Impala Kitchens and Bathrooms Pty Ltd v Chief Commissioner of State Revenue

[2025] NSWCATAD 162

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Impala Kitchens and Bathrooms Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCATAD 162

Hearing dates:

23 June 2025

Date of orders:

07 July 2025

Decision date:

07 July 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

EA MacIntyre, Senior Member

Decision:

The assessments under review are confirmed.

Catchwords:

REVENUE LAW - State taxes - payroll tax - assessment - objection - appeal

REVENUE LAW - penalties - reasonable care -whether tax default due to matters beyond control of taxpayer - remission - Revenue Ruling PTA 036 - Practice Note CPN 024

ADMINISTRATIVE LAW - reviewable decision - correct and preferable decision - Civil and Administrative Tribunal

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Payroll Tax Act 2007 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657

Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126

Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90

Continuum Recruitment Pty Ltd v Chief Commissioner of State Revenue [2024] NSWCATAD 38

Darghaw Pty Ltd & Ors v Chief Commissioner of State Revenue [2024] NSWCATAD 257

Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227

RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue [2004] NSWADT 64

Tacey v Chief Commissioner of State Revenue [2016] NSWCATAD 255

Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Impala Kitchens and Bathrooms Pty Ltd (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Applicant (Self-Represented)
Crown Solicitor (Respondent)

File Number(s):

2025/00050225

Publication restriction:

Nil

REASONS FOR DECISION

1. These proceedings arise out of a dispute between Impala Kitchens and Bathrooms Pty Ltd (“Applicant”) and the Chief Commissioner of State Revenue (“Respondent”) over assessments of penalty tax and interest. The penalty tax and interest were assessed as a result of payroll tax not being paid on time.

2. The Applicant claims that the penalty tax and interest should not be payable.

3. The Respondent, however, says that the Applicant did not take reasonable care. The Respondent also says the circumstances of late payment were not outside the control of the Applicant. For these reasons, the Respondent submits that penalty tax and interest is assessable.

4. The matter for determination is whether the penalty tax and interest assessed should be determined as not being payable or reduced.

Background

5. The Applicant was registered as a company on 21 July 2022.

6. On 16 April 2023, the Respondent sent a letter to the Applicant confirming it's registration for payroll tax from 21 July 2022. The letter said that payroll tax for a month must be paid monthly on the 7th of the following month.

7. On 28 April 2023, the Respondent issued an assessment for payroll tax to the Applicant for the period from 21 July 2022 to 31 January 2023, including penalty tax.

8. On 18 May 2023, the Respondent advised the Applicant in writing that payroll tax for April 2023 was outstanding.

9. On 29 May 2023, the Respondent issued a notice of overdue payroll tax to the Applicant.

10. Further assessments were issued on 5 June 2023 for the periods of February 2023 and April 2023. Each assessment included penalty tax.

11. On 6 July 2023, the Respondent issued a notice of overdue payroll tax. On 7 July 2023, a further notice of overdue payroll tax was issued.

12. On 19 July 2023, the Applicant contacted the Respondent about the amount of outstanding payroll tax and was advised to lodge an annual return for the 2023 year.

13. Further correspondence from the Respondent to the Applicant was sent on the following dates concerning outstanding or overdue payroll tax: 24 July 2023, 12 October 2023, 1 November 2023, 9 November 2023, 16 November 2023, 24 November 2023, 1 December 2023, 7 March 2024, 6 May 2024, 21 May 2024, and 3 June 2024.

14. On 18 June 2024, the Respondent issued a legal notice of pending legal action to the Applicant for the recovery of certain overdue payroll tax. On 8 July 2024, the Respondent issued a final notice for the recovery of certain overdue payroll tax. On 23 July 2024, the Respondent issued another legal notice of pending legal action to the Applicant for the recovery of overdue payroll tax.

15. On 26 July 2024, the Applicant wrote to the Respondent requesting a waiver of penalty tax.

16. On 12 August 2024, the Respondent wrote to the Applicant declining to remit the penalty tax and interest imposed.

17. On 4 September 2024, the Respondent sent to the Applicant a breakdown of the outstanding payroll tax liability, including penalty tax and interest.

18. On 6 September 2024, the Applicant lodged an objection to the decision of the Respondent of 12 August 2024 not to remit penalty tax and interest. On 12 September 2024, the Applicant provided further information in support of their objection.

19. On 9 December 2024, the Respondent disallowed the Applicant’s objection.

20. On 6 February 2025, the Applicant applied to the Civil and Administrative Tribunal (“Tribunal”) seeking review of the Respondent’s disallowance of their objection. That application was filed on 6 February 2025.

21. At the time of hearing of the matter, the Applicant had paid the outstanding payroll tax the subject of these proceedings. Penalty tax and interest had not been paid.

Applicant’s right of review

22. Where tax has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) (“Administration Act”), allows rights of objection to a taxpayer dissatisfied with an assessment. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act).

23. A taxpayer who is dissatisfied with the decision made upon the Respondent’s determination of an objection, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 (“NSW”) (“ADR Act”)of the decision of the Chief Commissioner of State Revenue.

24. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.

25. The onus of proving their case lies with the Applicant (s 100(3) of the Administration Act).

26. The Tribunal, dealing with the taxpayer’s application, may do one or more of the following under s 101 of the Administration Act:

“(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.”

Consideration

Liability for payroll tax

27. Under the Payroll Tax Act 2007 (“PTA”), payroll tax is imposed on all “taxable wages” (s 6). Section 7 of the PTA provides that the employer by whom taxable wages are paid or payable is the person liable to pay payroll tax on the wages. The time when payroll tax is payable is set out in s 9. It must be paid within 7 days after the end of the month in which wages are paid or payable other than for the month of June.

28. Section 9 provides as follows:

“9   When must payroll tax be paid

(1)  A person who is liable to pay payroll tax on taxable wages must pay the tax—

(a)  within 7 days after the end of the month in which those wages were paid or payable, other than the month of June, and

(b)  within 28 days after the end of the month of June in relation to taxable wages paid or payable in the month of June”.

29. Section 87 of the PTA provides for the lodgement of periodic returns for payroll tax. Returns must be lodged within 7 days after the end of each month, except June. They must be lodged within 28 days after the end of June in each year. The return for June must both deal with payroll tax for the month of June and also make any adjustments of payroll tax paid or payable by the employer during the financial year ending on the close of that month.

30. The amount of payroll tax assessed by the Respondent is not in dispute. What is in dispute is the penalty tax and interest levied arising out of late payment of amounts of payroll tax. The correctness of the calculations of penalty tax and interest as a mathematical matter, was not in dispute. What was in dispute was whether the penalty and interest should have been assessed and if so, whether the amounts assessed should be reduced.

Penalty tax

31. Provisions dealing with penalty tax are set out in the Administration Act. Section 27(1) of the Administration Act prescribes the default rate of penalty tax of 25%. It provides as follows:

“27   Amount of penalty tax

(1)  The amount of penalty payable for a tax default is, subject to this Division—

(a)  25% of the amount of tax unpaid, or

(b)  if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth—50% of the amount of tax unpaid”.

32. Penalty tax was assessed at 25% for shortfalls for the period January to May 2023, September 2023, January 2024 and March to May 2024. The Respondent said that the Applicant did not make payment of amounts of payroll tax in issue within the time allowed.

No penalty tax

33. Sections 27(2) and (3), 28, 29 and 30 provide for certain circumstances where the default rate of penalty tax of 25% set out in s 27(1) can be reduced or increased, depending on the application of various considerations set out in those provisions.

34. If the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with a taxation law, s 27(3)(a) allows for a determination that no penalty tax applies. Grounds for such a determination may also arise if a tax default occurred solely because of circumstances beyond the taxpayer’s control (s 27(3)(b)).

35. Section 33 makes provision for the remission of penalty tax. Section 33, as it applies from 1 February 2024, provides as follows:

“33   Remission of penalty tax

(1)  The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit penalty tax by any amount.

(2)  The imposition or remission of interest is not relevant to the imposition or remission of penalty tax”.

36. Penalty tax had been assessed at the rate of 25%. The Respondent justifies the assessments of penalty tax on the basis that, in his submission, the tax defaults in question occurred because the Applicant did not take reasonable care. He also says that the tax defaults did not occur because of circumstances outside the control of the Applicant. The Respondent further says that the assessments of penalty tax were made in accordance with his practices set out in Revenue Ruling PTA 036 (version 3). The Applicant disagrees with these submissions.

37. The Applicant’s case for a finding that no penalty tax should have been assessed is that the Applicant was a newly established company that was not aware of their obligations to lodge payroll tax monthly until they were notified by the Respondent on 16 April 2023. The Applicant further said that they had commenced lodging monthly returns and making payments on time from July 2023.

Did the Applicant take reasonable care?

38. The first question for determination is whether the Applicant took reasonable care in dealing with their payroll tax obligations for the periods in question. Where reasonable care has been taken, s 27(3)(a) of the Administration Act may allow for a determination that penalty tax is not payable. It provides as follows:

“(3)  The Chief Commissioner may determine that no penalty tax is payable in respect of a tax default if the Chief Commissioner is satisfied that—

(a)  the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the taxation law”.

39. What is “reasonable care” to comply with taxation obligations has been described as follows in Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227, following RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue [2004] NSWADT 64, at [95]:

"In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other enquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law."

40. The Applicant gave no evidence to support the proposition that they took reasonable care. They said they were a newly incorporated company and believed that their obligation to lodge payroll tax was an annual obligation and not an obligation to be discharged monthly. These circumstances of themselves do not assist the Tribunal in determining whether or not the Applicant took reasonable care.

41. There was no evidence as to;

1. what advice the Applicant had taken as to their payroll tax obligations;

2. if advice was taken, whether or not the Applicant acted on the advice;

3. what steps they had taken to inform themselves of such obligations, including review of information published by the Respondent on his website;

4. whether the Applicant retained the services of persons with the necessary experience and skills for undertaking payroll tax compliance obligations and if so, why timely compliance had not occurred;

5. the adequacy of the systems the Applicant had in place to discharge compliance obligations.

42. The taking of reasonable care at a minimum requires some steps to have been taken to understand and comply with a taxpayer’s obligations. There was no evidence of any such steps having been taken. The Applicant said that they did not know that monthly return of payroll tax was required until the Respondent informed the Applicant on 16 April 2022 of the requirement. The evidence is that late payment occurred for certain periods after that date. In these circumstances, I am unable to find that the Applicant took reasonable care to comply with their obligations to pay payroll tax in accordance with the PTA.

Were the tax defaults beyond the control of the Applicant?

43. The second question for consideration by the Tribunal is whether circumstances outside the control of the Applicant resulted in the relevant tax defaults. Section 27(3)(b) of the Administration Act may, in this case, allow for a determination that no penalty tax is payable. It provides as follows:

“(3)  The Chief Commissioner may determine that no penalty tax is payable in respect of a tax default if the Chief Commissioner is satisfied that—

…

(b)  the tax default occurred solely because of circumstances beyond the taxpayer’s control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person’s or the taxpayer’s control) but not amounting to financial incapacity”.

44. The Tribunal in Tacey v Chief Commissioner of State Revenue [2016] NSWCATAD 255 described when circumstances beyond the control of a party could arise, referring to the Respondent’s Revenue Ruling PTA 036. The Tribunal said, at [57];

“ … the statutory provision is, under s 64(3) of the ADR Act, to be applied in light of Revenue Ruling PTA 036, version 2, which relevantly states, “Interest may be fully remitted for a late payment tax default if the Chief Commissioner is satisfied that the late payment occurred as a result of circumstances beyond the control of the taxpayer. Examples of circumstances when interest may be remitted in full include, but are not limited to:

• official postal and DX delays

• natural disasters such as a fire or flood”.

45. The Respondent’s Practice Note CPN 024 sets out further examples of circumstances over which the taxpayer has no control, including:

“Events over which a taxpayer has no control include but are not limited to:

a. natural disasters such as fire or flood

b. computer system breakdowns including third party systems such as electronic funds transfer systems

c. illness or death of a principal taxpayer

d. Revenue NSW fault affecting receipt of payment, including processing problems

e. circumstances where it is impossible to lodge or pay on time (excluding financial incapacity including hardship)”.

46. Section 27(3)(b) applies only where the relevant tax default occurs “solely” because of circumstances beyond the taxpayer’s control. A similar provision fell for consideration in Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90. The ACT Administrative Tribunal said, at [35]:

“In order for the provisions of section 31(6)(b) to operate to avoid penalty tax, the cause of that failure to pay tax must first be identified. An outcome (the failure to pay tax) may have several causes, depending on the length of time of the obligation. This appeal tribunal must then be satisfied that the identified cause (or causes, where there are more than one) is the ‘sole’ cause of the failure. Unless all of the causes of the failure are identified and (in the case of a single cause), it is beyond the taxpayers control, or (in the case of multiple causes), all are beyond the taxpayers control the relief under section 31(6)(b) is not available. This necessarily involves consideration of all of the factors which the evidence shows contributed to the issue of the failure to pay payroll tax”.

47. The Tribunal in Continuum Recruitment Pty Ltd v Chief Commissioner of State Revenue [2024] NSWCATAD 38, in considering whether medical problems and workload issues “solely” caused a tax default, said, at [52]:

“While the Tribunal accepts Mr Doyle’s evidence that his daughters suffered from a medical condition which placed financial and emotional strain on the family, there is no evidence as to the nature or timing of their illnesses or how this impacted Mr Doyle’s ability to comply with the Applicant’s obligations. Nor is there any evidence as to the nature or extent of Mr Doyle’s own illness or how that may have affected his ability to meet his obligations. On the state of the evidence the Tribunal simply cannot be satisfied that these factors together with Mr Doyle’s increased workload as a result of the pandemic, which the Tribunal accepts were circumstances beyond the Applicant’s control, solely caused the Applicant’s tax default. By Mr Doyle’s admission, he “wrongly prioritised” his obligations and should have engaged someone to assist the Applicant meet its obligations. As the ACT Civil and Administrative Tribunal said in Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90 at [42], factors such as those are clearly part of the cause for the Applicant’s failure to comply with its obligations and cannot be regarded as being beyond the control of the Applicant though its director”.

48. The evidence does not show that the tax defaults in question occurred for reasons outside the control of the Applicant, whether “solely” on account of such reasons or otherwise. There was no evidence of matters of the kind set out at [45] above or other matters outside the control of the Applicant to explain their late payment of payroll tax. The Applicant said that non-compliance occurred because they did not know of the obligation to pay payroll tax monthly. There was no evidence of matters that stopped the Applicant from obtaining the information necessary to understand their obligations and comply. It cannot, in these circumstances, be said that the tax defaults in question occurred because of circumstances outside the control of the Applicant, whether solely because of such circumstances or otherwise.

48. For the above reasons, I cannot be satisfied that the Applicant’s tax defaults occurred solely (or otherwise) because of circumstances outside their control. Accordingly, I do not see any basis for a determination under s 27(3)(b) that no penalty tax is payable.

Remission under s 33 of the Administration Act

50. Section 33 of the Administration Act contains a broad discretion to remit penalty tax. The discretion allowed under that provision is not subject to the limits set out in s 27 (Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126). Nevertheless, that discretion cannot be exercised in a way that defeats the fundamental legislative objectives of the penalty scheme. Except in “special circumstances”, the general discretion under s 33 should not be exercised beyond the limits in ss 27(3) and 29 when the circumstances giving rise to a remission under s 27(3) of the Administration Act have not been made out (Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657, at [301]).

51. The Respondent's submission was that there were no special circumstances warranting a remission of the penalty tax. Where the Applicant had not taken reasonable care and had not provided any valid basis for failing to comply with their payroll tax obligations, the Respondent’s submission was that it would not be consistent with the objective of the penalty regime in the Administration Act for penalty tax to be remitted.

52. In Darghaw Pty Ltd & Ors v Chief Commissioner of State Revenue [2024] NSWCATAD 257, the Tribunal said, at [80]:

“I agree with the submission made by the Applicants that the discretionary powers set out in s 33 remain broad and unfettered. I also find myself in agreement with the proposition that in light of the broad and unfettered character of the discretion, no fixed rule can be brought to bear precluding an exercise of discretion in all circumstances where there has been an absence of reasonable care. However, in the circumstances of the matter, I do not consider that a full or partial remission of penalty tax under s 33 ought to be made. The absence of reasonable care on the part of the Applicants, though not determinative, remains relevant and persuasive”.

53. I accept the Respondent’s submission that there are no special circumstances or other circumstances to warrant a remission of penalty tax under s 33. The absence of reasonable care on the part of the Applicant, though not determinative, is a relevant matter going against the exercise of discretion under s 33. Further, remission of penalty tax would not be consistent with the general legislative purpose. That purpose is to allow for the remission of penalty tax where reasonable care has been taken or where a tax default occurred because of circumstances outside the control of the taxpayer.

Rate of penalty tax

54. The rate at which penalty tax has been assessed is 25%. This is the default rate set out in s 27 of the Administration Act. That rate can be varied upwards or downwards in particular circumstances. Where disclosure of a tax default has been made before commencement of an investigation, this is a circumstance where a reduction in the rate of penalty tax can be made. I do not see any basis in the evidence set out in the Background above, for a reduction in the rate of penalty tax.

Interest

55. The Respondent can assess interest at both the market rate and the premium rate (s 21 and 22 of the Administration Act). The assessments made included interest calculated at both rates.

56. The Respondent, however, has certain statutory powers to remit interest (s 25 of the Administration Act). That power is discretionary. The Chief Commissioner may issue guidelines setting out how interest must be remitted. If guidelines are issued, interest must be remitted only in accordance with the guidelines.

57. Section 25 in its current form came into effect on 1 February 2024. The provisions allowing for the use of guidelines for remittal of interest took effect from that date. No guidelines have been issued on or after that date. The Respondent sets out in Practice Note CPN 024 his earlier guidelines as to how he will exercise his powers of remission. These guidelines were issued in June 2022 but remain current. Relevantly, they provide as follows:

“When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid.

The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only.

…

Circumstances outside the control of a taxpayer

Where there is evidence that the default was outside the control of the taxpayer (or their representative), the Chief Commissioner may remit interest.  Events over which a taxpayer has no control include but are not limited to:

a. natural disasters such as fire or flood

b. computer system breakdowns including third party systems such as electronic funds transfer systems

c. illness or death of a principal taxpayer

d. Revenue NSW fault affecting receipt of payment, including processing problems

e. circumstances where it is impossible to lodge or pay on time (excluding financial incapacity including hardship).

In cases of financial incapacity, taxpayers may apply for relief in the form of an extension of time to pay, including an instalment arrangement.

Reasonable care taken by the taxpayer

Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to):

a. being honest and forthright when dealing with the Chief Commissioner

b. cooperation with the Chief Commissioner

c. the default is attributable to calculation errors

d. making diligent efforts to understand and comply with the law

e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer's obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits

f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements

g. applying any relevant revenue rulings in good faith

h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling

i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability

j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party.

Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration.

Note: Remission of the premium rate will only occur in special circumstances”.

58. Bathurst CJ in Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126 (“Downer EDI”) considered the reach of the power in s 25 of the Administration Act to remit interest. His Honour did not think there was a relevant limit on the power of the Chief Commissioner to remit interest in s 25 of the Administration Act.

59. Each of the components of interest assessed, however,  requires specific consideration. Those components are made up of interest assessed at the market rate and interest assessed at the premium rate.

60. The rationale for the market rate of interest is described as follows in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 (“Incise Technologies”) and why it should be waived only rarely. The Administrative Decisions Tribunal said, at [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. The Respondent, in CPN 024, contemplates that where the circumstances of non-payment were outside the control of the taxpayer, remission of interest assessed at the market rate may be justified. The initial question is whether the relevant tax defaults arose as a result of circumstances outside the control of the Applicant. I have found that the tax defaults in issue did not occur as a result of circumstances outside the control of the Applicant, whether solely due to such circumstances or otherwise, for the reasons set out at [48]- [49] above. Further, there was nothing in the evidence to show that factors of the kind described at [57] above or other factors outside the control of the Applicant resulted in the tax defaults in issue.

62. The Tribunal in Incise Technologies laid emphasis on fault on the part of the Respondent as grounds for remission. This was a factor that was also found to be of relevance in Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21, at [27].

63. The Applicant said that the Respondent had informed them on 16 April 2022 of the obligation to pay payroll tax monthly and before that time, they did not know this. These are not circumstances that involve fault on the part of the Respondent. It is for the taxpayer to be aware of and comply with its obligations to pay tax when due. This is not an obligation that depends on the Respondent informing a taxpayer of what their obligations are.

64. It is well accepted that interest at the market rate should rarely if ever be waived, because to do so would be to devalue the amount of tax payable. I see no reason to depart from this principle in the present case in light of the matters set out above, in particular because the tax defaults did not occur as a result of circumstances outside the Applicant’s control, whether solely as a result of such circumstances or otherwise as a result of such circumstances and because of the absence of fault on the part of the Respondent. I am unable to identify any other grounds for the remission of the market rate of interest. It follows that the assessment of interest at the market rate is affirmed.

65. The purpose of the premium rate of interest differs from that of the market rate of interest. While the market rate compensates the Respondent for the time value of money that is paid late, the premium rate of interest extracts from the taxpayer something more. It is in the nature of a penalty (Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317, at [443], per Emmett AJA). That difference informs the varying approaches to remission of each kind of interest. While remission of interest assessed at the market rate should be rare, the circumstances in which interest assessed at the premium rate can be remitted are not as restrictive.

66. The Respondent submitted that determining whether remission of the premium rate component is justified involved the question of whether or not the taxpayer took reasonable care to comply with their obligations. There is no express requirement in s 25 for considerations of “reasonable care” to be taken into account in determining whether to remit interest (unlike in the case of s 27 applying to the remission of penalties as discussed above). The Respondent’s guidelines, however, state that “taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements” will be a matter that goes to whether remission should be made.

67. That taking reasonable care is a consideration in determining whether or not interest at the premium rate should be assessed, alongside various other considerations, is well accepted (Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249, at [106])

68. Richmond J in Golden Age said, in accordance with the decision in Downer EDI, that s 25 of the Administration Act, conferred on the Chief Commissioner a broad discretionary power which is not subject to any limit. He went on to say, at [99]-[104];

“Section 25 of the TAA, both before and after its re-enactment, confers on the Commissioner (and on the Court standing in the place of the Commissioner under s 101) a broad discretionary power which is not subject to any limit: Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 at [151].

In the case of an unconfined discretionary power of this nature, the considerations which are relevant to its exercise are determined by reference to the subject matter, scope and purpose of the relevant statute, including the particular provision conferring the discretion: Sanctuary Lakes Pty Ltd v Commissioner of Taxation (2013) 212 FCR 483; [2013] FCAFC 50 at [227] per Griffiths J (Edmonds J agreeing); Giris Pty Ltd v Federal Commissioner of Taxation ([1969] HCA 5; 1969) 119 CLR 365 at 384 per Windeyer J.

In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19, the Appeal Panel observed at [60]-[61] that the market rate component is intended to compensate the Commissioner for not having the benefit of the tax payment from the time it was due, and so approximates the ordinary lending interest rates, whereas the premium rate is a form of penalty which operates as a disincentive to taxpayers to delay tax payments. The view that the premium component is penal in nature has been accepted in later decisions, see eg. Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [443] per Emmett AJA.

In my view it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion.

…

In Incise Technologies, the Appeal Panel identified (reflecting a submission made by the Commissioner in that case) four cumulative criteria which are relevant to the exercise of the discretion under s 25:

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

(2) There has been cooperation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;

(3) Such cooperation has occurred prior to any investigation being commenced by the Commissioner or, at the very least, within a reasonable time after the request for information had been made by the Commissioner; and

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

The Appeal Panel noted in Incise Technologies at [63] that the first of these criteria could be clarified to be “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” and that while they were all relevant and appropriate matters for consideration, they were not exhaustive. That the four criteria are not exhaustive has been confirmed in subsequent cases, eg. Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [179] and Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 at [105]- [106]”.

69. The Court in Golden Age affirms the approach to remission set out in the earlier cases and concludes that it was appropriate to remit the premium component in full, in circumstances where all four of the above criteria were satisfied. Further, the taxpayer was found to have taken reasonable care. The taxpayer had sought advice from a firm of solicitors and acted upon that advice. Non-payment of tax had occurred as a result of an oversight by the advisor.

70. The question of whether the premium component of interest should be remitted, however, is not limited to consideration of whether or not a taxpayer has taken reasonable care. In Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54, the Appeal Panel said, at [81] – [82]:

“Factors such as whether a taxpayer took reasonable care or whether there were exceptional circumstances are not irrelevant and the Tribunal was entitled to place great weight on them. Nevertheless, remission of interest is not an “all or nothing” exercise. Further, the degree of a taxpayer’s culpability is material. An assessment of the appellant’s culpability is not limited to whether he took reasonable care or whether there were exceptional circumstances.

It follows that by asking only whether there was reasonable care or exceptional circumstances and not asking whether there were any personal circumstances of the appellant apparent from the materials before it, relevant to establishing the degree of culpability other than the failure to meet his statutory obligations that may warrant remission, the Tribunal asked the wrong question”.

71. The evidence does not show that the Applicant took reasonable care nor that the tax defaults in question resulted from circumstances outside their control. There was no evidence of any exceptional circumstances. To the extent that the Applicant was a newly incorporated entity and had not taken steps to understand their obligation to remit payroll tax monthly, these are not exceptional circumstances. Nor do I find evidence of personal or other circumstances that warrant a remittal of premium interest in whole or part.

Conclusions

72. The onus is on the Applicant to show, on the balance of probabilities, that the evidence establishes the findings of fact necessary to enable the Tribunal to remit penalty tax and interest. They have not done so. For the reasons set out at [42], [48], [53], [61], [63] and [71] above, the Respondent’s assessments under review are confirmed.

Orders

1. The assessments under review are confirmed.

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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: 07 July 2025