Kessey v Commissioner for ACT Revenue

Kessey, the applicant, took the Commissioner for ACT Revenue to the Administrative Appeals Tribunal contesting a penalty tax imposed on him for unpaid land tax. The Commissioner had argued that Kessey had failed to pay the land tax for the third quarter of the 2010-11 financial year, and had therefore incurred a penalty tax. Kessey contended that he was not aware of the land tax and that the Commissioner should have matched data to inform him of the tax earlier. The Tribunal was required to determine whether the Commissioner's failure to carry out data matching earlier caused prejudice to Kessey, and whether the penalty tax should be remitted in light of circumstances such as the tenants leaving owing rent and damage to the premises. The Tribunal was also required to decide whether the penalty tax should be imposed at a lesser rate or remitted on the grounds of empathy or leniency.

The Tribunal found that Kessey had not been aware of the land tax and that the Commissioner's failure to match data earlier caused him prejudice. The Tribunal held that the Commissioner had a duty to take reasonable steps to ensure that Kessey was aware of the land tax, and that the failure to do so caused prejudice to Kessey. The Tribunal also found that the circumstances of the case warranted remission of the penalty tax, and that empathy and leniency were relevant considerations in determining whether to remit the penalty tax. The Tribunal held that the penalty tax should be remitted in light of the tenants leaving owing rent and the damage to the premises. The Tribunal further held that the penalty tax should be remitted on the grounds of empathy and leniency, as Kessey had not intentionally or recklessly failed to pay the land tax and had suffered significant financial hardship as a result of the penalty tax.

The Tribunal set aside the decision to impose penalty tax for Q3 of 2010-11 and substituted a decision to impose no penalty tax. The Tribunal confirmed the decision under review in all other respects. The Tribunal emphasised the importance of the Commissioner taking reasonable steps to ensure that taxpayers are aware of their obligations, and the need for empathy and leniency in administering the land tax laws.