List of legislation: ACT Civil and Administrative Tribunal Act 2008 s 68

Land Tax Act 2004 ss 9, 14, 19, 19A, 38 and 48 (now repealed)

Rates and Land Tax Act 1926 (repealed) ss 22A, 22BB, 22EB and 22EC

Taxation Administration Act 1999 ss 7, 29AA, 30, 31, 32, 33, 37, 53, 82, 107A, 108A, 136

List of cases: Commissioner for ACT Revenue v Dataflex Pty Ltd and ACT Civil and Administrative Tribunal [2011] ACTCA 14

Gonzalez v Commissioner for ACT Revenue [2015] ACAT 61

Hay v Commissioner for ACT Revenue [2014] ACAT 23

Steele v Commissioner for ACT Revenue (Administrative Review) [2010] ACAT 15

Wade & Tan v Commissioner for ACT Revenue [2014] ACAT 79

Date of Reasons for Decision: 22 September 2015

1. On 12 March 2015 Mr Michael Dess ('the Applicant') made an application to the ACT Civil and Administrative Tribunal for the review of a decision ('the decision') of the Commissioner for ACT Revenue ('the Commissioner') dated 5 February 2015. The decision imposed penalty tax in the total of $7,892.70 being 200% or $2,052.02 for the quarters prior to 1 July 2004, and 50% or $5,840.68 for the quarters from 1 July 2004 to 30 June 2014 on Block 14 Section 101 Ngunnawal, a property at 17 Noongale Court, Ngunnawal ("the property"), owned by the Applicant. The decision also imposed interest of $10,075.79. Penalty tax was not charged for the period 1 July 2014 to 30 September 2014. Interest was not charged for the periods 1 January 2003 to 30 June 2004 and from 1 July 2014 to 30 September 2014.

2. The periods of assessment of land tax on the property were covered by two enactments. The Rates and Land Tax Act 1926 (repealed) ("the old Act") applied for the period prior to 1 July 2004. Subsequent to that date the relevant Act was the Land Tax Act 2004 ("the current Act"). The Taxation Administration Act 1999 ("the TAA") applied at all relevant times.

3. In these reasons, a reference to the 'ACAT' refers to the ACT Civil and Administrative Tribunal generally and 'Tribunal' refers to the current member.

4. The matter was heard on 24 July 2015. The Applicant represented himself at the hearing. Ms K. Katavic, of counsel, represented the Commissioner. The Tribunal had before it the documents ("T docs") relevant to the decision under review together with the Applicant's Witness Statement (Exhibit A1) dated 16 June 2015, his written Submission (Exhibit A2) and his Witness Statement in Reply (Exhibit A3) dated 17 July 2015 and the Respondent's Statement of Facts and Contentions. The respondent tendered at the hearing the direct debit request completed by Mr Dess (Exhibit R1); an email from Mr Dess to the Respondent dated 5 July 2015 (Exhibit R2) and the section 136 TAA Certificate (Exhibit R3).

5. Mr Dess gave evidence and was cross examined. After hearing oral submissions from the parties the Tribunal reserved its decision.

6. The following facts in the Respondent's Statement of Facts and Contentions were not in dispute:

(a) the Applicant is the registered owner of the property;

(b) sometime in 1996 the Applicant and his former partner bought the property and he was jointly the registered owner of that property. In December 2000 the Applicant became the sole registered owner of the property;

(c) the Applicant lived in the property from 1996 and to November 2002;

(d) on or about November 2002 the Applicant first rented the property to Ms L Brown and Ms R Jeanes and at all material times the property has been rented to various tenants by the Applicant;

(e) for the periods when the property was rented, the Applicant was liable for any land tax arising out of the rental of the property;

(f) the Applicant did not pay land tax for the relevant rental periods;

(g) on or about 17 July 2014, the Respondent commenced its investigations into the rental status of the property. Following the investigations, the Respondent issued a notice under section 82 of the TAA;

(h) under cover of the facsimile dated 7 August 2014, the Applicant returned the completed section 82 notice to the Respondent, confirming information about the commencement of the rental period and the name of the first tenant;

(i) on 13 August 2014 the Respondent issued a land tax assessment notice to the Applicant for $31,193,72 comprising:

Penalty Tax at 200% (for land tax due prior to 30 June 2004)

Penalty Tax at 50% (for land tax due after 1 July 2004)

(j) on 11 September 2014, the Applicant contacted the Respondent by telephone, and then by email to advise he would lodge an objection; and

(k) on 5 February 2015 a delegate of the Respondent disallowed the objection.

(a) the Applicant managed the rental of the property himself;

(b) on 11 February 2003 the Applicant authorised ACT Revenue to direct debit weekly payments for rates from his bank account;

(c) the last weekly direct debit payment to ACT Revenue was made on 21 June 2012;

(d) the Applicant did not become aware that the direct debit payments had ceased until July 2014; and

(e) on 11 September 2014 the Applicant paid $5,000 towards the outstanding land tax. The Applicant told the Tribunal that this "was all the savings I had at that time".

8. In his Application the Applicant referred the Tribunal to the following sections of the Respondent's reasons statement, which he alleged were incorrect:

This Office provided the taxpayer with ample advice in regards to land tax. This advice included:

• Each time a property transfers or a change of address occurs, this office send out a letter confirming these changes with property owners. Along with this letter, this Office encloses a "Residential Land Tax Notification That Property is Rented" form. This form advised property owners that if their property is rented, they need to notify this Office by completing this form.
• Every year since the introduction of land tax, pamphlets containing advice on land tax liability have been sent to property owners, together with their initial rates notice for each financial year. These pamphlets were sent every year to the taxpayer and notified him that should he rent his property, he is required to inform this Office of this in writing, within 30 days of when the property becomes rented. The taxpayer failed to do this.

(a) shortly after deciding to rent the property and moving to Sydney in late 2002 he approached his accountant for advice on the requirements for claiming the property as an investment property. He had been using the same accountant since 1996. He was reliant on the advice of his accountant to ensure that he complied with his obligations in respect of claiming the property as an investment property;[1]

(b) he had never been aware of the requirement to notify any person or body that the property was rental property or that he had a liability for land tax.[2]

(c) he did not ever recall seeing any pamphlets or brochures concerning a possible land tax liability prior to July 2014;[3]

(d) "I have never seen any pamphlet as set out on page 22 of 'index to documents' prior to receiving same with the notice on July 25th 2014" and "I have never received a copy of the document 'Residential Land Tax Notification That Property is Rented' also referred to on page 22;"[4]

(e) "....I made enquiries with my accountant upon whose advice I say I was entitled to rely upon when preparing to declare rental income and claim expenses in respect of the Property which became an investment upon my transfer from Canberra to Sydney." and "I did not simply ignore seeking any advice by activity, but sought general advice from my accountant;"[5]

(f) "I received Rates Notices while living at 17 Noongale Court (again no pamphlets) but never received any further Rates Notices after moving to Sydney in 2002;"[6]

(g) "If I had been informed about Land Tax I would have established a weekly direct debit also for same as my rates as to avoid missing payments and remembering dates;"[7]

(h) "I can sincerely ensure (sic) you that it was never, nor would it ever be, my intention to avoid meeting my responsibility. However, I believe it extremely unfair that I have to incur such extreme penalties given the facts stated above;"[8]

(i) "I am confused, however, how it took twelve (12) years before an investigation was commenced."[9]

(j) If the Respondent was aware of his change of address in 2009 why did it not start the investigation then and not wait until 2014, and

(k) "I submit that in all the circumstance the penalty should be remitted to nil or in the alternative reduced to 25%."[10]

10. In the Statement of Facts and Contentions the Respondent contends that[11]:

3. .... the Applicant bears the onus of notifying the Respondent that his Property has been rented and ensuring land tax is paid in accordance with his obligations.

4. The circumstances that led to the Applicant's failure to pay land tax were not exceptional and do not support remitting all or part of the penalty tax.

5. Further the circumstances do not support the exercise of the discretion under s 31(6) of the TAA, applying no penalty tax.

11. Ms Katavic submitted, and the Tribunal agrees, that the issue for determination is whether the circumstances relied on by the Applicant support the Tribunal determining that another decision in relation to penalty tax should be made.

12. A further issue for determination arises as the result of the Applicant's submission that the Respondent should not have delayed its investigation, when it became aware of his change of address in 2009, for a further 5 years, until 2014. The Tribunal will consider whether the Respondent can make an assessment for a rental period that extends back to 2002, a period of 12 years.

13. The Rates and Land Tax Act 1926 ("the old Act") was in force prior to 1 July 2004 and provided for: the imposition of land tax; an obligation on the owner of land to tell the Commissioner if property was leased for residential purposes; an assessment of penalty tax of double the land tax payable if the owner failed to notify the Commissioner of property leased for residential purposes; and remission of penalty tax if satisfied this would be fair and reasonable. The following sections are relevant to the decision under review:

(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.

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.

22EC Refund or remission of 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.

14. After the old Act was repealed on 1 July 2004 the Land Tax Act 2004 ("the new Act") commenced. Part 7 of the new Act deals with the transitional issues of tax owing under the old Act but not paid. Land tax assessed under the old Act but not paid as at 1 July 2004, including penalty tax, is taken to be payable under the new Act. Section 48 of the new Act part 7 (since repealed) stated:

(a) land tax (including penalty tax and interest) was

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

15. The following sections of the new Act are also relevant to the decision under review. Section 9 provides for the imposition of land tax in relation to a property which is subject to a lease. Section 14 imposes an obligation on the owner to notify the Commissioner of the property being rented.

_(1) Land tax at the appropriate rate is imposed for a quarter on each parcel of rateable land that is - _

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

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 - _

16. Where a land owner has failed, in accordance with section 14 of the new Act, to disclose to the Commissioner that the land is rented, then part 3 of the new Act deals with enforcement. Section 19A relates to the imposition of interest and penalty tax and states:

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 month that the amount is payable; and

(c) at the interest rate applying to that day; and

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

(4) For subsection (3) (a), if an amount of land tax is payable for part of a month, interest is payable for the whole month.

_(5) The Taxation Administration Act, division 5.2 (Penalty tax) applies to the owner of the parcel of land as if - _

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

(b) a reference to interest under division 5.1 were a reference to interest under this section; and

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

(6) This section applies to land tax imposed before or after the commencement of this section.

17. Subsection 19A(5) of the new Act also provides, in circumstances of failure to notify the Commissioner, the land tax is subject to a penalty tax under division 5.2 of the TAA. This division applies to the land owner as if the owner's failure to comply with section 14 of the new Act is a tax default.

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

(1) The commissioner may make an assessment of the tax liability of a taxpayer.

(a) consist of a determination that there is not a particular tax liability; or

(b) include an assessment of the value of anything for the purpose of assessing tax liability.

(3) The commissioner has the same powers of assessment in relation to a trustee of a deceased person as the commissioner would have in relation to the person if the person were alive.

30 Penalty tax in relation to certain tax defaults

(1) If a tax default happens, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.

(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 failure to pay - _

(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 commissioner is satisfied that - _

(a) the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the tax law; or

(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.

32 Reduction in penalty tax for voluntary disclosure

The amount of penalty tax determined under section 31 is reduced by 80% if, before the commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out, the taxpayer discloses to the commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined.

33 Reduction in penalty tax for disclosure before investigation

The amount of penalty tax determined under section 31 is reduced by 20% if, after the commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out and before it is begun, the taxpayer discloses to the commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined.

_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 penalty tax.

19. Section 108A of the TAA provides that the Tribunal may review 'reviewable decisions'. Under section 68 of the ACT Civil and Administrative Tribunal Act 2008 ("ACAT Act") when conducting such a review the Tribunal has all the powers of the original decision maker. Section 107A of the TAA defines a 'reviewable' decision. This includes decisions made pursuant to section 31 of the TAA to impose penalty tax and a decision under section 37 not to remit penalty tax.

20. There is no right to apply for a review by the original decision maker or by the Tribunal in relation to the failure to reduce penalty tax under sections 32 and 33 of the TAA. Those sections of the TAA operate to reduce the assessment under section 31 where the facts on which those sections are predicated exist, and this is reflected in the assessment which is issued.

21. The Tribunal has considered the relevant provisions in the new Act and the TAA. Decisions under the TAA which may be internally reviewed and then reviewed by ACAT do not include a decision to remit interest pursuant to section 29AA of the TAA.

22. A decision to impose interest under section 19 or section 19A of the new Act cannot be reviewed by ACAT because it is not prescribed by section 38 of the new Act nor is it otherwise reviewable pursuant to the provisions of section 107A or schedule 1.2 of the TAA.

23. The Tribunal is satisfied that neither the imposition of interest, nor its remission can be reviewed by the Tribunal.

Can the Respondent make an assessment for a rental period that extends back to 2002?

24. In the very recent tribunal decision of Gonzalez v Commissioner for ACT Revenue[12] ("Gonzalez decision") that tribunal considered whether the Commissioner can make an assessment for a rental period beyond 5 years. That tribunal referred to an earlier decision of the tribunal in Hay v Commissioner for ACT Revenue[13] ("Hay decision") which considered the liability for land tax which had been outstanding since 2002. In the Hay decision the tribunal accepted that the Commissioner may issue an assessment for the period in question under section 7 of the TAA Act and that section 7 is a general power for assessing a tax liability[14].**

25. Notwithstanding the length of time since 2002, which has made it difficult for the Applicant to recall events and to still have any relevant documentation in his possession especially for the earlier years, the Tribunal is satisfied that the assessment for the whole period that the property was rented was validly made under section 7 of the TA Act.

26. However, the Tribunal makes the following observations in relation to the Respondent's delay in commencing the investigation. As the Respondent was aware in 2009 that the Applicant had changed addresses while remaining the registered owner of the property, it would have been prudent for the Respondent to have commenced its investigation at that time. No compelling explanation was put forward which might have justified the Respondent not commencing an investigation for a further five years. Had the investigation commenced in 2009 it may have resulted in the Applicant being able to better manage the payment of seven years of unpaid land tax, penalties and interest as opposed to the 12 year period which has eventuated.

27. The applicant did not dispute that land tax was payable in relation to the property for the relevant period. The Tribunal is satisfied that land tax was payable in relation the property.

Should penalty tax be imposed; if so at what rate?

28. In the period before the new Act commenced on 1 July 2004, where a person failed to comply with their obligation to notify the Commissioner of the property being leased, penalty tax under section 22EB of the old Act was fixed at 200% of the land tax payable.

29. From 1 July 2004 the provisions of section 31 of the TAA apply to impose a penalty tax if there had been a 'tax default' or failure to notify the Commissioner of the property being leased. Section 31(1) of the TAA set the amount of penalty tax payable at 25%. Pursuant to section 31(2) of the TAA, the amount of penalty tax may be increased to 50% if the tax default was caused wholly or partly by a failure of 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. The amount of penalty tax clearly depends on culpability.

30. The Tribunal is satisfied from the evidence that the Applicant failed to notify the Commissioner that his property was leased during the relevant periods. This failure to notify was a tax default. Therefore, the penalty tax under section 22EB of the old Act and section 31 of the new Act must be imposed for the relevant periods.

31. For the period prior to 1 July 2004 the appropriate rate under section 22EB of the old Act was 200%. There were no graduations of penalty tax as appear in sections 31-34 of the TAA.

32. As stated in paragraph 24 the amount of penalty tax that would be payable on and after 1 July 2004 depends on the application of the provisions of section 31, 32 and 33 of the TAA. The Tribunal accepts that the Applicant had no intention to avoid the operation of the tax laws.

33. The Applicant put forward a number of reasons to support his claim for the remission of all or part of the penalty tax. The Tribunal will consider them below.

34. The Applicant had sought advice from his accountant in 2002 and at later dates. He had been a client of the accountant since 1996 and relied on him for advice. He said he had sought advice in 2002 because he had not rented out his property before. The Applicant told the Tribunal although he could not recall the exact words spoken at his meeting with his accountant, the questions he had asked were to the effect of - What deductions can I claim? What expenses do I have? Since 2003 when preparing to lodge his annual tax returns he has asked his accountant what information he needs from him to prepare his tax return, including any deductions of expenses in maintaining the property. He said the accountant had not advised him of land tax.

35. The Applicant told the Tribunal that he had spoken with his accountant after he received the section 82 notice and asked for a statement from him. The Applicant said the accountant said he would get back to him. When he had tried to follow up the accountant in subsequent calls he had been told the accountant was not available.

36. It appeared to the Tribunal that the Applicant relied heavily on advice from his accountant who had been preparing his tax returns since 1996. It is not clear to the Tribunal why the accountant, on becoming aware that the Applicant would be leasing his property, did not advise the Applicant about his land tax responsibility or, at the very least, to notify the Commissioner that the property was leased. The accountant did not give evidence at the hearing. Unfortunately for the Applicant his accountant did not respond to the Applicant's request for a statement (refer previous paragraph) which may have assisted him in these proceedings.

37. Notwithstanding the matters in the previous paragraph, without evidence from the accountant it is simply not possible for the Tribunal to determine whether or not the tax default was caused wholly or partly by a failure of the accountant to take reasonable care in advising the Applicant of his taxation obligations.

38. In the Gonzalez decision, the taxpayer had also engaged professionals including an accountant. That tribunal referred to the tribunal decision in Wade & Tan v Commissioner for ACT Revenue [15] as authority for finding any duty or liability of a professional person engaged by the taxpayer does not necessarily relieve the taxpayer of their duty or liability regarding land tax or any associated penalty tax or interest.

39. In the Gonzalez decision the tribunal found that the liability for interest and penalty tax falls on the owner even though she had engaged professionals.

40. Doing the best it can with the available evidence it appears to the Tribunal that the only enquiry made by the Applicant was a general enquiry of his accountant as to taxation deductions he could claim while leasing the property.

41. Notwithstanding the reliance the Applicant had placed on the advice he had sought from his accountant, if the tax default was caused wholly or partly by a failure of his accountant to take reasonable care in advising him of his taxation obligations, section 31(2) specifically includes such a situation.

42. The reasons advanced by the Applicant for not making his own enquiries, other than of his accountant, and not notifying the Respondent that he was renting his property are not compelling. Ignorance of the law is not an excuse for failure to meet legal obligations.

43. The Tribunal has considered the matters put forward by the Applicant in urging it to find that he took reasonable care to fulfil his obligations, but the Tribunal is not satisfied that any one of these matters or the totality of the matters referred to above enable the Tribunal to be so satisfied.

44. The Tribunal is therefore not satisfied that the Applicant or the person acting on his behalf (the accountant) took reasonable care. This means that penalty tax at a rate of 50% would be payable pursuant to section 31(2) of the TAA.

45. The next question to be determined is whether the Applicant or the person acting on his behalf (the accountant) had a reasonable excuse for the purposes of section 31(3) of the TAA.

46. The Applicant maintained that he had not received the annual rates notices for the property until the 2010/2011 rates notice after he leased it and, to the best of his recollection, while he was living in the property until 2002 he had not received the land tax brochures which the Respondent claimed were posted with the annual rates notices.

47. The Respondent relied on the certificate pursuant to section 136 of the TAA ('the certificate') as evidence that between 17 July 2001 to 15 July 2009 all annual rates notices for the property were sent by post to the Applicant at 17 Noongale Court Ngunnawal ACT 2913 and from 16 July 2010 to 16 July 2014 to the Applicant at 13/441-443 Neutral Bay NSW 2089. Copies of all of the annual rates notices were annexure "C" to the certificate. Annexure "D" to the certificate was a list of the details of all annual rates assessment notices, a list of the dates of those rates assessment notices and whether there was a land tax brochure attached to that particular rates assessment notice. The certificate stated that "a review of the Commissioner's records indicates that rates payments for the property have been assessed by the Commissioner during the period of the land tax liability [1 January 2003 - 30 June 2014]."

48. The Applicant told the Tribunal that he was from country New South Wales and had never heard of land tax. He said he had never received a document to fill out in respect of land tax and he had no recollection of receiving land tax brochures with his rate notices before or after he leased the property. He recalled receiving the annual rates notices before he leased the property and said it was his practice to read everything he received, adding "if there was a footnote on the Rates Notices I would've read it."

49. When asked in cross examination if he just read the rates notice and not the brochures, the Applicant said he "could not recall as it was too long ago." When specifically asked in cross examination if he had ignored the residential land tax brochure for 2001-02[16] the Applicant said "I would not have ignored it if I had received it." When asked if he had seen the land tax brochure for the following year, 2002-03 the Applicant said "at that time I would've been asking questions of my accountant as I was considering renting the property."

50. The Applicant said he had not notified the Respondent of his change in address at the time he vacated the property as he was not aware of the requirement to do so. He also said he did not arrange for a mail redirection before leaving the property as his employer was providing him with three months accommodation in Sydney and he did not know what his address would be.

51. On 11 February 2003 the Applicant signed a direct debit request with the ACT Revenue Office (Exhibit R1) to pay his rates by weekly direct debit payments starting from 20 February 2003. He was asked in cross examination whether he had made any enquiries about the three references to land tax on this direct debit request form, to which he responded "Why would I?"

52. The Applicant said that he had not received the rates notices for the property for each of the financial years 03/04 through to 09/10 which were sent to the address of the property. At this time he was living in Neutral Bay NSW. Throughout this time he had in place the direct debit arrangement.

53. He was unable to recall notifying the Respondent of his change of address from Noongale Court, Ngunnawal ACT to Neutral Bay, NSW on 23 November 2009 and he said, when shown the Respondent's printout of the change of ownership/address form for the property which showed a change of address from Neutral Bay NSW to Mosman NSW on 13 August 2014, "I did not notify the Commissioner." It appears from this form that this information had been obtained from the Applicant's facsimile to the Respondent's compliance section of 7 August 2014 and the address changed on 13 August 2014 when the Respondent issued the land tax assessment notice to the Applicant.

54. The Applicant said he would have received the rates notices for the financial years 10/11 and the 11/12 as they were sent to Neutral Bay, NSW however he insisted that the land tax pamphlets were not included with the rates notices as he would not have ignored such notices. He added that he would have set up a direct debit payment as he had done for the rates.

55. The Applicant moved from Neutral Bay to Mosman NSW in October 2011 and had arranged for his mail to be redirected for three months. He said he did not receive a lot of his mail, including the financial years 12/13, 13/14 and 14/15 rates notices and did not know that his rates payments were in arrears in the sum of $2,907.08 as at 1 July 2014 and had not been paid since 21 June 2012. He said he became aware from his bank statements, not the rates notice for 2014/2015, that the weekly direct debit payments had stopped.

56. In his email to the Respondent dated 5 July 2015 the Applicant reiterated that he was not aware of the land tax until receiving the notice from the respondent on 25 July 2014. He variously stated:

I can sincerely and honestly say I had never received or sighted before [the land tax pamphlet enclosed with the notice]; and I was shocked and extremely embarrassed as I have never ignored my responsibilities however until that time I had never heard of land tax; and I sincerely apologise for my ignorance of not knowing about Land Tax and not meeting the required payments...I had never had an investment property prior to this, and at that time, and until July 2014 was never aware of Land Tax. Unfortunately, when discussing the requirements of the property being set up as an investment property with my accountant, Land Tax was never mentioned....Surely my timely response to the investigation would be clear demonstration of my honesty and integrity toward my responsibilities.

57. In cross examination the Respondent drew the Applicant's attention to his statement in this email that he had received rates notices between 2005 and 2010 at his Neutral Bay address which was contrary to the evidence he had given at the hearing. At the hearing the Applicant said that the statement in the email was wrong. It should have said that he had not received the rates notices.

58. The Tribunal is satisfied from the section 136 TAA certificate that rates notices and land tax pamphlets were sent to the Applicant while he was the owner of the property and was residing in it. The Applicant reasonably conceded that a lot of things were very hard to recall because of the time that had elapsed.

59. After the Applicant leased the property he did not register his change of address with the Respondent, nor did he arrange for a redirection of his mail, apparently because he did not know the address where he would be living in Sydney. It would have been prudent for the Applicant to have obtained and had his mail redirected to a post office box in Sydney once he had moved to Sydney.

60. The Applicant had arranged for a direct debit payment of his rates in February 2003 but had not enquired about the land tax, notwithstanding that it is referred to three times in the direct debit request form. In the circumstances it would have been reasonable for the Applicant to have made an enquiry about land tax when completing the form.

61. It appears to the Tribunal that the Applicant did not follow up with his tenants the whereabouts of his annual rates notices notwithstanding that he did not receive any between 2003 and 2010. Nor, apparently, did it occur to him to contact the Respondent to clarify why he had not received these notices. The Tribunal also noted that the Applicant was unaware that his direct debit payments for the rates stopped in June 2012. He, apparently, did not check his bank statements until sometime in 2014 at which time he discovered the rates had not been paid for approximately two years.

62. The Applicant does bear the onus of making appropriate enquiries about the responsibilities associated with being a landlord, including his liability for land tax. He is also responsible for notifying the Respondent that his property had been rented and ensuring that his land tax liability was discharged. Had he followed up receiving the rates notices between 2003 and 2010 he could have become aware much earlier than he did, of his land tax liability. By not doing so he did not avail himself of the opportunity to read the land tax pamphlets.

63. For the reasons set out above, the Tribunal is not satisfied that the applicant had a reasonable excuse for the purposes of section 31(2) of the TAA.

64. Section 31(5) imposes a 75% penalty rate where there has been an intentional disregard of a tax law. The Tribunal accepted the Applicant's evidence that he had never intended to disregard the law. The Tribunal also noted that the applicant responded to the Commissioner's requests promptly once he became aware of the investigation. Section 31(5) is of no application.

65. Section 31(6) of the TAA is not applicable as the Tribunal has found that the Applicant failed to take reasonable care and, for the reasons set out above, there was no evidence that would enable the Tribunal to find that the Applicant's tax default was due to circumstances beyond his control.

66. The Tribunal determines that the provisions of section 31 of the new Act require the imposition of penalty tax at 50% on the land tax payable from 1 July 2004.

67. Section 32 of the new Act is not applicable as the evidence enables the Tribunal to find that the Applicant did not voluntarily disclose to the Respondent that he had leased his property before he was contacted by a representative of the Commissioner.

68. Likewise, section 33 of the new Act does not apply as the Applicant did not notify the respondent before the respondent commenced the investigation. While it is true that the Applicant cooperated with the respondent and made a full disclosure when he became aware of the investigation, it is clear from the evidence that the investigation had commenced. It is also true that the respondent is not obliged to provide prior notice of an investigation.[17]

69. Section 22EC allowed for the remission of penalty tax under the old Act if the Commissioner considered it fair and reasonable to do so. 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. It is open to the Tribunal to consider whether the penalty tax imposed before 1 July 2004 should be remitted in whole or in part pursuant to section 37.

70. Section 37 provides a broad discretion to remit penalty tax where the following preconditions are met: either "reasonable steps to mitigate" or "exceptional circumstances" are established as well as "being satisfied that it would be fair and reasonable to remit all or part of the penalty tax." Otherwise the deterrence scheme in the new Act would be undermined.

71. As stated above, the Tribunal is comfortably satisfied that the Applicant, apart from speaking with his accountant, did not ascertain what obligations and liabilities flowed from renting his property. Any failure by a third party, such as the accountant, acting on the Applicant's behalf is a matter for the Applicant to pursue with that third party. Nor did he voluntarily disclose his failure to pay land tax to the Respondent or contact the Respondent, prior to their commencing their investigation, regarding the leasing of the property since 2002. The Tribunal is not satisfied, from the evidence, that the Applicant took any or any reasonable steps to mitigate the circumstances, or the effect of the circumstances, which resulted in his liability for land tax.

72. The Tribunal is also satisfied that the Respondent took reasonable steps, by circulating information with rates notices about land tax, to ensure that people such as the Applicant were reasonably made aware of their obligations and that the Applicant did not take any or any reasonable steps to ensure he received his annual rates notices over a very long period. Had he done so he would have had the opportunity to rectify the land tax situation at a much earlier opportunity. The expectation, at least for tax law in the ACT, is that the tax payer is meant to find out what liability exists.[18]

73. The Tribunal has also considered whether the Applicant's circumstances which resulted in the land tax liability were exceptional. In this regard he relied on the fact that he was from country NSW and unaware of land tax; that the respondent had waited for 12 years before commencing an investigation; that he would have arranged for a direct debit payment for land tax as he had done for the rates had he been made aware earlier of the land tax liability and that he had already paid $5,000, being all of his savings, towards the land tax assessment.

74. The Tribunal is not satisfied that making appropriate and relevant enquiries was beyond the Applicant's capabilities. Senior Member Hatch's following comments in an earlier tribunal decision of Steele v Commissioner for Act Revenue [19] could equally apply to the Applicant:

One relevant matter firmly in the Applicants' favour is that at all times they acted honestly. There is no suggestion that the Applicants did anything other than fail to realise that a tax they had never heard of was payable. Every tax payer can sympathise with the Applicants but that does not in my opinion help them with respect to the premium component of the interest rate [the subject of the review].[20]

75. It is unfortunate for the Applicant that he now finds himself in this situation and the Tribunal is satisfied that he did not engage in any activity intending to deceive the Respondent. However, the Tribunal is not satisfied that any of the matters put to the Tribunal amount to exceptional circumstances in the context of section 37 of the TAA. Given this finding it is not necessary for the Tribunal to determine whether it is fair and reasonable to remit the penalty tax.

76. Having regard to all of the matters before the Tribunal the order that the Tribunal is making is to confirm the decision under review.

[1] Applicant's Witness Statement at [10] & [12]

[2] Applicant's Witness Statement at [14]

[3] Applicant's Witness Statement at [17]

[4] Applicant's Written Submission at [2] & [3]

[5] Applicant's Written Submission at [5] & [6]

[6] Applicant's Witness Statement of Reply (Exhibit A3)

[7] Applicant's Witness Statement of Reply (Exhibit A3)

[8] Applicant's Witness Statement of Reply (Exhibit A3)

[9] Email Letter from Michael Dess to Revenue Accounts 5 July 2015 (Exhibit R2)

[10] Applicant's Written Submission at [9]

[11] Respondent's Statement of Facts and Contentions at page 4

[12] [2015] ACAT 61, at [47]

[13] [2014] ACAT 23

[15] [2014] ACAT 79

[16] At page 10 of the Respondent's Statement of Facts and Contentions

[17] Commissioner for ACT Revenue v Dataflex Pty Ltd and ACT Civil and Administrative Tribunal [2011] ACTCA 14

[18] Steele v Commissioner for ACT Revenue (Administrative Review) [2010] ACAT 15, at [12]

[19] (Administrative Review) [2010] ACAT 15