Ryan v Commissioner of State Revenue, Office of State Revenue - [2012] QCAT 314

CITATION:

Ryan v Commissioner of State Revenue, Office of State Revenue [2012] QCAT 314

PARTIES:	Belinda Ryan
v
Commissioner of State Revenue, Office of State Revenue

APPLICATION NUMBER:

GAR390-11

MATTER TYPE:

General administrative review matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Barry Cotterell, Member

DELIVERED ON:

23 July 2012

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The decision to disallow an objection against the reassessment of transfer duty on Miss Ryan is set aside.

2. The decision that further transfer duty in the sum of $5,100 is payable is confirmed.

3. The Tribunal sets aside the decision to impose a penalty tax of $1,275 and substitutes its own decision that the penalty tax imposed is $510.

4. The Tribunal sets aside the decision to impose Unpaid Tax Interest in the sum of $1,614.14 and substitutes its own decision that the recalculated Unpaid Tax Interest is $1,439.09.[1]

[1] Decision amended by order of the Tribunal 21 August 2012.

CATCHWORDS:

Application to review reassessment of transfer duty – imposition of penalty tax and imposition of unpaid tax interest – purchaser claimed concessional transfer duty – purchaser rented property before occupation – purchaser occupied property within 6 months

Duties Act 2001, ss 8-11, 85-86, 88-92, 95, 154-155
Taxation Administration Act 2001, ss 58, 60, 69, 71
Queensland Civil and Administrative Tribunal Act 2009, ss 17-20, 24

Ostrowski v Palmer [2004] HCA 30 followed

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).

REASONS FOR DECISION

This is an application by Miss Belinda Ryan (Miss Ryan) seeking to review the decision of the Commissioner of State Revenue (the Commissioner) of 11 November 2011 imposing further transfer duty, penalty tax and unpaid tax interest after reassessment of a contract self-assessed for home concession transfer duty. Miss Ryan incorrectly refers to the Respondent as the Office of State Revenue, which the Tribunal has corrected in these reasons.
Miss Ryan purchased a property situated at 5/1976 Gold Cost Highway, Miami (the property) by a contract dated 11 August 2009 and she was entitled to possession under the contract on 12 October 2009. At the time the property was tenanted and she understood this was until April 2010.
At the time of purchase of the property, Miss Ryan, through her solicitor claimed a concession for transfer duty as she intended to occupy the property “within a few months of the purchase” by which she presumably meant when the tenants vacated.
However, two weeks after Miss Ryan had taken over the property she was informed that the tenants had given two weeks notice to leave. Miss Ryan was in a shared rental agreement and was unable to afford both the shared rental and the mortgage so she arranged for the property to be rented from 19 November 2009 for four months until 12 February 2010. Miss Ryan states that she rented it for $270 per week when similar units in the building were rented for $320 to $350 per week. This does not seem to be relevant.
Miss Ryan moved in on 14 February 2010. She has remained in residence since then.
Miss Ryan states that “I was unaware that this short term lease disqualified me from claiming my property as my principal place of residence”.
The home transfer concession reduced the duty payable from $7,770 to $2,670.

Reviewable Decision

The Taxation Administration Act 2001 (TAA) provides Miss Ryan with the right to a review of the decision of 11 November 2011 and section 69 states:
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) ...
The reviewable decision is the decision of the delegate of the Commissioner of State Revenue dated 11 November 2011, being a decision to disallow an objection against an assessment of transfer duty imposed on Miss Ryan.
Miss Ryan has paid the whole amount of the tax and late payment interest under the assessment to which the decision relates as is required before section 69 applies to enable the application for review to be made.
The Tribunal’s review jurisdiction is the jurisdiction conferred on the tribunal by an enabling act in accordance with section 17 of the Queensland Civil and Administrative Tribunal Act 2009. The TAA is an “enabling Act” for the purposes of section 9 of the Queensland Civil and Administrative Tribunal Act 2009.
Division 3 of the QCAT Act refers to its review jurisdiction and the relevant sections state as follows:
17 Generally
(1) 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 that Act.
(2) For this Act, a decision mentioned in subsection (1) is a reviewable decision and the entity that made or is taken to have made the decision is the decision-maker for the reviewable decision.
18 When review jurisdiction exercised
(1) The tribunal may exercise its review jurisdiction if a person has, under this Act, applied to the tribunal to exercise its review jurisdiction for a reviewable decision.
(2) A person may apply to the tribunal to exercise its review jurisdiction for a reviewable decision, and the tribunal may deal with the application, even if the decision is also the subject of a complaint, preliminary inquiry or investigation under the Ombudsman Act 2001.
19 Exercising review jurisdiction generally
In exercising its review jurisdiction, the tribunal—
(a)     must decide the review in accordance with this Act and the enabling Act under which the reviewable decision being reviewed was made; and
(b)     may perform the functions conferred on the tribunal by this Act or the enabling Act under which the reviewable decision being reviewed was made; and
(c)     has all the functions of the decision-maker for the reviewable decision being reviewed.
20 Review involves fresh hearing
(1) The purpose of the review of a reviewable decision is to produce the correct and preferable decision.
(2) The tribunal must hear and decide a review of a reviewable decision by way of a fresh hearing on the merits.
24 Functions for review jurisdiction
(1) In a proceeding for a review of a reviewable decision, the tribunal may—
(a)     confirm or amend the decision; or
(b)     set aside the decision and substitute its own decision; or
(c)     set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the tribunal considers appropriate
Sub-sections 71(2) and (3) of the TAA provide as follows:
(2) The grounds on which the application for review is made are limited to the grounds of the relevant objection, unless QCAT otherwise orders.
(3) QCAT must—
(a) hear and decide the review of the decision by way of a reconsideration of the evidence before the commissioner when the decision was made, unless QCAT considers it necessary in the interests of justice to allow new evidence; and
(b) decide the review of the decision in accordance with the same law that applied to the making of the original decision.
In determining this review the Tribunal is only examining the decision of 11 November 2011 that was made by the delegate of the Commissioner.

The Law

The contract was assessed with transfer duty under ss 8(1), 9(1)(b), and 10(1)(a) of the Duties Act 2001 (the Duties Act). In the self-assessment made by Miss Ryan’s solicitor, transfer duty was calculated at concessional rates under ss 8(2), 11(7) and 91 of the Duties Act. None of these sections seem to be in contention.
The concessional duty was claimed by Miss Ryan lodging a Form 2.1 which required her to make certain declarations. Section 95 refers to the approved form for applying for the concession and states as follows:
95 Application for concession
An application for a concession for transfer duty on a dutiable transaction under this division must be made in the approved form.
The Tribunal assumes that the Form 2.1 is the “approved form” but has sighted no evidence in this regard. There is no submission to the contrary.
In the Form 2.1 Miss Ryan declared:
“I declare that –
·I have read the “Guide to claiming the home/first home concession” and retained it for future reference.
·I have occupied, or will occupy (…) the residence on the land that I have acquired as my home, starting within 1 year after the transfer date for the land.
·I am eligible for the concession claimed and I will notify the Office of State Revenue if I (…) fail to occupy the residence as my home within 1 year after the transfer date, or if I dispose of part or all of the land prior to, or within 1 year after I start to occupy the residence as my home.
·The information supplied is true and correct.”
Miss Ryan submits that she occupied the property within 1 year and this is not in contention. She asserts that the second dot point is misleading in that she did not “dispose” of the property by renting it for a period of 4 months. She did not rent it after she started to occupy the residence as her home.
Miss Ryan’s submission raises the question of what is required to qualify for the concessional duty.
Part 9 of the Duties Act refers to the Concessions for Homes and the relevant sections state the following:
Part 9 Concessions for homes
Division 1 Preliminary
85 Purpose of pt 9
The purpose of this part is to provide for concessions for transfer duty for a dutiable transaction that is—
(a)     the transfer, or agreement for the transfer, of a home or first home or …;
86 What is a home and a first home
(1) A residence is a person’s home if the person’s occupation date for the residence is within 1 year after the person’s transfer date for the residential land.
Note—
For transfer duty to be imposed for residential land, it must be in Queensland, see section 10(1)(a).
(2) A person’s home is the person’s first home if, before acquiring the home—
(a)     the person did not hold, and never before held, an interest in other residential land in Queensland or elsewhere other than—
(i) as trustee for another person; or
(ii) as lessee; or
(iii) as the holder of a security interest; and
(b)     the person was not, and had never been, a vacant land concession beneficiary in relation to land other than the residential land on which the home is constructed.
88 What is a person’s occupation date for a residence
A person’s occupation date for a residence is the date the person, as owner of the residence, starts occupying it as the person’s principal place of residence.
89 What is a person’s transfer date for residential land or vacant land
A person’s transfer date for residential land or vacant land is the date the person is entitled to possession of the land under the dutiable transaction that is—
(a)     the transfer, or agreement for the transfer, of the land; or
(b)     ...
90 What is the dutiable value of residential land or vacant land
….
Division 3 Concessions for homes and first homes 91 Concession—home
(1)This section applies if—
(a)     a dutiable transaction is 1 of the following—
(i) the transfer, or agreement for the transfer, of residential land;
(ii) …; and
(b)     either of the following apply—
(i) the transferees, … are individuals … and the residence will be their home;
(ii)
(2) The transfer duty imposed on the dutiable transaction is the amount worked out under subsection (3) or (5).
(3) If the dutiable value of the residential land is not more than $350000, the transfer duty is the total of—
(a)     $1 for each $100, or part of $100, of the dutiable value of the land; and
(b)     the amount worked out by deducting, from transfer duty on the dutiable value of the dutiable transaction, the amount worked out by applying the relevant rate to the dutiable value of the residential land.
(4) For subsection (3), the relevant rate is the rate of transfer duty stated in schedule 3, column 2, opposite the part of the dutiable value of the dutiable transaction attributable to the dutiable value of the residential land stated in schedule 3, column 1.
(5) …
92 Concession—first home
(1) This section applies if—
(a)     a dutiable transaction is 1 of the following—
(i) the transfer, or agreement for the transfer, of residential land or vacant land;
(ii)…
(b)     either of the following apply—
(i) the transferees, … are all individuals of at least 18 years of age on the day the liability for transfer duty arises, the residence will be the first home of all of the transferees, … and none of the transferees, … are trustees; and
(c)     either—
(i) the unencumbered value of the land is not more than—
(A)for residential land—$500000
(B)…
(C)
(2) The transfer duty imposed on the dutiable transaction is as follows—
(a)     for a dutiable transaction mentioned in subsection (1)(a) in relation to residential land—the amount of transfer duty worked out under section 91 less the concession amount stated in schedule 4A;
…
Applying the facts in this case to the legislation, under s 88 Miss Ryan’s occupation date was 14 February 2010 when she started occupying the property as her principal place of residence. This was within 1 year of her transfer date, which was 12 October 2009, and accords with s 86.
The Tribunal finds that Miss Ryan qualified for the concessional duty under Part 9 as the relevant transfer was of residential land; she is an individual and the residence was her home from 14 February 2010. The duty is required to be calculated, and was calculated, under s 91. The Tribunal will return to the calculation of the duty later.
The Tribunal notes that in the Dictionary “occupation requirement” is defined as follows:
occupancy requirement, for a person’s residence, means the person’s occupation date for the residence is within 1 year or …after the transfer date for the land, …under section 86(1) or …
Strangely, occupancy requirement is not referred to in Part 9 but first appears in the heading of s 154 in Part 14 of the Duties Act. It is not further mentioned in the body of s 154 which is unusual drafting.
As a result of investigative activity by the Commissioner, Miss Ryan received a reassessment notice dated 17 May 2011. The amount reassessed was as follows:
·Further transfer duty – $5,100;
·Penalty tax of 25% – $1,275;
·UTI – $1,614.14.
Miss Ryan objected to the reassessment but by letter dated 11 November 2011, the Commissioner disallowed the objection. Miss Ryan paid the reassessment in full on 23 November 2011 and applied to QCAT for a review on 22 December 2011.
The Commissioner submits that because of s 154, the Commissioner must make a reassessment because Miss Ryan disposed of the property prior to occupation of 14 February 2010. The Commissioner also refers to her having signed the declaration that she would not dispose of it.
Section 154 comes within Part 14 Reassessments for transfer duty Division 1 Reassessments for concessions for homes.
The relevant parts of s 154 state as follows:
154 Reassessment—noncompliance with occupancy requirements
(1) This section applies if—
(a)     transfer duty on a dutiable transaction that is 1 of the following is assessed on the basis of a concession under section 91, 92, 93 or 93A—
(i) the transfer, or agreement for the transfer, of residential land or vacant land;
(ii) …and
(b)     either of the following happens other than because of an intervening event—
(i) a transferee, lessee or vested person for land disposes of the land before the occupation date;
(ii) a transferee’s, lessee’s or vested person’s occupation date for the residence on the land is not within—
(A) if the dutiable transaction related to residential land—1 year after the transfer date for the land; or
(B)...
(2) For subsection (1)(b)(i), a transferee, lessee or vested person for land disposes of land if the lessee of a home or vacant land lease surrenders the lease or the transferee, lessee or vested person transfers, leases or otherwise grants exclusive possession of, part or all of the land, to another person, other than if—
(a)     another person (the occupier) has exclusive possession of the land before the occupation date; and
(b)     the occupier—
(i) is the transferor of the land, or the owner of the land immediately before the vesting; or
(ii) has exclusive possession of the land under a lease granted before the transfer date; and
(c)     the occupier—
(i)if paragraph (b)(i) applies—vacates the land as soon as reasonably practicable or within 6 months after the transfer date, whichever is the earlier; or
(ii) if paragraph (b)(ii) applies—vacates the land on the termination of the current term of the lease, or within 6 months after the transfer date, whichever is the earlier.
(2A) …
(2B) ...
(3) The commissioner must make a reassessment to impose transfer duty on the dutiable transaction as if the concession had never applied to the transferee, lessee or vested person.
(4) ...
(5) In this section— home or vacant land lease means a lease—
(a)     of residential land on which a home or first home is constructed or of vacant land on which a first home is to be constructed; and
(b)     for which a premium, fine or other consideration is payable.
Section 154(1)(a) applies here as the transfer duty was assessed on the basis of a concession under s 91. The relevant transfer, or agreement for the transfer, was of residential land.
Miss Ryan can correctly argue that s 154(1)(b)(ii) does not apply because her occupation date of 14 February 2010 was within 12 months of the transfer date of 12 October 2009.
However, sub-section 154(1)(b)(i) applies here as Miss Ryan did lease (or rent) the property before her occupation date of 14 February 2010.
“Intervening event” is defined in the Dictionary as follows and is not relevant here on the basis of the evidence presented to the Tribunal:
intervening event means—
(a) a natural disaster, including, for example, fire and flood; or
(b) the death or incapacity of a transferee, lessee or home borrower to whom section 153, 154 or 291 applies; or
(c) another event prescribed under a regulation.
Therefore, despite the fact that Miss Ryan initially qualified for the concessional transfer duty, the Tribunal finds that, because she breached sub-section 154(1)(b)(i), the commissioner must make a reassessment to impose transfer duty on the dutiable transaction as if the concession had never applied to Miss Ryan.
The Tribunal accepts the Commissioner’s submission that there is no discretion available here under sub-section 154(1)(b)(i).
The Tribunal accepts that, despite the obscurity of the provision in a different part of the Duties Act, Miss Ryan cannot rely upon her ignorance of the legislation as an excuse.
In Ostrowski v Palmer [2004] HCA 30 Gleeson CJ and Kirby J stated that:
“Professor Glanville Williams said that almost the only knowledge of law that many people possess is the knowledge that ignorance of the law is no excuse when a person is charged with an offence. This does not mean that people are presumed to know the law. Such a presumption would be absurd. Rather, it means that, if a person is alleged to have committed an offence, it is both necessary and sufficient for the prosecution to prove the elements of the offence, and it is irrelevant to the question of guilt that the accused person was not aware that those elements constituted an offence.”

The Commissioner also submits that s 155 of the Duties Act was not complied with by Miss Ryan. Section 155 states as follows:
155 When transferees, lessees and vested persons for land must give notice for reassessment
(1)    This section applies if a notifiable event happens after an assessment, on the basis of a concession under section 91, 92, 93 or 93A, of transfer duty on a dutiable transaction that is 1 of the following (each a relevant transaction)—
(a) the transfer, or agreement for the transfer, of residential land or vacant land;
(b) the acquisition, mentioned in section 85(b), of a lease of residential land or vacant land;
(c) the vesting, mentioned in section 85(c), of residential land or vacant land.
(2)    Within 28 days after the notifiable event happens, each transferee, lessee or vested person for land in relation to the relevant transaction must—
(a) give notice in the approved form to the commissioner; and
(b) ensure the instruments required for the assessment of duty for the transaction are lodged for a reassessment of transfer duty on the transaction.
Note—
Failure to give the notice is an offence under the Administration Act, section 120.
(3)    In this section—
lease does not include a lease or sublease entered into as part of a retirement village leasing arrangement.
notifiable event, for residential land or vacant land, means—
(a) the transfer, lease or otherwise granting of exclusive possession of all or part of the land within 1 year after the transferee’s, lessee’s or vested person’s occupation date for the residence on the land; or
(b) failure to comply with the occupancy requirement for the residence on the land.
Section (a) of the definition of notifiable event does not apply because Miss Ryan did not lease the property after her occupation date.
Section (b) of the definition of notifiable event also does not apply because the occupancy requirement as defined in the Duties Act required Miss Ryan to occupy the property within 12 months of 12 October 2009 which she did (14 February 2010).
Miss Ryan has paid the full amount of the transfer duty and does not challenge the calculation of that duty.

Penalty Tax and UTI

The Tribunal must now assess the Commissioner's submissions with regard to penalty tax and Unpaid Tax Interest (UTI).
The Commissioner submits that:
Under section 58(2)(c) of the TAA, penalty tax of 75% must be assessed on the difference in primary tax that was reassessed. Under section 54 of the TAA, a taxpayer must pay interest on the primary tax payable that is unpaid from time to time. Under section 60 of the TAA, the Commissioner may remit the whole or part of UTI or penalty tax.
The Commissioner then submits that:
… Although the Commissioner does not have any discretion to waive or reduce the primary tax payable under a reassessment, the Commissioner does have a discretion to remit the penalty tax or UTI payable after consideration of the Applicant's circumstances.

Penalty Tax

The Commissioner submits that he did take the Applicant's circumstances into account when determining the amount of penalty tax and interest that was to be imposed. Penalty tax was accordingly remitted from 75% to 25%.
According to the submissions, the Commissioner determined the reduction in penalty tax in accordance with Public Ruling TAA060.3 -Penalty tax - home concessions. This ruling provides guidance on the circumstances in which the Commissioner's discretion to remit penalty tax is exercised.
Section 58 of the TAA sets out a person’s liability for penalty tax and states as follows:
58 Liability for penalty tax
(1) A taxpayer is liable for an amount (penalty tax) if—
(a)     the commissioner makes a default assessment under section 13(1)(a) or (b); or
(b)     the commissioner makes a reassessment and the original assessment was a default assessment under section 13(1)(a) or (b); or
(c)     the primary tax assessed on a reassessment, other than under a reassessment mentioned in paragraph (b), is more than the primary tax assessed on the original assessment or an earlier reassessment.
(2) Penalty tax must be assessed as follows—
(a)     if subsection (1)(a) applies—an amount equal to 75% of the primary tax assessed;
(b)     if subsection (1)(b) applies—an amount equal to 75% of the reassessed primary tax;
(c)     if subsection (1)(c) applies and the primary tax assessed on the last reassessment is more than the primary tax assessed on the original assessment—an amount equal to 75% of the difference between the 2 amounts;
(d)     if subsection (1)(c) applies and the primary tax assessed on the last reassessment is less than the primary tax assessed on the original assessment but more than the primary tax assessed on an earlier reassessment—an amount equal to 75% of the difference between the primary tax assessed on the last reassessment and the lowest primary tax assessed on an earlier reassessment.
(3) The commissioner may increase the amount of the penalty tax by not more than 20% of the penalty tax under subsection (2) if the commissioner is satisfied the taxpayer—
(a)     has not complied with section 28; or
(b)     has hindered or prevented the commissioner from becoming aware of the nature and extent of the taxpayer’s liability for tax.
Here the primary tax assessed on the reassessment was more than the primary tax assessed on the assessment making Miss Ryan liable for penalty tax. Under sub-section 58(2)(c) the penalty tax is an amount equal to 75% of the difference between the 2 amounts.
Section 60 of the TAA, however, gives the Commissioner a discretion to remit interest and penalty tax and states as follows:
Division 2 Remission of interest and penalty tax 60 When commissioner may remit unpaid tax interest and penalty tax
(1) The commissioner may remit the whole or part of unpaid tax interest or penalty tax.
(2) The remission of assessed interest or penalty tax must be made by assessment.
(3) Despite section 26(1), the commissioner is not required to give an assessment notice for the assessment if, after the remission and the application of payments received by the commissioner for the taxpayer’s assessment liability, the taxpayer has no assessment liability.
Miss Ryan initially paid a concessional transfer duty of $2,670. The Commissioner on the reassessment calculated the transfer duty at $7,770. The difference is $5,100. This amount is payable and has been paid.
The issue is whether or not penalty tax is payable, and if so, the amount. Under ss 58(2)(c) the penalty tax is 75% on the amount of $5,100 but the Commissioner remitted the tax from 75% to 25% and imposed an amount of $1,275.
Is there any justification in the evidence before the Commissioner for a further remit of this penalty tax under the circumstances?
In its Notice of Decision and Statement of Reasons dated 11 November 2011, the Commissioner, discussed PR TAA060.3, which sets outs the Commissioner’s views in relation to how the discretion in s 60 of the TAA will be exercised to remit penalty tax in reassessments. The Commissioner took into account that Miss Ryan had failed to notify the Commissioner as the Commissioner stated she was required to do under s 155 of the Duties Act. However, the Tribunal has found that Miss Ryan was not required to notify the Commissioner under this section. As the leasing of the property before Miss Ryan’s occupation date was not a notifiable event, the Tribunal finds that Miss Ryan’s signing of the Declaration does not assist the Commissioner on this point.
In this regard the Tribunal notes that the Declaration signed by Miss Ryan and quoted in paragraph 18 of these Reasons differs from what the Commissioner states, in the letter to Miss Ryan dated 14 April 2011, that the Declaration in Form 2.1 to have required with regard to notification. The Declaration signed by Miss Ryan did not require Miss Ryan to notify the Office of State Revenue within 28 days if she “(b) disposed of all or part of the Property without having occupied the property as your home at all”. This is a misstatement of the Declaration Miss Ryan signed.
Miss Ryan was qualified for the concessional transfer duty when she claimed and was not required by the Declaration or s 155 of the Duties Act to notify the Commissioner when she leased the property for a short period which still allowed her to occupy the property within 6 months of the transfer date and did occupy the property as her residence, thereby satisfying the occupancy requirement as defined in the Duties Act. The lease was not a notifiable event.
When Miss Ryan purchased the property it was subject to a tenancy and she intended to take up permanent residency when the tenants moved out. Unfortunately for her plans the tenants moved out unexpectedly and because of her shared tenancy she was unable to move in at this time. The Tribunal finds that Miss Ryan did not set out to exploit or abuse the concession but “unexpectedly encountered circumstances leading to a change in (her) previous plans”. However, she maintained her intention to take up permanent residency and did so on 14 February 2010, within 6 months of the transfer.
The Tribunal finds that “the correct and preferable decision” arises from TAA060.3.3 Category 1, Case A. However, in these circumstances where Miss Ryan voluntarily disclosed immediately after being notified of an investigation the Tribunal, in reliance on Attachment 2, considers that the remission of penalty tax to 10% is appropriate.
The Tribunal accepts the Commissioner’s submission that a full remission of penalty tax is not appropriate in the circumstances.
Therefore, the Tribunal sets aside the decision to impose a penalty tax of $1,275 and substitutes its own decision that the penalty tax imposed is $510.

UTI

The last issue is that of the unpaid tax interest (UTI). This is referred to in s 54 of the TAA which relevantly states the following:
54 Unpaid tax interest
(1) A taxpayer must pay interest (unpaid tax interest) on the amount of primary tax payable by the taxpayer and unpaid from time to time (unpaid primary tax).
(2) Unpaid tax interest, other than late payment interest, accrues daily at the prescribed rate on the unpaid primary tax for the period starting on the start date and ending on the date the primary tax is paid in full, both dates inclusive.
(2A) Late payment interest accrues at the prescribed rate on the unpaid primary tax—
(a)     on the day of the week prescribed under a regulation first happening after the start date; and
(b)     weekly after the first accrual under paragraph (a).
(3) Any unpaid tax interest that has accrued when an assessment is made (assessed interest) must be included in the assessment.
(4) For subsections (2) and (2A)(a), the start date is the day after—
(a)     for a return self assessment—the date the return is required to be lodged under the revenue law for the self assessment; or
(aa) for a standard self assessment—
(i) the due date for the self assessment; or
(ii) if the self assessor has not complied with one or more lodgement requirements for the self assessment—the date that is the same number of days before the due date for the self assessment as the number of days in the periods of noncompliance with the lodgement requirements; or
(iii) if the liable party has not complied with the Duties Act 2001, section 471E—the date that is the same number of days before the due date for the self assessment as the number of days in the period of noncompliance with the Duties Act 2001, section 471E; or
(iv) if subparagraphs (ii) and (iii) both apply—the date that is the same number of days before the due date for the self assessment as the total number of days of noncompliance; or
(b)     for a default assessment of a taxpayer’s liability for tax required or permitted to be made by a self assessment—the date the return or transaction statement is required to be lodged under the revenue law for the self assessment; or
(c)     for another original assessment—
(i) the due date for the assessment; or
(ii) if the taxpayer has not complied with 1 or more information or lodgement requirements for the assessment—the date that is the same number of days before the due date for the assessment as the number of days in the periods of noncompliance with the information or lodgement requirements; or
(d)     for a reassessment of a self assessment—the date mentioned in paragraph (a) or (aa) for the assessment; or
(e)     for a reassessment of another original assessment—the date mentioned in paragraph (b) or (c) for the assessment.
Example for subsection (4)(c)(ii)—
If a taxpayer who is required to comply with a lodgement requirement by 10 March does not comply with the requirement until 15 March, the period of noncompliance under subsection (5) is 5 days. If the due date for the assessment made is 17 April, the start date is 13 April.
(5) For subsection (4)(aa)(ii), (iii) and (iv) or (c)(ii)—
(a)     a period of noncompliance ends on the date the commissioner issues a default assessment for the noncompliance; and
(b)     the date on which the requirement is complied with is included in calculating a period of noncompliance.
(6) For a reassessment—
(a)     the unpaid primary tax is the amount of the reassessed primary tax that is unpaid; and
(b)     any assessed interest included in the reassessment replaces any previously accrued unpaid tax interest.
Example for subsection (6)—
The assessment for the example for subsection (4)(c)(ii) is issued for $10000 primary tax and before any payment under the original assessment is made. A reassessment is issued on 24 April for $12000 primary tax.
If the prescribed rate for late payment interest is 10% per year, the late payment interest that has accrued on the $10000 when the reassessment is made (namely on and from 13 April to and including 24 April) is $32.87. When the reassessment is made, assessed interest is calculated on the $12000 unpaid reassessed primary tax on and from 13 April to and including 24 April. This replaces the $32.87 interest previously accrued.
If a payment of $10000 is made on 12 April, the assessed interest for the reassessment would be calculated on the unpaid reassessed primary tax of $2000 on and from 13 April to and including 24 April.
(7) In this section—
liable party see the Duties Act 2001, section 471A. total number of days of noncompliance means the total number of days worked out by adding the number of days in the period of noncompliance in subsection (4)(aa)(ii) to the number of days in the period of noncompliance in subsection (4)(aa)(iii).
Under TAA060.1.3, the Commissioner will only exercise the discretion to remit all or part of UTI in exceptional circumstances. Examples are given of exceptional circumstances. The Tribunal finds that no “exceptional circumstances” are raised here. Therefore, the Tribunal finds the decision not to remit UTI was correct and preferable.
UTI will accrue from the start date for reassessments as stated in s 54(4) of the TAA, which in this case was 15 days from 10 September 2009 or 25 September 2009. However, the reassessment used a start date of 10 October 2009 to calculate the UTI and the Commissioner does not intend to revisit the calculation of UTI on this basis.
Therefore, after acknowledging the calculation error in Miss Ryan’s favour which the Commissioner does not seek to vary, the Tribunal confirms the decision that Unpaid Tax Interest in the sum of $1,614.14 is payable.

Comment

In the opinion of the Tribunal, the Duties Act Part 9 should have a Note inserted referring to the Occupancy Requirement in s 154 which currently is somewhat obscure.

ORDERS

The Tribunal makes the following Orders:
1.The decision to disallow an objection against the reassessment of transfer duty on Miss Ryan is set aside.
2.The decision that Further transfer duty in the sum of $5,100 is payable is confirmed.
3.The Tribunal sets aside the decision to impose a penalty tax of $1,275 and substitutes its own decision that the penalty tax imposed is $510.
4.The decision that Unpaid Tax Interest in the sum of $1,614.14 is payable is confirmed.