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Hay v Commissioner for ACT Revenue

Hay v Commissioner for ACT Revenue

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ACT CIVIL & ADMINISTRATIVE TRIBUNAL

HAY v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2014] ACAT 23

AT 13/61
Catchwords: ADMINISTRATIVE REVIEW – land tax liability for non-contiguous
rental periods –no jurisdiction to review a decision to impose interest on unpaid land tax – imposition of penalty tax for the period pre-July 2004 under the saved provisions of the repealed Rates and Land Tax Act 1926, and for the period post-July 2004 under the Land Tax Act 2004 – whether penalty tax is a “penalty” - burden of proof - Briginshaw principles are a guide only - whether penalty tax rate may be reduced - consideration of deterrence - changing circumstances of the applicant over long period of time - honesty of the applicant - applicant’s circumstances extreme in nature - reduction of penalty tax – importation of pre-July 2004 land tax liability under the repealed Rates and Land Tax Act into the Land Tax Act -whether Commissioner’s discretion to remit penalty tax under the Rates and Land Tax Act repealed and whether remission power under the Taxation Administration Act 1999 applies

Legislation: ACT Civil and Administrative Tribunal Act 2008, ss 6, 68
Legislation Act 2001, ss 6, 84, 88 & 139
Land Tax Act 2004, ss 8, 9, 14, 19A, 36, 37 & 48 (as at 1 July 2004)
Rates and Land Tax Act 1926 (repealed), s 22EC
Taxation Administration Act 1999, ss 2, 7, 26, 31, 34, 33, 37, 107A &
108B

Cases: Briginshaw v Briginshaw; (1938) 60 CLR 336
Commissioner for ACT Revenue v Dataflex Pty Ltd and ACT Civil Administrative Tribunal [2011] ACTCA 14
James v Commissioner for ACT Revenue [2013] ACAT 32
Pazios v Commissioner for ACT Revenue [2013] ACAT 48

Rawson Finances Pty Ltd v Commissioner of Taxation (2013) FCAFC 26
Riverland Retreat Pty Ltd v Commissioner of State Revenue [2004] VCAT 1366
Scott and Anor v Commissioner for ACT Revenue [2013] ACAT 73
Steele v Commissioner for ACT Revenue [2010] ACAT 15 Theron v Commissioner for ACT Revenue [2013] ACAT 33
Touma v Chief Commissioner of State Revenue [2012] NSWADT 2
Newcastle City Council v GIO General Limited (1997) 191 CLR 85

Texts/Papers: Explanatory Memorandum to the Land Tax Bill 2003
Hon Justice Duncan Kerr, A Freedom to be Fair, Paper delivered to Excellence in Government Decision-making, AGS Symposium, Canberra, on 21 June 2013

Tribunal: Ms. L. Beacroft – Member

Date of Orders: 17 April 2014
Date of Reasons for Decision: 17 April 2014

ACT CIVIL AND ADMINISTRATIVE TRIBUNAL AT 13/61
BETWEEN:

DAVID HAY
Applicant

AND:

COMMISSIONER FOR ACT REVENUE
Respondent

TRIBUNAL: Ms. L. Beacroft – Member

Date:17 April 2014
ORDER

The Tribunal Orders that:

The decision under review is set aside and remitted to the Respondent for recalculation of penalty tax in accordance with the following directions:

a.penalty tax is remitted by reducing it from 200% to 25% for the period 8 October 2002 to 30 June 2004;
b.penalty tax is reduced from…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] ACAT 23
Decision Date: 17 April 2014

CaseChat Overview and Summary

In the case of Hay v Commissioner for ACT Revenue, the applicant challenged the imposition of land tax and associated penalties and interest by the Commissioner for ACT Revenue. The applicant argued that the imposition of land tax should be considered either quarterly or for each separate rental period, leading to a re-application of penalty tax and interest each time. Additionally, the applicant claimed that the penalty tax rate should be reduced from 50% to 25% for unpaid land tax post-1 July 2004. The applicant also asserted that the decision-maker must be "comfortably satisfied" that the penalty tax rate is appropriate, as per the Briginshaw principle, and that the Commissioner did not properly consider the applicant's personal circumstances.

The legal issues before the court were whether the imposition of land tax occurred quarterly or for each separate rental period, which would affect the application of penalty tax and interest provisions. The court also had to determine if the standard of proof for imposing penalty tax, namely the Briginshaw principle, was correctly applied, and if the penalty tax rate was appropriately set. The applicant argued that the Commissioner did not properly consider their personal circumstances and that the reasons provided for the decision were inadequate, resulting in an error of law.

The court found in favour of the applicant, setting aside the decision under review and remitting it to the Commissioner for recalculation of penalty tax. The court directed that the penalty tax be reduced from 200% to 25% for the period 8 October 2002 to 30 June 2004, from 50% to 25% for the period 1 July 2004 to 31 December 2006, and from 50% to 30% for the period 1 January 2007 to 31 December 2010. The court also noted that the Commissioner agreed that an error in calculating the interest payable under section 19A(2) of the LT Act had occurred, and a refund was due to the applicant.

Orders

Orders of the court

The Tribunal Orders that:

The decision under review is set aside and remitted to the Respondent for recalculation of penalty tax in accordance with the following directions:

a. penalty tax is remitted by reducing it from 200% to 25% for the period 8 October 2002 to 30 June 2004;

b. penalty tax is reduced from 50% to 25% for the period 1 July 2004 to 31 December 2006; and

c. penalty tax is remitted by reducing it from 50% to 30% for the period 1 January 2007 to 31 December 2010.

The Tribunal notes that the respondent agrees that there is an error in calculation of the interest payable under section 19A(2) of the LT Act, and a refund is due to the Applicant.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The applicant contended that if the imposition of land tax is made quarterly or in the alternative, for each separate rental period (see paragraphs 27 and 28 below), then the interest free month[26] applied multiple times. On this view, the applicant had been overcharged interest for unpaid land tax post-1 July 2004.b) A decision to impose land tax (and any associated penalties for unpaid taxes and interest) is for each quarter, or in the alternative is for each separate period of rental [26] see section 19A(2), LT Act The Applicant contended that the imposition of land tax occurred quarterly, based on the plain meaning of section 9(1)(a) of the LT Act, other sections of the LT Act and the Explanatory Memorandum. On this view penalty and interest provisions for any unpaid land tax should be re-applied each quarter. Thus it was contended that the decisions about penalty tax and the calculation of interest were flawed; the Commissioner would need to consider the appropriate rate of penalty tax[27] and whether to remit the penalty tax[28] for each quarter. Similarly, the benefit of the one month interest-free period[29] would apply multiple times (see paragraph 26 above). [27] section 31, LT Act[28] section 37, LT Act[29] section 19A(2), LT Act In the alternative, the applicant contended that the imposition of land tax occurred for each of the 5 separate rental periods, and the provisions on penalty and interest therefore apply afresh for each period.c) Penalty tax is a “penalty” such that the standard of proof is “comfortable satisfaction” The applicant contended that the decision-maker must be “comfortably satisfied” of its decision to impose the rate of penalty tax. This standard is commonly referred to as the ‘Briginshaw principle’[30]. He argued that the Briginshaw principles apply in this matter since the penalty tax imposed under the LT Act can be characterised as a “penalty”, punitive in nature, rather than a tax. He contended that the standard was not met.d) A penalty tax rate of 50% for unpaid post 1 July 2004 land tax is not appropriate, and it should be reduced to 25% (it being agreed that the penalty tax for unpaid pre-July land tax is set by statue at 200% unless remitted)[30] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 350 The applicant contended that the Commissioner should make a decision about the appropriate level of penalty tax each time there was an imposition of land tax, namely quarterly or, in the alternative, for each of the 5 separate periods of rental (see paragraphs 27 and 28 above). The applicant argued that the Commissioner did not properly consider the applicant’s personal circumstances for each quarter and/or for each of the rental periods. While this hearing requires a review of the Commissioner’s decision on its merits and is not a judicial review, the applicant presented some contentions more relevant to the latter. He contended that the Reasons Statement is flawed because various elements of the provisions relevant to penalties and remission are conflated. He said that the reasons are, as a result, inadequate; there is an error of law and the decision should therefore, be set aside.

Ratio Decidendi

Legal Principle Established

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