Market Square (Queensland) Pty Ltd v Commissioner of State Revenue
[2013] QCAT 578
| CITATION: | Market Square (Queensland) Pty Ltd v Commissioner of State Revenue [2013] QCAT 578 |
| PARTIES: | Market Square (Queensland) Pty Ltd as Trustee for the Market Square Unit Trust (Applicant) |
| v | |
| Commissioner of State Revenue (Respondent) |
| APPLICATION NUMBER: | GAR381-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 28 May 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | G Quinlivan, Member |
| DELIVERED ON: | 14 November 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The application to dismiss or strike out the application to review, in so far as it relates to assessment notice number 503 739 567 is granted. |
| CATCHWORDS: | General administrative review matters – Application to review assessment of duty – Non-payment of assessed duty – jurisdiction of Tribunal Taxation Administration Act 2001 s 69 Fleri v Commissioner of State Revenue [2012] QCAT 135 Cowie v Commissioner of State Revenue [2012] QCAT 612 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Market Square (Queensland) Pty Ltd represented by Mr PG Bickford of counsel and Mr A Knox |
| RESPONDENT: | Commissioner of State Revenue represented by RW Campbell of counsel and Ms Erin Mitchell. |
REASONS FOR DECISION
On 22 September 2011 the Commissioner of State Revenue issued default assessments under the Duties Act 2001 in respect of 3 trust surrenders:
a) Assessment 503739567 – surrender of NBA Varsity Lakes interest in the Market Square Unit Trusts;
b) Assessment 503739591 – surrender of Jones interest in the Market Square Unit Trust;
c) Assessment 503739666 – surrender of Rose’s interest in the Market Square Unit Trust.
On 12 November 2012 Market Square (Queensland) Pty Ltd ATF Market Square Unit Trust filed an application to review the decision of the Commissioner, disallowing in part an objection against the 3 assessments of duty imposed upon surrender of the trust interests.
The Commissioner does not contest the jurisdiction of QCAT to review the decision of the Commissioner in relation to assessment numbers 503739591 and 503739666.
In relation to the decision of the Commissioner regarding assessment number 503739567 the Commissioner argues that the application for review should be dismissed, as far as it relates to this assessment because of the provisions of section 47 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
The Commissioner refers to the decision of Izard V Cairns Regional Council [2010] QCAT 410 where Tribunal Member Allen determined that if the Tribunal has no jurisdiction to hear an application then that will be grounds for striking out the application.
The Commissioner argues that Market Square has failed to activate the review jurisdiction of QCAT under section 69 of the Taxation Administration Act 2001 (Qld) (TA Act) because the applicant failed to pay “the whole of the amount of tax and late payment interest payable under the assessment notice pertaining to NBA and to have applied to QCAT to review the assessment decision within 60 days of notification of that decision. Section 69 provides:
69 Right of appeal or review
(1) This section applies to a taxpayer if—
(a) the taxpayer is dissatisfied with the commissioner’s decision on the taxpayer’s objection; and
(b) the taxpayer has paid the whole of the amount of the tax and late payment interest payable under the assessment to which the decision relates.
(2) The taxpayer may, within 60 days after notice is given to the taxpayer of the commissioner’s decision on the objection—
(a) appeal to the Supreme Court; or
(b) apply, as provided under the QCAT Act, to QCAT for a review of the commissioner’s decision.
(3) QCAT may not, under the QCAT Act, section 61(1)(a), extend the period under subsection (2) within which the taxpayer may apply to QCAT for the review.
Market Square contends that QCAT should dismiss the application of the Commissioner on the basis that section 69 of the TA Act was complied with in relation to payment of duty and late interest payable with respect to assessment number 503739567 and in any event section 69(2) did not require such payment to be made within 60 days.
Market Square’s argument
Market Square through its legal representatives says that the relevant facts in connection with the Commissioner’s application can be summarised as follows:
a) The relevant assessment number 503739567 was issued on 5 October 2012 to McInnes Wilson Lawyers for Market Square.
b) The amount payable as at 5 October 2012 was $141,319.78.
c) The unpaid tax interest start date was 17 August 2007.
d) Particulars of the calculation of the amount allegedly payable was set out in tabular form on the first page of the assessment notice.
e) Immediately underneath the table appeared the following statement:
“All tax and additional UTI must be paid by 5 November 2012. If not paid by this date recovery action will commence”.
f) On the third page of the reassessment notice also in tabular form appeared a calculation of the unpaid tax interest.
g) The unpaid tax interest payable as at 5 October 2012 was $49,252.50.
h) Under the heading late payment information appeared the following:
“Late payment interest accrues at the rate of 11.66% per annum on any unpaid primary tax each Sunday following the issue date of this assessment or the UTI start date, which ever is the later.”
For example in this assessment:
If you pay on or before 6/10/2012, no payment interest will be payable. After 6/10/2012 but on or before 13/10/2012, late payment interest of $51.00 will be payable after 13/10/2012, additional late payment interest of $178.00 will be payable each Sunday thereafter.
i) On 2 November 2012 McDonald Balanda & Associates on behalf of Market Square, forwarded to the Office of State Revenue proof of payment in an amount of $141,855.28 paid into the Commonwealth Bank account of the Commissioner on 2 November 2012 comprising the amount of the assessment of $141,319.78 and interest of $535.00 calculated up to Monday, 5 November 2012.
j) The payment was made subject to reservation of all rights to appeal the assessments or to apply for a reversal of the decisions. McDonald Balanda & Associates sought acknowledgement of receipt of the payment.
k) A receipt issued from the Office of State Revenue dated 23 November 2012 acknowledging receipt of the amount with a receipt date of 6 November 2012. The payment was allocated as follows: $141,268.78, the amount of the default assessment and $586.00 UTI.
l) The incomplete document at attachment B to annexure A does not on the face of it convey any useful information.
m) According to the Commissioner payment was short by the amount of $51.00 for reasons explained in annexure A.
n) A further payment of $51.00 was made on 15 November 2012 with a receipt number 344045627 issued on 16 January 2013 acknowledging receipt of that amount paid by cheque.
o) The schedules which appear at attachment F to annexure A appear to provide something of a summary of the calculation of interest and penalty and the allocation of payments received by the Commissioner from the applicant.
Market Square submit that section 17 of the QCAT Act provides generally that the Tribunal’s review jurisdiction is the jurisdiction conferred on the Tribunal by an enabling Act to review a decision made or taken to have been made by another entity under the Act. Section 18 provides that QCAT may exercise its review jurisdiction if a person has under the Act applied to the Tribunal to exercise its review jurisdiction for a reviewable decision.
Based on their analysis, Market Square submit that the following issues need to be resolved in this application:
a) whether Market Square did pay the whole of the amount of the tax and late payment interest payable under the assessment to which the decision relates for the purposes of sub paragraph 69(1)(b) of the TA Act;
b) whether any failure by Market Square to pay the whole of the amount of tax and late payment interest payable under the assessment to which the decision relates was so small as to be de minimis;
c) alternatively whether QCAT has power to waive compliance with any procedural requirement under the TA Act pursuant to sub paragraph 61(1)(c) of the QCAT Act in relation to any short or late payment by the applicant of the amount of tax and late payment interest payable under the assessment to which the decision relates.
Market Square accepts that section 69 of the TA Act is the relevant provision for the resolution of the matters raised by the Commissioner.
There appears to be no dispute that a payment of $141,855.28 was made by Market Square to the Commissioner on 2 November 2012.
There is a dispute as to whether this involved a shortfall of $51.00.
Market Square contends that the Commissioner’s case can be summarised as follows:
a) As payment was made on 2 November 2012 additional late payment interest was not detailed on the assessment that issued.
b) $51.00 in late payment interest accrued in respect of the week ending 7 October 2012.
c) $178.50 late payment interest accrued in respect of each of the 3 Sundays after that whilst payments remained outstanding.
d) The total amount of late payment interest payable on 2 November was $586.50. Market Square says that the information in regard to late payment set out on page 3 of the reassessment notice is ambiguous in that it contains the suggestion that if payment is made after 13 October 2012 additional late payment interest would involve a figure of $178.00 for each Sunday after 13 October 2012. They say there were 3 Sundays after 13 October before payment was made on 2 November 2012, which would involve a total amount of $535.50.
Market Square say that they paid the amount referred to in their reassessment notice and the late payment interest indicated as payable under the information contained on page 3 of the reassessment notice of $535.50 on 2 November 2012.
They then point out that the Commissioner says that the information in the notice should be read as follows:
a) That an amount of $51.00 was payable for the period between the date of the issue of the reassessment notice being 5 October 2012 and the first Sunday in October being 7 October 2012 that further amounts of $178.50 were payable for each subsequent Sunday in October before the payment was made on 2 November 2012.
Market Square disputes this interpretation of the information contained under the heading “late payment information” and indicate that it is not the understanding which they had at the time of payment.
Further, Market Square say that as soon as possible after the Commissioner notified Market Square of the alleged short payment of $51.00 that payment was made on 12 November 2012 and was received by the Commissioner on 15 November 2012.
They contend that there is now no dispute as far as they are concerned that there is any amount payable for tax and late payment interest under the relevant assessment.
In essence, Market Square suggest that the Commissioner’s case seems to be that because the payment was not made within 60 days after notice was given to the taxpayer of the Commissioner’s decision, the Tribunal has no jurisdiction to deal with the objection.
They say that the amount of $51.00 was received no later than 15 November 2012 and that Market Square’s application was filed on 12 November 2012 being the last day for filing the application within the 60 day period referred to in subsection 69(2) of the TA Act.
What does section 69 mean?
Market Square submits that all section 69 requires is that “the whole of the amount of the tax and late payment interest payable under the assessment to which the decision relates is paid”. They claim that there is no specific requirement that payment in full of the whole of the amount of the tax and late payment interest payable under the assessment is to be made within 60 days after “notice is given to the tax payer of the Commissioner’s decision on the objection”.
Market Square argue that the proper interpretation of section 69 is that a right to pursue an appeal/review arises when 2 criteria are met as follows:
a) that the tax payer is dissatisfied with the Commissioner’s decision on the taxation objection;
b) that the taxpayer has paid the whole of the amount of the tax and interest payable under the assessment to which the decision relates.
Further, those payments should be made within the timeframe set out in the assessment to which the objection relates or, alternatively, within such further time as the Commissioner might allow. In either event the appeal/review cannot be pursued by the taxpayer until payment has been made.
They then say the proper construction of subsection 69(2) is that the tax payer has only 60 days after notice is given of the Commissioner’s decision to either appeal to the Supreme Court or apply to QCAT for a review of the Commissioner’s decision.
Market Square also seeks to rely on the principle encapsulated in the legal maxim de minimis non curat lex which means “the law does not concern itself with trifling matters”. Market Square acknowledges that this issue will normally arise with words such as “exclusively” “solely” and “only” are used in legislation. However they submit that whether the maxim will apply depends on the view taken by the Tribunal of the legislative intent and a value judgment of how trifling the action in question might be.
They contend that the Commissioner’s case is that the applicants short paid by $51.00 the amount of tax and late payment interest payable under the assessment to which the decision relates. Although 3 days late, the amount of $51.00 was paid on 15 November 2012. They say that the total amount payable according to the Commissioner on or before 12 November 2011 was $141,906.28 made up of the assessment notice of $141,319.78 plus a further $586.50 unpaid interest. They point out that the Commissioner made no attempt to notify Market Square that there had been any form of short payment prior to 12 November 2012. They claim that the short payment of $51.00 in an amount of tax payable of $141,906.20 is on any view of the matter de minimis.
As a consequence they strongly submit that QCAT does have jurisdiction to deal with the matter and on a proper construction of section 69 of the TA Act the “whole of the amount of tax and late payment interest payable under the assessment to which the decision relates” was paid by the applicant.
The next argument raised by Market Square relates to whether substantial compliance is sufficient in the context of section 69. They refer to the decision of Project Blue Sky Inc.[1]
[1]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78] - [79].
Having regard to the principles established in Project Blue Sky they submit that the issue to be determined in this case relates to whether tax payers should not be able to pursue an appeal or review in either the Supreme Court or QCAT unless they have paid the whole of the amount of tax and late payment interest payable under the assessment to which the decision relates.
They claim that in this case there is no doubt that the whole of the amount of tax and late payment interest has been paid and the only issue is whether or not that payment was made outside of 60 days from the date when the notice of the decision on objection was given to the taxpayer.
The last day for filing the application for review was 12 November 2012 and the application was filed on that date. The further amount of $51.00 was paid on 15 November 2012.
The relevance of section 61 of the QCAT Act
Market Square seek to distinguish the decisions in Fleri[2] and Cowie[3] where the Tribunal was satisfied that it did not have jurisdiction and therefore could not exercise any of the powers under section 61 of the Act.
[2] Fleri v Commissioner of State Revenue [2012] QCAT 135.
[3] Cowie v Commissioner of State Revenue [2012] QCAT 612.
Market Square argues that that may have been correct in circumstances where the relevant tax and late payment interest payable under the relevant assessment had not been paid at the time the Tribunal was dealing with the application by the Commissioner to strike out under section 47 of the QCAT Act. They say that Market Square’s application was properly brought before the Tribunal in relation to at least 2 of the decisions by the Commissioner on objections to default assessment notices and as a result QCAT does have jurisdiction to deal with Market Square’s application. On the same basis therefore there is no reason why the Tribunal cannot exercise its powers under subsection 61(1)(c) to waive compliance with a procedural requirement under the TA Act.
They submit that if QCAT decides that the requirements of section 69 of the TA Act were not met on this occasion because the Tribunal forms a view that the whole of the tax and late payment interest payable were not paid within 60 days after the notice was given to the applicant then QCAT has jurisdiction to waive compliance with the procedural requirement to pay the whole of the amount of the tax and late payment interest within 60 days provided that a proper case for so doing is made by them. This means on their submission that a proper case is clearly made here because the payment was made on 15 November only 3 days after the 60 days expired.
They argue that section 69 is directed to the possibility that taxpayers may seek to pursue appeals or reviews in either the Supreme Court or QCAT without paying the whole of the amount of tax and late payment payable under the assessment to which the decision relates. On their argument the requirement to make the payment within 60 days after notice is given to a taxpayer is purely procedural. The consequence for paying late is that further interest is accrued. They argue that there is nothing in the Act which indicates that a further consequence of late payment is that a taxpayer will lose all of their rights to appeal or review the decision irrespective of the merits of the decision. Overall therefore they submit that QCAT in this case has power to waive any non compliance by the applicant with requirements of section 69 pursuant to subparagraph 61(1)(c) and as a consequence the Commissioner’s application should be dismissed.
What the Commissioner says …
In response the Commissioner says that Market Square has not activated the jurisdiction of QCAT in relation to the whole of the objection because it has not “paid the whole of the amount of the tax and late payment interest payable under the assessments to which the decision relates as required by section 69(1)(b) of the TA Act.” The Commissioner says that tax “is defined in schedule 2 of the TA Act to mean “primary tax assessed interest or penalty tax”. An assessment includes any unpaid tax interest, which has accrued to the date of assessment under section 54(3) of the TA Act. However unpaid tax continues to accrue until payment of an assessment in full. Any unpaid tax interest accruing after the assessment (and therefore not included in the assessment document is known as late “payment interest”).
Further late payment interest accrues at the rate prescribed by the Taxation Administration Regulation 2012, and is calculated weekly commencing on the first Sunday after the date due for the payment as required by section 54(2)A of the TA Act and section 8 of the Taxation Administration Regulation 2012. With respect to assessment number 503739567 the Commissioner claims that payment of $141,855.28 was made on 2 November 2012 but this involved a shortfall of $51.00. In accordance with section 42 of the TA Act the payment was allocated to late payment interest and penalty tax resulting in the amount of $51.00 owing in respect of the primary tax. In relation to the assessment notice the details on page 3, provide the calculation of late payment interest in accordance with the provisions of the TA Act. Payment of the assessment after 6 October 2012 but before 13 October 2012 would incur late payment interest of $51.00 and should payment occur after 13 October 2012 “additional late payment interest of $178.50 will be payable each Sunday thereafter”.
As payment was made on 2 November 2012 additional late payment interest of $586.50 was incurred being $51.00 in late payment interest accrued in respect of the week ending 7 October 2012 plus $178.50 for each of the subsequent 3 Sundays that payment remained outstanding. The Commissioner says that payment of the outstanding $51.00 was received on 15 November 2012. This was both after the date of filing of the application for review with the Tribunal and following the expiry of the 60 day period within which the tax payer may apply to the Tribunal for a review of the decision of the Commissioner. The Commissioner issued a receipt for payment of the outstanding $51.00 on 16 November 2012.
The Commissioner claims that the purpose of section 69(1)(b) is clearly to provide a precondition to the right to apply for a review under section 69(2) of the TA Act. He says that the right does not exist unless and until the precondition in section 69(1) is satisfied which expressly requires that the whole of the amount of tax and late payment interest payable under the assessment must be paid before the taxpayer is entitled to make application to QCAT for a review of the decision under section 69(2). The Commissioner relies on the decision of Fleri where the learned Member noted that QCAT’s jurisdiction in regard to the review of decisions of the Commissioner of State Revenue is sourced in section 69 of the TA Act and agreed that QCAT has no jurisdiction to hear an application to review a decision of the Commissioner unless section 69(1) of the TA Act has been complied with. The Commissioner also notes that the decision in Fleri was affirmed by QCAT in Cowie.
The Commissioner also contends that QCAT does not have power under section 61 of the QCAT Act to waive this requirement because it is a substantive matter going to jurisdiction not merely a procedural requirement. He says that an applicant’s failure to comply with the statutory requirement expressed in s 69(1)(b) of the TA Act cannot be cured or waived by the operation of s 61(1) of the QCAT Act as no jurisdiction has been created unless the Tribunal has a reviewable decision on which procedural steps could be taken.
The Commissioner argues that there is no substantive evidence before QCAT to contradict the fact that $51.00 was not paid with respect to the assessment notice until 15 November 2012 and that s 73 of the TA Act ultimately places the onus of proof in these review proceedings on Market Square.
The Commissioner emphasizes that the payment on 15 November 2012 was made both after the bringing of the application to review on 12 November 2012 and after the expiry of the 60 day period prescribed by s 69(2) of the TA Act within which a dissatisfied taxpayer might apply to QCAT for a review of a decision made by the Commissioner.
On that basis the Commissioner argues that the threshold evidential and factual basis supports its argument to the effect that QCAT possesses no jurisdiction to entertain the application to review because the taxpayer failed to pay either the whole of the amount of tax and late payment interest within 60 days of notification of the assessment.
In relation to the submission by Market Square that it has paid the whole of the tax and late payment and the failure to pay within the 60 day period does not matter, the Commissioner says that the proper construction of s 69 is that it is imperative and jurisdictional in its language and character under the scheme of the TA Act and that a failure to comply with its whole payment and associated time limitation requirements regardless of the supposed severity or triviality of that failure will be fatal to any attempt to activate the jurisdiction of QCAT under section 61. The Commissioner submits that there is either compliance with a jurisdictional or an otherwise mandatory requirement under statute or there is not. Jurisdiction to exercise decision-making powers either exists or it does not.[4]
[4] Hunter Resources Ltd v Nelfull [1988] 164 CLR 234 at 249.
The Commissioner refers to the decision in Project Blue Sky and argues “that there is no doubt that the requirement to pay the whole of the amount of tax and late payment interest in s 69(1) is both substantive and mandatory in character and goes to the jurisdiction of QCAT. The failure to comply with this essential preliminary requirement would be a jurisdictional fact sufficient to invalidate any attempt to review proceedings under s 69.
The Commissioner argues that the provisions of s 69(1)(2) and (3) of the TA Act should be read and interpreted together and placed in the context of the legislation as a whole.
The Commissioner seeks to apply this reasoning by arguing that if a tax payer is dissatisfied with a decision of the Commissioner and has paid the whole of the tax and late payment interest under the relevant assessment then the tax payer may within 60 days of the notice of assessment being given to the tax payer apply to QCAT to review the decision. If such application is not made or the whole payment is not paid within the 60 days then the right to review will be lost. The Commissioner contends that this is exactly what has happened in relation to the assessment notice being reviewed. Consequently, the Commissioner submits that QCAT possesses no discretion to extend time and cannot therefore interpret section 69(2) in a discretionary or permissive fashion and at law is obliged to strictly observe section 69(2) as a mandatory provision.
The Commissioner submits that the failure of Market Square to comply with the essential preliminary requirements of section 69(1) and section 69(2) of the TA Act to pay the whole of the amount of tax and late payment interest within 60 days of notification of the decision before applying to QCAT for review within the same period amounted to a jurisdictional error which could not be waived, remedied or otherwise cured by QCAT or by the Commissioner or by the applicant.
With respect to the proposal by Market Square that the failure to pay $51.00 out of an amount exceeding $140,000.00 amounts to an opportunity to apply the de minimis maxim is not appropriate in this situation for the very reason that jurisdictional issues going as they do to activating the exercise of decision making powers under legislation cannot on any view be considered trivial or insignificant. The Commissioner contends that the Parliament intended the provisions of section 69 of the TA Act to be observed in a manner consistent with past strict observance of jurisdictional requirements in taxation legislation.[5]
[5] O’Sullivan v Commissioner of Stamp Duties [1983] 1 Qd R 212 at 216 - 217.
The outcome
The Tribunal may dismiss an application under section 47 of the QCAT Act if it satisfied that the application is frivolous, vexatious or misconceived or lacking in substance or otherwise an abuse of process. If the Tribunal has no jurisdiction to hear an application as submitted by the Commissioner that will be grounds for striking out the application based on it being misconceived or lacking in substance. As stated earlier, in Izard v Cairns Regional Council [2010] QCAT 410 Member Allen observed, “If the Tribunal has no jurisdiction to hear an application … that would be grounds for striking out the application based on it being misconceived or lacking in substance.”
In a letter from the Commissioner to McInnes Wilson Lawyers on 8 October 2012 the Commissioner reminded those solicitors that the “assessment remains outstanding … and late payment interest will continue to accrue as set out on page 3 of the reassessment notice.” The accrual of late payment interest was explained in these terms - “if you pay on or before 6 October 2012, no late payment interest will be payable … after 6 October 2012 but on or before 13 October 2012 late payment interest of $51.00 will be payable. After 13/10/2012 additional late payment interest of $178.50 will be payable each Sunday thereafter. On 2 November 2012 a deposit of $141,855.28 being made up of $141,319.78 and a late payment interest of $535.50 was made by McDonald Balanda & Associates in relation to the NBA reassessment on 2 November 2012.
The payment of $141,855.28 paid was $51.00 less than the requisite whole of the amount of tax and late payment interest under the assessment of duty, which was to be paid as a condition precedent to the associated act of making an application to QCAT to review the decision of the Commissioner. Details of the formula used to calculate the amounts were set out in the reassessment of default assessment notice.
The Tribunal is satisfied that the terms of section 42 of the TA Act relating to the order of application for payments for assessment liability received by the Commissioner require that the primary tax meaning the actual duty imposed is paid last, as a result the under payment of $51.00 by Market Square constituted a shortfall with respect to the payment of primary tax because the late payment interest and penalty tax had already been acquitted as required by section 42A and 42B.
The under payment of $51.00 remained outstanding until 15 November 2012 when payment by cheque dated 12 November 2012 was made. The Tribunal is satisfied that the legislative intent is clear. The requirement to pay the whole of the amount of tax and late payment interest in s 69(1) is both substantive and mandatory in character and goes to the jurisdiction of QCAT. The failure to comply with this essential preliminary requirement is a jurisdictional fact sufficient to invalidate any attempt to review proceedings under s 69.
The Tribunal finds that Market Square has not activated the jurisdiction of QCAT in relation to the whole of the objection because it did not pay the whole the tax and late payment interest payable under assessment 503739567 as required by section 69(1)(b) of the TA Act.”
The Tribunal accepts the submission of the Commissioner that the provisions of section 69 must be strictly observed. The Tribunal also finds that this is not a situation where the de minimis maxim applies because it is a jurisdictional issue going to the activating of decision making powers under the legislation.
The Application to dismiss or strike out the Application to Review, in so far as it relates to Assessment Notice No. 503 739 567 is granted.
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