Wan v Chief Commissioner of State Revenue

[2025] NSWCATAD 211

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Wan v Chief Commissioner of State Revenue [2025] NSWCATAD 211

Hearing dates:

7 July 2025

Date of orders:

25 August 2025

Decision date:

25 August 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

EA MacIntyre, Senior Member

Decision:

The matter is remitted to the Respondent for determination in accordance with these reasons.

Catchwords:

REVENUE LAW - State taxes - land tax - assessment - objection - appeal

REVENUE LAW - interest - premium rate - remission - discretion - reasonable care - exceptional circumstances - knowledge of taxpayer - delay in assessment

ADMINISTRATIVE LAW - reviewable decision - correct and preferable decision - Civil and Administrative Tribunal - appeal - remission for reconsideration

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Land Tax Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259

Wan v Chief Commissioner of State Revenue [2024] NSWCATAD 278

Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54

Whitehaven Coal Mining Limited v Chief Commissioner of State Revenue [2025] NSWSC 488

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Xiaofeng Wan (First Applicant)
Jiajun Zhu (Second Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Applicants (Self Represented)
Crown Solicitor (Respondent)

File Number(s):

2024/00170116

Publication restriction:

None

REASONS FOR DECISION

Introduction

1. These proceedings arise out of a dispute between Xiaofeng Wan and Jiajun Zhu (“Applicant”) and the Chief Commissioner of State Revenue (“Respondent”). The dispute is over the assessment of interest on unpaid surcharge land tax.

2. If a "tax default" has occurred, interest is imposed by ss 21 and 22 of the Taxation Administration Act 1997 (NSW) (“TA Act”) at both market and premium rates.

3. The Respondent, however, has certain powers to remit interest under s 25 of the TA Act. The particular question in issue was whether interest should have been remitted. The interest assessed at the premium rate remains in dispute and is the subject of these proceedings.

4. The matter was originally determined by the Tribunal on 18 September 2024. The Applicant appealed the decision of the Tribunal to the Appeal Panel. On 19 March 2025, the Appeal Panel remitted the matter to the Tribunal for reconsideration. The matter the subject of this decision is the reconsideration on remittal.

Evidence at first instance

5. In 2015, the Applicant purchased two residential properties in NSW. The notices of sale each recorded an "Address for Service of Notices". The Applicant changed address in February 2016.

6. The Respondent wrote to the Applicant at the notified street address recorded in the "Address for Service of Notices" on 16 July 2018, informing them of “potential land tax liabilities”. The letter specifically referred to surcharge land tax applicable to “foreign persons”. The Applicant said that they did not receive these documents, having vacated the address to which they were sent.

7. The Respondent issued an assessment for land tax dated 9 August 2018 for the 2018 year. It mentioned “surcharge taxable value” but assessed surcharge land tax at nil (“2018 Assessment”).

8. On 13 November 2018, the Respondent obtained from Roads and Maritime Services (now Service NSW) details of the Applicant’s change of address that had occurred in February 2016.

9. In November 2018, a legal notice for the overdue 2018 Assessment was sent to the second address. The Applicant received and paid it. Payment by the Applicant of the 2018 Assessment was processed by the Respondent on 21 January 2019. The 2018 Assessment is not the subject of this dispute.

10. On 19 January 2019, a 2019 "Land Tax Assessment Notice" (“2019 Initial Assessment”) was sent to the second street address. It also showed an assessment of nil for surcharge land tax.

11. There is no evidence (nor any suggestion) that the 2019 Initial Assessment was accompanied by any of the previous correspondence, including the 16 July 2018 letter.

12. On 26 October 2019, the Applicant notified Service NSW of a further change of address.

13. The Respondent on 16 November 2023 reassessed the Applicant for surcharge land tax of $13,430.65 for the 2019 land tax year only (“2019 Reassessment”), together with market rate and premium rate interest totalling $4,356.83. The Respondent also issued a "Notice of Investigation - Individual Surcharge Audit" (“NOI”).

14. Both the NOI and the 2019 Reassessment were sent to the address that the Respondent had located. There is no dispute that this correspondence was received by the Applicant.

15. The Applicant conceded the liability to surcharge land tax, but queried the interest imposed. They then made an objection to the assessment of interest on 30 January 2024.

16. The Respondent disallowed the objection on 28 March 2024.

17. The Applicant then sought administrative review of the 2019 Reassessment by the Tribunal.

Decision of Tribunal at first instance

18. The Tribunal at first instance refused the Applicant’s application for review (Wan v Chief Commissioner of State Revenue [2024] NSWCATAD 278).

19. The Tribunal identified the following issues for determination; “whether the applicant took reasonable care to comply with his tax obligations and whether there are exceptional circumstances warranting the remission of the market rate interest or the premium rate interest for the 2019 land tax year.”

20. The Tribunal found the Applicant did not establish that they took reasonable care to comply with their tax obligations and there were no exceptional circumstances warranting the remission of the market rate interest or the premium rate interest for the 2019 land tax year. The Tribunal said that the Applicant had not led any evidence that would ground a finding that they took reasonable care to comply with the tax laws or that there were exceptional circumstances warranting a remission.

Appeal to Appeal Panel

21. The Applicant appealed from the decision of the Tribunal at first instance to the Appeal Panel.

22. On appeal, the Applicant contended that discretion to remit interest should have been exercised. They said that the Tribunal "ignored" the fact that the delay in issue of the 2019 Reassessment for 4 years was clearly caused by the Respondent because the Applicant for their part, was unaware of their liability for surcharge land tax.

23. The Applicant further said the Tribunal had not taken relevant facts into account, including their notification on 26 October 2019 to Service NSW of the change of address, and the fact they had lodged income tax returns every year. They said that contrary to what was said in the Tribunal's decision, they lodged returns every year (ie income tax returns) and paid tax (income tax) every year.

24. They said that they could not understand why the Respondent had not contacted them or sent them anything over the next 4 years after 2019, including any payment notices for the intervening years.

25. The Applicant also stated that they did not receive the 16 July 2018 letter, which they read for the first time in the documents provided to them in these proceedings at first instance. Fairly read, the Appeal Panel said that the Applicant’s contention to the Tribunal at first instance and in their objection to the 2019 Reassessment was that they were not aware of surcharge land tax, consistent with them not receiving this letter.

26. The Respondent has a discretion to remit interest. The question before the Tribunal and later before the Appeal Panel concerned whether the discretion to remit interest allowed under s 25 of the TA Act should be exercised.

27. Section 25 relevantly provides for remission of interest in the following terms (with effect from 1 February 2024):

“(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”.

28. No relevant guidelines had been issued by the Respondent for the purpose of s 25(2) and (3) of the TA Act at the time of the objection in this matter, the first instance decision or when the appeal was heard.

29. The Appeal Panel was satisfied that there was an error on a question of law arising in the appeal. That question was whether the Tribunal asked itself the wrong question. The question of law was whether the Tribunal erred by failing to ask itself whether there was a basis to exercise the discretion to remit market or premium interest, which discretion is limited only by the subject matter, scope and purpose of the provision; and instead asked itself whether there was:

1. "reasonable care taken"; or

2. "exceptional circumstances".

30. The Appeal Panel identified the real questions as being, first, whether the Tribunal proceeded on a misconstruction of the discretion. The next question was whether, even if the Appeal Panel was so satisfied, the error was material.

31. The Appeal Panel said, at [73] that as regards interest assessed at the market rate, the Tribunal's reasons, read fairly and as a whole:

“demonstrate no error in its approach that in the absence of fault by the Commissioner and in the absence of "exceptional circumstances" there was no warrant for any reduction of the market rate component of the interest. As correctly highlighted by the Tribunal at [25] of the Decision, there was no obligation on the Commissioner to make enquiries and to track down taxpayers”.

32. However, as regards the interest assessed at the premium rate, the Appeal Panel said, at [74]:

“Fairly read, with respect to the premium rate of interest, the Tribunal did not undertake the requisite task, which required it to consider whether there was a factor which warranted remission having regard to the subject matter, scope and purpose of the provision. To this end, the fact that the premium interest has been accepted as being in the nature of a penalty is important. The Tribunal asked itself the question as to whether there was reasonable care or exceptional circumstances and did not ask the broader question whether there was a basis for remission on the appellant’s circumstances known to the Tribunal”.

33. The Appeal Panel, in considering whether there was fault on the part of the Respondent said, at [77]:

“As mentioned earlier there was no “fault” on the part of the Commissioner. There was no “delay” on his part. However, due to the passage of time between the land tax year and the date that the 2019 Reassessment was issued, interest was imposed under ss 21 and 22 of the TA Act; and comprises a significant part of the 2019 Reassessment”.

34. The Appeal Panel went on to describe in the following terms how discretion under s 25 should be exercised, at [81] – [82] and [86] - [87]:

“Factors such as whether a taxpayer took reasonable care or whether there were exceptional circumstances are not irrelevant and the Tribunal was entitled to place great weight on them. Nevertheless, remission of interest is not an “all or nothing” exercise. Further, the degree of a taxpayer’s culpability is material. An assessment of the appellant’s culpability is not limited to whether he took reasonable care or whether there were exceptional circumstances.

It follows that by asking only whether there was reasonable care or exceptional circumstances and not asking whether there were any personal circumstances of the appellant apparent from the materials before it, relevant to establishing the degree of culpability other than the failure to meet his statutory obligations that may warrant remission, the Tribunal asked the wrong question.

…..

The Tribunal's finding that there was no reasonable care and no exceptional circumstances did not equate to an assessment of whether there was a basis for remission of premium rate interest. It did not amount to an assessment of culpability, nor did it equate to a consideration of the Appellant's personal circumstances, understanding, awareness, and other matters that may have set his case apart from the “usual situation” and may be relevant to the remission of interest.

It is apparent that there were other factors that warranted consideration by the Tribunal; which may have been considered had the Tribunal had the broad discretion in mind”.

35. The Appeal Panel then outlined personal circumstances of the Applicant known to the Tribunal as follows, at [88]:

“The personal circumstances of the Appellant known to the Tribunal include those referred to above at [76], the first five of which do not favour remission. They also include the following, which may (we stress may, not must), tend to provide a basis to remit some of the premium interest:

(1) When he acquired the properties, the Appellant was assisted by a solicitor.

(2) When he acquired the properties, there was no surcharge land tax.

(3) The 2019 assessment which he did receive was nil (albeit it was incorrect as he was indeed liable to surcharge land tax).

(4) Whilst there is no doubt the respondent’s letter of 16 July 2019 was sent, it is consistent with the Appellant’s case that the letter was never received.

(5) The taxpayer notified a change of address to Service NSW (though this is not the way to notify the respondent).

(6) The Appellant’s case is that he was not aware of his liability to pay surcharge land tax and the respondent does not contend to the contrary.

(7) The Appellant’s case is that he was not aware of his obligation to lodge a return, and the respondent does not contend to the contrary.

(8) The Appellant’s case is consistent with there being no wilful default.

(9) The Commissioner did not suggest that there had been intentional disregard of a taxation law.

(10) Where a taxpayer is unaware of a tax liability there could be no expectation for cooperation before the respondent alerts them to that potential liability.

(11) There was evidence that the Appellant regularly uses the services of an accountant to file income tax returns (which does not demonstrate reasonable care so far as land tax obligations, but might suggest some attempt to comply with tax obligations more generally).

(12) English is not the Appellant’s first language.

(13) Irrespective that it was not the respondent’s fault, and even if it was the Appellant’s responsibility to identify and comply with tax laws, there was, in fact, a substantial delay where the respondent appears not to have been aware of the tax liability and this caused interest to build up. The interest is charged at 8% of the primary tax. As Richmond J said in Golden Age, this is not a small penalty.

(14) This list is not meant to be exhaustive”.

Decision of the Appeal Panel

36. The Appeal Panel allowed the Applicant’s appeal. It decided that the matter should be remitted to the Tribunal for reconsideration. Whether new or fresh evidence should be adduced, or whether there should be a hearing, was to be a matter for its consideration.

Interlocutory orders and hearing on remittal

37. On 12 May 2025, the Tribunal made orders concerning the remittal. The Applicant was to provide further submissions and evidence. The Respondent was allowed by further order to reply and also provide evidence. The Applicant was allowed to provide their reply to the Respondent’s submissions and evidence.

38. The Applicant provided their materials to the Tribunal on 2 June 2025. The Respondent provided his submissions on 10 June 2025. The Applicant provided their materials in reply on 17 June 2025.

39. The matter was heard on 7 July 2025. The Applicant was physically present at the proceedings on remittal and was assisted by an interpreter. The Respondent’s legal representative was also physically present. Both parties made oral submissions.

Consideration

40. Following remittal, what is before the Tribunal is the task of weighing the factors warranting consideration when exercising discretion under s 25 to remit interest, other than those considered at first instance.

41. The matters the Tribunal considered at first instance in deciding whether or not to remit interest assessed at the premium rate were whether the Applicant took reasonable care and whether there were exceptional circumstances. It found there was no reasonable care taken and there were no exceptional circumstances. The Appeal Panel said that these matters were not irrelevant and the Tribunal was entitled to place great weight on them.

42. The Appeal Panel set out a number of other matters to be taken into consideration, although saying that none were mandatory considerations and that the considerations it listed were not exhaustive (see [35] above).

43. The Applicant did not file any new evidence in support of the claim for remission of interest assessed at the premium rate.

44. The Respondent submitted that the Tribunal should not remit the premium interest as the further factors to be considered were not circumstances that affected the relevant tax default. That tax default was a failure to lodge a tax return advising of the Applicant’s foreign person status.

45. I set out below my consideration of each applicable matter and its relevance to the question of whether interest assessed at the premium rate in the 2019 Reassessment should be remitted.

Assistance by solicitor

46. The first of the matters mentioned by the Appeal Panel of potential relevance was assistance given to the Applicant by a solicitor when they acquired the properties in question.

47. There was no new evidence as to what the solicitor told the Applicant and what advice was provided in 2015.

48. Given that surcharge land tax was not in force in 2015 and in the absence of further evidence, I do not think that the assistance given by the solicitor and advice (if any) provided is a consideration that can carry much weight in the exercise of discretion to remit interest, whether in favour of or going against the Applicant.

Absence of surcharge land tax in 2015

49. Surcharge land tax was not in force in 2015 at the time the Applicant acquired the properties in question. The Applicant cannot, in these circumstances, be expected to have sought or received advice on the tax at the time. These are circumstances that, to some extent, explain why they were not aware of surcharge land tax. Lack of awareness in this situation cannot be a basis for the Applicant being found to be at fault. These are circumstances that are relevant to whether premium interest should have been assessed and if so, the quantum.

2019 Initial Assessment

50. The 2019 Initial Assessment assessed the Applicant with a liability of “nil” for surcharge land tax. The assessment, however, did refer to “surcharge taxable value” while assessing surcharge land tax as “nil”. Even if the assessment did contain information about the existence of the tax, I do not think that that information could reasonably be expected to have made the Applicant aware that they themselves were liable. I am not therefore able to conclude that fault attaches to the Applicant by reason of being given the information set out in the 2019 Initial Assessment and not acting on that information to ascertain whether or not the Applicant was liable for surcharge land tax. Further, to the extent that the Applicant relied on the “nil” assessment, I do not think that fault can attach to the Applicant.

16 July 2018 letter and change of address

51. The Applicant says that they did not receive the Respondent’s letter of 16 July 2018 notifying them of a potential liability for surcharge land tax. I accept this evidence. However, the Applicant did not receive the letter because they did not notify the Respondent of their change of address in 2016, even if they did notify Service NSW. Nevertheless, that the Applicant notified Service NSW and did not receive the Respondent’s letter of 16 July 2018 are matters that, to some extent, favour the Applicant in seeking exercise of discretion under s 25. They provide an explanation for why the Applicant did not receive the 19 July 2016 letter and act on the warning that they may be liable for surcharge land tax. That explanation does not involve wilful default or intentional disregard of the law.

Awareness of Applicant

52. The Applicant says that they were not aware of the liability to pay surcharge land tax or of the obligation to lodge a return until late 2023 and the Respondent did not contend to the contrary. The obligation to lodge a return arises from s 12 of the Land Tax Management Act 1956 (NSW). There was no dispute that such an obligation had arisen.

53. The Respondent’s submission, however, was that while the Applicant may not have been aware of their surcharge land tax liability or obligation to lodge a return, this was not in itself a sufficient basis to remit premium interest when weighed up against other relevant matters. The Respondent submitted there was no evidence of any steps the Applicant took to understand or comply with their tax obligations.

54. The Tribunal agrees that no basis for remittal of interest can arise simply by reason of the taxpayer being unaware of their obligations with nothing more, absent further evidence as to the circumstances of the Applicant’s lack of awareness. No such further evidence was provided by the Applicant on remittal.

55. The Applicant also says that there was no guidance provided by the Respondent when sending the assessment of surcharge land tax in November 2018 about the need to update their personal information.

56. There is, however, no obligation on the part of the Respondent to provide guidance of the kind the Applicant says should have been provided about the liability for surcharge land tax or the obligation to lodge a return. It is for the taxpayer to know their obligations and comply with those obligations. The absence of guidance on the part of the Respondent do not constitute circumstances that involve fault on the part of the Respondent. Nor do I find any other basis for remittal of interest arising out of the absence of guidance.

Wilful default and intentional disregard of law

57. The presence or absence of wilful default and intentional disregard of law are relevant considerations in determining whether interest should be remitted and the extent of any remission of interest.

58. The Respondent says that while he did not contend that there was a wilful default by the Applicant in failing to lodge a land tax return, there had been a wilful default in failing to pay the surcharge land tax after it had been assessed, in circumstances where that surcharge land tax was not in dispute.

59. The relevant assessment had been issued on 16 November 2023. The amount assessed had to be paid by 27 December 2023. After the Respondent had contacted the Applicant in respect of the outstanding surcharge land tax, the Applicant entered into an instalment arrangement on 11 October 2024 for payment of the outstanding amount. That amount was not paid in full by the Applicant until 19 December 2024.

60. In Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259, the Court of Appeal said:

“The reference to “wilful default by the taxpayer” in not paying the tax on time is an important consideration. It was open to E Group Security to pay the assessed liability for the Relevant Years and then seek a refund of tax (together with interest) if it succeeded in an objection or on a review. It plainly elected not to do so. Absent any good reason for remitting the interest, I would not accede to E Group Security’s request”.

61. The consequences of delay in paying tax assessed also fell for consideration in Whitehaven Coal Mining Limited v Chief Commissioner of State Revenue [2025] NSWSC 488. The Supreme Court (Hammerschlag CJ in Eq), said, at [107]:

“The fair and just date that should be chosen for the imposition of penalties and interest should be 2 November 2022, being the date of the positive assessment notices. From then the Plaintiffs knew they had to pay the tax but, they have not done so. This is properly to be characterised as a wilful default, disentitling them to the benefit of any remission from that point on: Winston-Smith v Chief Commissioner of State Revenue (NSW) [2018] NSWSC 773; (2018) 108 ATR 63 at [84]-[85]”.

62. I accept that the Applicant had knowledge of their liability for surcharge land tax from late 2023. However, there is no evidence of wilful default (or intentional disregard of the law) before that time.

63. However, after receipt of the assessment in November 2023, the Applicant was aware of the liability but did not discharge it. That did not happen until after the Respondent contacted the Applicant to seek payment and negotiated an arrangement in September 2024 to pay the outstanding tax by instalment. The Applicant then discharged the tax liability by the end of 2024.

64. I accept that, in these circumstances, a wilful default arose after the due date for payment of the 2019 Reassessment had passed. This is not a matter that assists the Applicant in claiming relief from the assessment of interest at the premium rate, even if the interest had accrued for the period before the wilful default.

65. This was not, however, a default that involved the Applicant ignoring the assessment they had received. After receipt of the assessment, they actively engaged with the Respondent while pursuing their rights of objection and appeal.

Co-operation

66. During the period when the Applicant was unaware of their liability to surcharge land tax, they did not take any action. This did not involve a failure to cooperate with the Respondent. The Applicant’s inaction occurred by reason of the Applicant not being aware of their liability for surcharge land tax and not because of a lack of cooperation.

67. Where a taxpayer is unaware of a tax liability there could be no expectation for cooperation before the Respondent alerts them to that potential liability or they otherwise become aware of it.

68. There is no evidence of a lack of co-operation on the part of the Applicant once they became aware of their liability for surcharge land tax in late 2023. After that time, the Applicant engaged with the Respondent. They did not ignore the 2019 Reassessment. They negotiated terms for payment of the principal amount of the surcharge land tax assessed and exercised their rights of objection and appeal. These are matters that favour the Applicant’s claim for remission of premium interest.

Use of accountant

69. The use of the services of an accountant might suggest some attempt to comply with tax obligations generally.

70. The evidence was that the Applicant used the services of an accountant in lodging income tax returns. There is no evidence, however, of the advice (if any) the Applicant sought as regards surcharge land tax. If they sought or obtained advice on surcharge land tax, what that advice was and whether the Applicant acted on the advice was not in evidence and is not known.

71. The advice the Applicant obtained or did not obtain, cannot, in these circumstances, be a matter that assists the Tribunal in determining whether or not interest at the premium rate should have been assessed and if so, the quantum.

Language

72. English was not the first language of the Applicant. They used the services of a Chinese (Mandarin) interpreter at the hearing of the matter on remittal.

73. However, despite not having proficiency in the use of the English language, the evidence was that the Applicant had previously retained the services of a solicitor and also an accountant for the purposes of lodging income tax returns. This evidence in my opinion establishes that despite not having proficiency in English, the Applicant had sufficient knowledge of the legal system to understand what they had to do to acquire a property and also comply with their tax obligations generally.

74. In these circumstances, I do not think that not having proficiency in the English language is a matter that can bear to any significant degree upon ascertaining the degree of culpability of the Applicant. However, it has some relevance.

Delay

75. The consequences of the delay in notifying the Applicant of the 2019 assessment of surcharge land tax remains to be considered. This occurred some four years after the issue of the previous assessment for 2019.

76. The Respondent accepted that there was delay but submitted that the delay in assessing the Applicant for surcharge land tax must be weighed against the clear obligation to notify the Respondent that they were a foreign person. The Respondent also said that he was not obliged to commence an investigation as he was entitled to rely on taxpayers. The Respondent said that he became aware on 16 November 2023 that the Applicant had been a foreign resident and issued an assessment on the same day.

77. The passage of time between the two assessments is considerable. The Applicant’s failure to lodge a return when due, notify the Respondent of their status as a “foreign person” and update their postal address with the Respondent is part of the explanation for the delay in the issue of the 2023 Reassessment. The delay, however, also occurred because for four years, no action was taken by the Respondent.

78. The Respondent’s delay does not necessarily mean that there is fault on the part of the Respondent. How the Respondent uses his resources to administer taxation laws and the time this takes is a matter for the Respondent. However, where delays occur in finding a taxpayer and issuing an assessment some four years after an earlier assessment, the cause of premium interest accumulating is not for reasons that are solely on account on the Applicant’s failure to lodge a return on time.

79. This is a case where delays in the issue of an assessment for 2019 occurred because of the taxpayer not lodging a return when due, not notifying the Respondent of their status as “foreign person” and not providing their updated address to the Respondent, but also because of delay in the Respondent issuing an assessment.

80. These are not, in my opinion, circumstances where premium interest should be assessed at the full 8% rate over the relevant period. It is well accepted that premium interest is penal in character. Allowing premium interest to run at the full rate over the entire period of non-payment without any reduction may be appropriate in cases where the delay is entirely the fault of the taxpayer. Where, however, the delay is not entirely attributable to the taxpayer, premium interest should be reduced to take account of the degree of the taxpayer’s culpability. The 2019 Reassessment does not do this in its assessment of premium interest.

Other matters

81. There was no evidence of any other matters that the Applicant claimed could go to the determination of the remission of interest. The Applicant did not produce any relevant new evidence additional to that before the Tribunal at first instance and the Appeal Panel.

Guidelines

82. Guidelines concerning the remission of interest under s 25 were issued on 1 July 2025. The guidelines are found in Revenue Guideline “TAA 001: Remission of Interest Guidelines”. These guidelines contain transitional rules. Among other things, they provide that the guidelines must be adopted when deciding to remit interest if an initial request for an interest remission is made or objection lodged after the date of publication. The Respondent submitted that these guidelines, applying as they do where an objection is made after the date of publication (1 July 2025), did not apply in the present case. The Tribunal agrees.

Conclusions

83. The assessment of premium interest is not an “all or nothing” exercise. In other words, the statutory scheme does not contemplate only two outcomes, namely assessment of premium interest at the full rate and remission of premium interest in its entirety. The amount to be remitted is to be determined having regard to all relevant matters found in the evidence, without being limited to questions of whether there was a lack of reasonable care and whether there were no exceptional circumstances.

84. The lack of reasonable care on the part of the Applicant and the absence of exceptional circumstances both carry significant weight and go against the full remission of interest assessed at the premium rate. Weighing these matters however does not exhaust the task of the Tribunal in determining the extent to which remission of interest at the premium rate should occur for the reasons given by the Appeal Panel. I set out below my consideration of other relevant matters in determining how the discretion under s 25 to remit interest at the premium rate should be exercised.

85. The use by the Applicant of a solicitor in 2015 does not carry significant weight for the reasons set out at [48] above in determining how the discretion under s 25 should be exercised.

86. The absence of surcharge land tax at that time, however, carries some relevance in that, for the reasons set out at [49] above, failure to obtain advice about the tax in 2015 cannot be said to put the Applicant at fault. This is a matter that favours the Applicant’s claim for an exercise of discretion under s 25 in their favour.

87. Similarly, culpability should not attach to the Applicant by reason of being made aware of some information about the existence of surcharge land tax in the 2019 Initial Assessment as set out at [50] above.

88. That the Applicant notified Service NSW and did not receive the Respondent’s letter of 16 July 2016 are matters that, to some extent, favour the Applicant in seeking exercise of discretion under s 25 (see [51] above).

89. The Applicant’s lack of awareness of surcharge land tax before late 2023 does not, in my opinion, carry sufficient weight in the circumstances of the case to allow a full remission of interest assessed at the premium rate. That lack of knowledge, however, carries weight in explaining to the Tribunal why the tax default occurred and allows the Tribunal to conclude that the taxpayer was not in wilful default and did not intentionally disregard their obligations. This has a bearing on the determination of the amount of any remission.

90. The absence of wilful default or intentional disregard of law on the part of the Applicant before January 2024 as well as the failure to pay the assessed interest after that date are also matters of relevance. Nonpayment of the assessment after the due date for payment has passed, however, is not a matter that assists the Applicant’s case for remission.

91. The absence in the evidence of any advice that the taxpayer received from their accountant does not assist the Tribunal in its determination of what if any relevance the use of the accountant should have on determining the amount of premium interest to be assessed.

92. The absence of English language skills on the part of the Applicant is a matter of relevance that carries some weight. However, equally, the obligation on the part of taxpayers to understand and comply with their taxation obligations is a matter that carries significant weight, regardless of the proficiency in the Applicant in English, especially in circumstances where they had some knowledge of the legal system and tax system.

93. The Applicant’s cooperation with the Respondent at all times must carry some weight in favour of the Applicant in the determination of the amount of premium interest to be assessed.

94. The amount of premium interest assessed is a direct result of the period of time during which it was allowed to accumulate. That delay of four years during which the interest ran was a matter, to a great extent, outside the Applicant’s control. The delay goes to the quantum of interest that accumulated at the premium rate. The amount of premium interest assessed should fairly take into account the impact of delays for which the Applicant was not responsible.  

95. That delay does not carry any imputation of fault on the part of the Respondent. The Respondent may need time to carry out his duties to collect tax having regard to the resources available to him. He should in the circumstances of the case be compensated for the time cost of late payment through an assessment of interest at the market rate.

96. I do not, however, think that the Applicant bears the entire fault for late assessment of surcharge land tax. They bear fault to the extent that they did not take reasonable care, including not lodging a return on time. There were also no exceptional circumstances. They bear some fault in respect of the matters set out above, especially at [53] – [54], [64] and [76] above. However, in the absence of wilful default and intentional disregard of their obligations during the four-year period during which premium interest ran, I do not think that the maximum degree of fault can attach to the Applicant. Additionally, regard must be had to the matters above going in the Applicant’s favour, especially at [88] and [93].

97. The absence of responsibility on the part of the Applicant for the entire delay in the issue of the 2019 Reassessment, in my opinion, has a significant bearing on the amount of premium interest the Applicant should bear.

98. I think that a reduction of the amount of premium interest assessed by 50% will be the correct decision, having regard to the degree of culpability of the Applicant as set out above, and taking into account the delays in assessment for which they were not responsible.

Orders

1. The matter is remitted to the Respondent for determination in accordance with these reasons.

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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: 25 August 2025