Zapari Property Coombs Pty Ltd v Commissioner for
[2022] ACTSC 189
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Zapari Property Coombs Pty Ltd v Commissioner for Australian Capital Territory Revenue | |
Citation: | [2022] ACTSC 189 | |
Hearing Date: | 20 June 2022 | |
DecisionDate: | 27 July 2022 | |
Before: | Kennett J | |
Decision: | Prayers 1 to 4 of the Amended Originating Application are dismissed. The costs of the hearing on 20 June 2022 are reserved. The matter is listed before the Registrar for directions. | |
Catchwords: | STATUTES – INTERPRETATION – Planning and Development –whether when conducting review of a decision made pursuant to s 277E of the Planning and Development Act 2007 (ACT) the ACT Civil and Administrative Tribunal has jurisdiction to make any order concerning remission of lease variation charge under s 278 of that Act STATUTES – INTERPRETATION – Planning and Development – whether assessment of the amount of remission of lease variation charge to be applied under s 278 of the Planning and Development Act 2007 (ACT) amenable to objection under Part 10 of the Taxation Administration Act 1999 (ACT) | |
Legislation Cited: | ACT Civil and Administrative Tribunal Act 2008 (ACT) s 68 Administrative Appeals Tribunal Act 1975 (Cth) s 43 Taxation Administration Act 1999 (ACT) ss 6, 7, 9, 13, 14, 16, 56H, 100, 104, 105, 107, 107A, 108A, 134, sch 1, sch 2 | |
Cases Cited: | Chaudhary v Chaudhary [1985] Fam 19; [1984] 3 All ER 1017 Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338 Thirteenth Beach Coast Watch Inc v Environmental Protection Authority (Vic) [2009] VSC 53; 29 VR 1 | |
Texts Cited: | ACT, Parliamentary Debates, Legislative Assembly, 23 June 2011 Explanatory Statement, Planning and Development (Lease Variation Charges) Amendment Bill 2011 (ACT) | |
Parties: | Zapari Property Coombs Pty Ltd (Plaintiff) Commissioner for Australian Capital Territory Revenue (Defendant) | |
Representation: | Counsel P Walker SC with I Metz (Plaintiff) N Oram (Defendant) | |
| Solicitors MV Law (Plaintiff) ACT Government Solicitor (Defendant) | ||
File Number: | SC 41 of 2022 | |
KENNETT J:
Background
The plaintiff is the lessee pursuant to a Crown lease, granted on 29 October 2018, of a block of land in Coombs. The purpose set out in the lease is “multi-unit housing for not less than twenty one (21) nor more than forty four (44) dwellings”. On 9 June 2020, the plaintiff lodged a development application seeking a variation of the Crown lease. Relevantly to these proceedings, the development application sought to increase the maximum number of permitted dwellings to 140. The proposed variation was approved by a delegate of the Planning and Land Authority on 10 August 2020.
The Crown lease in this case is a “nominal rent lease” as defined in the Dictionary to the Planning and Development Act 2007 (ACT) (the Act). As a result, the lease variation that had been approved was a “chargeable variation” as defined in s 276 of the Act. This meant that, under s 276B of the Act, the variation was not able to the executed until either the lease variation charge provided for in Division 9.6.3 of the Act had been paid to the Territory or a deferral arrangement in relation to that charge had been entered into.
On 11 November 2020 a delegate of the Commissioner for ACT Revenue (the Commissioner) issued to the plaintiff a Notice of Assessment of the lease variation charge, in which the charge was assessed under s 277 of the Act in an amount of $1,365,000 (the first assessment).
Shortly afterwards, on 16 November 2020, the same delegate wrote to the plaintiff purporting to revoke the first assessment on the basis that a relevant provision of the Planning and Development Regulation 2008 (ACT) (the Regulation) had not been applied. A second Notice of Assessment was issued on the same day (the second assessment). It also assessed the lease variation charge in an amount of $1,365,000. However, it then applied an “increase” of $455,000, citing s 182 of the Regulation, and a reduction of $250,000 referable to what was described as the “Construction Sector Recovery Package”. The total payable pursuant to this assessment was therefore $1,570,000.
On 21 January 2021, the plaintiff made an application pursuant to s 277C of the Act for reconsideration of the lease variation charge.
On 19 May 2021, another delegate of the Commissioner wrote to the plaintiff advising that the total charge in respect of the chargeable variation had been reassessed. This was said to have been done under s 9 of the Taxation Administration Act 1999 (ACT) (the TA Act). The basis for the reassessment was the delegate’s understanding that construction on the land had not commenced by 31 March 2021 and, as a consequence, the plaintiff was not entitled to the reduction that had been included in the second assessment. Other aspects of the assessment were unchanged, and the total liability as assessed was now $1,820,000 (the third assessment). It is apparent that this reassessment was not made in response to the reconsideration application that the plaintiff had made on 21 January 2021.
The 21 January 2021 reconsideration application was the subject of a decision and a further Notice of Assessment dated 28 May 2021 (the fourth assessment). This assessment made no reference to the reassessment that had been issued nine days earlier, but is consistent with it in that the reduction, allowed in the second assessment, was not allowed. However, apparently in response to the case that had been advanced by the plaintiff, the charge assessed under s 277 was reduced to $825,000 and the increase attributed to s 182 of the Regulation was reduced to $275,000. The total payable was thus $1,100,000.
The plaintiff takes the view that the third and fourth assessments are erroneous because, contrary to the position taken in those documents, it is eligible for remission of part of the lease variation charge pursuant to s 278 of the Act. It has attempted to advance this position by seeking merits review through two avenues.
First, on 22 June 2021, the plaintiff applied to the ACT Civil and Administrative Tribunal (ACAT) for review of the fourth assessment. This was put on the basis that the fourth assessment was a decision made on reconsideration under s 277E(1)(b) of the Act, and thus a “reviewable decision” pursuant to s 407 and item 28 or 29 of Schedule 1 to the Act. However, the ACAT has decided in two cases that it is not open to it, when reviewing a reconsideration decision made under s 277E, to determine whether a remission under s 278 of the Act should be granted: St Landco No 1 Pty Ltd v Commissioner for ACT Revenue (Administrative Review) [2020] ACAT 81 (St Landco); Empire Global Developments No 3 Pty Ltd v Commissioner for ACT Revenue (Administrative Review) [2020] ACAT 118. The plaintiff wishes to contend that those decisions are wrong in relevant respects and should not be followed. The parties agreed that it would be convenient for that issue to come straight to this Court. On 8 November 2021, the ACAT made orders by consent staying the proceedings before it pending the outcome of this proceeding.
Secondly, on 18 July 2021 the solicitors for the plaintiff lodged with the Commissioner what purported to be an objection, pursuant to relevant provisions of the TA Act, to the third and fourth assessments. A response was received from an officer in the ACT Revenue Office on 23 July 2021 advising that the right of objection under the TA Act did not apply to a decision relating to remission of lease variation charge under s 278 of the Act. Further correspondence ensued, culminating in a letter from the ACT Government Solicitor dated 15 October 2021 which advised that the Commissioner declined to determine the objection.
The proceeding
The Amended Originating Application contains seven substantive prayers for relief. Some of these remedies are sought in the alternative to each other, reflecting different ways in which arguments in the case might be expected to be resolved.
On 9 June 2022 McWilliam AsJ listed the matter for hearing, for determination only of the questions of law raised by prayers 1 to 4 in the Amending Originating Application. These are as follows.
The Plaintiff claims:
A.the following declarations:
1.that when reviewing a reconsideration decision under section 277E of the Planning and Development Act 2007, the ACT Civil and Administrative Tribunal has jurisdiction to determine whether an applicant for reconsideration is entitled to the benefit of any remission of leave variation charge under section 278 of that Act.
2.that when issuing an assessment of leave variation charge under section 276D of the Planning and Development Act 2007 the Defendant is obliged to take into account when making that assessment, the applicability of any remission under section 278 of that Act.
3.that the Plaintiff is entitled to object to the reassessments of lease variation charge for [the relevant parcel of land] issued to it by the Defendant dated 19 May 2021 and 28 May 2021 on the grounds that the Defendant should have remitted the lease variation charge in accordance with section 278 of the Planning and Development Act 2007, and the Defendant is obliged to consider an objection on those grounds.
4.that the ACT Civil and Administrative Tribunal has jurisdiction to hear an appeal from the decision of the Defendant refusing to consider and determine an objection by the Plaintiff to the reassessments of lease variation charge for [the relevant parcel of land] issued to it by the Defendant and dated 19 May 2021 and 28 May 2021 on the grounds that the Defendant should have remitted the lease variation charge in accordance with section 278 of the Planning and Development Act 2007.
Prayer 1 relates to the plaintiff’s review application made to the ACAT. The first proposed declaration effectively seeks to overturn the effect of the two decisions of the ACAT referred to above. It would clear the way for the issue sought to be raised by the plaintiff in the ACAT to be argued and decided there.
Prayers 2, 3 and 4 relate to the plaintiff’s objection to the third and fourth assessments. Prayer 3 seeks to establish the entitlement to object where the subject matter is remission under s 278. Prayer 2 appears to be intended to assist in that endeavour, by establishing that the question of entitlement to remission is a necessary aspect of an assessment, from which objection may then be taken. Prayer 4 seeks to establish that, where the Commissioner refuses to determine an objection made in circumstances such as the present, that refusal can be reviewed in the ACAT. (There is an alternative to prayer 4 which is not currently before the Court. Prayer 6 seeks an order in the nature of mandamus directing the Commissioner to determine the objection. Prima facie, there is a case for mandamus to issue if the plaintiff was entitled to make the objection and the Commissioner has refused to determine it.)
The statutory scheme
The Act in its initial form
To understand the issues that arise concerning the construction of the Act, it is useful to begin with Division 9.6.3 as originally enacted in 2007. It was as follows (omitting detail of the calculation of the charge that is not presently relevant).
276Variation of nominal rent lease—change of use charge
(1)The planning and land authority must not execute a variation of a nominal rent lease unless the lessee has paid the Territory any change of use charge worked out by the authority, less any remission under section 278, plus any increase under section 279.
NoteThe change of use charge is worked out under s 277.
(2)A variation of a lease has no effect if the change of use charge payable under subsection (1) for the variation is not paid.
(3)This section does not apply to a variation of a nominal rent lease if—
(a)the only effect of the variation would be to alter a common boundary between 2 or more adjoining leases; and
(b)the land comprised in each adjoining lease is leased for the same purpose; and
(c) none of the adjoining leases is a rural lease.
277Working out change of use charge
…
278When authority must remit change of use charge
The planning and land authority must remit all or part of a change of use charge for a variation of a lease under section 276 in the circumstances prescribed by regulation.
279When authority must increase change of use charge
The planning and land authority must increase a change of use charge for a variation of a lease under section 276 in the circumstances prescribed by regulation.
Section 276 was the central provision, making (with very limited exceptions) payment of an amount to the Territory a condition for the execution of a lease variation. The amount was described as “the change of use charge worked out by the authority, less any remission under section 278, plus any increase under section 279”. Section 277 described how the authority was to “work out” the charge. In very broad outline, the charge was to be calculated as 75 per cent of the difference between the value of the lease as varied and its value prior to variation.
Sections 278 and 279 made no reference to any process of “working out”. They simply required remission or increase, as the case may be, in prescribed circumstances.
Section 408 of the Act permitted interested persons to apply to what was then the ACT Administrative Appeals Tribunal for review of “reviewable decisions”. “Reviewable decisions” were defined by s 407 as those listed in Schedule 1. Included in that Schedule (at items 26–28) were “decisions” under ss 277, 278 and 279.
Amendments in 2011
Extensive amendments were made to Division 9.6.3 by the Planning and Development (Lease Variation Charges) Amendment Act 2011 (ACT) (the 2011 Amending Act). They can be summarised as follows.
Lease variations were split into two categories, as defined in new s 276A. In short, simpler matters were “s 276E chargeable variations” which were to become payable in accordance with a determination made by the Treasurer under s 276E. Other variations were referred to as “s 277 chargeable variations”, and for these the charge was to be “worked out” under s 277. The former s 276(1), now renumbered as s 276B(1), continued to provide that the lease variation charge, plus any increase and less any remission, had to be paid as a condition for the execution of a lease variation. Recognising the two categories of case that now existed, new s 276C provided:
276CLease variation charges—amount payable
(1)The lease variation charge for a chargeable variation of a nominal rent lease is—
(a)for a s 276E chargeable variation—the determined charge for the variation; or
(b)for a s 277 chargeable variation—the charge (if any) worked out under section 277 for the variation.
(2)If a development approval of a development application relates to more than 1 chargeable variation of a nominal rent lease, the lease variation charge is worked out as follows:
(a)if all the chargeable variations are s 276E chargeable variations for which a charge is determined in an LVC determination—in accordance with the LVC determination;
(b)if all the chargeable variations are s 277 chargeable variations—in accordance with section 277;
(c)if 1 or more are a kind of variation mentioned in paragraph (a) and 1 or more are a kind of variation mentioned in paragraph (b)—as prescribed by regulation.
Section 277 was recast, although not in a way that affects the issues in this proceeding. It still requires, in essence, a comparison of before and after values. Further provisions in relation to the calculation of what was now termed “lease variation charge” were added by s 277A.
Section 278 was replaced by seven sections dealing with remission.
(a)Each of ss 278–278D provided for particular classes of case in which the Minister was empowered to determine circumstances in which there was to be a remission of lease variation charge and the Treasurer was empowered to determine the amount (expressed as a percentage) to be remitted in such circumstances. Each of these sections then obliged the Commissioner to remit the amount determined.
(b)Section 278E made similar provision but without reference to particular classes of case so that there was, in effect, a general power in the Minister to determine circumstances in which remission would be made.
(c)Section 278F empowered the Treasurer to determine, for a financial year, an amount (being a percentage) to be remitted for each charge that had been assessed during that year. This was in effect a refund that could be granted to every lessee who had been assessed for lease variation charge in a particular year.
In substance, the former s 279 became sub-s (1) of an expanded provision. More detail was added concerning the Regulations that could be made for this purpose.
Responsibility for assessing the lease variation charge payable in each case was now vested in the Commissioner, who is the officer responsible for administering the Territory’s tax laws. A new s 276D required the Commissioner to provide a “notice of assessment of the lease variation charge” to the lessee when a development application for a chargeable variation was approved.
In a case involving a “s 277 chargeable variation”, s 277B provided for the “applicant” (after receiving a notice of assessment) to request and receive a “working out statement” explaining the working out of the charge under s 277. Having received that statement (or after the end of the period specified for providing it), the applicant could apply under s 277C for reconsideration of the “original decision”. An application was required to include a report from an independent valuer (s 277D). The Commissioner was then required by s 277E to “reconsider the original decision”. The “original decision” was defined by s 277B(1)(b) as the working out of “the lease variation charge in relation to the s 277 chargeable variation”.
This “reconsideration” regime applied in its terms only to a “s 277 chargeable variation” and was evidently intended to be used only once for each variation. The right to apply for reconsideration was triggered by receipt of a working out statement (or the Commissioner’s failure to provide one within the specified period), and there was no right to request such a statement if the “original decision” had previously been the subject of reconsideration (s 277B(1)(d)).
An express power was also provided to the Commissioner to “reassess” a lease variation charge under s 279A. More will need to be said about this section later in these reasons. Section 279A was expressed to apply only when (among other things) the relevant variation to the lease had been executed (subs (1)(c))—in other words, after the lease variation charge had been paid. The Commissioner had (and still has) a general power of reassessment under the TA Act which will also need to be discussed later. Section 279A included a provision apparently limiting the application of Part 10 of the TA Act (which deals with objections and reviews) to reassessments made under that section (s 279A(4)).
More generally, and consistently with responsibility being allocated to the Commissioner, s 279B was inserted providing that the TA Act applied to Division 9.6.3 “as if a lease variation charge … were a tax payable from the day the development application … is approved”. It also provided that a “tax liability” was only to arise in the event that the Planning and Land Authority executed the relevant lease variation. This is consistent with the fundamental nature of the charge as one that does not have to be paid if, having been told the amount, the applicant decides not to proceed with the lease variation.
That basic feature, formerly reflected in s 276, was now contained in s 276B. It provided that a chargeable variation was not to be executed unless:
… the lessee has paid the Territory the lease variation charge for the variation, less any remission under section 278A to 278F, plus any increase under section 279.
The 2011 Amending Act also made amendments to Schedule 1, which (it will be recalled) specifies reviewable decisions for the purposes of s 407. Before mentioning these, it is necessary to mention something of the legislative history of that Act.
The Bill for the 2011 Amending Act was presented by the Treasurer on 5 May 2011 and debated on 21 and 23 June of that year. On the latter of those days various amendments were moved by private members, including 25 amendments proposed by Ms Hunter. These were moved together and agreed to. The Hansard record of the debate indicates that this occurred during the evening of 23 June, and complaints were aired about the speed with which the Assembly was being asked to deal with what were quite extensive amendments.
The Bill as presented by the Treasurer would have deleted items 26 to 28 of Schedule 1, referred to above (which had in the meantime been renumbered 27 to 29), and replaced them with new items including as reviewable decisions:
(d)decisions under s 277E(1)(b) to make a decision on reconsideration of a lease variation charge or to confirm the original decision (items 27–28);
(e)decisions under s 278 (which, as amended during the Bill’s passage, became ss 278-278F) about the amount of remission (item 29); and
(f)decisions under s 279 about the amount of an increase (item 29A).
The amendments that were agreed to, however, deleted proposed items 29 and 29A from the Bill. In moving her amendments, Ms Hunter said that they “provide that there is no review available for remissions decisions” (ACT, Parliamentary Debates, Legislative Assembly, 23 June 2011, 2479). Since the enactment of the 2011 Amending Act, the only decisions under Division 9.6.3 identified as reviewable decisions have been those made under s 277E(1)(b).
Amendments in 2018
Division 9.6.3 was further amended by the Planning and Development (Lease Variation Charge Deferred Payment Scheme) Amendment Act 2018 (ACT) (the 2018 Amendment Act) which, as its name suggests, introduced a scheme under which payment of a lease variation charge could be deferred rather than having to be made before the relevant variation was executed.
Central to these amendments was the substitution of new s 276B(1) and (3), so that the provision read:
276BChargeable variation of nominal rent lease—lease variation charge
(1)The planning and land authority must not execute a chargeable variation of a nominal rent lease unless—
(a)the lease variation charge for the variation, less any remission under section 278, plus any increase under section 279 (the total charge) has been paid to the Territory; or
(b)a deferral arrangement in relation to the total charge has been entered into.
NoteIf the planning and land authority has executed a variation of a nominal rent lease, the authority must lodge a copy of the variation with the registrar‑general for registration. A lease variation takes effect on registration (see Land Titles Act 1925, s 72A).
(2)A lease variation charge is taken to be paid to the Territory if—
(a)the amount of the charge is waived by the Treasurer under the Financial Management Act 1996, section 131 (Waiver of debts etc); or
(b)part of the amount is waived and the rest of the amount is paid.
(3)Payment of the lease variation charge, or entering into a deferral arrangement in relation to the lease variation charge, does not affect any right a person may have to apply for reconsideration under section 277C (Lease variation charge under s 277—application for reconsideration).
A new Subdivision 9.6.3.3, containing ss 279A to 279AE, was inserted. These sections provided for applications to defer payment of lease variation charge, circumstances in which such applications were to be approved and conditions of approval. Section 279AD provided for what was to occur if the amount of a lease variation charge that had been deferred was varied following reconsideration.
Section 279AE dealt with a consequence of the TA Act applying to lease variation charges so as to treat them as tax liabilities. One consequence of that application is that an unpaid lease variation charge can become a charge on the land under s 56H of the TA Act. Under s 269AE, a person can obtain from the Commissioner a certificate setting out the amount of the unpaid lease variation charge and any interest and penalty tax, which will be proof for an honest buyer of the matters certified.
A curious feature of the provisions inserted by the 2018 Amending Act is that, although s 276B(1)(a) and (b) refer to payment or deferral of “the total charge” (comprising the “lease variation charge” plus any increase and minus any remission), s 276B(3) and all of the provisions in Division 9.6.3.3 refer to what is being deferred as the “lease variation charge” and omit any reference to the “total charge”: see ss 279AA(2), 279AB(2), 279AC(1), 279AD(2)–(3), 279AE(1). That apparent inconsistency complicates the task of construction involved in the present case.
The final aspect of the 2018 Amending Act that should be noted is that it repealed ss 278 to 278F (which had been enacted in 2011) and substituted s 278 in its current form.
The current form of the legislation
At the risk of some repetition, it is useful to set out the important provisions of Division 9.6.3.3 as they currently stand.
276BChargeable variation of nominal rent lease—lease variation charge
(1)The planning and land authority must not execute a chargeable variation of a nominal rent lease unless—
(a)the lease variation charge for the variation, less any remission under section 278, plus any increase under section 279 (the total charge) has been paid to the Territory; or
(b)a deferral arrangement in relation to the total charge has been entered into.
NoteIf the planning and land authority has executed a variation of a nominal rent lease, the authority must lodge a copy of the variation with the registrar‑general for registration. A lease variation takes effect on registration (see Land Titles Act 1925, s 72A).
…
(3)Payment of the lease variation charge, or entering into a deferral arrangement in relation to the lease variation charge, does not affect any right a person may have to apply for reconsideration under section 277C (Lease variation charge under s 277—application for reconsideration).
276CLease variation charges—amount payable
(1)The lease variation charge for a chargeable variation of a nominal rent lease is—
(a)for a s 276E chargeable variation—the determined charge for the variation; or
(b)for a s 277 chargeable variation—the charge (if any) worked out under section 277 for the variation.
…
276DLease variation charges—notice of assessment
(1)On approval of a development application for a chargeable variation, the commissioner for revenue must give—
(a)a notice of assessment of the lease variation charge to the lessee; and
(b)if the development application in relation to the chargeable variation is made by someone other than the lessee—a copy of the notice to the applicant.
Note 1The notice of assessment is an assessment under the Taxation Administration Act 1999 as if the lease variation charge were a tax liability of the lessee under that Act (see this Act, s 279B (1)). However, no obligation to pay the lease variation charge arises on the giving of the notice (see s 279B (2)). The planning and land authority must not execute a variation of the lease unless the lessee has paid the assessed lease variation charge or the amount has been deferred (see s 276B (1)).
Note 2The commissioner for revenue must give a notice of assessment as soon as possible after the development application for the chargeable variation has been approved (see Legislation Act, s 151B).
(2)A lease variation charge is taken to be worked out—
(a)on the day the development approval of the chargeable variation is approved; or
(b)if another day is prescribed by regulation—on that day.
(3)A notice of assessment lapses on the earlier of—
(a)the day the lease variation charge is paid; or
(b)the day the development approval of the chargeable variation lapses.
…
277BLease variation charge under s 277—working out statement
(1)This section applies if—
(a)a development application in relation to a s 277 chargeable variation of a nominal rent lease is approved; and
(b)the lease variation charge in relation to the s 277 chargeable variation has been worked out (the original decision); and
(c)the commissioner for revenue gives a notice of assessment of a lease variation charge under section 276D (1); and
(d)an application has not previously been made under section 277C for reconsideration of the original decision.
(2)The applicant for the development application may ask the commissioner for revenue for a statement (a working out statement) explaining the commissioner’s working out of the original decision.
NoteIf a form is approved under s 425 for this provision, the form must be used.
(3)The commissioner for revenue must give the applicant a working out statement within 20 working days after the day the applicant asks for the statement unless—
(a)the notice of assessment contains the matters that the working out statement would contain; or
(b)a document that contains the matters that a working out statement would contain has already been given to the applicant.
277CLease variation charge under s 277—application for reconsideration
(1)The applicant for the development application may apply for reconsideration of the original decision on the earlier of—
(a)the day the applicant receives a working out statement; and
(b)the end of the 20-working day period mentioned in section 277B (3).
(2)If a development approval of a development application relates to more than 1 chargeable variation of a nominal rent lease, this section only applies to the part of the lease variation charge that is worked out for a s 277 chargeable variation.
NoteThe total lease variation charge for a development application that relates to more than 1 chargeable variation is worked out in accordance with s 276C (2).
(3)This section does not apply to a reassessment of a lease variation charge under section 279A.
…
277ELease variation charge under s 277—reconsideration
(1)Within 20 working days after receiving a reconsideration application, the commissioner for revenue must—
(a)reconsider the original decision; and
(b)either—
(i) make a decision in substitution for the original decision that the commissioner could have made; or
(ii) confirm the original decision.
…
(3)In reconsidering the original decision, the commissioner for revenue—
(a)must consider the independent valuation required under section 277D (2) (b) and any other information given in the reconsideration application; and
(b)may consider any other relevant information.
…
278Remission of lease variation charges
(1)The Minister may determine circumstances in which an amount of a lease variation charge for a chargeable variation of a nominal rent lease must be remitted.
(2)If a determination is made under subsection (1), the Treasurer must determine an amount to be remitted for each lease variation charge for a chargeable variation to which the determined circumstances apply.
(3)The amount must be expressed as a percentage of the lease variation charge for a chargeable variation.
(4)The commissioner for revenue must remit the amount determined under subsection (2) for a chargeable variation to which the determination applies.
(5)A determination under this section is a disallowable instrument.
NoteA disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.
279When commissioner must increase lease variation charge
(1)The commissioner for revenue must increase a lease variation charge for a chargeable variation of a nominal rent lease as prescribed by regulation.
(2)A regulation may prescribe the amount of the increase under subsection (1).
(3)Subject to any disallowance or amendment under the Legislation Act, chapter 7, the regulation commences—
(a)if there is a motion to disallow the regulation and the motion is negatived by the Legislative Assembly—the day after the day the disallowance motion is negatived; or
(b)the day after the 6th sitting day after the day it is presented to the Legislative Assembly under that chapter; or
(c)if the regulation provides for a later date or time of commencement—on that date or at that time.
279ALease variation charge—reassessment
(1)This section applies if—
(a)a development application for approval of a chargeable variation of a nominal rent lease is approved; and
(b)the commissioner for revenue gives a notice of assessment of a lease variation charge under section 276D (1); and
(c)the planning and land authority executes a variation of the lease to which the lease variation charge relates.
(2)The commissioner for revenue may reassess the lease variation charge under the Taxation Administration Act 1999, section 9 (Reassessment).
(3)The commissioner for revenue must give—
(a)a notice of assessment of the lease variation charge to the lessee; and
(b)if the development application in relation to the chargeable variation is made by someone other than the lessee—a copy of the notice to the applicant.
NoteThe assessment notice must show the amount of the reassessment and the amount by which the assessment has been increased or decreased (see Taxation Administration Act 1999, s 14 (3)).
(4)For this division, the Taxation Administration Act 1999, part 10 (Objections and reviews) applies only to a reassessment of a lease variation charge under this section.
Note 1Either the lessee or, if the lessee is not the applicant for the development approval, the applicant for the development approval, may apply under this Act for reconsideration of a notice of an assessment of a lease variation charge worked out under s 277 (see s 277D).
Note 2A notice of a reassessed lease variation charge is an internally reviewable decision (see Taxation Administration Act 1999, s 107, def internally reviewable decision), and the notice of assessment must be an internal review notice (see that Act, s 107B).
279BApplication of Taxation Administration Act
(1)The Taxation Administration Act 1999 applies to this division as if a lease variation charge for a chargeable variation were a tax liability from the day the development application in relation to the chargeable variation is approved.
(2)However, the tax liability is only payable if the planning and land authority executes a variation of the lease to which the chargeable variation relates.
Note 1The time for payment of the tax liability for the lease variation charge may be extended to a time after the date of execution of the lease variation under a deferral arrangement (see s 279AB (2)).
Note 2A charge on the land under the Taxation Administration Act 1999, s 56H arises when the tax liability becomes payable.
Note 3The planning and land authority must not execute a variation of a nominal rent lease unless the lessee has paid, or deferred, the lease variation charge worked out under s 276C less any remission under s 278, plus any increase under s 279 (see s 276B (1) and s 276C).
I have not set out s 276E but note that it provides for determination of amounts of lease variation charge to cover significant categories of matters. Sections 277 and 277A (which I have also not set out) provide the method of calculation of lease variation charge in other cases, including the present case.
I have also not included any provisions of Subdivision 9.6.3.3 but note that these provisions continue to refer to the charge being deferred as the “lease variation charge”.
Relevant subordinate legislation
For the purposes of s 278, and relevantly to the issues in this case, the Planning and Development (Remission of Lease Variation Charges—Construction Sector Recovery) Determination 2020 (ACT) (the 2020 Determination) was deemed to commence on 25 June 2020 and expressed to expire on 31 March 2021. It was issued in the names of both the Minister and the Treasurer, and evidently intended to serve the purposes of both s 278(1) and (2). The amount to be remitted was “50% of the lease variation charge” (cl 5), but this apparently applied only to the portion of the charge identified in cl 4. The circumstances for remission were identified in cl 4 as follows:
4Determination of circumstances—s 278 (1)
I, the Minister for the Planning and Land Management, determine the following circumstances in which an amount of a lease variation charge for a chargeable variation of a nominal rent lease must be remitted:
(a)a development application for the variation has been approved; and
(b)the development approval in subsection 4 (a) relates to the development of a building on the land under the lease; and
(c)the lease variation charge to be remitted is only in respect of that part of a lease variation charge that is less than or equal to $500,000; and
(d)prior to 25 June 2020, the lease variation charge:
(i) had not been paid; or
(ii) was not already subject to a deferral arrangement under subdivision 9.6.3.3 of the Act; and
(e)an application under section 279AA of the Act to defer payment of the lease variation charge is lodged on or before 23 December 2020 and subsequently approved under section 279AB of the Act; and
(f)construction under the development approval has not commenced prior to 25 June 2020 but commences on or before 31 March 2021.
A further determination, the Planning and Development (Remission of Lease Variation Charges—Construction Sector Recovery) Determination 2021 (ACT) was deemed to commence on 24 December 2020 and expired on 30 September 2021. It took a similar approach to the 2020 Determination, but was based on construction commencing between 24 December 2020 and 30 September 2021 and applied a remission of only 25 per cent. It overlapped temporally with the 2020 Determination, but did not apply in a case where remission was available under that Determination.
For the purposes of s 279, increases are prescribed by Division 5.5.3 of the Regulation. Regulation 182, which was considered relevant in the present case and referred to in the second to fourth assessments, prescribes a variation of a “recently commenced lease” (which is defined in s 180) in various circumstances, and imposes an increase of “25% of the added value for the variation”.
The TA Act
It is sufficient to refer to the TA Act in its current form.
Section 4 of the TA Act provides that Division 9.6.3 of the Act is a “tax law”. The TA Act makes general provision for the administration and enforcement of tax laws (s 6(1)), including “the assessment and reassessment of tax liability”, “payment of tax, where this is not provided for in the tax law concerned”, “the imposition of interest and penalty tax” and “objections and appeals” (s 6(3)).
“Tax liability” is not defined but its meaning can be inferred from the definition of “tax” in the Dictionary to the TA Act. A “tax” means “a tax, duty or levy under a tax law” and includes any amount payable to the Commissioner under a tax law. It is therefore not limited to the classical concept of a “tax” employed in the field of constitutional law.
Under s 7, the Commissioner has a general power to “make an assessment of the tax liability of a taxpayer”. (A “taxpayer” includes anyone who is or may be liable to pay “tax”.) Section 9 empowers the Commissioner to “make 1 or more reassessments of a tax liability of a taxpayer”.
The Commissioner generally has a power rather than a duty to issue a notice of assessment (s 14(1)), but must do so if it is requested by the taxpayer (s 14(2)) and must also do so if a reassessment is made (s 14(3)). If a notice of assessment has been issued, the assessment can be withdrawn (s 13); and if that is done a notice of withdrawal must be issued (s 14(4)).
Provisions whose general nature will be familiar to Australian tax practitioners are ss 16 and 134. Section 16 provides that the validity of an assessment is not affected by non-compliance with a provision of a tax law. Section 134 provides that production of a notice of assessment is conclusive evidence of the due making of the assessment, and that the amount and all particulars of the assessment are correct, except in objection or appeal proceedings under the TA Act. Equivalent provisions in Commonwealth income tax legislation were considered in Federal Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; 237 CLR 146, especially at [24] (Gummow, Hayne, Heydon and Crennan JJ). Their effect is that something that is in truth an assessment (and not, for example, a product of conscious maladministration) can be challenged only on the merits and only through the procedures of objection and review that the tax laws themselves provide.
“Assessment”, for these purposes, is defined in the Dictionary as follows:
assessment means—
(a)an assessment, reassessment or compromise assessment of the tax liability of a person under a tax law, made by the commissioner under part 3; or
(b)an assessment substituted by the ACAT on review under part 10.
Part 10 of the TA Act contains provision for objections and reviews. Under s 100, a taxpayer who is dissatisfied with an assessment that is shown in a notice of assessment may lodge a written objection with the Commissioner. Under s 104, the Commissioner must consider the objection and allow it, in whole or in part, or disallow it. Lodging an objection does not affect the assessment or the Commissioner’s ability to recover the amount assessed: s 105. A determination by the Commissioner of an objection to an assessment is a “reviewable decision” (s 107A), and the taxpayer in relation to whom such a decision is made may apply to the ACAT for review of that decision (s 108A).
The assessments in the present case
The successive decisions made in the present case have been mentioned above. It is useful to note the basis upon which each purported to be made.
First assessment
The first assessment was headed “Notice of Assessment – Lease Variation Charge – Planning and Development Act 2007 – Section 276D”. Appended to it was a document headed “Working Out Statement” which said that it was a statement pursuant to s 277B of the Act. There is no reason to doubt that the first assessment was a notice of assessment issued under s 276D. As noted earlier, it did not refer to any remission under s 278 or any increase under s 279.
Second assessment
The second assessment was headed in the same way as the first assessment. It also came with a document that styled itself a “working out statement”.
The second assessment included an amount for “S277 Lease Variation Charge” (which was the same as the amount of the first assessment). It also included an “Increase” and a deduction as noted above, and stated a total “Amount Payable” that reflected these amounts. The second assessment was sent under cover of a letter by which the delegate purported to “revoke” the first assessment.
It is reasonably clear, however, that the second assessment did not involve a “reconsideration” under s 277E of the Act. There was no application for reconsideration, no provision of an independent valuation, and no revisiting of the “working out” of the lease variation charge under s 277.
Third assessment
Although an application for reconsideration was before the Commissioner at the time of the third assessment, this assessment did not purport to respond to or determine that application. Like the second assessment, it was an own-motion exercise.
The third assessment purported to be made under s 9 of the TA Act. There is question whether that provision is applicable.
Like the second assessment, the third assessment did not purport to revisit any aspect of the working out of the lease variation charge under s 277. It dealt only with additions to and subtractions from that amount under ss 278 and 279. The second assessment had apparently allowed a remission of $250,000 on the footing that the 2020 Determination applied. The third assessment involved a reversal of that view, on the basis that construction had not commenced by 31 March 2020. This is the aspect of the decision making that the plaintiff wishes to contest by way of merits review.
Fourth assessment
The fourth assessment is headed in the same way as the first and second (ie, as a notice of assessment under s 276D) and was also accompanied by a working out statement. It was issued under cover of a letter which makes it clear that it responds to the reconsideration application lodged by the plaintiff. Interestingly, the covering letter also suggests that the determination being varied is the second assessment rather than the third.
As noted above, the fourth assessment varied the amount of lease variation charge previously worked out under s 277. At least to the extent that it does that, it is properly seen as reflecting or embodying a decision under s 277E(1)(b)(i). Both the letter and the notice of assessment advised that review could be sought in the ACAT.
The fourth assessment included a change to the amount of the increase that had been included in the third assessment, which was consequential upon the amount of the charge worked out under s 277 having been reduced (consistently with s 182 of the Regulation). As with the third assessment, no amount was allowed by way of remission under s 278.
Revocations and reassessments
To the extent that a notice of assessment issued under s 276D creates or alters legal rights, the assessment is a “statutory instrument” to which s 46(1) of the Legislation Act 2001 (ACT) applies. Section 46 is a “determinative provision”, which means that it can be displaced only “expressly or by a manifest contrary intention” (s 6(2)). However, the extent to which the Commissioner is authorised to revisit the decisions that inform the content of a notice (other than by way of a reconsideration under s 277E) is unclear. So too is the extent to which a notice under s 276D in itself affects legal rights.
However, it was not contended that any of the four assessments was beyond power. The fourth assessment, at least, reflected a decision made under s 277E(1) in response to an application for reconsideration and therefore operated at least to redetermine the amount of “lease variation charge” payable by the plaintiff. It must also be kept in mind that a decision that is infected by jurisdictional error may nevertheless be amenable to review by an administrative tribunal: Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338, 342, 370. It is only the availability of merits review that is currently in issue.
The plaintiff’s application for review
The application filed in the ACAT by the plaintiff on 22 June 2021 is clearly competent and the Tribunal has jurisdiction to review the “reviewable decision” in respect of which that application was made. The fourth assessment, which was made following a reconsideration (commenced by the plaintiff’s application), embodies a decision under s 277E(1)(b)(i) of the Act made “in substitution for the original decision”. A decision of that nature is a “reviewable decision” by force of item 27 of Schedule 1 to the Act and ss 407–408.
The issue of construction
The issue that arises is whether the ACAT has power as part of its review to make any order concerning remission under s 278. This question turns on whether the issue of remission formed part of the “reviewable decision”. That is because s 68(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACT) (ACAT Act) is closely analogous to s 43 of the Administrative Appeals Tribunal Act 1975 (Cth), as to which the High Court has held that “[t]he primary decision, and the statutory question it answers, marks the boundaries of the AAT’s review”: Frugtniet v Australian Securities and Investments Commission [2019] HCA 16, 266 CLR 250, [51] (Bell, Gageler, Gordon and Edelman JJ); see also [15] (Kiefel CJ, Keane and Nettle JJ). Section 68(2) of the ACAT Act authorises the ACAT to perform functions given by an Act to the primary decision maker, but only the functions given “for making the decision”. In other words, the ACAT is armed with the powers that were available to the original decision maker for the purpose of making the decision under review, and not with other decision making powers invested in that entity. Its position is therefore substantially the same as that of the Commonwealth Administrative Appeals Tribunal, although the language of s 68(2) is different to that of the equivalent provision in the Commonwealth legislation (see Shi v Migration Agents Registration Authority [2008] HCA 31; 235 CLR 286, [133] (Kiefel J), citing Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32, 40).
The “reviewable decision” here is a decision under s 277E(1)(b) of the Act (there being no separate right to seek review of a decision under s 278). The scope of the decision to be made under s 277E(1)(b) is therefore critical.
The task of the Commissioner under s 277E(1) is to “reconsider the original decision” and then either to confirm that decision or to make a decision in substitution for it. The subject matter is therefore the same as that of the “original decision”. The “original decision” is defined by s 277B(1)(b) (and see s 276) as the decision by which “the lease variation charge in relation to the s 277 chargeable variation [is] worked out”.
Careful reading of that definition reveals that it is not expressly limited to the process that has to occur under s 277. Rather, it refers to the working out of “the lease variation charge” in relation to a “s 277 chargeable variation” (which is a defined class of lease variation). The definition does refer to a charge that is “worked out”—language which (apart from s 277B itself) occurs only in ss 277, 277A, 277C and 277D. This suggests that the “working out statement” for which s 277B provides, the process of reconsideration and the decision under s 277E were all intended to apply only to the process of evaluation that takes place under s 277 and not to adjustments that might then be made under s 278 or 279. However, it is not conclusive. The question what is meant by “the lease variation charge” in s 277B(1)(b) needs to be addressed in the context of Division 9.6.3 as a whole.
The preferred construction
Five aspects of the legislation and its history lead me to the conclusion that the phrase “lease variation charge” in s 277B(1)(b) refers only to the component that is worked out under s 277 and does not include the application of any increase or remission.
First, the provision that does the actual work of requiring the charge to be paid—s 276B(1)—refers to payment of (or deferral arrangements for) “the lease variation charge …, less any remission under section 278, plus any increase under section 279” (defined, together, as “the total charge”). The predecessor provision (the original s 276) was to substantially the same effect.
It is normally presumed that a word or phrase has the same meaning throughout an Act: Regional Express Holdings Ltd v Federation of Air Pilots [2017] HCA 55; 262 CLR 456, [21]. That presumption is not always a strong one; indeed, it only goes a certain distance in the present case, as will appear below. However, where the phrase being construed describes a charge imposed by the Act itself (and thus has no “ordinary meaning” outside the Act), there is a strong basis to presume that the legislature intended to use it consistently at least within the four corners of each exercise of legislative power. Sections 276B and 277B were both inserted by the 2011 Amending Act, as were s 276C, s 276D (which provides for an assessment of “the lease variation charge”), the provisions which follow on from s 277B (culminating in s 277G) and the current form of s 279. (Section 276B was amended further in 2018, but the version enacted in 2011 contained the same careful delineation of elements as is now seen in s 276B(1)(a).) Consistency of meaning throughout these provisions indicates that the phrase “lease variation charge” does not encompass adjustments that might be made under ss 278 or 279.
Secondly, s 276C(1), which follows straight after s 276B, expressly says that the lease variation charge “is” either the determined amount under s 276E or the amount worked out under s 277. This provision is not framed as a definition, but it is a strong indicator of how the expression was intended to be used throughout Subdivision 9.6.3.2. It is the provision that makes the express link between the Commissioner’s “working out” under s 277 and the amount required to be paid under s 276B, and removes any doubt that the Commissioner’s assessment is (subject to any reconsideration and review) determinative of the amount payable.
Thirdly, as the ACAT noted in St Landco, ss 278 and 279 provide for determination or prescription of amounts to be remitted from, or added to, “a lease variation charge”, with such amounts to be expressed, in the case of remissions, “as a percentage of the lease variation charge for a chargeable variation”. The Commissioner is commanded to make a remission or apply an increase in accordance with a determination or the Regulations, as the case may be. A “lease variation charge” needs to have been ascertained before these provisions can do their work.
Fourthly, if calculation of a remission forms part of the “original decision” as defined by s 277B(1)(b), so that it can then be the subject of reconsideration and of review by ACAT, a distinction is thereby created between variations chargeable under s 277 and those chargeable under s 276E that has no logical explanation. Sections 278 and 279 apply in exactly the same way to charges levied under both provisions. Their application to a charge levied under s 276E is clearly not subject to review, because there is no provision for reconsideration or review of such a charge.
Fifthly, in enacting the 2011 Amending Act, the Assembly expressly deleted items from Schedule 1 that had previously conferred review rights expressly in relation to decisions under ss 278 and 279. That change might possibly be explained on the basis that it was unnecessary to specify these classes of decision because they would be wrapped up in a decision under s 277E(1)(b). However, that explanation does not sit well with the legislative scheme and is contradicted by the legislative history of the 2011 Amending Act.
It does not sit well with the legislative scheme because it means that, in 2011, the right to seek review of a decision concerning remission under s 278 was taken away from lessees whose charge was levied under s 276E but not from those whose charge was levied under s 277. As noted above, there is no logical explanation for such a distinction.
As to the legislative history, the original Bill for the 2011 Amending Act included what became ss 276D and 277B–277E. It also included provisions that would have expressly made decisions under both 277E and 278–279 “reviewable decisions”, which indicates an understanding that decisions concerning remission would not be swept up in s 277E. As noted above, decisions under ss 278 and 279 were then removed—from the classes of reviewable decision that the Bill would have created—by amendments agreed to during the debate. The intention of the amendments as explained in the Assembly by their proponent (in a contribution analogous to a Second Reading Speech) was that there would be “no review available for remissions decisions”.
The legislative intention to be inferred from the amendments to Schedule 1 made by the 2011 Amending Act—especially in the light of the legislative history of that Act itself—is that reconsideration of an “original decision” under s 277E would not encompass issues concerning remission of lease variation charge, and that the separately conferred right to seek review of decisions concerning remission in the ACAT was to be removed.
Countervailing considerations
It must be acknowledged that there are two considerations that point in the other direction. However, they are weaker indicators of legislative intention than the five factors I have outlined above.
First, several provisions in Subdivision 9.6.3.3 (which concerns arrangements for deferral) use the expression “lease variation charge” in a way that appears to refer to the “total charge” referred to in s 276B rather than a component of that total charge. For example, while s 276B calls for either payment or deferral of the “total charge”, ss 279AA(2) and 279AB(1) envisage an application to defer the “lease variation charge”. The amount that then becomes payable at a later time, under s 279AC(1)(a), is also described as the “lease variation charge”. Invoking the presumption of consistent meaning (referred to above), these provisions arguably indicate that the same phrase where it appears in the definition of “original decision” must be understood to denote the “total charge”.
That argument, however, attributes too much force to the presumption. It leads to a construction of the phrase that is at odds with s 276B, which I have described above as the key provision, and with the clear language of s 276C(1). The presumption “must yield to the requirements of the context” (McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633, 643 (Gibbs ACJ)), and there is authority for the view that it is readily rebuttable in the case of a large Act which is frequently amended (see, eg, Thirteenth Beach Coast Watch Inc v Environmental Protection Authority (Vic) [2009] VSC 53; 29 VR 1, [10] (Cavanough J)). More specifically, the presumption must logically have less force in relation to provisions enacted at different times than in relation to provisions enacted together in the original Act or in the same amending Act (a position supported by at least one English decision: Chaudhary v Chaudhary [1985] Fam 19; [1984] 3 All ER 1017, 1031–1032 (Oliver LJ), 1035 (Balcombe J)). That is why, at [74] above, I noted that the relevant language of ss 276B, together with ss 276C, 277B and closely related provisions, were introduced by the 2011 Amending Act.
The provisions in Subdivision 9.6.3.3 were introduced later, by the 2018 Amending Act. That Amending Act could probably have been drafted more carefully. The new provisions that it inserted in Subdivision 9.6.3.3 used the expression “lease variation charge” in what appears to be a different sense from the way it is used in s 276B(1), even though that subsection was amended at the same time in order to accommodate the new deferral regime. New s 276B(1)(a) uses the same language as the former subsection (1) to identify the combination of the three elements which is then referred to as the “total charge”, and new s 276(1)(b) refers to a deferral arrangement in relation to the “total charge”; yet new the provisions dealing with the mechanics of deferral in Subdivision 9.6.3.3 refer throughout to the “lease variation charge”. That internal inconsistency, and the fact that these provisions were inserted at a different time, leads me to conclude that the references to the “lease variation charge” in Subdivision 9.6.3.3 are not a safe guide to the meaning of that expression in other provisions.
Secondly, the understanding that I consider flows from text and context leaves something of a gap in relation to the ascertainment of the correct amount of remission under s 278 and increase under s 279 in individual cases.
Section 277, as noted above, requires the Commissioner to “work out” an amount based on valuation evidence. That is plainly a matter for expert judgment on which minds may differ. Section 276C(1) confirms that it is the Commissioner’s working out that is determinative. Section 276D requires the Commissioner to give the lessee a “notice of assessment of the lease variation charge”. I deal later with questions concerning the effect of such an assessment.
If (as I consider to be the better view) “lease variation charge” in this context means only the amount worked out under s 277 (or the amount determined under s 276E in a case to which that section applies), the notice of assessment issued under s 276D need not say anything about any remission applied under s 278 or any increase applied under s 279. Further, whatever status or legal force the notice of assessment has under the Act, it will not have that status or force in relation to those matters. Any power to make an assessment in relation to a s 278 remission or a s 279 increase that has a legal effect must therefore be found in the TA Act. There is a degree of complexity in relation to that, as will appear below. But in any event, the Commissioner is not under any duty to furnish a notice of assessment dealing with these matters.
On this view, the lessee may therefore become entitled to a remission or liable to an increase without the Commissioner giving any formal notice to that effect. This raises large questions as to whether ss 278 and 279 make a remission or an increase payable consequently upon an opinion reached by the Commissioner that specified circumstances exist, or operate of their own force to require remission or additional payment when those circumstances objectively exist (cf, eg, Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 391–392 (Dixon J)). Those questions have not been argued before me and may arise later in these proceedings.
These uncertainties, which are significant, do not arise if “lease variation charge” is taken to mean what s 276B(1) refers to as the “total charge”. However, that construction flies in the face of s 276B itself as well as s 276C, and is very difficult to reconcile with the terms of ss 278 and 279 themselves as discussed above. If the construction that I prefer were found to create insoluble contradictions when applied to the subject matter of an assessment under s 276D, so as to undermine the objects of the Act, it would have to be accepted that the phrase “lease variation charge” is not used consistently as between that section and others in Subdivision 9.6.3.2.
Conclusion on the review application
Having applied for reconsideration and obtained a decision under s 277E(1)(b), the plaintiff was entitled to apply to the ACAT for review of that decision. However, in conducting and deciding upon that review, the ACAT has no power to make any order in relation to the amount of remission that should have been applied.
The objection
The plaintiff purported to object to the third and fourth assessment, in reliance on s 100(1)(a) of the TA Act, which is contained in Part 10. That paragraph permits a “taxpayer” to lodge a written objection to “an assessment” that is “shown in a notice of assessment given to the taxpayer”.
Section 279A of the Act is important to an understanding of whether the right of objection under s 100 is available to the plaintiff.
Section 279A(2) expressly authorises reassessment of a lease variation charge under s 9 of the TA Act in the circumstances referred to in s 279A(1) (which do not exist here). Section 279A appears to have been intended as an anti-avoidance measure (see the Explanatory Statement to the Bill for the 2011 Amending Act (the 2011 ES) at [48]), conferring a special power on the Commissioner to reassess an amount of lease variation charge after the relevant lease variation has been executed (and either the charge has been paid or a deferral arrangement is in place).
Importantly for present purposes, 279A(4) then provides that, “for this division”, the provisions relating to objections and appeals in Part 10 of the TA Act apply “only to a reassessment of a lease variation charge under this section”. In its terms, s 279A(4) both authorises objection and review under Part 10 in relation to a reassessment under that section and precludes it (to the extent it is otherwise available) in connection with other decisions under Division 9.6.3.
It was suggested in argument that s 279A(4) is governed by the opening words of s 279A(1) (“This section applies if …”), and therefore does not apply if s 279A is not enlivened. However, while that construction makes textual sense, it deprives the exclusionary aspect of s 279A(4) of any effect. The only way to give effect to the words of s 279A(4) is to construe it as excluding the application of Part 10 of the TA Act to any assessment or reassessment of lease variation charge other than one that is authorised by s 279A. This is consistent with the intention expressed in the 2011 ES (at [157]).
In so far as the third or fourth assessment involved an assessment of the amount of “lease variation charge”, therefore, it was not amenable to objection and review under Part 10 of the TA Act. This is the case even if it otherwise constitutes an “assessment” within the meaning of s 100 of the TA Act.
The issues that remain are whether the third or fourth assessment has some additional operation in so far as it purports to decide the amount to be remitted under s 278, and whether in that additional operation it amounts to an “assessment” that is amenable to objection under s 100 of the TA Act.
In this connection it is sufficient to focus on the fourth assessment. It was clearly intended to replace the third assessment and become the operative assessment in all respects. On the issue of what if any remission was to be made, the fourth assessment is consistent with the third assessment and can be taken to have adopted its reasoning. That reasoning is thus a particular which, if otherwise amenable to objection, could be challenged by objecting to the fourth assessment.
As noted above, s 276C of the Act has the effect that the amount of “lease variation charge” payable in respect of a lease variation is either the amount determined under s 276E or the amount worked out by the Commissioner under s 277 (either initially or following reconsideration). To that extent the regime under the Act does not need to depend on the conclusive status given to “assessments” of tax by s 134 of the TA Act. There is no equivalent to s 276C in relation to the other components of the “total charge” mentioned in s 276B(1).
Arguably, amounts to be remitted under s 278 and increases under s 279 are amounts of “tax” which may be the subject of assessments made under s 7 and 9 of the TA Act. If that is correct then, also arguably, such assessments are “assessments” in relation to which the lessee is a “taxpayer” within the meaning of those terms as defined in the Dictionary to the TA Act and may be the subject of objection under s 100.
These arguments raise complex questions which, in the absence of detailed argument, it is preferable that I should not attempt to decide. These include:
(a)as noted above, whether the operation of ss 278 and 279 depends on any decision being made by the Commissioner;
(b)in the case of a remission, whether it is a “liability for tax” in any relevant sense (given that the term “remission” normally connotes forgiveness or release of a debt, and decisions concerning “remission” provided for in the TA Act itself do not appear to be treated as assessments (see ss 100(1)(b), 107, Schedule 1 cl 1.2(f), Schedule 2 cl 2.2(a)); and
(c)whether, in the light of the express provision in s 279A(2), provisions in Part 3 of the TA Act are to be understood as applying to any component of the “total charge” in the absence of such express provision (noting also that, according to the 2011 ES, the Commissioner was not to have any power to make reassessments other than that conferred by s 279A(2): at [155]).
These questions do not need to be resolved because s 279A(4), the effect of which has been discussed above, is expressed to apply “for this division”. It should therefore be understood to mean that the only decisions under Division 9.6.3 that can be objected to under Part 10 of the TA Act are reassessments made under s 279A(2). In so far as that means that decisions concerning remission under s 278 cannot be reviewed on their merits by way of objection, it is consistent with such decisions having originally been reviewable in the ACAT under s 408 of the Act, and that avenue of review having been closed off in 2011 by amendments whose stated purpose was that that “there is no review available for remissions decisions”.
For these reasons, the fourth assessment is not amenable to objection under Part 10 of the TA Act either generally or in so far as it determines the amount of remission available to the plaintiff under s 278 of the Act. The same is true of the third assessment, to the extent that it has any continuing force.
Conclusions and orders
The conclusions I have reached above are contrary to the directions sought by prayers 1 to 3 of the Amended Originating Application. My conclusions are also contrary to the declaration in prayer 4, because it would expressly identify an argument that remission should be made under s 278 as the ground on which a review application could be advanced. The more general question raised by prayer 4 (whether a refusal by the Commissioner to determine an objection is a decision that can be reviewed in the ACAT) therefore does not need to be decided for present purposes.
The Commissioner submitted in writing that the plaintiff should be ordered to pay his costs of the application. That is not appropriate, at least because some aspects of the application remain to be determined. The plaintiff’s written submissions (filed before specific aspects of the proceeding were set down for hearing) covered all prayers for relief and suggested that a costs order in favour of the Commissioner might not be appropriate even if the plaintiff ultimately failed. Neither position was developed orally. The Commissioner has succeeded on the issues that have been argued before me. However, it is preferable that the costs of this argument be dealt with as part of the orders that are made at the conclusion of the proceeding.
The orders of the Court are as follows:
(1)Prayers 1 to 4 of the Amended Originating Application are dismissed.
(2)The costs of the hearing on 20 June 2022 are reserved.
(3)The matter is listed for further directions before the Registrar at 9:30AM on Friday 5 August 2022.
| I certify that the preceding one hundred and seven [107] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Kennett Associate: Date: |
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