Karazincir v Chief Commissioner of State Revenue

[2025] NSWCATAD 138

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Karazincir v Chief Commissioner of State Revenue [2025] NSWCATAD 138

Hearing dates:

19 May 2025

Date of orders:

13 June 2025

Decision date:

13 June 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

E A MacIntyre, Senior Member

Decision:

The assessments of the Respondent under review are confirmed.

Catchwords:

ADMINISTRATIVE LAW - administrative review - assessment - objection - review by Civil and Administrative Tribunal

STATE TAXES - surcharge purchaser duty - tax default - interest - market rate - premium rate - penalties - remission - discretion - circumstances beyond control of taxpayer -reasonable care - exceptional circumstances - personal circumstances

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Duties Act 1997 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

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

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19

Denton v Chief Commissioner of State Revenue [2024] NSWCATAD 206

Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249

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

Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317

Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21

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

Category:

Principal judgment

Parties:

Ata Karazincir (First Applicant)
Simge Karazincir (Second Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Oncu Lawyers (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2025/00040283

Publication restriction:

None

REASONS FOR DECISION

1. This is an application for review of a decision of the Chief Commissioner of State Revenue (the “Respondent”) to assess interest and penalty tax on unpaid amounts of surcharge purchaser duty. The Respondent's submission is that one of the applicants is liable for that interest and penalty tax. The applicants, however, disagree with the assessment of interest and penalty tax.

Background

2. The applicants in these proceedings are Ata Karazincir and his wife Simge Karazincir. It was agreed that Ata Karazincir had a liability to surcharge purchaser duty but Simge Karazincir did not. Ata Karazincir, as the party liable, will be referred to as the “Applicant” in these reasons.

3. The Applicant was a citizen of Turkey (now known as Turkiye) at all relevant times.

4. On 10 February 2021, he was granted a partner visa. That visa lapsed because he did not enter Australia within one year. On 27 August 2023, he was granted another partner visa. The Respondent treated that visa as a permanent visa.

5. On 27 August 2022, both applicants entered into a contract for the purchase of a property. They purchased the property as joint tenants. On 19 October 2022, settlement occurred.

6. On 29 August 2022, a Purchaser/Transferee declaration was completed. This is a declaration which is completed by each person entering into a transaction that results in the acquisition of land in NSW.

7. In questions 1.9 and 1.10 in the Purchaser/Transferee declaration, the Applicant declared that Australia was his country of tax residence and Turkey was his country of citizenship.

8. Question 2.1 asked: “Is the purchaser/transferee a foreign person?”. The Applicant answered “no”. He also ticked the box to indicate that he was an Australian citizen. It was agreed that both answers were incorrect.

9. During the 12 month period prior to exchange of the contract, the Applicant was in Australia for 45 days. In the 12 month period following the purchase, he was in Australia for 64 days.

10. On 18 March 2023, a contract for the purchase of a second property was exchanged. Both applicants were the purchasers as tenants in common in equal shares.

11. On 19 April 2023, the Applicant completed a Purchaser/Transferee declaration for the second property. It was in the same form as the earlier Purchaser/Transferee declaration. In answer to question 2.1, “Is the purchaser/transferee a foreign person?”, the Applicant answered “no”. He also ticked the box to indicate that he was a person who is “ordinarily resident in Australia”. It was agreed that both answers were incorrect.

12. The contract for the purchase of the second property settled on 8 June 2023.

13. In the 12 month period prior to the exchange of contracts for the second property, the Applicant was in Australia for 85 days. In the 12 month period following exchange, he was in Australia for 51 days.

14. The Purchaser/Transferee declarations required acknowledgment that it was an offence to give false and misleading information.

15. On 30 August 2024, the Respondent issued a notice of investigation to the applicants in respect of a potential liability for surcharge purchaser duty for the purchase of both properties.

16. Following an investigation, the Respondent issued notices of assessment in respect of the purchase of both properties. This happened on 11 September 2024. The notices included assessments of surcharge purchaser duty and penalty tax. The amount of penalty tax had been reduced from 25% to 20%. The assessments also included interest, assessed both at the market rate and the premium rate.

17. The amounts of the assessments were paid by the Applicant on 28 September 2024.

18. On 3 October 2024, the Applicant’s solicitor lodged an objection to the assessments. On 4 December 2024, the Respondent disallowed the Applicant’s objection.

19. By application dated 31 January 2025, the Applicant sought administrative review of the Respondent’s decision by the Civil and Administrative Tribunal (“Tribunal”). This is the application for review before the Tribunal in these proceedings.

Applicant’s rights of review

20. 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). On the facts at hand, that determination happened by 4 December 2024.

21. 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)of the decision of the Chief Commissioner of State Revenue. These circumstances have arisen in the present matter as set out above, so bringing the matter within the jurisdiction of the Tribunal.

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

23. 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

24. Surcharge purchaser duty is chargeable on a transfer or an agreement for sale or transfer of certain property to a foreign person (Duties Act 1997 (NSW) (“Duties Act”), s 104L). Who is a “foreign person” is defined in s 104J. Section 104J provides that a “foreign person” is “a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section”.

25. Section 4 of the Foreign Acquisitions and Takeovers Act 1975 (“Cth”) (“FATA”) defines a “foreign person” to include an individual not “ordinarily resident in Australia”. Section 5 of the FATA provides that an individual who is not an Australian citizen is “ordinarily resident in Australia” at a particular time if certain requirements are satisfied, including minimum periods during which the individual must be in Australia. Section 104J(2)(a) of the Duties Act goes on to make the following modifications to that definition:

"foreign person" in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth is modified as follows-

(a) an Australian citizen is taken to be ordinarily resident in Australia, whether or not the person is ordinarily resident in Australia under that definition..”

26. What follows is that the definition of a “foreign person” will not include an Australian citizen and a person “ordinarily resident in Australia” within the meaning of s 5 of the FATA.

27. The Applicant’s liability for surcharge purchaser duty was not in dispute. The matters for determination were whether interest and penalty tax had been properly assessed.

28. Surcharge purchaser duty is payable within 3 months of execution of contracts on which it is charged. This did not happen for both contracts in this matter. In circumstances where a tax liability has not been discharged within the required period, a “tax default” arises. That tax defaults have arisen is not in dispute.

29. The Respondent submitted that the tax defaults in the present matter, namely non-payment of surcharge purchaser duty when due, allowed him to assess interest and penalty tax on the unpaid surcharge purchaser duty. The Applicant disagrees.

Interest

30. 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.

31. 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.

32. 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 (“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”.

33. 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.

34. 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.

35. 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”.

36. 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.

37. The tax defaults in question occurred because of wrong information being included in the two Purchaser/Transferee declarations in evidence. They contained erroneous descriptions of the Applicant. The result of these errors was that the Applicant was not identified as a “foreign person”, even though that is what he was. Had correct information been included in both declarations so that the Applicant could be correctly identified as a “foreign person”, surcharge purchaser duty should have been assessed, and no tax defaults would have occurred.

38. The Applicant has not shown that circumstances outside of his control resulted in the wrong information being included in the Purchaser/Transferee declarations. I am unable, as a consequence, to find that the tax defaults occurred as a result of circumstances outside the control of the Applicant.

39. 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]. There is no evidence that there was any fault on the part of the Respondent resulting in the tax defaults in question occurring (see further [63]-[66] below).

40. 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 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.

41. 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.

42. 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 his 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 below). 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.

43. 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]) (“Golden Age”). What “reasonable care” to comply with taxation obligations means 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."

44. Richmond J in Golden Age said in accordance with the decision in Downer EDI, that s 25 of the Administration Act, conferred on the 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]”.

45. 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. 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.

46. In the matter at hand, there were erroneous statements made to the Respondent. Those erroneous statements resulted in the failure to assess surcharge purchaser duty.

47. In the first Purchaser/Transferee declaration he made, the Applicant represented that he was an Australian citizen at the relevant time, when he was not. In the second Purchaser/Transferee declaration he made, he declared that he was a person who is ordinarily resident in Australia, even though he was not. Each was a basis for a claim that he was not a “foreign person” liable for surcharge purchaser duty.

48. Whether the Applicant was liable for surcharge purchaser duty depended on whether he was, in fact, a “foreign person”. In both declarations, the Applicant declared that he was not a “foreign person”. This was also not a correct statement.

49. The Applicant’s submission is that despite the errors in both declarations, his answers to questions in the Purchaser/Transferee declarations and disclosure of his passport and visa status, were sufficient to communicate his status as a “foreign person”. He had produced copies of his Turkish passport and visa information to the Respondent.

50. The Applicant had, in the first Purchaser/Transferee declaration, said that he was in Australian citizen, but he had also said that he was a Turkish citizen. The copy of his passport also showed that he was a citizen of Turkey.

51. The second Purchaser/Transferee declaration also said that the Applicant was a Turkish citizen. He did not claim to be an Australian citizen in the second Purchaser/Transferee declaration as he had previously done, but he claimed not to be a “foreign person”, on the basis that he was “ordinarily resident in Australia”.

52. The Applicant’s further submission was that in both of his Purchaser/Transferee declarations, disclosure of his visa number and class sufficiently communicated that he was a “foreign person”.

53. I do not think that the information set out in each Purchaser/Transferee declaration was sufficient to identify the Applicant as a “foreign person”. In both Purchaser/Transferee declarations, the Applicant said that he was not a “foreign person”. That answer was categorical.

54. The Respondent submitted that disclosure of Turkish citizenship, of itself, did not provide the information required to determine the status of the Applicant. In the first Purchaser/Transferee declaration had said that he was also an Australian citizen. If he had been a dual national also holding Australian citizenship, disclosure that he was a citizen of Turkey was, in the Respondent’s submission, not sufficient to inform the Respondent of the Applicant’s status and inform the Respondent that the Applicant was a “foreign person”. I accept the Respondent’s submission.

55. However, declaring Australian citizenship and at the same time providing visa details appears inconsistent. Nevertheless, holding a visa does not make a person a “foreign person” if they happen to be “ordinarily resident in Australia”, (as the Applicant claimed he was, in the second Purchaser/Transferee declaration). The Applicant also stated that he was not a “foreign person” in the first (and second) Purchaser/Transferee declaration. I do not think in these circumstances that the discrepancies in the information contained in the first Purchaser/Transferee declaration necessarily meant that the Applicant was saying that he was a “foreign person”.

56. In the second Purchaser/ Transferee declaration, the Applicant said he was a Turkish citizen. He did not, unlike in his earlier declaration, say that he was also an Australian citizen. However, he claimed to be “ordinarily resident in Australia”. This was the alternative basis contemplated by the Purchaser/Transferee declaration for a claim that a taxpayer was not a “foreign person”. I cannot see anything in these disclosures that could have informed the Respondent that the Applicant was a “foreign person”.

57. He had also said (in both declarations), in answer to question 2.2, that he was not an “exempt permanent resident who will occupy the property as their principal place of residence for a continuous period of 200 days within the first 12 months after the liability date”. The answer does not indicate, one way or the other, whether the Applicant was or was not a “foreign person” in circumstances where the Applicant had already said that he was not a “foreign person”.

58. The Applicant's claim was that the incorrect answers given were the result of a “clerical error”. Whatever the cause of the errors, the errors made resulted in the Respondent not assessing surcharge purchaser duty. Further, the Applicant made erroneous declarations not once but twice. Making wrong declarations twice in succession indicates something more than a simple “clerical error”. These are circumstances that, in my opinion, evidence a lack of reasonable care.

59. The taking of and acting on legal advice and reliance on information published by the Respondent may be relevant to determining whether or not a taxpayer has taken reasonable care. There was no evidence to indicate whether or not the taxpayer had done so. Consequently, these are not matters that can have a bearing on the question of whether or not reasonable care had been taken in the present case.

60. I am unable to find that the Applicant has discharged the onus of proof to show that reasonable care was taken, in circumstances where material errors were made in the Purchaser/Transferee declarations. These errors had the consequence of surcharge purchaser duty not being assessed. I am able to distinguish the facts of Golden Age from those of the present case on the basis that in Golden Age, no factually erroneous information had been provided to the Respondent. This is not a case where the Applicant “made diligent efforts to read and understand the material” (Denton v Chief Commissioner of State Revenue [2024] NSWCATAD 206).

61. In Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54, the Appeal Panel said that the enquiry went beyond asking “whether there was reasonable care or exceptional circumstances”. The question for the Tribunal was “whether there were any personal circumstances …. 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”. I am unable to find, on the basis of the evidence, any “exceptional circumstances” or “personal circumstances” that could allow for a remission of interest assessed at the premium rate. No matters of fact establishing circumstances of these kinds were in evidence.

62. I understood the Applicant’s submission to be that the Respondent was required to verify information given to him before making an assessment of tax and that not having done so, there were grounds for remission. If he was saying that there was fault on the Respondent’s part by not verifying the information he was given before assessing tax, I am unable to agree.

63. Section 10 of the Administration Act provides that a “person who is liable to pay tax under a taxation law must, before or at the time an assessment of the tax liability is made, fully and truly disclose to the Chief Commissioner all the facts and circumstances affecting the tax liability under the relevant taxation law”. The Purchaser/Transferee declaration form, in turn, notifies the taxpayer: “Under the Taxation Administration Act 1996, you are required to provide all relevant information to enable duty to be assessed on a dutiable transaction”.

64. The onus is on the taxpayer to ensure that the Respondent receives relevant information that is accurate, before or at the time of an assessment, including information provided in the declarations made to the Respondent.

65. The Respondent has powers to require the provision of information under s 72 of the Administration Act. However, there is nothing in the Administration Act or elsewhere to indicate that the Respondent’s power to assess a liability to tax requires the Respondent to use these powers to verify the information provided by the taxpayer before making an assessment in the manner submitted by the Applicant.

66. Even if there was at least one obvious inconsistency in the first Purchaser/Transferee declaration made by the Applicant, namely declaring Australian citizenship and also his visa number and class, I do not think this created an obligation on the part of the Respondent to immediately investigate the matter. The Applicant had categorically stated that he was not a “foreign person”.

67. The assessment of interest at the premium rate is, for the reasons set out above, affirmed.

Penalty tax

68. The Respondent’s power to assess penalty tax arises under s 26 of the Administration Act. It is imposed in addition to interest. The Administration Act expressly provides that the imposition or remission of interest is not relevant to the imposition or remission of penalty tax (s 33(2); see also s 25(4)).

69. The amount of penalty tax payable for a tax default is relevantly set at a default rate of 25% of the amount of tax unpaid (s 27). The Respondent has the power to make certain variations to the amount of penalty tax. He may increase the amount of penalty tax in certain circumstances based on the degree of culpability of the taxpayer that are not presently relevant. The Respondent in addition has the power to reduce the amount of penalty tax by 20% if, after the Respondent informs the taxpayer that an investigation relating to the taxpayer is to be carried out and before it is completed, the taxpayer discloses to the Respondent, in writing, sufficient information to enable the nature and extent of the tax default to be determined (s 29). This happened and the rate of penalty tax was reduced to 20%.

70. The Respondent’s guidelines as set out in CPN 024 are as follows:

“Penalty tax is generally imposed after all the facts and circumstances surrounding the tax default are considered. In certain circumstances the Chief Commissioner may increase the rate of penalty tax or determine that no penalty tax is payable.

A liability to penalty tax arises when a tax default occurs. Penalty tax is in addition to interest. The amount of penalty tax is 25% of the amount of unpaid tax or 50% if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth. The Chief Commissioner may increase the amount of penalty tax to 75% of the unpaid tax if the tax default was caused wholly or partly by the intentional disregard of the taxation law. Penalty tax may be reduced if a taxpayer makes or voluntary disclosure of a tax default before or during an investigation.

…..

The Chief Commissioner also has a general discretion to remit penalty tax by any amount in such circumstances as the Chief Commissioner considers appropriate (s 33 of the TAA).

Where there is evidence that the taxpayer (or their representative) took reasonable care to comply with the taxation law, or the tax default occurred solely because of circumstances beyond their control (excluding financial incapacity), the Chief Commissioner will usually determine that no penalty tax is payable”.

71. The Respondent has a power to determine that no penalty tax is payable in respect of a tax default under s 27(3)(a). He may exercise that power if satisfied that the taxpayer or a person acting on behalf of the taxpayer, took “reasonable care” to comply with the taxation law. The Respondent did not use his power to remit penalty tax. In the absence of reasonable care having been taken by the Applicants (see [60] above), I do not think that s 27(3)(a) has application in the present circumstances.

72. Section 27(3)(b) of the Administration Act provides that the Respondent may determine that no penalty tax is payable if the tax default occurred solely because of circumstances beyond the control of the Applicant or a person acting on behalf of the Applicant. Section 27(3)(b) explicitly requires that the tax default be “solely” caused by circumstances beyond the control of the Applicant.

73. The evidence does not allow for a conclusion to be drawn that the Applicant’s tax defaults were caused “solely” by circumstances beyond his control. I have found that the tax defaults in question arose for reasons other than matters outside the control of the Applicant (see [38] above). That the relevant power can only be exercised when the tax default was caused “solely” by circumstances beyond the control of the Applicants, clearly precludes its operation. I am therefore of the opinion that the power of remission allowed under s 27(3)(b) has no application in the present matter.

74. A separate power to remit penalty tax is allowed under s 33 of the Administration Act. The Court of Appeal in Downer EDI considered that the power of remission under s 33 was not limited either expressly or by necessary implication by the mandatory reductions required by ss 28 and 29 of the Administration Act. Bathurst CJ said:

“ …. it does not seem to me that the power in s 33 of the TAA to remit penalty tax “in such circumstances as the Chief Commissioner considers appropriate” is limited either expressly or by necessary implication by the mandatory reductions required by ss 28 and 29. These mandatory reductions are a relevant matter for the Commissioner to take into account in considering whether to exercise the power to remit in s 33 but they do not limit that power.

As the Chief Commissioner pointed out, in Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue Ward CJ in Eq stated at [301] that 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 TAA had not been made out. However that was a matter of discretion not power”.

75. The discretionary powers set out in s 33 remain broad and unfettered. 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. Despite the broad and unfettered discretion allowed under s 33, limits on its exercise nevertheless can arise, in that that discretion cannot be exercised in a way that defeats the fundamental legislative objectives of the penalty scheme.

76. 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 Applicant is not determinative but relevant and on the facts at hand, persuasive. I place considerable weight on the erroneous statements made to the Respondent, together with the other matters I have found going to the absence of reasonable care at [59] above.

77. The Respondent has assessed penalty tax at the default rate of 20%. He has not imposed penalty tax at higher rates applicable where the taxpayer’s degree of fault goes beyond a lack of reasonable care. I consider that the Respondent was correct in doing so, on the basis of the evidence before the Tribunal.

Conclusions

78. For the reasons set out above, the assessments of the Respondent are confirmed.

Orders

1. The assessments of the Respondent 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: 13 June 2025