Milutinovic v Commissioner for Act Revenue - [2016] ACAT 34

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

MILUTINOVIC v COMMISSIONER FOR ACT REVENUE
(Administrative Review) [2016] ACAT 34
AT 64, 74, 85 and 86/2015
Catchwords: ADMINISTRATIVE REVIEW – land tax – interest and penalty tax – taxpayer did not exercise reasonable care and did not have a reasonable excuse

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 (ACT) s 68

Land Tax Act 2004 (ACT) ss 9, 14, 19, 19A, 36, 38, 39
Rates and Land Tax Assessment Act 1926 ss 22EB, 22EC
Taxation Administration Act 1999 (ACT) ss 4, 30, 31, 37, 32, 33, 38, 82, 101, 105, 107A, 108, 108A, Sch 1 and 2

Tribunal: Senior Member W Corby

Date of Orders: 22 February 2016
Date of Reasons for Decision: 26 April 2016
AUSTRALIAN CAPITAL TERRITORY )

CIVIL & ADMINISTRATIVE TRIBUNAL )
AT 64/2015
AT 74/2015
AT 85/2015
AT 86/2015

BETWEEN:
STEVE SLAVOLJUB MILUTINOVIC
SUE SNEZANA MILUTINOVIC
Applicant

AND:
COMMISSIONER FOR ACT REVENUE
Respondent

TRIBUNAL: Senior Member W Corby

DATE:22 February 2016
ORDER

The Tribunal Orders that:

The decision under review is confirmed.

…………signed…………..
Senior Member W Corby

REASONS FOR DECISION

Sue Milutinovic (the ‘applicant’ in applications AT 64/15 and AT 84/15) and Steve Milutinovic (the ‘applicant’ in applications AT 74/15 and AT 86/15) have applied to the ACT Civil and Administrative Tribunal (ACAT) for review of the Commissioner for ACT Revenue’s (the respondent) decisions to disallow their objections to the 50% rate of penalty tax imposed and the interest component in two land tax assessments both dated 27 March 2015.
The assessments were made in relation to a property in Narrabundah in the ACT (the ‘property’).
The Tribunal made orders at the conclusion of the hearing of this matter on 22 February 2016. The respondent made an oral request for written reasons. In these reasons for decision, the term ‘Tribunal’ refers to the individual ACAT Member who heard the matter and made orders.
Although there are four applications and two applicants, the applications were heard together. The submissions made and evidence given related to both applicants in relation to the applications AT 64/15 and AT 74/15; and applications AT 85/15 and AT 86/15 respectively.

The Hearing

The matter was heard on 22 February 2016. The applicants appeared in person and were not represented. The respondent was represented by Ms Irving of Counsel, instructed by Mr Kwan from the ACT Government Solicitor’s office. Mr Hitches attended the hearing on behalf of the respondent’s office. Neither party called witnesses.

Information relied on by the Tribunal

The Tribunal took into account the documents filed by each party, including the Tribunal Documents (T Docs) filed by the respondent, being those documents which the respondent relied on in making the reviewable decisions. These will be referred to by the page number.
The Tribunal also took into account the oral and written submissions made by or on behalf of the parties, the oral evidence given at the hearing and documents filed by or on behalf of the parties during the hearing.

Obligation to give notice when property leased

The owner of a parcel of land must give the respondent notice in writing within 30 days after it is leased for residential purposes under section 14 of the Land Tax Act 2004 (the LT Act). A failure to do so is a tax default[1] and the penalty tax provisions of the Taxation Administration Act 1999 (the TA Act) apply. Interest is imposed and calculated pursuant to section 19A(2)-(4) of the LT Act on any land tax imposed. A reference to interest and unpaid in the penalty tax provisions of the TA Act are taken to be a reference to interest under section 19A of the LT Act section 19A(5)(b)) and land tax assessed under section 19A(5)(c).

Background

[1] Section 19A(5)(a) of the LT Act

The applicants gave evidence that some time before 11 September 2001 they approached their friends, Teresa and Anthony Lopilato, about an investment. Mr Lopilato was, at that time, also the applicants’ accountant. The applicants suggested and the Lopilatos agreed that they would jointly purchase the property. There was an old house on the property. The plan was to knock down the existing house and build two houses.
The applicants have experience in the building industry. They considered that they would bring this experience to the joint venture and Mr Loplilato, in particular, would look after the finances.
The applicants and the Lopilatos purchased the property and transfer was effected on 11 September 2001. There were four people on the title, being the applicants and Teresa and Anthony Lopilato. Each couple held the property as tenants in common as to 50% and the couples each held their 50% interest as joint tenants (the jointly owned property).
In about October 2002 the original house was demolished and two houses were constructed. The building work was finished in 2003.
When the two houses were completed, one of the houses was at the front of the block and was known as ‘Unit 1’ (Unit 1). The applicants gave evidence that once the construction of Unit 1 was completed they considered that they owned and were solely responsible for the management of Unit 1. At about the same time a second house was completed on the property. It was at the back of the property. It was known as Unit 2 (Unit 2). The applicants considered that the Lopilatos owned and were solely responsible for the management of Unit 2. From the time that Units 1 and 2 were completed, the applicants gave evidence that they no longer considered that Mr Lopilato was responsible for financial matters concerning Unit 1.
After Units 1 and 2 were completed, and notwithstanding the applicants’ understanding that they were then solely responsible for the management of Unit 1 and the Lopilatos for Unit 2, all four people remained on the title of the property. It was not until 12 July 2011 that the Unit Plan was registered and on 17 October 2011, Unit 1 was transferred to the applicants and Unit 2 was transferred to the Lopilatos.
At the hearing the applicants gave evidence that the original house on the property was unoccupied from the date of purchase until it was knocked down. Their recollection is that, as it was an old house, from the time they purchased it until it was knocked down, it was not leased.
There is a copy of a covering letter dated 3 June 2003[2] from the, then, ACT Revenue Office to the applicants and the Lopilatos. The letter encloses two Land Tax Assessments for the periods 1 January 2002 to 30 June 2002 and 1 July 2002 to 31 December 2002 (the ‘2002 land tax assessments’) respectively. The covering letter notes that the assessments are made based on, among other things, a questionnaire dated 9 April 2003 completed by someone ‘with regards to land tax liability’ for the jointly owned property. The respondent’s representative advised that the respondent had not been able to locate a copy of the completed questionnaire referred to in the letter.
[2] T Docs 115 -118
The respondent’s letter suggests that no notice that the jointly owned property was leased had been provided by the owners. The respondent made the 2002 land tax assessments including 25% penalty tax assessment for the period 1 January to 31 December 2002. The Tribunal notes that the respondent remitted all but 25% of the 200% penalty tax that would otherwise have been imposed under the Rates and Land Tax Assessment Act 1926[3] which then applied.
[3] Rates and Land Assessment Tax Act 1926 – see S22EB re rate and section 22EC re remission of penalty tax
The respondent advised that the 2002 land tax assessments, including penalty tax amount, had been paid.
The applicants said that in the period immediately after the purchase of the jointly owned property, and while Mr Lopilato was still responsible for ‘financial’ matters, the applicants and the Loplilatos shared a joint cheque account which was used to pay expenses relating to the jointly owned property. The applicants gave evidence that they did not know that the 2002 land tax assessments were made and do not understand why the land tax assessments were paid, but assumed this was something Mr Loplilato would know more about. Mr Lopilato did not give evidence at or attend the hearing.
Although T Documents 115-118 were in the documents provided to the applicants prior to the hearing of these matters, the applicants advised the Tribunal that they had not noted the information about the 2002 land tax assessments until the hearing on 22 February 2016. The applicants were surprised by the inference that the property had been tenanted and that land tax had been assessed and paid in relation to this period.
Information provided by the Office of Rental Bonds indicates that bond amounts were paid in relation to tenancies at the property which began on 22 December 2001 and ended on 31 August 2002.[4]
[4] T-Doc 60
When Units 1 and 2 were completed in 2003, the applicants initially engaged an agent to look for tenants for Unit 1. The agent did not find a tenant. As the applicants were not happy with agent’s efforts, they then took over the management of the property and themselves advertised for and found tenants.
Mr Milutinovic said that his wife looked after the administrative side of things and he relied on her to undertake any administrative actions and arrangements in relation to Unit 1.
Mrs Milutinovic said that she recalls having attended at an ACT Government office in Fyshwick where she was advised about what she needed to do in relation to tenanting the property. She recalls being given advice about payment of bond monies and about notifying the respondent in relation to land tax. She says she recalls being advised that she only had to given the land tax notice (about the property being leased) once, and then further notice was only required if the property was vacant for a period. It is her recollection that she notified the respondent when the first tenancy of Unit 1 commenced in January 2005. The applicants did not provide any written evidence that the notice was given. They said that as they were only required to keep records for five years, that if they had kept a copy, they were not now able to locate it.
Mrs Milutinovic gave evidence that in 2014 she undertook a ‘clean up’ of their paperwork. As part of that she had destroyed most of the paperwork before that date. This evidence would appear to be inconsistent with the evidence that the applicants keep records for five years. Nonetheless, the applicants’ consistent evidence is that they were unable to locate any document to support their assertion that the respondent was given a land tax notice about the jointly owned property and/or Unit 1 at any time before 2014 or relating to any period before 2014.
The respondent had no record of any written notice by, or on behalf of, the applicants that Unit 1 was tenanted.
Unit 2 was tenanted for some periods after it was constructed. No notice about the tenancy of that property was received by the respondent. The applicants considered that the Lopilatos were responsible for Unit 2 and do not know about the rental status of Unit 2. As noted, the Loplilatos did not give evidence or attend the hearing.

The first assessment – regarding the jointly owned property (Units 1 and 2)

The first assessment was issued to all four owners, the applicants and the Lopilatos, and is for the period 1 July 2004 to 30 September 2011 (the ‘first assessment’). The first assessment is based on Unit 2 being rented from 16 March 2004, and Unit 1 from 10 January 2005, until the unit title was registered on 12 July 2011.
On 8 May 2015[5] Mr Lopilato objected to the first assessment on behalf of the applicants and the Lopilatos[6] (‘objection 3818’). On 2 October 2015 the respondent disallowed objection 3818 (the ‘reviewable decision in relation to objection 3818’).
[5] T Doc 92
[6] T Docs 85-90
Prior to the first assessment the respondent had commenced an investigation into the land tax liability for the property. By letter dated 16 February 2015 the respondent sent the applicants and the Lopilatos a notice pursuant to section 82 (‘section 82 notice’) of the TA Act requiring them to provide information about the rental status of the property. Mr Lopilato responded on 2 March 2015 confirming that Unit 2 had been rented for the period ‘November 2003 to 1 July 2011’ and that it was under construction from October 2002 to November 2003. He said a notice had been sent to the respondent. He makes no reference to Unit 1. It does not appear that the applicants responded separately in relation to this request for information.
The respondent sent a follow-up letter dated 10 March 2015[7] (the ’10 March 2015 letter’) requesting information about Unit 1. The letter included details about ACTEWAGL electricity information for Unit 1. The ACTEWAGL information suggested that Unit 1 was tenanted for most periods between 10 January 2005 and March 2015, with a brief gap from 29 July to 21 October 2014. Mr Lopilato advised the respondent should forward the 10 March 2015 letter to the applicants as the Lopilatos had nothing to do with Unit 1.
[7] T Docs 65-66
On 24 March 2015 the applicants responded to the respondent’s 10 March 2015 letter saying they did not keep tax records for more than five years, that as they were new to private leasing they were learning as they went along, that they had relied on others, and that they believed they had paid all relevant taxes. The applicants also stated that they considered some of the ACTEWAGL electricity account information included in the letter was not accurate. They did not dispute that Unit 1 had been tenanted and did not assert that they had notified the respondent about the tenanting of the property.
In objection 3818 Mr Lopilato asserts that “we had previously notified ACT Revenue up to Q2 of 2002-03.”
This statement appears to refer to the 2002 land tax assessments relating to the period from 1 January 2002 to 15 November 2002[8] and appears to support the conclusion that the property was tenanted for a period prior to the end of Q2 FY 2002-2003 being the period before the original dwelling was knocked down. The Tribunal accepts that, for a period after November 2002, no part of the jointly owned property was leased during the period of that Units 1 and 2 were constructed.
[8] T Docs 115-118
The Tribunal considers that the payment of the 2002 land tax assessments, which included penalty tax, appear to support the conclusion that no notice that the property was leased was provided to the respondent prior to these assessments being made. Mr Lopilato’s suggestion in objection 3818 that the respondent was notified in relation to the period prior to the assessments sent on 3 June 2003 is inconsistent with this conclusion. Although not directly relevant to the current matter, to the extent that the applicants rely on a land tax notice having been given to the respondent in relation to the jointly owned property prior to June 2002:
(a)The applicants’ evidence is that no part of the jointly owned property was leased prior to the original house being knocked down in about October 2003.
(b)Based on the available evidence it appears that the original house was leased for a period in 2002 before it was demolished.
(c)There is no evidence that a land tax notice was given to the respondent by or on behalf of any of the owners of the jointly owned property in relation to this period.
Mr Lopilato goes on to assert that once the construction of Units 1 and 2 was completed:
we advise [sic] ACT Revenue that they were being rented and this was done in writing
Mr Lopilato appears to suggest that notice was given in relation to both Unit 1 and Unit 2. He provides no evidence that this was done. The respondent has undertaken a search of its records and found no written notice that Unit 1 and or Unit 2 was being tenanted for the period relating to the land tax assessment.
Mr Lopilato suggests that as more than seven years has passed he no longer holds the relevant records and thus cannot provide evidence that the notice/s were sent. He considers that it is open to debate whether he should have taken steps to confirm that their land tax liability was being met and submits that:
as we had previously informed ACT Revenue and why wouldn’t we do it again.
This statement appears to be based on the assumption that the respondent was notified in relation to the period prior of the 2002 land tax assessments.[9] As noted above, the Tribunal is not persuaded that either the applicants or the Lopilatos notified the respondent about the tenancy of the property during this period.

The second assessment- Unit 1 after 12 July 2011

[9] T Docs 115-118

The second assessment is for the period 1 October 2011 to 31 December 2014. The period commences after the registration of the Unit Title on 12 July 2011. The second assessment is made in relation to Unit 1. From 12 July 2011 the applicants were the registered owner of Unit 1.
On 10 June 2015 the applicants objected[10] to the second assessment. They objected to the penalty tax and interest component of the assessment, but did not object to the assessment of land tax (‘objection 3843’). On 19 August 2015 the respondent disallowed objection 3843 (the ‘reviewable decision in relation to objection 3843’)[11].
[10] T Docs 8-9
[11] T Docs 25-35
The respondent conceded at the hearing that the second land tax assessment was incorrect in that the period should have ended on 30 September 2014. Whilst the applicants did not concede that the rate of penalty tax calculated at 50% or amount of interest was appropriate, they consented to an amendment of the period for this assessment, and the necessary adjustment in the land tax amount. Accordingly a consent order was to made to reduce the period and amount of the second land tax assessment as follows:
(a)that land tax is assessed for the period 1 October 2011 to 30 September 2014;
(b)the amount of land tax assessed is $8,698.19 and fixed charge (being a component of land tax) is $226.85; and
(c)without conceding the 50% rate of penalty tax, if any, to be applied, the applicants agreed that if the rate to be applied is 50% then the penalty tax is $4,462.55; and
(d)without conceding that any or all of the interest amount was payable, the applicants agreed that if interest on the amounts in paragraphs (a) and (b) is payable, then the amount is $1,759.48.
As the applicants had paid the land tax, but not the penalty tax component of the original, incorrect second assessment, the respondent at the hearing undertook to recalculate and advise the applicants of the amount now outstanding. The applicants were reminded that interest on the penalty tax component of the assessment continues to accrue on outstanding amounts until fully paid.
Prior to the second assessment the respondent commenced an investigation to determine whether Unit 1 at the property had been leased in the period subsequent to the registration on 12 July 2011 of the unit title of Unit 1 to the applicants.
On 16 February 2015 the respondent sent a section 82 notice to the applicants.[12] Ms Milutinovic responded[13] on behalf of the applicants. The applicants’ response was received by the respondent on 3 March 2015. In the response to the section 82 notice the applicants advised that Unit 1 had been rented from October 2012 to June 2014 and again from November 2014 to the date of response (presumably 27 February 2015). Although the applicants appear to concede that they had not notified the respondent about the rental status of Unit 1 in this period, they advise that they “Assumed this was done when property was subtitled.”
[12] T Docs 48-51
[13] T Doc 53
When the respondent wrote to the applicants on 10 March 2015[14] as part of the investigation into the rental status of Unit 1, they included information that had been provided by ACTEWAGL about the names of consumers who had electricity connected to Unit 1 for various periods between 10 January 2005 to March 2015. In their response to this letter[15] the applicants assert that some of the information from ACTEWAGL is not accurate, however they do not provide any evidence to support this assertion. They say that they only keep records for 5 years, however this would suggest that they would have records in relation to the period dating back to, at latest, March 2010 and possibly 1 July 2009, which is the start of FY2009-2010. In any event they would then still have information relevant to the period commencing 12 July 2011 (when the unit title was registered) which is the relevant date for the purpose of the second assessment.
[14] T Docs 65-66
[15] In a telephone conversation Mr Milutinovic had with the Respondent’s office on 24 March 2015 (T Doc 68) and in an email response dated 24 March 2015 (T Doc 69-70)

In their application to ACAT about the determination of objection 3843 the applicants do not dispute the assessment of land tax and therefore the Tribunal is not required to consider this aspect of the assessment. The information provided by the applicants in response to the section 82 notice[16] about the rental of Unit 1 subsequent to 12 July 2011 does not appear to provide a full disclosure of the rental status of the property during the period 12 July 2011 to October 2011. The respondent asked the applicants about this at the hearing. The applicants were unable to offer an explanation. The Tribunal accepts that it is likely that Unit 1 was tenanted for at least some periods between 12 July 2011 and October 2012 and the applicants were unable to explain why they had not included the periods of these tenancies in their response to the section 82 notice.
[16] T Doc 53
The applicants did provide a ‘Notification of Rental Status of a Residential Property’ to the respondent dated 20 January 2014 (sic) in which they advised that Unit 1 would be rented from 22 November 2014.[17] The respondent received this written notification and land tax was then assessed for the period commencing 1 January 2015, being Q1 for the FY 2014-2015. This falls outside the period of the land tax assessment under review, the respondent does not dispute receiving the notice and the applicants do not dispute land tax assessed.
[17] Exhibit R1 (also included as T Doc 22)
The applicants also relied on another completed ‘Notification of Rental Status of a Residential Property’ which Ms Milutinovic gave evidence that she completed on or about and dated 30 June 2014.[18] In this notice the applicants advise that Unit 1 had not been rented since 5 June 2014. There is a ‘Faxed’ stamp on the document. Ms Milutinovic gave evidence that she “would have” stamped the document as ‘Faxed’ when she faxed it and it would probably have been faxed on the day it was completed. She says it was sent to the respondent’s fax number which appears on the form. The applicants say that this document demonstrates that they believed that they had provided notice of the tenancy of Unit 1 prior to June 2014, otherwise they would not have then advised, in this notice, that it was no longer tenanted.
[18] Exhibit R2 (also included as T Doc 21)
The applicants did not provide any further evidence to confirm that this document was faxed. The respondent advised at the hearing that no copy of this document was found in the respondent’s office. The Tribunal is not persuaded, if this document was completed and faxed by Ms Milutinovic in about June 2014, that it was received by the respondent. The Tribunal does not consider that either this document, nor the later notice sent in January 2015 (although it is dated 2014, the Tribunal accepts this is an error), assist the Tribunal in considering the current application for review. They do not purport to provide notice about the rental status of the property in the period before June 2014, and as noted, the Tribunal does not accept that the earlier notice was received by the respondent.

Applicants’ submissions

The applicants submit that they provided a written notice to the respondent of the rental status of Unit 1 at the jointly owned property at around the time that it was first tenanted in 2005. The Tribunal accepts that Mrs Milutinovic did attend at an ACT Government office, and was provided with accurate information about the need to provide the respondent with a written notice. Mrs Milutinovic confirmed that she was correctly advised that the notice relating to land tax liability only had to be provided once unless, during a period, the property was not tenanted, in which case the respondent should be notified so that land tax would, if appropriate, not be assessed during that period. If the property was then re-tenanted, a further notice would need to be sent. Mrs Multinovic says that after receiving this advice she downloaded the relevant forms from the internet. Although Mrs Multinovic believes that she then completed and sent the notice to the respondent, the applicants provide no further evidence that a notice was sent to the respondent. The respondent, despite searches, has not located a copy of a notice which relates to any period before 22 November 2014.[19]
[19] Exhibit R1 (also included as T Doc 22)
The applicants gave evidence that prior to the construction of Units 1 and 2 the applicants relied on the fact, or assumed, that Mr Lopilato had attended to financial matters including giving any necessary notice to the respondent. After Units 1 and 2 were completed, the applicants considered that they were responsible for Unit 1 and the Lopilatos for Unit 2.
Mrs Milutinovic gave evidence that she made enquiries about what she was required to do and seemed to understand that she needed to give written notice that the property was leased in order for the applicants to meet their obligations in respect of land tax and comply with section 14 of the LT Act. Although initially the applicants engaged an agent to manage the leasing of Unit 1, when this did not work out the applicants assumed the responsibility for managing the rental of Unit 1 and found tenants. The property was tenanted from January 2005. Mrs Miluntinovic believed she sent the necessary land tax notice to the respondent.
The applicants subsequently bought a further investment property which they leased for residential purposes (the ‘Philip property’). It appears that the necessary notice for this property was received by the respondent and land tax assessments were made by the respondent and paid by the applicants from Q4 FY2005-2006. The applicants submitted that as they are also required to pay body corporate fees on the Philip property, the expenses for that property are different from those payable for Unit 1. The applicants submitted that this difference explains why they were not alerted, after receiving land tax assessments for the Philip property, that they were not being assessed for land tax in relation to Unit 1.
The applicants gave evidence, which the Tribunal accepts, that they are hard working, honest, law abiding citizens who are actively involved in and positively contribute to the community. They have consistently met other tax obligations and indeed have paid land tax in relation to another rental property. The Tribunal can accept that their oversight in failing to notify the respondent, and therefore meet their land tax liability in relation to Unit 1, was a result of their inexperience and perhaps their misguided belief that by declaring the rental income from Unit 1 in their ATO taxation returns that they had met this obligation.
Since 2010 Mrs Milutinovic has had to meet family demands that have required her to attend Melbourne on a regular basis to provide support to sick and aging relatives. Mrs Milutinovic said that during this period she experienced considerable stress, developed her own health issues and did not turn her mind to land tax obligations.
The Tribunal accepts that Mr Milutinovic relied on Mrs Milutinovic to undertake, on behalf of the applicants, the administrative tasks associated with the rental of the property including to send notices, if required, to the respondent.
It seems that the applicants did not make any alternative arrangements to meet these obligations notwithstanding the pressures faced and time constraints placed on Mrs Multinovic.
In the period subsequent to the completion of Units 1 and 2, and before the unit title was registered on 12 July 2011, all four people – the applicants and the Lopilatos – remained on the title and were therefore all responsible to meet the land tax liability. The applicants gave evidence that prior to the completion of Unit 1, the applicants had relied on Mr Lopilato to deal with ‘financial’ matters relating to the property. After the construction of Units 1 and 2 was completed, the applicants considered that they were then solely responsible for Unit 1 and the Lopilatos for Unit 2, even though until 12 July 2011 this obligation, from the respondent’s point of view, was shared equally with the Lopilatos.
The applicants submit that for many years after the construction of Units 1 and 2 the respondent sent mail addressed to the Lopilatos to the applicants’ address. The applicants say that although they provided the respondent on many occasions with the Lopilatos’ correct address, the respondent continued to send mail addressed to the Lopilatos to the applicants’ address. The applicants submit that this demonstrates that the respondent does not properly manage and maintain information that it receives and therefore explains why the notice which the applicants assert they sent about the tenancy of Unit 1 cannot now be found by the respondent.
Mrs Milutinovic gave evidence that when the jointly owned property was subdivided in July 2011 she recalls discussing land tax and other matters. She says that they signed a number of forms but she is unable to recall the details. The applicants assumed that either they had at this time signed the relevant land tax notice form or that the registration of the unit title would have resulted in notice to the respondent for the purpose of land tax.

Findings and operation of legislation

Applicants failed to comply with section 14 of the LT Act

The applicants did not provide any evidence that a section 14 LT Act land tax notice was sent to the respondent which is relates to the periods of the first or second assessment. Although the applicants’ believe that they, or someone on their behalf, sent a land tax notice to the respondent, the Tribunal is not persuaded by the applicants’ assertions that:
(a)the respondent failed to properly record a change of address for the Lopilatos and that this supports the conclusion that the respondent fails to properly process and maintain records; and
(b)the Tribunal can therefore infer that the applicants, or someone on their behalf, did send the required land tax notice in compliance with section 14 of the LT Act for the jointly owned property and or Unit 1, even though no copy of this or these document/s can now be found by the respondent.
In relation to the first assessment (and objection 3818), for the period from 16 March 2004, when Unit 2 was rented, and from 10 January 2005, when Unit 1 was rented, until 12 July 2011 when the property was registered for unit title, the Tribunal finds that the neither the applicants, the Lopilatos nor anyone on their behalf provided written notice to the respondent in accordance with section 14 of the LT Act. Notice was not provided within the 30 day period specified, nor at any time up until the unit title was registered on 12 July 2014. The Tribunal finds that the applicants failed to meet the obligation imposed by section 14 of the LT Act.
In relation to the second assessment (and objection 3843), for periods from 12 July 2011, after the unit title was registered, and until 5 June 2014 the Tribunal finds that Unit 1 was rented and the applicants failed to give written notice to the respondent that Unit 1 was rented and failed to meet the obligation imposed by section 14 of the LT Act.
The applicants objected (objection 3818 and 3843) to the penalty tax and interest imposed in the first and second assessments. The respondent disallowed those objections.

Applicants’ objection to interest

The respondent can remit interest imposed under section 19A of the LT Act.[20] A taxpayer can object to the respondent’s decision to refuse to remit interest.[21] However the respondent’s determination of an objection in relation to section 38(c) of the LT Act is not reviewable by the ACAT.[22]
[20] Section 36 of the LT Act
[21] Section 38(c) of the LT Act)
[22] Section 39(1) of the LT Act
When providing reasons for the respondent’s determination to disallow the applicants’ objections 3818 and 3843 the respondent concludes that applicants do not have the right to object to the respondent’s decision not to remit interest pursuant to section 36(1) of the LT Act. The Tribunal considers that this conclusion is not correct. Accordingly the respondent has not determined that aspect of the applicants’ objections 3818 and 3843 and should do so in accordance with sections 38(c) 36 of the LT Act.

Penalty tax

The respondent’s determination in relation to the rate of penalty tax[23] and to refuse to remit penalty tax[24] are reviewable by ACAT.[25]
[23] Section 31 of the TA Act
[24] Section 37 of the TA Act)
[25] Sections 107A, 108A, 107A(b) and Schedule 1 Section 1.2(d) and (f) of the TA Act
When considering applications of this kind the Tribunal ‘stands in the shoes’ of the original decision maker. The Tribunal must either confirm, vary or set aside the decision under review.[26] The applicants bear the onus of showing that their objection should be sustained.[27] However neither the applicants nor the respondent is limited to relying on the grounds raised in making or dealing with the original objection.[28]
[26] Section 68 of the ACT Civil and Administrative Tribunal Act 2008
[27] Section 101(3) of the TA Act
[28] Section 108B(1) of the TA Act
Failure to give notice that a property is rented is a failure to comply with section 14 of the LT Act and is a tax default for the purpose of the penalty tax provisions of the TA Act.[29] If a tax default happens the taxpayer is liable to pay penalty tax[30] at a rate of 25%.[31] However the rate of penalty tax is 50% if the respondent (and in making this decision, the Tribunal) is satisfied that the tax default happened because the taxpayer, in this case the applicants, failed to take reasonable care to fulfil their obligation.[32] However the 50% rate will not apply if the Tribunal is satisfied that the applicants have a reasonable excuse for their failure.[33]
[29] Section 19A(5)(a) of the LT Act
[30] Section 30 of the TA Act
[31] Section 31(1) of the TA Act
[32] Section 31(2) of the TA Act
[33] Section 31(3) of the TA Act
Although the Tribunal has accepted the applicants’ evidence that they never intended to avoid their land tax obligations, intention alone is not relevant to the operation of sections 31(1) to 31(3) of the TA Act. There are higher penalties imposed where there is intentional disregard or concealment of information.[34] Equally, if a taxpayer realises that they have not met their obligations, and come forward before any investigation is undertaken by the respondent, then there are reductions in penalty that automatically apply[35] and there may be further remission of penalty tax and interest in some circumstances. However, for the applicants these opportunities were lost as they did not provide full disclosure of the rental status of the property (before it was registered for unit title) or Unit 1 (after 12 July 2011) before the investigation by the respondent was commenced.
[34] Sections 31(5) and 34 of the TA Act
[35] Sections 32 and 33 of the TA Act
Whatever reliance the applicants may have had on Mr Lopilato prior to the completion of Unit 1 and Unit 2 in 2003, the applicants gave evidence that from the time that the Units were completed they considered that they were responsible for managing Unit 1. At that time Mrs Milutinovic made enquiries about what their obligations were in regard to rental. She was advised about and indeed says she downloaded forms relating to land tax. The Tribunal is unable to say, based on the evidence provided, whether she did this before they had engaged agents to rent Unit 1, or after they decided to take on the management of Unit 1 themselves when they were dissatisfied with their agents who had not found tenants. Based on the available information the Tribunal is satisfied that for periods from 10 January 2005 until June 2014 Unit 1 was tenanted. Although the Tribunal accepts there may have been ‘gaps’ between tenants, the applicants do not dispute the land tax assessed – noting the amendment of the period of the second assessment to reflect the mistaken inclusion of Q2 FY 2014-2015.
The Tribunal has concluded that the applicants did not comply with section 14 of the LT Act. The applicants gave evidence that they were new to the role as lessor and that they were unfamiliar with their obligations, that they were busy running their business ventures and that Mrs Milutinovic was required to respond to family demands in Melbourne from 2010. The Tribunal finds that the applicants did not exercise reasonable care to ensure that they met their obligation to provide notice about the rental of Unit 1 and is not satisfied that their explanation provides a reasonable excuse for having failed to do so. Whilst it is unfortunate that, because the property was not registered for unit title until 12 July 2012, they are also impacted by the failure of the Lopilatos to give the necessary notice in respect of Unit 2, and therefore the first assessment commences when Unit 2 was first tenanted on 16 March 2004. However, each owner is responsible to meet the obligation under section 14 in relation to any part of the property that is tenanted, and this did not occur.
The Tribunal is satisfied that the applicants failed to take reasonable care to meet their obligations under section 14 of the LT Act and that they have not provided a reasonable excuse for having done so. In the circumstances the Tribunal is satisfied that section 31(2) of the TA Act is applicable and the 50% rate of penalty should be applied. For these reasons the Tribunal is not satisfied that s31(6(a) of the TA Act applies, as it requires the Tribunal to find that the applicants took reasonable care to meet their tax obligations.
The Tribunal is not satisfied that the failure to comply with their tax obligation was solely the result of circumstances beyond the applicants’ control.[36] Whilst the applicants gave evidence about reliance on the advice of others, and Mrs Multinovic gave evidence about family commitments from 2010, the Tribunal does not consider that these matters, if they contributed to the applicants’ failure, were solely responsible for their failure to meet their obligations for the period from, at latest, January 2005 until June 2014.
[36] Section 31(6)(b) of the TA Act)
The Tribunal is not satisfied that there are any circumstances applicable in this matter which would be relevant to consideration of s37 of the TA Act. There is no evidence that, beyond taking the opportunity to object to the decision by the respondent after receiving the first and second assessment, that the applicants took any particular step to address the tax default. Whilst they have now given notice in respect of Unit 1 and are being assessed for land tax, it does not appear that they took any particular action, beyond obtaining advice about what was required after Unit 1 was constructed, to determine or meet their obligations under section 14 of the LT Act. The Tribunal does not consider that their circumstances are exceptional and indeed, given that they are now operating two investment properties, the Tribunal considers that it is reasonable to expect that they would be familiar with their obligations under the relevant legislation. The Tribunal finds that there is no basis for the remission of part or all of the penalty tax pursuant to section 37 of the TA Act.
Except for the period of the second assessment, which has been dealt with by the consent order, the reviewable decisions as to the rate and imposition of penalty tax are confirmed.
………………………………..
Senior Member W Corby
HEARING DETAILS

FILE NUMBER:	AT15/64,74,85,86
PARTIES, APPLICANT:	Steve Slavoljub Milutinovic and Sue Snezana Milutinovic
PARTIES, RESPONDENT:	Commissioner for ACT Revenue
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	Alicia Irving
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	James Kwan (ACT Government Solicitor’s Office)
TRIBUNAL MEMBERS:	Senior Member W Corby
DATES OF HEARING:	22 February 2016