Thompson v Chief Commissioner of State Revenue

[2024] NSWCATAD 266

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Thompson v Chief Commissioner of State Revenue [2024] NSWCATAD 266

Hearing dates:

On the Papers

Date of orders:

05 September 2024

Decision date:

05 September 2024

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S Higgins, Senior Member

Decision:

The 21 August 2023 reassessments of the Respondent for the 2020, 2021 and 2022 land tax years are confirmed.

Catchwords:

TAXES AND DUTIES – land tax – tax defaults – interest – remission of interest

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Land Tax Administration Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Bagnall v Chief Commissioner of State Revenue [2023] NSWCATAD 341

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19

Giunta v Chief Commissioner of State Revenue [2005] NSWADTAP 19

Golden Age & Hannas the Rocks v Chief Commissioner of State Revenue [2024] NSWSC 249

Griglio v Chief Commissioner of State Revenue [2024] NSWCATAD 212

Gunast v Chief Commissioner of State Revenue [2012] NSWADT 218

Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215

Matiushenko v Chief Commissioner of State Revenue [2023] NSWCATAD 25

Oueik v Chief Commissioner of State Revenue [2022] NSWCATAD 132

Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227

Strathavon Resort Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 200

Category:

Principal judgment

Parties:

Lisa Joy Thompson (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Solicitors:
L J Thompson (Applicant self-represented)
NSW Crown Solicitor (Respondent)

File Number(s):

2023/00336820

Reasons for decision

1. On 5 September 2023, the respondent disallowed the further objection of the applicant, Lisa Joy Thompson, to the interest component of the respondent’s 21 August 2023 land tax reassessment for the 2020, 2021 and 2022 land tax years. The interest amounts in issue are $893.00 for the 2020 land tax year, $884.27 for the 2021 land tax year and $378.54 for the 2022 land tax year.

2. Being dissatisfied with the respondent’s decision to disallow her objection, on 24 October 2023, the applicant lodged this application with the Tribunal seeking external review of the interest component of the abovementioned land tax reassessments for the 2020, 2021 and 2022 land tax years.

3. For the reasons set out below, I have decided, based on the material before the Tribunal and the relevant law, that the interest components (market and premium) of the respondent’s 21 August 2023 land tax assessment for the 2020, 2021 and 2022 land tax years is correct and should be confirmed.

Jurisdiction and role of the Tribunal

4. There is no dispute that the Tribunal has jurisdiction to hear and determine the applicant’s application: Administrative Decisions Review Act 1997 (NSW) ADR Act sections 7 and 9 and the Taxation Administration Act 1996 (NSW) (TA Act) section 96.

5. The role of the Tribunal on administrative review is to decide the correct and preferable decision, having regard to any relevant factual material before it and any applicable law: ADR Act section 63(1).

6. Section 100(3) of the TA Act provides that the applicant taxpayer has the onus of proving his or her case, which requires the applicant taxpayer to prove, on the balance of probabilities, all matters necessary for the Tribunal to answer the statutory question in his or her favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [30] to [36]. In the absence of the taxpayer discharging his or her onus, the respondent’s Assessment prevails, including the interest component of the assessment.

7. The applicant’s application came before me at a directions hearing on 21 November 2023 and 11 March 2024. On 11 March 2024, with the consent of the parties, I made an order under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) dispensing with a hearing as I was satisfied that the issues for determination could be adequately determined in the absence of the parties by considering the material the parties had lodged with the Tribunal.

Material before the Tribunal

8. In support of her case, the applicant relied on a small bundle of documents she had lodged with the Tribunal on 19 December 2023. The first document in that bundle was essentially the applicant’s submissions as to why the impost of the interest component of the assessment was inequitable and did not reflect her level of culpability given the complexity of the taxing system. Included in the submissions is a chronology of land tax re-assessments issued by the respondent between March and August 2023. Copies of these re-assessments are also included in the bundle.

9. In support of his case the respondent relied on:

1. A paginated and tabulated bundle of documents that was lodged with the Tribunal on 21 November 2023. The documents in this bundle were copies of every document or part of a document that the respondent had in his possession or under his control that he considered to be relevant to the determination of the applicant’s review application: ADR Act s 58;

2. A further small bundle of documents that was lodged with the Tribunal on 25 January 2024. The documents in this bundle were also paginated and tabulated. Included in this bundle were copies of the Transfer document of the properties purchased by the applicant in 2014, 2019 and 2022; land tax assessment notices issued to the applicant in 2015, 2016, 2020, 2021 and 2022; and Practice Note 024 of the respondent concerning ‘Interest and penalty tax guideline’; and

3. Written submissions lodged with the Tribunal on 25 January 2025.

The applicant’s case

10. In her application for review the applicant said that the grounds on which she sought review were as follows:

The State Revenue office have backcharged interest up to three years on debts only correctly assessed in September 2023. Whilst I do not agree interest should be applied to the debt, given the inaccuracies of the assessment over multiple re-iterations, if interest is to be applied I am seeking a review of the interest to be payable only by the time the original invoice payments were late. It should not be assumed, should I have received the invoice for the correct amount on the original dates, that I would have delayed payment for 3 years. I have a long history paying land tax debts which has not been taken into account by the Revenue Office.

11. As noted above, in her written submissions the applicant called for a ‘fair and equitable outcome regarding penalty interest with the understanding and acknowledgement of the complexity of our taxation system’. She submitted that there had been no intentional disregard of the taxation laws and all and prior and current assessments of land tax had been paid in full.

The respondent’s case

12. The respondent contends that the applicant has not established that she took reasonable care to comply with her tax obligations and that there are no exceptional circumstances warranting the remission of interest on the 21 August 2023 reassessment.

Background

Properties owned by the applicant

13. On 30 October 2014, the applicant acquired a residential property at Randwick (Randwick property). This property was acquired by the applicant under her then/former name.

14. On 3 July 2019, the applicant and the applicant’s husband, Joshua Thompson, acquired, as joint tenants, a residential property at Bondi (Bondi property). The applicant acquired this property in her then/former name.

15. On 15 October 2019, the applicant acquired a residential property at Byron Bay (Byron Bay property).

16. On 14 October 2022, the applicant acquired a property at Newrybar (Newrybar property). That property was made up of two parcels – PID 1654267 and PID 1669987.

17. As outlined below, until 2023, the applicant’s purchases were recorded on the respondent’s data base under the three different land tax account/Client ID numbers.

Randwick property

18. On 14 January 2016, a land tax assessment was issued to the applicant for the 2016 land tax year regarding the Randwick property. The assessment was issued under account/Client ID number xxxxxx955 and the Randwick property was assessed as liable for land tax for that year.

19. On 29 June 2016, the applicant sought an exemption from land tax for the Randwick property on the grounds it was her principal place of residence.

20. On 3 August 2016, the applicant was issued with a land tax assessment for the 2015 and 2016 land tax years regarding the Randwick property. The assessment was issued under account/Client ID number xxxxxx955 and the Randwick property was assessed as liable for land tax for the 2015 and 2016 land tax years.

21. On 29 September 2016, a land tax reassessment was issued to the applicant for the 2015 and 2016 land tax years regarding the Randwick property. The assessment was issued under account/Client ID number xxxxxx955 and the Randwick property was assessed as liable for land tax for the 2015 and exempt for the 2016 land tax year on the grounds it was the applicant’s principal place of residence: Land Tax Management Act 1956 (NSW) (LTM Act) Schedule 1A clause 2.

2020 land tax year

Byron Bay property

22. On 3 September 2020, the respondent wrote to the applicant, under land tax account/Client ID number xxxxxx319, requesting that she review her landholding details for the 2020 land tax year and if they were incorrect, to update her information online. The only landholding listed in this account was the Byron Bay property.

23. On 28 September 2020, a land tax assessment was issued to the applicant for the 2020 land tax year regarding the Byron Bay property. The assessment was issued under account/Client ID number xxxxxx319 and the Byron Bay property was assessed as liable for land tax for the 2020 land tax year. That assessment was re-issued to the applicant on 23 October 2020 as the earlier assessment had been marked ‘return to sender’.

24. On 18 January 2021, the applicant paid the first two instalments of the 28 September 2020 land tax assessment as re-issued on 23 October 2020.

Bondi property

25. On 3 September 2020, the respondent wrote to the applicant and her husband, under land tax joint account/Client ID number xxxxxx464, requesting that they review their landholding details for the 2020 land tax year and if they were incorrect, to update their information online. The only landholding listed in this account was the Bondi property.

26. On 22 September 2020, the 3 September 2020 letter was re-sent to the applicant and her husband, under land tax joint account/Client ID number xxxxxx464. The letter was sent to the Randwick property, as the earlier letter sent to the Bondi property had been marked ‘return to sender’.

27. On 16 October 2020, a land tax assessment was issued to the applicant and her husband for the 2020 land tax year regarding the Bondi property. The assessment was issued under account/Client ID number xxxxxx464 and the Bondi property was assessed as liable for land tax for the 2020 land tax year.

2021 land tax year

Byron Bay property

28. On 18 January 2021, a land tax assessment was issued to the applicant for the 2021 land tax year regarding the Byron Bay property. The assessment was issued under account/Client ID number xxxxxx319 and the Byron Bay property was assessed as liable for land tax for the 2021 land tax year.

Bondi property

29. On 10 March 2021, a land tax assessment was issued to the applicant and her husband for the 2021 land tax year regarding the Bondi property. The assessment was issued under account/Client ID number xxxxxx464 and the Bondi property was assessed as liable for land tax for the 2021 land tax year.

2022 land tax year

Byron Bay property

30. On 6 January 2022, a land tax assessment was issued to the applicant for the 2022 land tax year regarding the Byron Bay property. The assessment was issued under account/Client ID number xxxxxx319 and the Byron Bay property was assessed as liable for land tax for the 2022 land tax year.

2023 land tax year

Byron Bay, Bondi and Newrybar properties

31. On 31 January 2023, a land tax assessment was issued to the applicant for the 2022 land tax year regarding the Byron Bay property and the Newrybar property the applicant had purchased the previous year. The assessment was issued under account/Client ID number xxxxxx319 and the Byron Bay property and the Newrybar property were assessed as liable for land tax.

32. On 3 February 2023, TNR Byron Accountants (TNR), on behalf of the applicant, lodged with the respondent a Land Tax Variation Return seeking an exemption from land tax for PID 1654267 of the Newrybar property on the grounds that it was used for primary production.

33. On 13 March 2023, a land tax reassessment was issued to the applicant, under land tax account/Client ID number xxxxxx319, in respect of:

1. the Byron Bay property for the 2020 to 2023 land tax years, which was assessed as liable for land tax for each of these years;

2. the Bondi property for the 2020 to 2023 land tax years, which was assessed as liable for land tax in the 2020 land tax years and otherwise exempt on the grounds of the principal place of residence exemption;

3. the Randwick property for the 2019 to 2022 land tax years, which was assessed as liable for land tax in the each of these land tax years; and

4. the Newrybar property for the 2023 land tax year where PID 1654267 was exempt, and the other parcel (PID 1669987) was liable for land tax for that land tax year.

34. On 17 April 2023, TNR, on behalf of the applicant, lodged a further land tax Variation Return seeking an exemption from land tax for: (a) the Randwick property for the 2019 to 2021 land tax years, and (b) the Byron Bay property for the 2022 to 2023 land tax years. The ground for exemption was that these properties were the applicant’s principal place of residence at the relevant taxing date: LTM Act Schedule 1A clause 2.

35. On 20 April 2023, a land tax reassessment was issued to the applicant, under land tax account/Client ID number xxxxxx319, in respect of:

1. the Byron Bay property which was reassessed as exempt for the 2022 and 2023 land tax years - with no change to the previous assessment of liability for the 2020 and 2021 land tax years;

2. the Bondi property which was reassessed as liable for the 2021 to 2023 land tax years; and

3. the Randwick property which was reassessed as exempt for the 2019 land tax year – with no change to the previous assessment of liability for the 2020 to 2022 land tax years.

36. On 29 June 2023, the applicant lodged an objection, under land tax account/Client ID number xxxxxx319, to the reassessment of 20 April 2023 on the following grounds:

1. the Randwick property was exempt for land tax for the 2020 land tax year as it was unoccupied land intended to be used and occupied as her principal place of residence: LTM Act Schedule 1A clause 6;

2. the Randwick property was exempt from land tax for the 2021 land tax year as it was her principal place of residence: LTM Act Schedule 1A clause 6; and

3. Newrybar property PID 1669987 was exempt from land tax under section 10AA of the LTM Act.

37. On 21 August 2023, the respondent determined to allow the applicant’s objection on the following grounds:

1. the Randwick Property was exempt from land tax for the 2020 and 2021 land tax years: LTM Act Schedule 1A clause 8; and

2. the Newrybar property PID 1669987 was exempt from land tax for the 2023 land tax year: LTM Act section 10AA.

38. On 21 August 2023 the applicant was issued, under land tax account/Client ID number xxxxxx319, with a revised assessment for the 2020, 2021 and 2023 land tax years, as follows:

1. for the 2020 land tax years – the Bondi property and the Byron property were assessed as liable for land tax and the Randwick property was exempt;

2. for the 2021 land tax year - the Bondi property and the Byron property were assessed as liable for land tax and the Randwick property was exempt; and

3. for the 2023 land tax year – the Bondi property was assessed as liable for land tax, and the Byron Bay property and the Newrybar property (PID 1654267 and PID 1669987) were exempt.

Objection to interests for the 2020, 2021 and 2023 land tax years

39. Four days after the issue of the 21 August 2023 revised assessments for the 2020, 2021 and 2023 land tax years, the applicant sent an email to the respondent challenging the interest imposed in respect of the 2020, 2021 and 2022 land tax years. The interest being $893 in respect of the 2020 land tax year, $884.27 for the 2021 land tax year and $378.54 for the 2022 land tax years.

40. In her email, the applicant said:

All original Tax Assessment Notices received from 2020 - 2022 were paid on time and in full as required.

Should the original Land Tax Assessment notices for those years have included the recent Revenue NSW assumptions then we would have objected to those charges at that time. This would have resulted in the same taxable outcome but without any interest penalties. It is unreasonable to charge interest on debts from previous years that we have only become aware of now.

41. On 24 August 2023, the respondent wrote to the applicant and confirmed the interest had been correctly imposed. On 31 August 2023, the respondent provided the applicant with a breakdown of how interest had been calculated. On the same day, the applicant sent an email to the respondent again expressing her dissatisfaction with the interest assessed. The respondent responded on 5 September 2023 and advised the applicant that her objection of interest had been disallowed.

Relevant legislation

Land Tax Management Act 1956 (LTM Act)

Land tax

42. Section 7 of the LTM Act provides that land tax is to be levied and paid on the ‘taxable value’ of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under that Act).

43. Section 8 of the LTM Act provides that land tax is to be ‘charged’ on land owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. The word ‘year, is defined in that section to mean the period of twelve months commencing on the first day of January.

44. Section 9(1) of the LTM Act provides that land tax is payable by the owner of land on the ‘taxable value’ of all the land owned by the owner which is not exempt from taxation under that Act. Section 9(2) to (5) sets out how the ‘taxable value’ of land is calculated, as follows:

(2)  The taxable value of that land is the total sum of the average value of each parcel of that land.

(3) The average value of a parcel of land is to be calculated, as provided for by section 9AA, on the basis of the land value of the land.

(4)  The land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year.

(5)  The fact that there is no land value entered in the Register on 31 December in a year as the land value of the land as at 1 July in that year does not prevent land tax being levied and charged and becoming payable for any following tax year once that land value is entered in the Register and the average value is ascertained.

Land tax returns

45. Section 12 of the LTM Act provides that a taxpayer is to furnish a land tax return. That section relevantly provides as follows:

12   Taxpayer to furnish returns

(1)  The Chief Commissioner may by order published in the Gazette require all persons or specified classes of persons to furnish land tax returns for a specified year or years or for a specified year and each subsequent year.

(1A)  Every person subject to such a requirement in force in respect of a year shall furnish a land tax return to the Chief Commissioner on or before 31 January in that year.

(1B)  A land tax return required to be furnished by a person must—

(a)  set out a full and complete statement of all land owned by the person at midnight on 31 December in the previous year, and

(b)  set out, or be accompanied by, any information, as to the following, that may be required to complete the return—

(i)  the person’s land ownership,

(ii)  the eligibility of the land for an exemption from land tax or for a reduction in the taxable value of the land.

…

(2)  The Chief Commissioner may at any time require any person to furnish a return or a further and fuller return setting forth a full and complete statement of all or any land owned by the person, or in respect of which the person is agent or trustee, at midnight on the thirty-first day of December in any year including the year one thousand nine hundred and seventy-three or at midnight on the thirty-first day of October in any preceding year, with such other particulars as the Chief Commissioner requires, and whether or not any return has previously been made by that person in respect of land owned by the person, or in respect of which the person is agent or trustee, on that date.

(3)  All the provisions of this Act shall extend and apply to any return made or required in accordance with subsection (2).

46. To the extent relevant to this application, the NSW Government Gazettes dated 13 December 2019, 18 December 2020 and 17 December 2021, published the orders made by the respondent, pursuant to s 12(1) of the LTM Act, for the 2020, 2021 and 2022 land tax years: see Government Gazette Number 173, 2020 and 648.

47. As noted in each order, the purpose of the order is to inform persons who own land in NSW if they are required to lodge an initial return or a variation return for the relevant land tax year, and any subsequent year. In each order, under the heading ‘Persons who Must Lodge a Variation Return’, is a general description of who must lodge a variation return:

A variation return is required to be lodged by a person who receives an incorrect notice of assessment of land tax. …

48. This is followed by examples of errors on a notice of assessment that require lodgement of a variation return. Included in the December 2019 order were the following:

(a) the assessment notice is missing land …

…

(h) an exemption is incorrectly applied to land that is not exempt.

49. Included in the examples of errors on a notice of assessment in the December 2020 and December 2022 orders were the following:

(b) details of land owned by the person as shown on the notice are incorrect …

(c) exempt land has been incorrectly assessed as exempt from land tax;

(d) liable land has bee incorrectly assessed exempt from land tax

50. Each order also specified, under the heading ‘Due Date for Lodgement of Variation Returns’, that a variation return was to be lodged by the first instalment date shown on the notice of assessment. If no tax was payable on the notice of assessment, the due date for the lodgement of a variation return was 40 days after the ‘Issue Date’ of the assessment. Each order also noted that a failure to lodge a variation return by the due date, penalty tax and interest may be imposed under the LTM act and the TA Act.

51. Section 14 of the LTM Act provides that, subject to that Act and the Taxation Administration Act 1996 (NSW) (TA Act), the respondent shall, from any returns and other information in his possession, cause an assessment to be made of the taxable value of the land owned by the taxpayer and of the land tax payable thereon.

Collection and recovery of land tax

52. Section 39 of the LTM Act provides that land tax payable by a taxpayer is due and payable as required by the relevant notice of assessment served on the taxpayer.

Failure to furnish information

53. Section 72(1) of the LTM Act provides that a taxpayer who fails or neglects duly to furnish any return or information as and when required under that Act or the respondent, or who fails to include in any return land that is owned by the taxpayer, is taken to have committed a ‘tax default’ for the purpose of Part 5 of the TA Act.

54. Section 72(2) provides for interest to be payable in relation to that tax default as follows:

(2)  In relation to the tax default—

(a) interest is payable in accordance with Part 5 of the Taxation Administration Act 1996 but accrues on the amount of land tax assessable to the taxpayer for the period commencing on the last day allowed for furnishing the return or information, or the correct particulars of land ownership, and ending on—

(i)  the day on which the return or information is furnished or the correct particulars are furnished, or

(ii)  the day on which the assessment calculated on the basis of the return or information that is required, or the correct particulars that are required, is made, or

(iii)  the day on which the whole of the land tax assessable to the person is paid,

whichever occurs first, and

(b) penalty tax is payable in accordance with Part 5 of the Taxation Administration Act 1996 on the amount of tax unpaid.

Taxation Administration Act 1996 (TA Act)

55. Section 8(1) of the TA Act provides that the respondent may make an assessment of the tax liability of a taxpayer. Section 8(2) provides that an assessment of tax liability may consist of a determination that there is not a particular tax liability.

56. Section 9 of the TA Act provides the circumstances in which the respondent may make a reassessment. In this application there is no dispute that the circumstances in which the respondent made a reassessment of the applicant’s liability for land tax were made in accordance with this section.

57. Section 10 of the TA Act provides that a person who is liable to pay tax under a taxation law must, before or at the time an assessment of tax liability is made, fully and truly disclose to the respondent all facts and circumstances affecting the tax liability under the relevant ‘taxation law’.

58. The term ‘taxation laws’ is defined in section 4 of the TA Act to include the LTM Act.

59. Section 21 of the TA Act provides that, if a ‘tax default’ occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid.

60. Section 3 of the TA Act defines ‘tax default’ as a failure by a taxpayer to pay, in accordance with a ‘taxation law’, the whole or part of tax that the taxpayer is liable to pay.

61. Section 22 of the TA Act makes provision for the applicable rate of interest as follows:

22 Interest rate

(1) The interest rate is the sum of:

(a) the market rate component, and

(b) the premium component.

(2) The market rate component is:

(a) unless an order is in force under paragraph (b), the Bank Accepted Bill rate rounded to the second decimal place (rounding 0.005 upwards), or

(b) the rate specified for the time being by order of the Minister published in the Gazette.

(3) The premium component is 8% per annum.

(4)  In this section, the Bank Accepted Bill rate in respect of any day within a period specified in Column 1 of the Table to this subsection is the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank for the month specified in Column 2 of that Table opposite that period.

Table

Column 1	Column 2
Period	Monthly average yield
1 January to 31 March	the preceding November
1 April to 30 June	the preceding February
1 July to 30 September	the preceding May
1 October to 31 December	the preceding August

(5)  If the monthly average yield of 90-day Bank Accepted Bills for a particular month is not published by the Reserve Bank before the beginning of the relevant period, it is taken to be the same as the last monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank before that month.

62. Section 25(1) of the TA Act provides that 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. Section 25(2) and (3) provide that the respondent may issue guidelines setting out how interest must be remitted and where such guidelines are issued, interest must be remitted only in accordance with the guidelines.

Consideration

Is there a tax default by the applicant?

63. It is not disputed that the initial land tax assessment notices issued to the applicant under account/Client ID number xxxxxx319 for the 2020, 2021 and 2022 land tax years were incorrect in that these assessment notices failed to include the taxable value of all the land owned by the applicant as at the taxing date (31 December 2019, 31 December 2020 and 31 December 2022) of the relevant land tax year: see LTM Act ss 8 and 9.

64. As noted above, these assessments were only based on the applicant’s ownership of the Byron Bay Property, and did not, as required by s 9 of the LTM Act, include the Randwick property owned by the applicant or the applicant’s 50% interest in the Bondi property.

65. I agree with the respondent, that the incorrect land tax assessment notices for the applicant for the 2020, 2021 and 2022 years were not due to any error or fault by, or on behalf of the respondent.

66. First, the liability to pay land tax arises by the direct operation of the LTM Act and is not imposed by the respondent, who is obliged, due to his general administration of the taxation laws to assess liability for land tax: see Matiushenko v Chief Commissioner of State Revenue [2023] NSWCATAD 25 at [19], Gunast v Chief Commissioner of State Revenue [2012] NSWADT 218 at [24].

67. Second, there was no obligation on the respondent to issue correct assessments or to make enquiries of Land Title records or other sources of relevant information before issuing an assessment notice: Oueik v Chief Commissioner of State Revenue [2022] NSWCATAD 132 at [48]. Instead, when making an assessment of land tax, the respondent is entitled to rely on the information that is provided by the taxpayer and where that information is found to be inaccurate, to issue a reassessment under s 9 of the LTM Act.

68. At the same time, as noted above, the LTM Act (sections 12 and 72) and the TA Act (section 10) clearly specify that it is the taxpayer who is required to ensure that, prior to or at the time an assessment of liability is made under the LTM Act, a full and true disclosure of all facts and circumstances affecting the taxpayer’s tax liability is made to the respondent: see also Bagnall v Chief Commissioner of State Revenue [2023] NSWCATAD 341 at [66].

69. In this case, having been issued incorrect assessment notices for the 2020, 2022 and 2021 land tax years, it was incumbent on the applicant to lodge with the respondent a variation return by the first instalment date listed in the relevant incorrect assessment notices: see Giunta v Chief Commissioner of State Revenue [2005] NSWADTAP 19 at [14]. In this case the relevant dates by which a variation return was to be lodged by the applicant were as follows:

1. 2 December 2020 for the 2020 land tax assessment;

2. 2 March 2021 for the 2021 land tax assessment; and

3. 15 February 2022 for the 2022 land tax assessment.

70. The evidence is that it was not until 3 February 2023, that TNR Accountants, on behalf of the applicant, lodged a variation return following the issue of the assessment notice, for the 2023 land tax year, under account/Client ID number xxxxxx319. That return was also incomplete in that it failed to include the Randwick property and the Bondi property.

71. Nevertheless, I agree with the respondent and find that the applicant’s failure to lodge a variation return, under account/Client ID number xxxxxx319, by the following dates:

1. 2 December 2020 for the 2020 land tax year;

2. 2 March 2021 for the 2021 land tax assessment; and

3. 15 February 2022 for the 2022 land tax year

constituted a tax default, under s 72(1) of the LTM Act, in respect of the relevant land tax year.

Interest

72. Based on this finding, pursuant to s 72(2) of the LTM Act, interest began to accrue as of the abovementioned dates, in accordance with Part 5 of the TA Act, for each land tax year in issue. That is, interest, like land tax arises by the direct operation of the LTM Act and the TA Act and is not imposed by the respondent.

73. For this reason alone, the applicant’s contention that interest should only apply from the date on which her payments on the original incorrect invoiced were late must be rejected.

74. The applicant does not otherwise dispute the amount of land tax ultimately assessed on all the land she held (other than the land that was exempt from land tax) as at midnight on 31 December immediately preceding the 2020, 2021 and 2022 land tax years (the taxing dates).

75. In his 5 September 2023 decision disallowing the applicant’s objection to the interest charged for each of the 2020, 2021 and 2022 land tax years, the respondent set out how interest had been calculated on the amount of land tax ultimately assessed as being payable by the applicant for each land tax year.

76. For each land tax year, the calculation of interest commenced from the day on which the tax default arose (see at [71] above) until 29 June 2023, which was the date on which the applicant provided the respondent with additional information through an objection to the 30 April 2023 reassessment. In that objection the applicant sought further exemptions, including an exemption for the Randwick property for the 2020 and 2021 land tax years. Based on the information provided by the applicant, the respondent allowed the applicant’s objection. Hence, because of the information provided by the applicant’s accountant and the applicant, in August 2023, the applicant’s liability for land tax for the 2020, 2021 and 2022 land tax years could be correctly assessed, including the interest that was payable.

77. Nevertheless, as noted above, section 25 of the TA Act gives the respondent a discretion to remit interest in whole or in part to the extent considered appropriate by the respondent. That discretion to be exercised in accordance with the guidelines issued by the respondent under that section.

Remittal of Interest

78. The interest that was assessed for the 2020, 2021 and 2022 land tax year is composed of both the market rate and the premium rate of interest.

79. The market rate component of interest approximates the ordinary lending interest rates and is intended to compensate the respondent for not having the benefit of the tax payment from the time it was due and payable and, is a component of interest that is rarely, if ever, be waived: Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 (Incise Technology) at [60].

80. The premium rate component of interest ‘is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment’: see Golden Age & Hannas the Rocks v Chief Commissioner of State Revenue [2024] NSWSC 249 (Golden Age) at [102] and Griglio v Chief Commissioner of State Revenue [2024] NSWCATAD 212 at [50].

81. In this case, the relevant guidelines issued by the respondent regarding the remission of interest is Practice Note CPN 024 (“CPN 024”), which relevantly provides as follows:

When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid.

The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only.

……..

Circumstances outside the control of the taxpayer

Where there is evidence that the default was outside the control of the taxpayer (or their representative), the Chief Commissioner may remit interest. …

Reasonable care taken by the taxpayer

Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to):

a. being honest and forthright when dealing with the Chief Commissioner

b. cooperation with the Chief Commissioner

c. the default is attributable to calculation errors

d. making diligent efforts to understand and comply with the law

e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer's obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits

f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements

g. applying any relevant revenue rulings in good faith

h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling

i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability

j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party.

Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration.

Note: Remission of the premium rate will only occur in special circumstances.

Intentional disregard of a taxation law

Intentional disregard of a taxation law includes circumstances where a tax default is caused by a deliberate act or omission by the taxpayer, or person acting on behalf of the taxpayer. …

82. The applicant has not specifically addressed or referred to these guidelines.

83. Nevertheless, it has not been contended, and appropriately so, that the tax defaults (failure to lodge a variation return within the prescribed time) of the applicant were intentional or that they were caused by a deliberate omission.

84. At the same time, on the material before the Tribunal, it cannot be said that the tax defaults arose due to exceptional circumstances outside the applicant’s control.

85. Hence, the question is whether the applicant took reasonable care in attending to her tax obligations for the 2020, 2021 and 2022 land tax years.

86. Whether the applicant took reasonable care is essentially a question of fact that is to be assessed objectively: see Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227 at [94] and [95] (Qualweld) and Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215 (Levitch Design Associates) at [113].

87. In Qualweld at [94] and [95] the Tribunal provided the following description of the reasonable care test as follows:

94 Reasonable care is the care that a reasonable person in the circumstances of the taxpayer would be likely to have exercised to fulfil the taxpayer's obligations.

95 In RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue 2004 NSWADT 64 the Tribunal view was expressed as follows:

"In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other enquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law."

88. In Levitch Design Associates at [113] provided the following description of the reasonable care test (citations omitted):

113 "Reasonable care" is an objective test, but the particular (and subjective) circumstances relevant to the taxpayer are to be considered in applying the test. It requires that the taxpayer exercise the care that a reasonable person would be likely to have exercised in the circumstances of the taxpayer... In my view, simply hiring or relying on an accountant to prepare returns or assuming that an adviser would review returns, is not of itself a "taking advice" on the operation of relevant provisions.

89. In the more recent decision of Richmond J in Golden Age, at [99], his Honour noted that s 25 of the TA Act conferred a broad discretionary power on the respondent that was not subject to any limitation. At [100] to [102], his Honour went on to observe the following (citations omitted):

100 In the case of an unconfined discretionary power of this nature, the considerations which are relevant to its exercise are determined by reference to the subject matter, scope and purpose of the relevant statute, including the particular provision conferring the discretion: …

101 … [the market rate component] is intended to compensate the Commissioner for not having the benefit of the tax payment from the time it was due, and so approximates the ordinary lending interest rates, whereas the premium rate is a form of penalty which operates as a disincentive to taxpayers to delay tax payments. The view that the premium component is penal in nature has been accepted in later decisions, …

102 In my view it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion. …

90. At [103] his Honour cited with approval the following (not exhaustive) cumulative criteria relevant to the exercise of the discretion under s 25 that had been identified by the Tribunal Appeal Panel in Incise Technology:

(1) All principal tax that is owing and not in dispute has been fully paid;

(2) There has been cooperation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;

(3) Such cooperation has occurred prior to any investigation being commenced by the Commissioner or, at the very least, within a reasonable time after the request for information had been made by the Commissioner; and

(4) There has been no wilful default by the taxpayer in not paying tax on time.

91. At [106] his Honour agreed that:

106 … [whether the taxpayer] took reasonable care is relevant to the remission of the premium component under s 25. In particular, it is necessary to consider whether there are factors which mitigate the taxpayer’s behaviour in failing to pay its tax liability on time and, in this regard, it is necessary to consider the steps (if any) taken by the taxpayer to comply with the taxation law, whether those steps were reasonable and the explanation for why, despite those reasonable steps, the tax default occurred.

92. For the reasons set out above, I have found that the applicant’s tax defaults for the 2020, 2021 and 2022 land tax years are not due to a calculation error, as the respondent’s initial assessments were based on the information the applicant had provided to the respondent.

93. Hence, no fault can be attributed to the respondent in having issued the initial land tax assessments for the 2020, 2021 and 2022 land tax years. That is, the tax defaults did not arise due to any fault on behalf of the respondent. Nor has the applicant put forward any explanation as to why the market rate of interest should be remitted. As I have already noted, interest arises by reason of s 72 of the LTM Act and in the absence of any fault by the respondent it is difficult to see how the market rate of interest could be remitted when the tax default arose due to the ongoing failures of the applicant.

94. As I have already noted, the tax defaults arose due to the ongoing failures by the applicant to lodge a variation return before, or after she was issued with the land tax assessments for the 2020, 20201 and 2022 land tax years. By reason of s 12 of the LTM Act, it was the responsibility of the applicant to lodge a variation return if issued with a land tax assessment that did not include all the land she owned as at midnight on 31 December immediately preceding the abovementioned land tax years (the taxing date). This included any land for which the applicant claimed an exemption, or land for which an exemption had been claimed and granted in a previous land tax year, but was no longer exempt as at 31 December immediately preceding the year for which land tax was levied (the taxing date).

95. This the applicant failed to do, even though she was issued an assessment, under account/Client ID xxxxxx319, for each of the abovementioned land tax years that specifically only related to the Byron Bay property. Yet she was always aware that she also owned the Randwick and the Bondi properties.

96. As noted above, on 3 September 2020, the respondent wrote to the applicant, under account/Client ID xxxxxx319, requesting that she review her landholding details for the 2020 land tax year. The applicant did not respond to that letter. Nor has she provided any explanation as to why she did not respond, or whether she sought any advice following receipt of that letter.

97. In my opinion, a reasonable taxpayer, having received a letter of this kind, would seek advice on what this letter might mean as to his or her land tax liability, for that land tax year. That advice being sought either by contacting the office of the respondent or a tax agent.

98. It was not until 2023, after her purchase of the Newrybar property in 2022 and the issue of the 31 January 2023 land tax assessment that the applicant sought professional advice from an accountant. The advice appears to have been limited as the variation return submitted by the applicant’s accountant, under account/Client number xxxxxx319, only sought an exemption from land tax, for the 2023 land tax year, for one of the parcels of the Newrybar property. That is, the variation return was incomplete in that it failed to include any reference to the Randwick and Bondi properties that were also owned by the applicant as at the taxing date for the 2023 land tax year. The further variation return lodged by the applicant’s accountant was also incomplete in that it failed to include the Randwick and Bondi properties.

99. As noted above, it was not until 29 June 2023, that the applicant provided the remaining relevant information to the respondent so that a correct land tax assessment could be issued to her, under account/Client ID xxxxxx319, for the 2020 to 2023 land tax years regarding all the property she owned as at the taxing date of each of those land tax years. That reassessment was issued on 21 August 2023 and included the disputed charge of interest on the amount of land tax that was payable by the applicant on for the 2020, 2021 and 2022 land tax years.

100. Hence, the question is whether, the applicant took reasonable care warranting the exercise of the discretion, under s 25 of the TA Act, to remit the premium component of interest.

101. The amount of tax ultimately assessed as owing by the applicant has been fully paid.

102. However, I am not satisfied, on the material before the Tribunal, that the applicant has established that she took reasonable steps to ensure that her Randwick and Bondi properties were included for the purpose of assessing her land tax liability for the 2020, 2021, and 2022 land tax year: see Ouelik at [68] and Bagnall at [78]. I make this finding as the evidence does not establish that for three years (2020, 2021 and 2022) the applicant:

1. made diligent efforts to understand and comply with the law;

2. took reasonable steps to be aware of and comply with her tax obligations and to be familiar with the legislative requirements under the LTM Act; or

3. acted promptly to seek advice, including professional advice regarding her land tax liability.

103. I accept that the applicant may have been unfamiliar with the legislative requirements. However, it was her responsibility and not that of the respondent to take steps to ensure that she did understand her obligations under the LTM Act. This was especially so after 2019 when she purchased the additional property at Byron Bay and Bondi, the latter of which was jointly purchased with her husband.

104. In this regard, the applicant has not said that she was unaware that the Randwick and Bondi properties should have been included with the Byron Bay property, for the purpose of assessing her land tax liability for the 2020, 2021 and 2022 land tax years. Nor, as noted above, despite the respondent’s letter of 3 September 2020, has the applicant provided any evidence of having sought advice regarding her liability for these land tax years: see Ouelik at [68] and Bagnall at [78]. And when she did seek advice in 2023, it was limited and did not appear to initially include any reference to the Randwick and Bondi properties.

105. Accordingly, I find that, on the evidence, the applicant has failed to demonstrate that she took reasonable care to ensure that her Randwick and Bondi properties were included when assessing her land tax liability for the 2020, 2021, and 2022 land tax years. Based on this finding, the applicant has failed to establish the reasonable care grounds in CPN 024 on which the premium component of interest may be remitted.

Fair and Equitable outcome regarding penalty interest

106. The applicant’s claim for a fair and equitable outcome regarding penalty interest appears to be based on the applicant’s assertion that her tax defaults were due to the respondent having incorrectly assessed her land tax liability for the 2020, 2021 and 2022 land tax years. This assertion, as noted above, is unfounded.

107. However, for completeness, regarding the issue of unfairness, I note the following remarks of the Tribunal in Strathavon Resort Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 200 at [22]:

...concepts such as fairness and justice cannot intrude into the legislative taxation scheme, notwithstanding the fact that such a scheme might in certain circumstances operate harshly. I accept that for a taxpayer in the position of (the applicant in that case) that may be a bitter pill to swallow. But that is the law.

108. The Tribunal’s remarks equally apply to this application.

Conclusion and order

109. For the reasons set out above, I have found that the applicant has failed to establish any grounds for the exercise of the discretion in s 25 of the TA Act, to remit the interest (market and premium) charged in the assessments issued to the applicant on 21 August 2023 regarding the 2020, 2021 and 2022 land tax years.

110. Based on this finding, it must follow that the respondent’s decision not to remit the interest imposed, in whole or part, in the land tax assessment, as re-assessed by the respondent on 21 August 2023, is the correct and preferred decision and should be confirmed.

111. Hence, I order:

1. The 21 August 2023 reassessments of the respondent for the 2020, 2021 and 2022 land tax years are 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: 05 September 2024