Sutton v Chief Commissioner of State Revenue

[2024] NSWCATAD 338

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Sutton v Chief Commissioner of State Revenue [2024] NSWCATAD 338

Hearing dates:

On the papers

Date of orders:

12 November 2024

Decision date:

12 November 2024

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S E Frost, Senior Member

Decision:

The assessment of interest included in the Land Tax Assessment Notice dated 7 December 2023 is confirmed.

Catchwords:

TAXES AND DUTIES – Land tax – Applicant fails to notify Respondent of errors in assessment – Errors ultimately corrected and revised assessment made – Interest imposed – Whether there are grounds for remission

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Land Tax Management Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Texts Cited:

State of New South Wales – Government Gazette Number 648, 17 December 2021

State of New South Wales – Government Gazette Number 562, 2 December 2022

Category:

Principal judgment

Parties:

Mark Sutton (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Applicant (Self-Represented)
Crown Solicitor (Respondent)

File Number(s):

2024/00173385

Publication restriction:

No restriction

REASONS FOR DECISION

Introduction

1. The Applicant, Mark Sutton, disputes an assessment of interest charged to him in relation to his land tax liability for the land tax years 2022 and 2023.

2. The Applicant owns multiple properties in New South Wales and has paid land tax for many years. An error occurred in relation to the 2022 and 2023 land tax years that led to the Applicant paying part of his land tax late. The Applicant claims the Chief Commissioner was either wholly or largely responsible for the error, and wants the interest removed or reduced.

3. I have decided that the interest was properly imposed and that there are no grounds for remission. These are my reasons.

Jurisdiction and onus of proof

4. This is an application under s 96 of the Taxation Administration Act 1996 (NSW) (TA Act) for an administrative review of the assessment of interest as specified in a Land Tax Assessment Notice dated 7 December 2023. The administrative review is conducted under the Administrative Decisions Review Act 1997 (NSW) (ADR Act).

5. The Tribunal’s task is to decide what the correct and preferable decision is having regard to the material before it: ADR Act, s 63(1). The Applicant has the onus of proving his case: TA Act, s 100(3). That means he must establish that he was not liable to the interest in the first place, or that it should be remitted either in whole or in part. He must prove all matters necessary for the Tribunal to answer the statutory questions in his favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities.

The facts

6. Among the many properties the Applicant has owned over the years is a property in North Ryde (the Property), which he has owned since 2002. Originally it was a unit in a strata plan and was identified under property identification (PID) xxx612.

7. In January 2021 Ryde Council approved a subdivision which resulted in the conversion of the Property to Torrens title. It was given a new identification number, PID xxx895. In November or December 2021 the Property was registered under the new PID with the Land Titles Office (LTO). It is not clear what additional information was provided to the LTO at the time, nor who provided it, but the papers show the address for service recorded by the Valuer-General as an address in Eastwood (s 58 docs, Tab 35). That is an address where the Applicant had once lived but which he had apparently left in 2016. Why the Eastwood address was recorded as the Applicant’s address for service, and by whom, is unclear.

8. In any event, when the Chief Commissioner was informed about the land identified in PID xxx895 (which, with a new PID, appeared to be a new or different property), nobody in his office was able to match it with the Applicant’s existing land tax account, with Client ID xxx666. A new Client ID xxx923 was opened for Mark Joseph Sutton as the owner of the Property. That person appeared to own no other land in New South Wales apart from the Property.

9. On 21 February 2022 the Chief Commissioner issued a Land Tax Assessment Notice for the 2022 land tax year to the Applicant under Client ID xxx666 (LTAN 2022/666: s 58 docs, Tab 6). The Notice was sent to an address in Lionel Avenue where the Applicant has lived since 2016. The Applicant acknowledges he received the Notice. At page 4 of the Notice is a list of properties (labelled ‘Aggregated land’) on which the assessment is based. The Property is not included in the list and the Applicant took no action to alert the Chief Commissioner as to the omission.

10. On 4 January 2023 the Chief Commissioner issued a Land Tax Assessment Notice for the 2023 land tax year to the Applicant under Client ID xxx666 (LTAN 2023/666: s 58 docs, Tab 10). The Notice was sent to the same address in Lionel Avenue where the Applicant has lived since 2016. The Applicant acknowledges he received the Notice. At page 4 of the Notice is a list of properties (labelled ‘Aggregated land’) on which the assessment is based. The Property is not included in the list and, once again, the Applicant took no action to alert the Chief Commissioner as to the omission.

11. Meanwhile, on 27 July 2022 the Chief Commissioner wrote to the Applicant, under Client ID xxx923, at the (incorrect) Eastwood address to inform him that:

… our records indicate that you own land which may have a land tax liability. We have listed the land details over the page and it is important you review this information. (emphasis in the original)

12. The land listed is the Property, identified as PID xxx895.

13. In the letter the Applicant was told he needed to login to Land Tax online to update his records if, among other things, his contact details were incorrect; or he wished to claim an exemption; or the land information was not correct as at 31 December; or he was the owner of additional land at 31 December; or he was not the owner of the property listed.

14. Having left the Eastwood address in 2016, the Applicant was unaware of this correspondence. The letter was returned, as unclaimed mail, to the Chief Commissioner.

15. On 30 November 2022, having heard nothing in response to the July 2022 correspondence, the Chief Commissioner issued a Land Tax Assessment Notice for the 2022 land tax year to the Applicant under Client ID xxx923 (LTAN 2022/923). The Notice was sent to the Eastwood address and identified the Property as the only land included in the assessment. The Applicant was unaware of this correspondence.

16. On 2 February 2023 the Chief Commissioner issued a Land Tax Assessment Notice for the 2023 land tax year to the Applicant under Client ID xxx923 (LTAN 2023/923). This Notice, like the one for the 2022 land tax year, was sent to the Eastwood address and identified the Property as the only property included in the assessment. Once again, the Applicant was unaware of this correspondence.

17. The Chief Commissioner also sent reminder payment notifications about LTAN 2022/923 and LTAN 2023/923 to the Applicant’s email address but it is not clear when these were sent. Nor is it clear how the Chief Commissioner’s officers were able to establish the Applicant’s email address belonged to the newly created Client ID xxx923. But it doesn’t really matter, since the email messages went to the Applicant’s junk email folder. The Applicant didn’t discover them until much later, and then only because one of the Chief Commissioner’s officers suggested he check to see whether the reminder notices had ended up there.

18. In around December 2023 the Chief Commissioner conducted a compliance review, during which the duplicated Client IDs were discovered, as well as the unpaid land tax on LTAN 2022/923 and LTAN 2023/923.

19. On 7 December 2023 the Chief Commissioner issued, in respect of the 2022 and 2023 land tax years, a new notice of assessment that included the Property as well as all the other properties owned by the Applicant at the relevant taxing dates (s 58 docs, Tab 12). Adjustments were made for the amounts of land tax already paid on LTAN 2022/666 and LTAN 2023/666, and interest totalling $5,805.66 was imposed. That is the interest amount that the Applicant is now disputing.

The law

20. Land tax is an annual tax, levied on the taxable value of all land in New South Wales unless it is exempt: Land Tax Management Act 1956 (NSW) (LTM Act), s 7.

21. The tax is charged on land owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied: LTM Act, s 8.

22. It is one thing to provide that land tax is ‘levied’ and ‘charged’ on land, but there has to be a mechanism by which the Chief Commissioner can keep track of property ownership and administer the land tax law, since he is the one who has been given that responsibility. The mechanism is found in s 12 of the LTM Act. Under that section the Chief Commissioner may, by order published in the Gazette, require all persons, or specified classes of persons, to furnish land tax returns. And that is precisely what he does, every year. The reason for making such an order is obvious – the Chief Commissioner doesn’t have all the information about a taxpayer’s affairs, but the taxpayer does. And it is the taxpayer’s responsibility to bring the Chief Commissioner fully into the picture, by lodging returns as required by the Order.

23. For each of the 2022 and 2023 land tax years (which are the relevant land tax years in this case), the Chief Commissioner made an Order that was published in the Government Gazette. Using the 2022 land tax year as an example, clauses 2 to 12 of the Order published in the Government Gazette No. 648 dated 17 December 2021 require specified classes of persons to lodge an ‘initial return’. None of those clauses apply to the Applicant.

24. Clauses 15 to 19 require specified classes of persons to lodge a ‘variation return’. Clause 15 is the most comprehensive of those clauses. Relevantly it provides as follows:

Persons Who Must Lodge a Variation Return

[15]   A variation return is required to be lodged by a person who receives an incorrect notice of assessment of land tax. An incorrect notice of assessment of land tax may occur in the following circumstances:

…

(b)   details of land owned by the person as shown on the notice are incorrect (including but not limited to inclusion of land disposed of prior to midnight on 31 December 2021; land acquired prior to midnight on 31 December 2021 that has not been included in the assessment; the percentage interest in land is incorrect for land that is jointly owned; land shown in an assessment is owned by the person in the capacity of trustee but is not shown as such; or an incorrect property description is shown)

…

(f)   the calculation of tax is incorrect (being either too high or too low)

…

25. Clauses 20 and 21 are also relevant. They provide:

Due Date for Lodgement of Variation Returns

[20]   A variation return is required to be lodged by the first instalment date shown on the notice of assessment. If the notice of assessment shows that no tax is payable, the due date for lodgement of a variation return is 40 days after the ‘Issue Date’ shown on the notice.

[21]   Penalty tax and interest may be imposed under the Land Tax Management Act 1956 and the Taxation Administration Act 1996 for failing to lodge a return by the due date.

26. Identical provisions are to be found in the corresponding clauses of the Government Gazette No. 562 dated 2 December 2022, and relevant to the 2023 land tax year.

27. Section 72 of the LTM Act provides that a taxpayer who fails or neglects to furnish any return as and when required by the Chief Commissioner is taken to have committed a tax default for the purposes of Part 5 of the TA Act.

28. Under s 21 of the TA Act, if a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid, calculated on a daily basis. The interest rate is the sum of the market rate component, and the premium component: TA Act, s 22(1).

29. Section 25 of the TA Act provides for the remission of interest. On 1 February 2024, s 25 was amended to provide as follows:

25 Remission of interest

(1)   The Chief Commissioner may remit interest.

(2)   The Chief Commissioner may issue guidelines setting out how interest must be remitted under this division.

(3)   If guidelines are issued, interest must be remitted only in accordance with the guidelines.

(4)   The imposition or remission of penalty tax is not relevant to the imposition or remission of interest.

30. Prior to that amendment, s 25 provided:

25 Remission of interest

The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount.

The Applicant’s case

31. The Applicant’s case boils down to the following propositions:

1. The delay in payment of the correct amount of land tax for the two land tax years in question was caused by the Chief Commissioner’s administrative errors, particularly the creation of separate Client IDs and the sending of notices to the wrong address.

2. The Applicant was unaware that the Property had been excluded from the original notices (LTAN 2022/666 and LTAN 2023/666) due to the new Client ID and ‘had no reasonable way to suspect such an error without being properly notified by the [Chief Commissioner]’.

3. The Applicant does not accept that he had an obligation to notify the Chief Commissioner of the omission of the Property from those assessment notices, as he ‘was not informed by the [Chief Commissioner] of the existence of multiple client IDs’.

4. The interest imposed is unfair and should be remitted due to the administrative errors and inadequate communication on the part of the Chief Commissioner.

Consideration of the Applicant’s case

32. It is regrettable that the Chief Commissioner failed to match PID xxx895 to the Applicant’s land tax client record in December 2021. But the Applicant places far too much emphasis on the creation of the second Client ID and the sending of notices to the wrong address to explain away his own tax default.

33. As a person who has been paying land tax for many years, the Applicant had obligations he should have been aware of. He was specifically told about those obligations in the two land tax assessment notices he received in early 2022 and early 2023 (LTAN 2022/666 and LTAN 2023/666). At page 2 of each of the notices is the following information:

If you believe your Assessment is incorrect

If you have additional information that we haven't previously considered, you should lodge a return. You should do this through [the land tax website] on or before the first due date of this notice.

34. In each notice the parcels of land taken into account by the Chief Commissioner to make the assessment are clearly listed on page 4. In LTAN 2022/666 there are 7 parcels listed; in LTAN 2023/666 there are 3. The Property is not included in either list. The Applicant had ‘additional information’ – the fact that he owned the Property in addition to the parcels identified in the notice – that hadn’t previously been considered. He should have lodged a variation return. His circumstances are squarely within clause 15 of the Orders published in the Gazette.

35. While the title to the Property changed in 2021 from strata to Torrens, the Applicant had owned the Property since 2002. Most likely he had paid land tax on it for many, if not all, of the intervening years. It should have taken no more than a cursory glance at the paperwork to realise there was a mistake here. And if he had taken that glance, the position would have been corrected quickly, without fuss and without the imposition of interest.

36. It is not the Chief Commissioner’s fault that the Applicant paid insufficient attention to the assessment notices. It is not the Chief Commissioner’s fault that the Applicant failed to comply with his obligation to lodge a variation return. And these are the factors that led to the tax default, not the creation of a second Client ID or the use of an incorrect mailing address or the fact that the Applicant’s email service provider bounced the reminder emails into the Applicant’s junk email folder.

37. As for the Applicant’s claims in [31](b) and (c) of these reasons, they are entirely without merit. The Applicant was not unaware that the Property had been excluded from the assessments: page 2 of each notice made that as clear as day. And he certainly did have an obligation to notify the Chief Commissioner of the omission of the Property from the assessment notices. The existence of the second Client ID is a distraction that has no impact on that obligation.

38. Failure to lodge a variation return is a tax default (LTM Act, s 72), and so is late payment of tax (TA Act, s 3(1), definition of ‘tax default’). Interest becomes payable under TA Act s 21, but it can be remitted under TA Act s 25.

39. In this case there would have been no tax default if only the Applicant had paid attention to the assessment notices. He should have notified the Chief Commissioner the Property had been omitted from the assessments. It is not asking too much of a landowner who has been paying land tax for several years, that he read the paperwork the Chief Commissioner sends him and correct any errors or omissions. Not to do so amounts to an obvious failure to take reasonable care: the level of care that would be expected of any reasonable person in such circumstances.

40. It is to be expected that a person who fails to take reasonable care to comply with their tax obligations will be exposed to the assessment of interest. In a case such as this one, there need to be unusual or atypical circumstances that warrant the remission of any of the interest imposed. I have found none.

Order

1. The assessment of interest included in the Land Tax Assessment Notice dated 7 December 2023 is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 12 November 2024