Legislation: ACT Civil and Administrative Tribunal Act 2008, s.68

Rates and Land Tax Act 1926 (Repealed), ss.22AAB, 22A, 22BB, 22EB & 22EC

Land Tax Act 2004, ss.8, 9, 14, 19, 19A, 36, 38, 48 & 59

Taxation Administration Act 1999, ss.26, 30, 31-34, 37, 82, 101 & 107A & schedule 1.2

Case Law: Riverland Retreat Pty Ltd v Commissioner of State Revenue

[2004] VCAT 1366

American Express International v Commissioner of State Revenue [2003] VSC 32

Aurora Developments Pty Ltd v Federal Commissioner of Taxation (No.2) [2011] FCA 1090

Federal Commissioner of Taxation v Traviati [2012] FCA 546

Trust Company of Australia Limited v Chief Commissioner of State Revenue [2002] NSWADT 21

Touma v Chief Commissioner of State Revenue [2012] NSWADT 2

Date of Reasons for Decision: 28 September 2012

CIVIL AND ADMINISTRATIVE TRIBUNAL ) NO: AT 12/25

AND: THE COMMISSIONER FOR ACT REVENUE

The Tribunal orders, pursuant to section 68(3) of the ACT Civil and Administrative Tribunal Act 2008, that the decisions of the Commissioner for ACT Revenue under review in matters AT12/25, AT12/26, AT12/27 and AT12/28 be set aside and remitted to the Commissioner for reconsideration in accordance with the directions and findings set out herein.

1. On 23 April 2012 Mr Christakis Alexandrou ("the Applicant" or "Mr C. Alexandrou") made four applications to the ACT Civil and Administrative Tribunal ("the Tribunal") for the review of four decisions of the Commissioner for ACT Revenue ("the Commissioner") dated 26 March 2012. The decisions disallowed, in whole or in part, objections to the assessment of land tax, penalty tax and interest on three properties owned by the Applicant and on one property owned by the Applicant and his brother Mr Alex Alexandrou. On 31 May 2012, the Tribunal ordered that Mr Alex Alexandrou be joined as a party in AT12/27, which matter relates to the co-owned property being Block 11 Section 65 Downer at 19 Gardiner Street, Downer ("Gardiner"). Matter AT12/25 relates to the property being Unit 1, Block 3, Section 23 Dickson, at 37A Marsden Street, Dickson ("Unit 1"); matter AT12/26 relates to the property being Unit 2, Block 3, Section 23 Dickson, at 37B Marsden Street, Dickson ("Unit 2"); and matter AT12/28 relates to the property being Block 10, Section 34, Scullin, at 52 Broadbent Street, Scullin ("Broadbent"). The Tribunal also ordered that the four applications be heard together.
2. In respect of three of the properties the periods of assessment were covered by two enactments. The Rates and Land Tax Act 1926 (Repealed) ("RLTA") applied in the period prior to 1 July 2004. Subsequent to that date the relevant Act was the Land Tax Act 2004 ("LTA"). The Taxation Administration Act 1999 ("TAA") applied at all relevant times.

1. The matters were heard on 13 and 14 August 2012. Mr W. Bolin CPA represented the Applicant and the party joined, and the Commissioner was represented by Dr D. Jarvis of counsel. The Tribunal had before it four sets of documents ("T docs") relevant to the four decisions under review together with the Applicant's Facts and Contentions (Exhibit A5), the Applicant's response to the Commissioner's Facts and Contentions (Exhibit A6), a statement from the Party Joined (Exhibit A1) and the Respondent's Facts and Contentions, including a witness statement with annexures from Ms Simone Black, an officer with the ACT Revenue Office (Exhibit R2). Any reference to a T-doc is a reference to the T-doc relevant to the property being discussed. The Applicant and Ms Black gave oral evidence to the Tribunal. Mr Alex Alexandrou was not called to give evidence.

lease means a lease from the Commonwealth or the Territory, and includes an agreement with the Commonwealth or Territory -

(b) for the tenancy or occupation of a parcel of land,

1. The following sections of the RLTA are relevant to the decision under review:

prescribed date, in relation to a quarter, means the first day of the quarter.

quarter means the period of 3 months beginning on 1 July, 1 October, 1 January or 1 April.

rent means valuable consideration for which a tenant is liable under a tenancy agreement in relation to the tenancy or a period of the tenancy.

tenancy agreement means an agreement under which a person grants to another person for value a right of occupation of a parcel of land for use as a residence -

(a) whether the right of occupation is exclusive or not; or

(b) whether the agreement is express or implied; or

(c) whether the agreement is in writing, is oral, or is partly in writing and partly oral;

but does not include an agreement conferring a right of occupation solely as a boarder or lodger.

tenant means a person who has a right of occupation under a tenancy agreement, or the person's legal representative, heir or assign.

(a) in relation to a dead person - an executor of the will, or an administrator of the estate, of the dead person; or

(b) a guardian or manager of the property of a person under a legal disability.

(2) For this part, a parcel of land or dwelling shall not be taken to be rented only because a tenant is liable to pay for rates, land tax, repairs, maintenance or insurance in relation to the parcel or dwelling.

(3) For this part, a parcel of land or a dwelling that is -

shall be taken to be rented on the prescribed date in the next quarter unless -

(c) the owner gives written notice to the commissioner before the beginning of the next quarter that the parcel of land or dwelling will not be rented at any time in that quarter; or

(d) the owner gives written notice to the commissioner during the next quarter that the parcel of land or dwelling has not been, and will not be, rented at any time in that quarter; or

(e) the owner gives written notice to the commissioner that the parcel of land or dwelling is not rented during a continuous period of at least 91 days that -

(i) begins in the firstmentioned quarter after the prescribed date in that quarter; and

(1) Land tax at the appropriate rate mentioned in subsection (2) is imposed for a quarter for each parcel of rateable land that is not exempt from land tax.

(2) For subsection (1), the appropriate rate is as follows:

(a) for a parcel of residential land that is owned by a company or trustee or is rented - the rate for each part of the average unimproved value of the land mentioned in column 2 of the following table that is mentioned opposite that part in column 3 of the table;

(b) for a parcel of commercial land - the rate for each part of the average unimproved value of the land mentioned in column 2 of the following table that is mentioned opposite that part in column 4 of the table.

annual rate for residential land mentioned in paragraph (a)

(3) This section is subject to section 24A (Unit subdivisions).

22BB Commissioner must be told if land leased for residential purposes is rented

(1) A person who becomes the owner of a parcel of land that is leased for residential purposes, and becomes or continues to be rented by a tenant on the change of ownership, must tell the commissioner in writing within 30 days -

(a) that the parcel became or continued to be rented; and

(2) The owner of a parcel of land that is leased for residential purposes must tell the commissioner in writing within 30 days if the parcel becomes rented by a tenant.

(3) Subsections (1) and (2) do not apply to a company.

(a) fails to give any information as required by this Act; or

(b) provides any such information, whether orally or in writing, that is false or misleading in a material particular;

the owner is liable to pay, as a penalty, an additional amount equal to double the amount of any land tax payable in relation to that parcel of land.

(2) The commissioner shall assess the amount of penalty tax payable by an owner of a parcel of land under subsection (1) and shall, as soon as practicable after making the assessment, give the owner written notice of the assessment and of the due date for payment of the penalty tax.

If the commissioner is satisfied that it is fair and reasonable that all or part of any penalty tax payable or paid in relation to a parcel of land should be remitted or refunded, the commissioner may remit or refund the relevant amount to the owner of the parcel of land.

1. The relevant definitions of "lease", "rent" and "tenancy agreement" within the LTA are:

lease means a lease from the Commonwealth or the Territory, and includes an agreement with the Commonwealth or the Territory -

(b) for the tenancy or occupation of a parcel of land.

rent means valuable consideration for which a tenant is liable under a tenancy agreement in relation to the tenancy or a period of the tenancy.

(a) means an agreement under which a person grants to someone else for value a right of occupation of a parcel of land for use as a residence -

(i) whether the right of occupation is exclusive or not; and

(ii) whether the agreement is express or implied; and

(iii) whether the agreement is in writing, is oral, or is partly in writing and partly oral; but

(b) does not include an agreement giving a right of occupation only

1. Part 2 of the LTA deals with the imposition and payment of land tax. The following sections in Part 2 are relevant:

(1) For this part, a parcel of land or dwelling is not taken to be rented only

because a tenant is liable to pay for rates, land tax, repairs, maintenance or insurance in relation to the parcel or dwelling.

Note For provision about multiple dwellings on a parcel of land, see s 15.

(2) For this part, a parcel of land or dwelling is taken to be rented if it is

(3) For this part, a parcel of land or dwelling is taken to be rented on the

(a) it is leased for residential purposes on that day; and

(b) it was rented at any time in the previous quarter.

(4) However, the parcel of land or dwelling is taken not to be rented on

(a) the owner gives written notice to the commissioner before the

beginning of the quarter that the parcel or dwelling will not be rented at any time in the quarter; or

(b) the owner gives written notice to the commissioner during the

quarter that the parcel or dwelling has not been, and will not be, rented at any time in the quarter; or

(c) the owner gives written notice to the commissioner after the

quarter that the parcel was not rented at any time in the quarter; or

(d) the owner gives written notice to the commissioner that the

parcel or dwelling was not rented during a continuous period of

(i) begins in a quarter after the 1st day of the quarter; and

(5) Also, if the owner of a parcel of land becomes the owner on the 1st day

of a quarter or during the previous quarter, the parcel is taken to be not rented on the 1st day of the quarter unless -

(a) the owner advises under section 14 that the parcel is rented; or

(b) the commissioner is otherwise satisfied that the parcel is rented.

(1) Land tax at the appropriate rate is imposed for a quarter on each parcel

(b) residential land owned by a corporation or trustee; or

(2) The appropriate rate of land tax for a parcel of land is the amount

(3) However, land tax is not imposed on a parcel of land that is exempt

average unimproved value means the average unimproved value of the parcel of land under the Rates Act 2004.

(a) means rateable land that is not residential land or rural land; and

(b) includes part of a parcel of land used for commercial purposes.

determined rate means the rate determined under the Taxation Administration Act, section 139.

Note The power to determine a rate under the Taxation Administration Act includes the power to determine a different rate for different matters or different classes of matters (see Legislation Act, s 48).

14 Commissioner to be told if residential land rented

(1) This section applies in relation to a parcel of land that -

(2) A relevant person must tell the commissioner, in writing -

Note 1 If a form is approved under the Taxation Administration Act 1999, s 139C, the form must be used.

Note 2 It is an offence to fail to notify the commissioner under this section (see Taxation Administration Act 1999, s 67 (2)).

Note 3 It is also an offence to knowingly avoid paying, or disclosing a liability to pay, part or all of an amount of tax (see Taxation Administration Act 1999, s 65 (1)).

(3) The relevant person must tell the commissioner the information

mentioned in subsection (2) not later than 30 days after -

(a) if there is a change of ownership of the parcel - the day the

(4) This section does not apply if the owner of the parcel of land is a

(b) if the owner has authorised an agent to act on the owner's behalf in relation to the rental of the parcel - the agent.

Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).

1. Part 3 of the LTA deals with enforcement. Section 19A reads:

19A Interest and penalty tax payable on land tax if no disclosure

(a) land tax is imposed on a parcel of rateable land under section 9 (1) (a); and

(b) the owner of the parcel of land fails to comply with section 14 (Commissioner to be told if residential land rented).

(2) The owner is liable to pay interest on the amount of land tax from the

end of 30 days after the 1st day of the 1st quarter for which the tax is imposed.

(3) Interest on the amount of land tax is worked out -

(a) for each calendar month that the amount is payable; and

(d) on the total amount of land tax that is payable on a day when the interest is worked out.

Note The Minister may determine an interest rate for this section under the Taxation Administration Act, s 139.

(4) For subsection (3) (a), if an amount of land tax is payable for part of a

calendar month, interest is payable for the whole month.

(5) The Taxation Administration Act, division 5.2 (Penalty tax) applies to

(a) the owner's failure to comply with section 14 were a tax

(b) a reference to interest under division 5.1 were a reference to

(c) a reference to the amount of tax unpaid were a reference to the

(6) This section applies to land tax imposed before or after the

1. The following transitional provisions in the LTA are relevant:

repealed Act means the Rates and Land Tax Act 1926 (repealed).

(a) land tax (including penalty tax and interest) was payable under the repealed Act; and

(b) the land tax had not been paid before 1 July 2004.

(2) The land tax is taken to be payable under this Act.

1. The following sections of the TAA are relevant to the decision under review:

30 Penalty tax in relation to certain tax defaults

(1) If a tax default happens, the taxpayer is liable to pay penalty tax in

Note A taxpayer may also be liable to pay penalty tax under the Land Tax Act 2004, s 19A (5) (Interest and penalty tax payable on land tax if no disclosure).

(2) Penalty tax imposed under this division is in addition to interest.

(3) Penalty tax is not payable in relation to a tax default that consists of a

(b) penalty tax previously imposed under this division.

(1) The amount of penalty tax payable in relation to a tax default is 25% of

the amount of tax unpaid, subject to this division.

(2) The amount of penalty tax payable in relation to a tax default is 50% of

the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by a failure by the taxpayer (or a person acting on behalf of the taxpayer) to take reasonable care to fulfil the taxpayer's obligations under a tax law.

(3) Subsection (2) does not apply if the tax payer satisfies the

commissioner that the taxpayer (or a person acting on behalf of the taxpayer) had a reasonable excuse for the failure.

(4) Subsections (2) and (3) apply to a tax default that happened before

their commencement in the same way as they apply to a tax default that happened after their commencement.

(5) The amount of penalty tax payable in relation to a tax default is 75% of

the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a tax law.

(6) No penalty tax is payable in relation to a tax default if the

(a) the taxpayer (or a person acting on behalf of the taxpayer) took

(b) the tax default happened solely because of circumstances

beyond the taxpayer's control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person's or the taxpayer's control) but not amounting to financial incapacity.

Note The commissioner's decision to impose penalty tax is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).

The commissioner may remit all or part of an amount of penalty tax payable by a person if satisfied that -

(i) the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; or

(ii) the circumstances that resulted in the liability for penalty tax were exceptional; and

(b) it would be fair and reasonable to remit all or part of the

Note The commissioner's decision to refuse to remit penalty tax payable by a person is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the person (see s 107B).

1. On 1 July 2004, the RLTA was repealed although land tax and penalty tax were taken to be payable under the LTA by the transitional provisions. The grounds for the imposition of land tax under the RLTA and the LTA are essentially the same. The land must be held under a crown lease for residential purposes on the first day of the quarter and it must have been rented at some time in the previous quarter. Both Acts provide for notices to be given to the Commissioner to remove liability for land tax in the light of changed circumstances. Penalty tax may be levied under both Acts although the rates and conditions differ.

1. Mr Bolin contended that the properties were vacant during some of the periods for which the Commissioner had assessed land tax. The details of these contentions will be discussed in the context of specific properties. He also said that although Unit 2 was occupied it was not rented, contrary to the basis of the assessment.

1. He said that the Applicant feared giving incorrect or incomplete information when required to do so by the Commissioner because the letters from the Commissioner emphasised that this was a serious offence. Information requested in 2011 went back to 1999 and required a substantial amount of researching old records. He said rental information had been misplaced and that the Applicant felt overwhelmed and had a sense of helplessness. Mr Bolin said that the two months allowed by the Commissioner were inadequate.
2. Mr Bolin argued that the Applicant did not intentionally disregard the law but was mislead by the Commissioner's letter. His solicitor advised that it was better to provide no information than incorrect material.
3. He also said that the penalty tax should be reduced to 25% as this was the rate imposed in May 2002. He said that part of the interest which was characterised as a penalty should not be applied because that would amount to a double penalty.

1. The Commissioner contended that the assessments of November 2012 had been adjusted following the applicant's objections and the evidence showed the properties were rented at the relevant times in the amended assessments.
2. Dr Jarvis said that land tax and penalties incurred prior to 1 July 2004 should have been assessed under the RLTA. The Commissioner assessed land tax and penalty tax under the LTA. Penalty tax under the RLTA was set at 200% for failing to inform the Commissioner that a property was rented. Dr Jarvis said the Applicant had failed to inform the Commissioner. He also said the Commissioner had incorrectly charged interest on land tax and penalty tax under the RLTA. That Act did not provide for interest to be charged and corrected assessments would need to be issued.
3. Dr Jarvis submitted that the remission of penalty tax or interest called for exceptional circumstances to be established, otherwise the deterrence scheme in the LTA would be undermined. He referred to Riverland Retreat Pty Ltd v Commissioner of State Revenue [2004] VCAT 1366 and American Express International v Commissioner of State Revenue [2003] VSC 32.
4. In relation to the rate of penalty tax under the TAA, Dr Jarvis argued that on the evidence before the Tribunal it should not be less than 50%. The Applicant had been paying land tax on other properties and in 2002 had been assessed and had paid penalty tax on another property. Whether before or after 1 July 2004, the Applicant had not taken reasonable care to fulfil his relevant tax obligations nor did the Applicant have any reasonable excuse.
5. Furthermore Dr Jarvis said that the Applicant's knowledge of the obligation to pay land tax, the placing of electricity accounts in the names of his own name and that of his brother, and the failure to deposit rental bonds, pointed to an intention to avoid land tax by avoiding detection. The Tribunal was thus entitled to conclude that the tax default was caused wholly or partly by an intentional disregard by the taxpayer of a tax law and should set the penalty tax at 75%. He referred to Touma v Chief Commissioner of State Revenue [2012] NSWADT 2.
6. In dealing with the remission of penalty tax Dr Jarvis contended that the Applicant had not provided any reasons for the failure to notify the Commissioner of the rental status of the properties, nor had he provided any other material as to why it would be fair and reasonable to remit the penalty.
7. In respect of the Applicant's contention that insufficient time had been given to gather information, some going back more than 10 years, Dr Jarvis said no penalty tax had been imposed for non-compliance with the section 82 notice under the TAA. The penalty tax was imposed for the failure to notify the Commissioner that the properties were rented.
8. Dr Jarvis argued that interest, under section19 or section 19A of the LTA, cannot be reviewed by the Tribunal because it is not prescribed by section 38 of the LTA nor is it otherwise reviewable pursuant to the provisions of section 107A or schedule 1.2 of the TAA.
9. He went on to argue that if the imposition of interest was reviewable, the rate set under section 26 of the TAA has a "market" component based on 90 day bank bill rates and a "premium" component. The market component was to compensate the Commissioner for a loss of use of the funds and the "premium" component was in the nature of a penalty. He said remission of interest permitted by section 36 of the LTA should not be granted so as to undermine the policy in the LTA and TAA to deter tax default. He referred to Trust Company v Chief Commissioner of State Revenue [2002] NSWADT 21 and other cases in support of his submission.

1. The Tribunal proposes firstly to examine when each of the four properties was rented as this is the basis on which land tax is levied. Penalty tax, remission and interest will be discussed later.

1. The Commissioner assessed land tax on Unit 1 from Quarter 1 (Q1) of 1999/2000 (1/10/1999) to Q2 of 2011/2012 (31/12/2012) [T34-35]. The Applicant did not dispute this assessment except for two periods (Exhibit A5) which he later withdrew (Exhibit A6). However he also said that Unit 1 was vacant from 17/2/2012 until 1/4/2012. He now accepts that this period, being Q3 of 2011/2012, was not assessed. Thus there is no dispute on the issue of land tax between the parties.

1. The Commissioner assessed land tax on Unit 2 from Q1 of 1999/2000 (1/10/1999) to Q2 of 2011/2012 (31/12/2012) [T32-34]. The Applicant disputed various periods on the basis that Unit 2 was not rented. He said that Unit 2 was not rented from 1/10/1999 to 1/8/2008 and also from 2/5/2009 to 8/7/2011. The Commissioner accepted the unrented status of Unit 2 in this latter period. The disputed period now runs from 1/10/1999 to 1/8/2008.
2. From 1/10/1999 until 29/9/2002 a number of persons occupied Unit 2, as is apparent from a list of electricity consumers compiled by the Commissioner from electricity records (Attachment C to Exhibit R2). It is not surprising that the Commissioner concluded that Unit 1 was rented and that the Applicant was liable for land tax. The Applicant in his evidence said the occupants did not pay rent but he required them to pay electricity. He did not charge rent because he wanted the flexibility to move them out quickly if his brother Alex needed to use the unit.
3. He also said there were possible redevelopment options that also made flexibility advantageous. He said having the unit occupied gave some protection against vandalism. He said the rent was about $100 a week. The cost of flexibility and protection was about $15,000 for the non rental period. He said 6 Bride Street, Mawson, which he also owned is occupied under similar rent-free arrangements because redevelopment is in progress and he needs flexibility to move the occupiers out quickly if necessary.
4. The Tribunal finds this explanation of the occupation of the premises unusual and commercially odd but Mr C. Alexandrou's evidence seemed frank and honest. He answered questions from Dr Jarvis and the Tribunal without hesitation or equivocation. The Tribunal finds Mr C. Alexandrou a truthful witness and accepts that he did not receive rent for Unit 2 between 1/10/1999 and 29/9/2002 and the only advantage he thus gained was flexibility and protection from vandalism.
5. Dr Jarvis also argued that the receipt of this protection amounted to valuable consideration within the meaning of "rent" in section 22AAB(1) of the RLTA. The definition of "rent" is "valuable consideration for which a tenant is liable under a tenancy agreement in relation to the tenancy or a period of the tenancy". The definition of "tenancy agreement" in the same section of the RLTA states it is an "agreement under which a person grants to someone else for value a right of occupation of a parcel of land". Thus, the concept of receiving value is embedded in both definitions.
6. Mr Bolin pointed to section 22AAB(2) which says "a parcel of land shall not be taken to be rented only because a tenant is liable to pay for rates, land tax, repairs, maintenance or insurance". These are payments of substance and constitute an exception to what would otherwise be valuable consideration. They are examples of the kind of valuable consideration the RLTA contemplates.
7. It seems to the Tribunal that the meaning of "value" and "valuable consideration" is something substantial and quantifiable rather than the amorphous idea of protection from vandalism provided by the occupiers. Furthermore even if the provision of this protection did amount to valuable consideration it was not something the tenant was "liable for" under a tenancy agreement and is not within the definition of rent in the RLTA. The Tribunal therefore finds that for the period from 1/10/1999 to 29/9/2002 no valuable consideration was received and that Unit 2 was not rented.
8. For the period from 29/9/2002 to 1/8/2008, Mr C. Alexandrou said Unit 2 was used by his brother Alex when he was in Canberra assisting with renovation work on various properties. In between these visits Unit 2 was not rented. The Tribunal accepts the Mr C Alexandrou's evidence in this regard and finds that Unit 2 was not rented in this period.
9. In summary the Tribunal finds that Unit 2 was not rented from 1/10/1999 to 1/8/2008. The Commissioner accepted that it was not rented from 2/5/2009 to 8/7/2011. The Applicant does not dispute that Unit 2 was rented from 1/8/2008 to 2/5/2009 and from 8/7/2011 to31/12/2011.

1. The Commissioner assessed land tax on Broadbent from Q2 of 2004/2005 to Q1 of 2011/1012 [T33]. The Applicant in his objection disputed various periods on the basis that Broadbent was not rented. The Commissioner accepted that the Applicant was not liable for land tax for Q2 and Q4 of 2009/2010 and also for Q1 of 2010/2011 [T2, p.11]. The unrented period between 21/9/2011 and 30/10/2011 is discussed in the following paragraph.
2. The Applicant stated that Broadbent was not rented between 21/9/2011 and 30/10/2011. Even if this is correct the liability for land tax will not change. For Q1 of 2011/2012 (i.e. the vacant period 21/9/2011-30/9/2011), there would be a liability for land tax because Broadbent was rented in the previous quarter. For Q2 of 2011/2012 (i.e. the vacant period 1/10/2011-30/10/2011), the Commissioner had not assessed any land tax but, on the evidence, Broadbent was rented for some of Q1 of 2011/2012. However Q2 of 2011/2012 is not before the Tribunal.
3. There are no longer any periods where liability for land tax is in dispute between the parties.

1. The Commissioner assessed land tax on Gardiner from Q2 of 2002/2003 to Q1 of 2011/2012 inclusive [T38-39]. The Applicant objected to various periods but the Commissioner disallowed the objection [T7]. The disputed rental periods were later narrowed (Exhibit A6) to the Hartley tenancy in 2002 and the Taylor tenancy in 2011. A period between 6 October 2011 and 29 June 2012 was initially disputed (ExhibitA5) but later withdrawn (ExhibitA6) as no assessment had been made for that period.
2. In Hartley the tenancy was for the period 14 September 2002 to 14 March 2003 (Exhibit A4) but was ended early by the tenants. Their last direct credit to the Applicant's bank took place on 4 November 2002. As their payments were fortnightly in advance it seems more likely than not that rent was paid to 18 November 2002. In terms of the Applicant's liability for this land tax the exact date is not required. The evidence shows Gardiner was rented to Hartley from 14 September 2002 to a date in November 2002 that is during Q2 of 2003/2003. The Commissioner said he would accept that he had been given notice that Gardiner was not rented in Q3 of 2002/2003. The evidence is that the Marku tenancy commenced on 13 April 2003. The effect of this is that the owners are liable for land tax for Q3 of 2002/2003 as Gardiner was rented in Q2 of 2002/2003 but not for Q4 of 2002/2003 because Gardiner was not rented in the previous quarter.
3. In Taylor, the tenancy was for 12 months commencing on 31 January 2011 but the tenants left the property early. The Applicant had separately lodged claim (RT 950 of 2011) with the Tribunal and was granted the right to recover arrears of rent for a period to 12 November 2011 (ExhibitA6). The exact date Gardiner ceased to be rented is not required for the assessment of land tax, but only that it was rented in Q2 of 2011/2012. The Tribunal accepts that it was.
4. The Tribunal finds that for Gardiner the owners are liable for land tax in the quarters assessed by the Commissioner except for Q4 of 2002/2003.

1. The Commissioner acknowledged that the basis of the assessment of the land tax differed between section 22A of the RLTA and section 59 of the LTA. He said that a corrected assessment would be required for those periods where the RLTA applied, that is, prior to 1 July 2004.

1. In the period before the LTA commenced on 1 July 2004, penalty tax under section 22EB of the RLTA was fixed at 200% of the land tax payable. There were no graduations of penalty tax as appear in sections 31-34 of the TAA. In section 22EC the RLTA did provide for the remission or refund of penalty tax if the Commissioner considered it fair and reasonable to do so. In respect of 46 Walker Circuit Weston, owned by the Applicant and his wife, remission of 175% of the penalty tax was granted in 2002.
2. The Commissioner conceded the rate of penalty tax for the period prior to 1 July 2004, that is, under the RLTA, was incorrectly assessed and a corrected assessment is required for the period prior to 1 July 2004.
3. Section 22EC allowed the remission of penalty tax under the RLTA but that section is now repealed. Any remission of penalty tax is now provided for in section 37 of the TAA which sets out a more restrictive regime. The criteria set out in section 37 require reasonable steps to be taken " to mitigate, or mitigate the effects of, the circumstances that resulted in the liability for penalty tax" or in the alternative that "the circumstances that resulted in the liability for penalty tax were exceptional". There is no evidence before the Tribunal that any steps to mitigate were taken or that the circumstances were in any way exceptional for any of the properties. However in addition the Commissioner must be satisfied that it is fair and reasonable to remit the penalty tax. In light of the Tribunal's later finding that the owners of all the properties intentionally disregarded a tax law, the Tribunal finds it would not be fair and reasonable to remit all or part of the penalty tax on any of the properties.

1. The Tribunal notes the Commissioner acknowledged that under the RLTA there was no provision for the payment of interest. Dr Jarvis also indicated that the Commissioner did not consider that interest should be charged on land tax or penalty tax assessed under the RLTA and taken to be payable under the LTA by section 48 of the transitional provisions of the LTA.

1. Section 14 of the LTA requires the owner of land or an authorised agent to inform the Commissioner when residential land is rented and when the rental began. This must be done within thirty days of the start of the tenancy or the day ownership of the land changes. If the owner fails to do this, section 19A of the LTA treats that failure as a tax default for the purposes of penalty tax under Division 5.2 of the TAA. It should be noted that section 30(2) of the TAA is quite explicit that penalty tax is in addition to interest.
2. Division 5.2 creates a penalty regime based on the degree of culpability of the taxpayer. If the taxpayer took reasonable care to comply with a tax law or default occurred because of circumstances beyond the taxpayer's control, no penalty tax is payable under section 31(6) of the TAA. At the other end of the scale if the Commissioner informs a tax payer an investigation is to be carried out and the taxpayer, for example, destroys relevant records or obstructs an authorised officer the penalty rate under section 34 is 90% of the land tax.
3. In between these extremes, if a taxpayer fails to take reasonable care in carrying out tax obligations the penalty tax rate is set at 25% by section 31(1) of the TAA. The rate increases to 50% under section 31(2) if the Commissioner is satisfied there is no reasonable excuse for the failure. The rate reaches 75% under section 31(5) when the tax default was caused wholly or partly by the intentional disregard of a tax law by the taxpayer or a person acting for the taxpayer.
4. The imposition of the rates of 25% and 50% imports an objective element by the use of the terms "reasonable care" and "reasonable excuse". The question that needs to be answered is: what would a reasonable person do in the circumstances of the taxpayer? These issues were considered in Aurora v Federal Commissioner of Taxation (No.2) [2011] FCA 1090 and Federal Commissioner of Taxation v Traviati [2012] FCA 546. However, in section 31(5) where an "intentional disregard" of a tax law is the trigger for a penalty tax of 75%, the question is subjective.
5. From the evidence before the Tribunal, it is clear that Mr C Alexandrou knew and understood from May 2002 that he was obliged to notify the Commissioner when one of his properties was rented. He knew this because he had paid penalty tax for failing to do so for 46 Wakelin Circuit (T3, p.17) and also because he admitted notifying the Commissioner that he owned 44 Reveley Crescent and 2 Dale Street and had paid land tax on these properties. He continues to own and pay land tax on 46 Wakelin Circuit. He admits he "was aware of his obligations .... from the audit in 2002" (Ex A6). The evidence demonstrates that by knowing and not acting, Mr C Alexandrou intentionally disregarded his obligations under both the RLTA and the LTA. It may be that prior to May 2002 he was merely careless in his compliance with his obligations, but under the law at the time, the RLTA, this distinction was not relevant for the imposition of penalty tax.
6. Mr Alex Alexandrou gave no evidence to the Tribunal about his knowledge of his obligation to pay land tax. The evidence shows that the Applicant managed Gardiner for both owners and land tax notices were sent to his address. Section 101 of the TAA places the burden on the taxpayer to show that the objection should be sustained and Mr Alex Alexandrou has not done so.
7. In 2002 when penalty tax of 200% was reduced to 25%, Mr C. Alexandrou had volunteered the information that Wakelin Circuit was rented. This is not so in the present matter. Although penalty tax was imposed under the RLTA, remission is now dealt with under the TAA. Section 22EC of the RLTA gave a discretion to remit or refund the penalty tax if the Commissioner was satisfied it was "fair and reasonable" to do so. The extremely high fixed penalty of 200% was tempered by the broad discretion to remit or refund. With the repeal of the RLTA a more restrictive approach to remission was set out in section 37 of the TAA. However, the penalty tax rates in the TAA are set well below the 200% rate in the RLTA. Even if a taxpayer deliberately damages or destroys tax records required to be kept under a tax law the highest penalty tax rate is 90%. The repeal of the RLTA and the transitional provisions of the LTA seem to have had an untended and unfortunate consequence for those taxpayers assessed after the repeal of the RLTA for periods before 1 July 2004.

1. The Tribunal has considered the relevant provisions in the LTA and the TAA. It accepts Dr Jarvis' submission that neither the imposition of interest nor its remission can be subjected to review by the Tribunal.
2. If the Tribunal is wrong to conclude that it lacks jurisdiction to review interest then the Tribunal adopts the analysis of the interest provisions set out in paragraphs 24 to 30 inclusive of Trust Company of Australia Limited v Chief Commissioner of State Revenue [2002] NSWADT 21. The NSW provisions are essentially the same as those in sections 25 to 29 of the TAA. The evidence in this matter does not disclose any exceptional circumstances that would justify the remission of the market rate component of the interest.
3. Although in the Trust Company case the Chief Commissioner of State Revenue remitted the whole of the premium or penalty component of the interest, the Tribunal would not do so in the circumstances of the present case where the taxpayer intentionally disregarded a tax law.

1. Having regard to the evidence and the submissions put to it the Tribunal has made the findings set out in below and will make orders pursuant to

section 68(3) of the ACT Civil and Administrative Tribunal Act 2008 setting aside the decisions of the Commissioner for ACT Revenue and remitting those decisions to him and directing him to reconsider those decisions in accordance with the findings of the Tribunal. 2. In respect of Unit 1, the Applicant is liable for land tax from and including Q1 of 1999/2000 to Q2 of 2011/2012. 3. In respect of Unit 2, the Applicant is liable for land tax from and including Q2 of 2008/2009 to Q1 of 2009/2010 and Q2 of 2011/2012. 4. In respect of Broadbent, the Applicant is liable for land tax from and including Q2 of 2004/2005 to Q1 of 2009/2010, Q3 of 2009/2010 and from and including Q2 of 2010/2011 to Q1 of 2011/2012. 5. In respect of Gardiner, the Applicant and his brother are liable for land tax for Q2 and Q3 of 2002/2003 and from and including Q1 of 2003/2004 to Q1 of 2011/2012. 6. For the period prior to 1 July 2004, land tax and penalty tax is to be assessed under the RLTA and after that date under the LTA. 7. No interest is payable on land tax and penalty tax assessed under the RLTA. 8. The Tribunal lacks jurisdiction to review the decision of the Commissioner to impose interest on land tax and penalty tax under the LTA. 9. The tax default in respect of all four properties in the period after 1 July 2004 was caused wholly or partly by the intentional disregard by the Applicant and his brother of a tax law and that penalty tax of 75% was correctly imposed by the Commissioner. 10. Following the repeal of section 22EC of the RLTA any remission or refund of penalty tax is governed by section 37 of the TAA. 11. The Applicant and his brother have failed to meet the eligibility criteria for the remission of penalty tax under section 37 of the LTA.

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )