisfied. However, and as set out previously the Assessment was issued before the expiry of 5 years from the earliest relevant land tax assessment. It follows that there was never any legal impediment to the issue of the Assessment.
In respect of the "unjust" contention, there are a number of reasons why such a contention cannot be correct.
The first and most important aspect is that it simply does not apply. The High Court in Commissioner of Taxation v Ryan (2000) 201 CLR 109 made it clear that the "unfair" argument does not apply. In that case a taxpayer was issued with an income tax assessment in 1987 stating that no tax was payable. After he disallowed a deduction the Commissioner of Taxation issued an amended assessment in 1994 for the 1987 year assessing her assessable income as $14,470. As is the case here, the taxpayer stressed that she had made a full and frank disclosure before the amended assessment. The taxpayer argued it was too late to issue the amended assessment, and that to do so was "unfair". The majority - Gleeson CJ, Gummow & Hayne JJ - allowed the Commissioner of Taxation's appeal. Their Honours confirmed that the relevant question is whether the power to issue the amended assessment was restricted and It was not.
In relation to the "unjust" style arguments their Honours said at 123:
But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any "policy" or "general intention" unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of "fairness" or "justice" do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted.
The majority in FCT v Ryan also highlighted the effect of Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55, to the effect that the provisions of the Commonwealth taxing legislation dealing with collection and recovery of taxation constitute a scheme which covers the field, such that outside concepts of "fairness" and "justice" do not intrude into the legislative scheme.
As to general notions of fairness it was said, in Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222 at [27] by Handley Acting Deputy President, that:
I note there is no general discretion in the LTMA allowing the Chief Commissioner to take into account other special circumstances that may apply in respect of a landowner which are not the subject of an exemption under the Act.
The Tribunal also rejected a "fairness" based outcome in Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222. Justice Gzell was unsympathetic to the "fairness" aspect of the claim in Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68 at [8]. It is clear that there is no general discretion available to the Chief Commissioner or, on application for review, this Tribunal based on "fairness".
That the Applicant considers it "unjust" to be assessed to land tax which he was otherwise liable to pay does 'no more than attempt to mask the absence of any foundation' to his argument.
In the second place the issue of the Assessment was not unjust. The Applicant is not faced with a penalty or interest charge, but merely the land tax which under the Act he is obliged to pay. The Applicant has had the use of the funds he otherwise should have paid in land tax progressively over the relevant years.
In the third place, section 14(2) of TAA constitutes a response to an unjustness contention. The majority in Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 125 also relied on section 171 of the 1936 Act, which allows a taxpayer to request an assessment, with which request the Commissioner of Taxation must comply, as a sufficient response to any argument as to fairness. The equivalent provision in TAA is section 14(2), which allows a taxpayer to call for the issue of a notice of assessment.
Fourthly and finally it must be acknowledged that the Act can sometimes be"harsh" in its operation. By way of example and in Chief Commissioner of State Revenue v Aldrige and anor (RD) [2003] NSWADTAP 50 at [24] the Appeal Panel said 'Application of the Act in cases such as this can produce what might be perceived to be harsh results'. However, it remains the application of the Act and it applies to the Applicant.
It follows that the issue of the Assessment was not unfair or unjust, and even if it was it would nevertheless be and remain altogether valid.
In conclusion it must always be remembered that section 16 of TAA provides that:
The validity of an assessment is not affected because a provision of a taxation law has not been complied with.
Part E Conclusion
It follows that the issue of the Assessment is not open to attack on the basis for which the Applicant contends and accordingly the decision under review is affirmed.
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Decision last updated: 29 October 2012
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