Driver Group Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2013] VCAT 1151

Respondent's decision set aside and remitted to the respondent for reconsideration with a direction that the applicant's liability be reassessed in accordance with the attached reasons.

Mr M. Flynn and Mr A. de Wijn of counsel, instructed by Slater and Gordon

Mr C.P. Young of counsel, instructed by the Solicitor to the Commissioner of State Revenue

1. Driver Group Pty Ltd operates a long-established family transport and tourism business. It has an annual turnover of $33m and employs approximately 250 staff with some 11 subsidiaries.
2. The company's headquarters are in Mount Waverley, Victoria. It operates a variety of services. In Victoria it provides route bus services and school bus services with vehicles operating in a livery and under the name 'Driver'.
3. Interstate it operates a number of tourist services under the name 'Gray Line' with Driver and 'Gray Line' treated as separate brands.
4. This proceeding relates to its liability under the Duties Act 2000 for what Chapter 9 of that statute describes as 'motor vehicle duty' in the years 2003 to 2009 relative to the registration of the companies' buses in Victoria.
5. The company now has a fleet of 128 vehicles. In the relevant years the fleet ranged from 65 to 80 vehicles. The present dispute pertains to some 43 vehicles.
6. In addition to the 'Driver' brand operating route and school buses in Victoria, the company also provides some four buses for the Melbourne Visitor Shuttle Service which operate under a special livery with that name.
7. There are also a number of vehicles which operate charter services, mainly within Victoria, though buses chartered through this service sometimes travel interstate.
8. The third element of the business entails day trips to tourist attractions mounted from Melbourne to destinations such as the Great Ocean Road, the Penguin Parade on Phillip Island etc.
9. The business also provides what are described as series charters. This entails a vehicle being chartered to a tourist operator and spending 28 days on a tour around Australia, taking in locations as far afield as Cairns and Darwin. This business operates principally from October to April with the buses in question being parked outside the hotel or motel where the passengers are being accommodated for the night. For the balance of the year the buses are based in Victoria.
10. Driver has a depot in Sydney and from 2002 through to 2013 a depot in Adelaide. At material times it employed drivers and provided day tours in Adelaide. From 2004 to 2006 there was a depot operated in Perth and from 2004 to 2005 in Alice Springs. Now, where charters are required based in those locations, the business is sub-contracted to a local operator. Depending on the arrangement these local operators either provide the service with buses in the Gray Line livery or under their own local brand names.

1. The Road Safety Act 1986 establishes the regime for registration of motor vehicles in Victoria which comprehends the buses the subject of this proceeding. By Section 6 the statute is expressed to apply 'only to motor vehicles ... which are used or intended for use on a highway'. The registering authority known as 'VicRoads' is prohibited from registering a motor vehicle 'unless it is satisfied that the vehicle's garage address is in Victoria'. By Section 7 it is an offence to use such a vehicle on the highway in Victoria unless it is registered or exempted from registration under the Regulations.
2. By the Road Safety (Vehicles) Regulations 1999, Regulation 301(3) a motor vehicle that is 'temporarily in Victoria' and is registered in another State is exempt from registration in Victoria 'if it meets the requirements of sub-Regulation (4)'. Sub-Regulation (4) requires that a vehicle to qualify for the exemption display all number plates and labels required to be carried in the State of registration and be used in accordance with any condition of the registration in the other State.
3. The Duties Act 2000 by Chapter 9 imposes what it describes as 'motor vehicle duty' which is payable on an application for registration of a motor vehicle under the Road Safety Act 1986, if 'the vehicle has not previously been registered under that Act'. See Duties Act 2000, Section 214(1). Section 216 imposes the duty on the applicant for registration with the duty becoming payable 'on the lodging of the application for registration', Section 217. Assessment of the duty is provided for by Section 217A(1) which I set out in full:

(1) On the lodging of an application for registration or transfer of registration of a motor vehicle -

(a) the Commissioner is taken to have made an assessment of duty on the application; and

(b) the application is taken to be a notice of assessment of the duty; and

(c) the Commissioner is taken to have served the notice of assessment on the person who is liable to pay the duty.

1. Section 237 of the Duties Act provides an exemption from registration for vehicles previously registered in the same name interstate. The section is as follows:
   1. Vehicles previously registered in the same name interstate

No duty is chargeable under this Chapter on an application for registration of a motor vehicle by a person if -

(a) the vehicle was last registered by the person outside Victoria but within Australia; and

(b) the Commissioner is satisfied that the vehicle was not registered outside Victoria for the purpose of avoiding duty under this Chapter

1. Since Driver operated and operates nationally it seeks to minimise compliance costs and simplify procedures. It has found compliance with the registration procedures in Victoria on an ongoing basis the most convenient course to follow so it seeks ultimately to have all of its vehicles registered in Victoria. This is consistent with its being headquartered in Victoria and also means that only a single set of vehicle inspection processes need be undertaken on a continuing basis.
2. Until 2003 all newly acquired vehicles for the route and school bus services which operate exclusively in Victoria were registered for the first time in Victoria. As a result, the duty provided for in Chapter 9 of the Duties Act was payable upon first registration of those vehicles and presumably any duty imposed on first registrations in Victoria under the predecessor statute, the Stamps Act 1958, would have been payable in the years in which that statute was in force before its replacement by the Duties Act. Vehicles which were acquired for the other three elements of the business were customarily registered in South Australia first. According to evidence given by various members of the Driver family who have been involved in management of the company in the past decade or so, the election to register, first, in South Australia, was dictated by the lower cost of registration there. South Australia does not levy the 'motor vehicle duty' provided for by Chapter 9 of the Victorian Duties Act. Within the first year of operation these vehicles were re-registered in Victoria under the Victorian Road Safety Act 1986 on the basis that they were entitled to the exemption from motor vehicle duty provided for in Section 237 of the Duties Act which I have quoted above. In 2003 a Mr David Nickels became General Manager of the Driver Group of Companies, a role which he fulfilled until last year. He said that, based on his experience as an officer of other bus companies, the same duty minimisation arrangements could properly be applied to the route and school bus vehicles which had heretofore been first registered in Victoria. Mr Gary Driver, who has served as a director of the company since July 1974, said that Mr Nickels convinced him that this was a legitimate course to follow. He was initially concerned as to the legitimacy of the practice but, based on the experience described by Mr Nickels as an employee of other operators, he was persuaded. Neither the company nor Mr Gary Driver took any accounting or legal advice on the propriety of these arrangements either under the Road Safety legislation or the Duties Act.
3. The attitude of Mr Gary Driver and other members of the family who acted as directors during this time, including Mr Darryl Driver and Mr Mark Driver, was that their company had bona fide operations in a number of different States, including in particular, New South Wales and South Australia in addition to Victoria and that it was therefore open to the company to choose the registration regime which is most cost effective for it.
4. The buses acquired are either bought as whole vehicles with a body and chassis sold by the same supplier or with the chassis sold by one manufacturer and the body fitted by another. Driver sources its buses from a number of suppliers including a supplier known as Denny which carries out its manufacturing in Brisbane and others in South Australia and Queensland, including Volgren based in Victoria.
5. Typically a Driver employee attends the manufacturer's premises and collects the bus. At that stage it is unregistered and is driven using 'trade plates' to Driver's headquarters in Mount Waverley where a pre-delivery and roadworthy check is carried out by Driver. The vehicles are then taken, again using the trade plates, from Mount Waverley, to Mount Gambier for test by a licensed vehicle tester in South Australia. The services of the South Australian Department for Transport, Energy and Infrastructure at Mount Gambier are customarily used. The vehicle is then driven to the South Australian Government Registration Office with an application for registration, an inspection certificate from the licensed tester, a weighbridge ticket, a cheque for payment of the registration fees and a letter of authority.
6. The evidence shows that within the ensuing 12 month period each of the 43 buses which had been registered in South Australia, according to the above procedure, was re-registered in Victoria. The longest period of time elapsed was some 348 days, though for the most part, the number of days elapsed was far shorter. The process for re-registration in Victoria was managed, not by VicRoads directly, but under delegation in accordance with Section 91 of the Road Safety Act 1986 from VicRoads to an organisation known as Road Safety Inspections Pty Ltd, known colloquially as 'RSI'. RSI is owned by the Victorian Bus Association and operates under what is described as a 'dealer certification scheme' in the collection of what the relevant agreement between it and VicRoads refers to as 'registration fees'. The definition in the agreement of registration fees extends to 'motor vehicle duty'. According to a statement from a Mr Gibbs, RSI registers the majority of accredited buses in Victoria, perhaps 80% to 90%. He said that a vehicle which has been previously registered in Victoria or interstate is treated as 'secondhand' for the purposes of the operation of the scheme by RSI. According to Mr Gibbs, where re-registration is affected, the procedure entailed the customer, in this case Driver, ringing RSI and making a booking. In accordance with the ordinary procedure, Driver would be required to complete a form called 'Heavy Vehicle Information - Verification Check' known colloquially as the HVIV form which was sent to VicRoads. Registration can take place only following written approvals on this form from VicRoads. This investigation is carried out so that VicRoads can check that the bus is not on a register of stolen or written-off vehicles. The vehicle would then be brought to RSI's testing facility in Port Melbourne and inspected for roadworthiness and design regulation. Driver would be required to complete a registration form approved by VicRoads. This form which was used in all instances for the 43 buses includes all the expected information including, in the present case, particulars of the prior registration in South Australia and also the 'compliance plate date', that is, the date on which manufacture of the bus was completed. The last panel included a provision indicating the total fee payable. Amongst the items to be totalled to reach that figure is the amount of 'motor vehicle duty'. Mr Gibbs said:

As far as I am aware RSI's practice has always been to not charge duty whenever a vehicle has been previously registered interstate in the same name because, as I understand the law, an exemption for duty applies in that circumstance. I cannot, however, specifically remember who told me about that exemption or when.

1. He said that RSI has always applied the exemption in that manner. The exemption referred to is clearly the one referred to in Section 237 and the form discloses in the case of the 43 vehicles, the previous registration in South Australia. There is no question or panel which canvasses the issue of the existence or non-existence of a purpose of duty avoidance in the prior registration. Another company known as 'Salmat' is involved in these arrangements. According to Mr Gibbs:

Salmat reviews the paperwork and confirms that RSI has correctly registered the bus and collected the correct fees and duty. Salmat has access to the registration databases so can confirm that a particular bus was actually previously registered in the same name, if that is relevant. If Salmat found the bus was not previously registered in the same name, so that duty should have been paid, it would then write to the owner of the bus and claim the duty. I am not aware of that ever happening in relation to a bus registered by RSI but I am aware that our staff have sometimes mistakenly charged the wrong weight of duty (eg. 2.5% instead of 4%) and Salmat has picked that up. Where Salmat finds a mistake such as that it notifies RSI as a courtesy but RSI does not take any part in correcting the additional duty and Salmat writes to the customer directly. For that purpose Salmat is not given any information other than the three documents [lodged with RSI].

As far as I was aware, it was quite legitimate for a bus owner that had previously registered a bus interstate to then register it in Victoria and not pay duty.

As well as Driver Group, I am aware of other bus companies that have registered buses with RSI that were previously registered in other States.

1. Mr Gibbs said that by reference to the compliance plate date:

Our [that is RSI's] inspectors know the earliest possible date that the bus could have been first registered.

1. In accordance with these procedures, each of the 43 buses in question was registered and given an assessment of motor vehicle duty as 'exempt'. In the relevant period from 2003 to 2009 the evidence showed that there were two buses acquired by Driver which were first registered in Victoria. The evidence disclosed that as to one of those buses, it was acquired from a dealer rather than the manufacturer and was required for urgent deployment. The circumstances surrounding the immediate registration of the other of the two was not canvassed in evidence.

1. In 2009, officers of the Commissioner conducted an investigation of compliance by Driver with Part 9 of the Duties Act. On completion of the investigation a senior investigator in the State Revenue Office wrote to the then general manager of Driver, Mr Nickels, indicating an assessment of primary duty under Chapter 9 of $878,148.24. The letter stated that penalty tax at the rate of 75% of the primary tax would be levied because the Commissioner was 'satisfied that the tax default was caused by your intentional disregard of the duty obligations under the Act'. The letter also advised that interest at 'market and premium rates from the due date of the assessment' would be charged. Notice of assessment dated 19 August 2010 was issued, presumably by way of re-assessment. Solicitors acting for Driver lodged a Notice of Objection to the assessment. A delegate of the Commissioner advised by letter of 15 June 2011 that the objection had been partially successful. The primary duty was fixed at $470,865; penalty tax of $235,432.50 was calculated at the rate of 50% and interest was levied at market rates. The Commissioner did not step back from the finding of an intentional disregard of tax obligations by Driver but exercised a general power to remit interest under Section 35 of the Taxation Administration Act so as to reduce the relevant penalty from 75% of the primary tax to 50%, the interest is set at market rate. Solicitors acting for Driver requested their client's objection be referred to the Tribunal for determination by letter dated 30 June 2011. The referral was received at the Tribunal on 18 December 2012.

1. Driver was represented at the hearing by Messrs M.T. Flynn and A.J. de Wijn of counsel. They submitted, first, that the re-assessment made by the Commissioner with respect to 12 of the buses were made more than five years after the initial assessment and therefore, by virtue of Section 30(2) of the Taxation Administration Act 1997, were invalid. They conceded that motor vehicle duty was payable with respect to some 19 of the buses, that is, the buses which were used exclusively in Victoria as route buses or school buses. They submitted that motor vehicle duty was not payable in relation to the remaining buses. They said that with respect to some eight buses, additionally, the assessments were made beyond the five year time limit but, in any event, the requirement for exemption under Section 237 had been met.
2. They contended that Driver took reasonable care to comply with the relevant taxation law and so no penalty tax should be payable. At any rate, there was no tax default caused by any intentional disregard of the law, so the weight should be 25% rather than 75%. They noted that the reduction in penalty was made in light of Driver's co-operation with the Commissioner's investigation. That remission, they said, should be maintained 'and the penalty should be reduced from 25% to 16.7%'. In a submission in reply, they contended that, since the Commissioner conceded at the time of the initial assessment, he had been satisfied for the purposes of Section 237 that the relevant vehicles were 'not registered outside Victoria for the purpose of avoiding duty under [Chapter 9 of the Duties Act]'; there was at the time no tax default as defined in the Taxation Administration Act. Hence, there was no basis to levy any penalty tax at all.
3. As to interest, they said that the interest charged should be fully remitted because the Commissioner and VicRoads:

were incorrectly applying the law for a long period of time and so contributed to the tax default so that it is appropriate that the State bears the cost of financing the tax in the meantime

If this were not done they said there should be a partial remission of interest for the period 29 August 2011 to 18 December 2012 'due to the Commissioner's failure to refer the matter to the Tribunal within the required time'.

1. As to the timing of the re-assessment, they noted that Section 9 of the Taxation Administration Act allows the Commissioner to make a re-assessment but only within five years of the original assessment. The re-assessment was made on 19 August 2010 which was more than five years after the original assessment relative to 12 buses. They said the exception to the limit which occurred where all the facts and circumstances affecting the tax liability under the relevant taxation law of the person in respect of whom the assessment or re-assessments was made were not fully and truly disclosed to the Commissioner, did not apply. As to the requirements of Section 237 of the Act for exemption, there was no question that the requirements of paragraph (a) of the Section were met. The only matter open to contention was the operation of paragraph (b). They said that Driver 'disclosed to RSI all the information required by VicRoads and the Commissioner to register the buses and determine the amount of duty payable'. Therefore, they said, there was no fact or circumstance affecting the tax liability that was not disclosed to the Commissioner at the time of the original assessment. They referred to Section 9(3)(b) of the Taxation Administration Act. The issue as to the five year limit was not taken in the original objection, however I granted leave for it to be relied upon given that there was no opposition to this course expressed by Mr Young of Counsel who appeared on behalf of the Commissioner.
2. As to some 20 buses which they identified, they submitted:

That the Tribunal should be satisfied that those buses were not registered in South Australia for the purpose of avoiding duty in Victoria.

1. They said they were purchased for use in both Victoria and in other States and spent varying proportions of their time interstate. They relied on the evidence to this effect by Mr Mark Driver. As to the operation of paragraph (b) of Section 237, they referred to the celebrated analysis of the old Section 260 of the Income Tax Assessment Act 1936 by Lord Denning on behalf of the Judicial Committee of the Privy Council in Newton v Federal Commissioner of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1, 8. They said as to the buses that were intended to be used in a number of States:

An owner of buses to be used in that way can potentially register those buses in any one of a number of States. ... it is submitted that a decision of where to register a bus that will travel from State to State is 'an ordinary business dealing' which should not be labelled as a means to avoid tax.

1. The formulation by Lord Denning has excluded ordinary business dealings from arrangements that had the purpose of avoiding tax.
2. As to the issue of penalties, they said it was wrong to regard Driver as having exhibited an intentional disregard for the law. Such a finding, they said, would require an understanding by the taxpayer of the effect of the relevant legislation. They referred to the judgment of Collier J in Price Street Professional Centre v Federal Commissioner of Taxation [2007] FCA 345 at [43]. They said the directors of Driver were unaware of the requirement of Section 237(b) and therefore they and the company lacked the level of 'moral culpability' which would justify levying the penalty at the higher rate. They said:

They did not know that Driver was doing anything wrong by not paying duty and that knowledge is required before a taxpayer can be said to have intentionally disregarded the law.

1. They said this would reduce any potential penalty to 25% and in any event, not even that penalty should be levied because Driver 'did take reasonable care to comply with the taxation law so that the penalty should be reduced to nil'. The following considerations they said indicate that reasonable care had been exercised. First, there was a well accepted practice in the bus industry which was followed. They said that the Commissioner had recognised the significance of such commercial practices in revenue ruling TAA.007. The relevant authorities have accepted over a long period of time without question or suggestion that duty should be payable. The body delegated to collect the duty, namely RSI, never asked Driver any questions about its 'purpose in previously registering buses in South Australia'. The guidelines and procedures adopted by VicRoads for the guidance of RSI 'did not require RSI to ask any such questions'. Another organisation 'Salmat' carried out its check based on the information disclosed and did not ask for, or require, any information as to the purpose of previous registration. The application provided by VicRoads and required to be used 'did not ask any questions about purpose' and finally, the amount of duty involved in relation to each bus was small. They said it was an average of $10,950 in comparison with the size of the business having a $33m turnover. Therefore, they said, it was reasonable for Driver to continue with the procedures it had adopted and:

A reasonable person would have no reason to suspect that the law was otherwise [than as administered by RSI] and would continue not paying duty on that basis, particularly in circumstances where other bus companies appeared to be doing the same.

1. They noted that there was a general power to remit penalties under the Taxation Administration Act, Section 35. In any event, since the Commissioner had, on the basis of co-operation during the investigation, reduced the penalty from 75% to 50% viz by one-third, that one-third reduction should be applied to a 25% penalty if it were otherwise thought appropriate, cutting it to some 16.67%. As to interest, they noted that the Commissioner had already remitted any 'premium' element of interest over and above market interest rate. Eight percent might otherwise have been payable. They referred to Section 25(1) of the Taxation Administration Act. They submitted that all interest should be remitted, having regard to the factors which they had already relied on. They said:

The Commissioner and parties delegated to collect duty on his behalf were for a long period of time applying the law without regard to the 'satisfaction' requirement in s.237(b) and simply treated applications for registration as exempt for the requirement in s.237(a), that the vehicle was previously registered interstate in the same name was satisfied. The practice contributed to a very large extent to the failure of Driver Group to pay the duty and therefore it was fair and reasonable for the State to bear the cost of not having the use of the tax.

1. They referred to Karci v Commissioner of State Revenue [2012] VCAT 790 [29] in the determination of Dr Glover. They said in the ruling TAA.007, contribution by the Commissioner to a tax default by a tax payer was a ground for full remission of interest. They referred to Chief Commissioner of State Revenue v Insis Technologies [2004] NSWADTAP 19 [60]. They also said interest for the period 29 August 2011 to 18 December 2012 should be remitted because of the delay in referral by the Commissioner of the taxpayer's objection.

1. Mr Young of counsel who appeared for the Commissioner said that he was unaware of any determination of the Supreme Court or a Tribunal on the provisions relevant to this proceeding, nor analogous provisions in the Duties Act 2008, Section 242 of the State of Western Australia.
2. He submitted that in assessing whether there was an exemption from duty, the availability of the exemption had to be judged by reference to the application for registration which should be regarded as an application for assessment given that the exemption was expressed to exist 'on an application for registration'. The applicant for these purposes was, he submitted, the taxpayer and the taxpayer was, as a matter of logic and reality, the only possible source of information for the operation of the exemption.
3. He said that it applied only where the Commissioner was 'satisfied' as to certain matters. This required, he submitted, a positive state of satisfaction. He referred to Abebe v The Commonwealth [1999] HCA 14; (1999) 197 CLR 510, 576 [187]; SJSB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 225 [16]; SZNCW v Minister for Immigration and Citizenship [2008] FCA 1385. The state of satisfaction he said:

will necessarily be formed on the basis of the information provided in support of the application. If the Commissioner does not reach a positive state of satisfaction about the matters stated, the exemption cannot be engaged.

1. Mr Young conceded that in the events which occurred, the Commissioner was, at the time of assessment, satisfied as to the matter in Section 237(b). This was however, subject to the Commissioner's power to re-assess.
2. Mr Young submitted it was incumbent on Driver to

include with its application for registration all information that [was] relevant to the formation of the Commissioner's satisfaction. The Commissioner must be able to look at the information provided and form a view about it.

The circumstances required the consideration not merely of the prior registration outside Victoria.

1. Next, he said, insofar as the Commissioner was required to form an opinion as to whether there was a 'purpose of avoiding duty', this necessarily required a consideration of the jurisprudence surrounding the old Section 260 of the Income Tax Assessment Act 1936 which rendered void against the Commissioner of Taxation arrangements for the avoidance of tax. He referred to the judgment of Brennan J (as he then was) in _Federal Commissioner of Taxation v Gullan_d [1985] HCA 83; (1985) 160 CLR 55, 80. He said, in light of these matters, it could be 'predicated' that there was a substantial purpose of avoiding duty in first registering the relevant buses in South Australia and within a relatively short period of time moving the registration to Victoria. The purpose, he said, was to achieve a result where no duty was payable in Victoria. There was no obvious business purpose for the short-term registration in South Australia. Driver wanted all the buses registered in Victoria. He said the two step process was explicable only based upon there being a duty avoidance purpose.
2. Mr Young said that, insofar as Driver had conceded its liability to Victorian duty with respect to 19 of the buses, that concession involved

the proposition that the buses were registered in South Australia for the purpose of avoiding duty. That must be so in order for the Commissioner to be unable to reach a state of satisfaction to the contrary.

1. The buses were registered over a substantial period of time and therefore Driver conceded 'that in respect of those buses it had a purpose of avoiding duty'. It could be inferred, he said, that Driver knew about the respective duty and registration regimes in South Australia and Victoria.
2. He then turned to a consideration of the classes of bus not covered by the concession.
3. Mr Young said that as to the charter of touring buses substantially based in Victoria but operating outside Victoria at some time, the only explicable purpose for the initial registration in South Australia 'was the purpose of avoiding duty'. He made a similar submission as to all other classes of use of bus.
4. As to the argument that certain of the buses could not be the subject of reassessment because of the passage of five years, the Commissioner was not bound by any time limit on reassessment because in accordance with Section 9(3) of the Taxation Administration Act 1997, the Commissioner was at liberty to reassess without time limit where the circumstances affecting liability 'were not fully and truly disclosed' to him. The relevant facts and materials for the Commissioner's consideration were not placed before him, said Mr Young. He continued:

It cannot seriously be suggested that if Driver Group had have put forward all of the relevant overt facts about the buses that the Commissioner would nevertheless have been satisfied that there was no substantial duty avoidance purpose.

1. He submitted it was incumbent on Driver to make disclosure of the intended use of the relevant buses because this would shed light on whether the initial registration in South Australia prior to a re-registration in Victoria was carried out for a legitimate business purpose or merely for the purpose of tax avoidance. As to the level of penalty, whilst it will be recalled that there has been some remittal of the 75% penalty imposed for intentional disregard of the revenue law, Mr Young submitted that the 75% penalty was justified. He referred to the purpose which he said the evidence revealed stood behind Driver's registration practices and continued:

It may be inferred from that purpose [of tax avoidance], particularly where that purpose was implemented through a course of conduct which extended over a number of years, that Driver Group knew about the motor vehicle registration and duty provisions in South Australia and Victoria ... further, it may be inferred from the purpose of duty avoidance in the circumstances described that the short-term, first registration in South Australia, particularly of buses only intended for use in Victoria, followed by registration in Victoria, was a contrived arrangement.

1. He referred to Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCA 345; (2007) 66 ATR 1 [42] - [43]. He said the submission that the directors did not know there was anything wrong

does not sit well with the concession made in respect of the 19 buses. Nor does it sit well with the admission that the directors did know about (at least) the financial differences between South Australia and Victoria for motor vehicle duty. The evidence suggested an unwillingness to enquire further 'lest the directors actually discover the true position that the law treated their overt acts as duty avoidance.

This, he submitted, constituted intentional disregard.

1. There was no question, he said, of Driver having taken reasonable care to comply with the revenue law. The evidence showed it took no legal or accounting advice and the reference by the directors to well accepted industry practice was not supported by any extensive evidence and, said Mr Young, 'can hardly be relied on as justifying [Driver's] actions'. Nor, he submitted, was Driver's position excused or mitigated by the absence of any questions from those administering the registration scheme. He said 'it was for Driver Group to satisfy itself of the propriety of its actions'.
2. The only interest charge that had been levied was interest at the market rate which, he said, reimbursed the Victorian Crown for the financing costs incurred due to late payment of tax and also reflected the fact that Driver, by not paying its proper duty liability, had the use of the funds in the meanwhile. The reassessed duty has not been paid, therefore, said Mr Young, any delay in referral of Driver's objection to the Tribunal could not have been productive of loss to Driver or be operative as a justification to reduce the claim's entitlement to the interest.
3. Mr Young made a late concession in the course of his oral presentation to the effect that Driver might be entitled to an 80% reduction in penalty tax based on Section 31 of the Taxation Administration Act 1997. That section provides:
   1. Reduction in penalty tax for disclosure before or during investigation

(1) The amount of penalty tax determined under section 30 is to be reduced by 80% if, before the Commissioner commences an investigation into a known or suspected tax default or notification default by the taxpayer, the taxpayer voluntarily discloses to the Commissioner, in writing, sufficient information to enable the nature and extent of the default to be determined.

(2) The amount of penalty tax determined under section 30 is to be reduced by 20% if, after the Commissioner commences an investigation into a known or suspected tax default or notification default by the taxpayer and before it is completed, the taxpayer voluntarily discloses to the Commissioner, in writing, sufficient information to enable the nature and extent of the default to be determined.

(3) Subsection (1) or (2) (as the case requires) does not apply in respect of information disclosed by a taxpayer if the taxpayer is registered by the Commissioner under a taxation law and -

(a) the tax default involved the failure to lodge a return and pay tax by the date required under that taxation law; or

(b) in the case of a taxpayer who lodged a return by the due date that disclosed a liability to pay tax, the tax default involved the failure to pay that tax by the date required under the taxation law.

1. He referred to the Tribunal's determination in Liquid Rock Constructions Pty Ltd v Commissioner of State Revenue [2011] VCAT 2164 where I considered that disclosures made by a taxpayer in the course of an investigation could nevertheless be regarded as voluntary disclosures for the purposes of Section 31(1) where the investigation was initiated as a 'routine' investigation without an overt statement that there was a known or suspected tax default. The Commissioner, in his determination on objection, conceded that in the course of the 'routine' investigation which his officers carried out, Driver had given proper co-operation. I reached this conclusion in Liquid Rock by noting the contrast between the provisions of the Victorian statute and the corresponding provisions in the Australian Capital Territory considered by the Supreme Court (Higgins CJ) and the Court of Appeal, Gray P., Refshauge and Katzmann JJ in Commissioner of ACT Revenue v Dataflex Pty Ltd [2010] ACT FC 117; (2011) ACTCA 14. Mr Young, as I understood him, conceded that the investigation conducted here was not one of known or suspected tax default. The same reasoning, he conceded, as I applied at [90] in the Liquid Rock case, applied here.
2. In reply, Mr Young referred to a decision of the Court of Appeal in Commissioner of State Revenue v Gas Ban Pty Ltd (in Liq) [2011] VSCA 89; (2011) 31 VR 397. In that case, the Commissioner issued revised assessments against the respondent company as an employer under the Payroll Tax Acts 1971 and 2007 which remained unpaid. The Commissioner then served a statutory demand ('wind up notice') under Section 459E of the Corporations Act. A judge of the Trial Division set aside the demand and the Commissioner appealed on the basis that there was a genuine dispute as to whether the reassessments were invalid. On appeal, the Court of Appeal held that, by virtue of the provisions of the payroll tax legislation, the notices of reassessment were conclusive evidence and so there was no genuine dispute as to liability. Mr Young relied on paragraph [45] of the Court's judgment which appears at [2011] VSCA 89; [2011] 31 VR 397, 407-8 and is in the following terms:
   1. Section 9 of the Act expressly empowers the Commissioner to make one or more reassessments of tax. The process of reassessment is effected by the Commissioner inserting the amount of the reassessment in the notice of reassessment and serving it on the taxpayer. The notice of reassessment thereby replaces the initial assessment, or previous reassessment, without need of further notice or other manifestation of intention to withdraw the original assessment or preceding reassessment.
3. Mr Young relied on this statement by the Court, Nettle and Mandie JJA and Hargrave AJA, that a Notice of Reassessment automatically replaces the initial assessment.
4. Mr Young conceded that RSI and Salmat could be regarded as persons acting for the Commissioner in accordance with the principles analysed by the High Court of Australia in O'Reilly v The Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1.
5. As to the issue of the adequacy of disclosure, Mr Young referred me to a decision of the Western Australian Court of Appeal in Commissioner of State Taxation v EDI (Maryborough) Pty Ltd (2010) 41 WAR 197 where McLure P with whom Owen and Newnes JJA concurred, said:

I accept that the information [which a taxpayer is obliged to disclose] must be both relevant and significant in the sense that it is capable of influencing the outcome, either in combination with the information the respondents [taxpayers] were obliged to supply to the Commissioner ... or because it would have led to a further line of factual enquiry.

1. As to the obligation more generally to provide information, Mr Young referred to Section 10(1) of the Taxation Administration Act 1997 which provides as follows:

(1) A taxpayer and any tax agent of a taxpayer must ensure that there is included in an instrument that is liable to tax, or in a statement that is produced to the Commissioner together with the instrument prior to the payment of tax, all information necessary for a proper assessment of the tax liability of the taxpayer in respect of the instrument.

Penalty: 100 penalty units in the case of a body corporate;

1. He observed that until an amendment made in 2007, the Commissioner's power to reassess a tax liability under Section 9 of the Taxation Administration Act was limited to three years. The time limit is now under Section 9(3) set at five years. He said that an assessment which had become immune from being re-visited because of the lapse of three years prior to the commencement of the amending legislation (Act No. 26 of 2007) could not retrospectively be rendered subject to reopening.

1. In reply, Mr de Wijn on behalf of Driver, submitted that there was nothing in Section 237 of the Duties Act which required or provided for, a taxpayer to 'apply' for the relevant exemption. He said:

Either the Commissioner is or is not .... satisfied [that the vehicle was not registered outside Victoria for the purpose of avoiding duty under this Chapter] and duty is therefore either chargeable or it is not. Nothing depends on the taxpayer applying for the exemption.

1. Next, he said there was nothing in Section 237(b) which required Driver to provide any particular information to the Commissioner. The Commissioner is entitled to ask for information if he requires it. He submitted the Commissioner did seek certain information through the application for registration form. According to Mr de Wijn, Driver did not have any claims about tax avoidance purposes or lack thereof. It was unaware that this was a requirement of the legislation, 'it simply applied for registration, provided the information requested and was then assessed to nil duty'. As to the allegation that full and true disclosure had not been made for the purposes of Section 9 of the Taxation Administration Act, Mr de Wijn said:

The Commissioner's submission appears to be that if he had known further, unspecified facts, at the time of the initial assessment he would not have been satisfied that there was not a tax avoidance purpose as required by s.237(b). The taxpayer accurately disclosed all the facts that it was required to disclose to VicRoads, or its agent, RSI, and the mechanism established by VicRoads, the Commissioner's delegate, did not provide any means for the taxpayer to disclose any additional facts.

1. He said RSI and Salmat were aware of the short-term registration in South Australia and allowed registration in Victoria without requiring the payment of duty.
2. As to the existence or non-existence of a tax avoidance purpose, Mr de Wijn said:

The question for the Tribunal is simply this: is the registration in South Australia of buses designed to operate outside Victoria as well as inside Victoria capable of explanation of an ordinary business dealing? The answer to that question is obvious - registration of a bus outside Victoria that was intended to operate across State borders is capable of being explained as an ordinary business dealing.

1. As to the issue of penalties, he referred to Section 30(2) imposing a 75% penalty for tax defaults that were caused 'wholly or partly by the intentional disregard by the taxpayer ... of a taxation law'. He said, merely to have a purpose of tax avoidance is not contrary to taxation law. He referred to the definition of tax default. He submitted:

It is a failure to pay tax where the taxpayer is liable to do so but must result from an intentional disregard of the law. That, in turn, requires knowledge on Driver Group's part that, in its circumstances, it was required to pay duty.

1. The evidence, he submitted, demonstrated that the directors did not have that knowledge.
2. He denied that to demonstrate that there was a contrived arrangement was indicative of an intentional disregard of taxation law in accordance with the judgment of Collier J in Price Street Professional Centre v Federal Commissioner of Taxation. He submitted that 'wilful blindness' was not an intentional disregard of the law:

In any event, [he said] the evidence is far from establishing wilful blindness. In fact, both directors have given evidence that it never occurred to them that what Driver Group was doing was wrong. Indeed, even the agent (RSI) appointed to collect duty on the Commissioner's behalf was unaware of the true position.

1. He submitted that Driver did take reasonable care to meet its obligations. It is not an invariable obligation on persons to seek legal advice. A reasonable person would not have done so. RSI had told Driver 'that duty is not payable if the bus was previously registered in South Australia and it continued not charging duty on that basis over a period of at least 10 years'. He said Driver 'had no reason to suspect that that was incorrect and so no reason to seek legal advice'. He continued:

Even if Driver Group had sought legal advice it is difficult to see what difference that would have made. Any competent advice would have told Driver Group that the determinative factor was whether the Commissioner was satisfied that the registration in South Australia was not for tax avoidance purpose. Armed with that knowledge of the law, it would have been reasonable for Driver Group to conclude after receiving a nil assessment that the Commissioner was so satisfied meaning that duty was not payable. No reasonable person would, after receiving a nil assessment, attempt to go behind the assessment and enquire of the Commissioner whether he really was satisfied.

1. Mr de Wijn took me to the definition of 'tax default' in the Taxation Administration Act. He submitted that no default existed at the time of registration because the Commissioner had, on the material available to him, been satisfied that there was no tax avoidance purpose and the registration was regarded as exempt pursuant to Section 237 of the Duties Act. This situation did not change, at least until valid reassessments were made in accordance with the terms of the Taxation Administration Act. It was only from that point that a tax default could be said to exist.
2. Mr de Wijn also referred to a decision of the Full Federal Court of Australia (Hill, Heerey and Merkel JJ in Federal Commissioner of Taxation v Broken Hill Pty Company Limited [2000] FCA 1431; (2000) 45 ATR 507, 520 [52] where Hill J said, after reviewing a number of High Court authorities on what constitute a full and true disclosure of all material facts necessary for assessment, 'the taxpayer is not required to disclose that which is already known to the Commissioner'.

1. In considering whether the limb of the exemption created by Section 237 of the Duties Act is made out with respect to the buses which were not the subject of a concession by Driver, viz. those which were intended solely for use in Victoria relative to Section 260 of the Commonwealth Income Tax Assessment Act 1936, it is necessary to consider the seminal analysis of Lord Denning delivering the advice of the Judicial Committee of the Privy Council in Newton v Federal Commissioner of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1. As to what a 'purpose' of tax avoidance is, he said

... the section is not concerned with the motives of individuals. It is not concerned with their desire to avoid tax, but only with the means which they employ to do it. It affects every "contract, agreement or arrangement" (which their Lordships will henceforward refer to compendiously as "arrangement") which has the purpose or effect of avoiding tax. In applying the section you must, by the very words of it, look at the arrangement itself and see which is its effect - which it does - irrespective of the motives of the persons who made it. Williams J. put it well when he said "The purpose of a contract, agreement or arrangement must be what it is intended to effect and that intention must be ascertained from its terms. These terms may be oral or written or may have to be inferred from the circumstances but, when they have been ascertained, their purpose must be what they effect" (1957) 96 CLR, at p 630 . In order to bring the arrangement within the section you must be able to predicate - by looking at the overt acts by which it was implemented - that it was implemented in that particular way so as to avoid tax. If you cannot so predicate, but have to acknowledge that the transactions are capable of explanation by reference to ordinary business or family dealing, without necessarily being labelled as a means to avoid tax, then the arrangement does not come within the section.

[1958] UKPCHCA 1; (1958) 98 CLR 1, 8

1. It follows that a decision made by a taxpayer for a legitimate business purpose would not be stigmatised as a decision taken for a tax avoidance purpose and it would not provide any ground for the Commissioner not to be satisfied that re-registration of motor vehicles previously registered interstate was not done for the purpose of avoidance of duty.
2. It was also held with respect to Section 260 of the Income Tax Assessment Act that it did not operate to void, for the purposes of the Commissioner, an arrangement which represented an election by a taxpayer between choices which the income tax legislation itself offered; WP Keighery Pty Ltd v Federal Commissioner of Taxation [1957] HCA 2; (1957) 100 CLR 66.
3. In the present case Mr Flynn and Mr de Wijn conceded that the presence of paragraph (b) in the Section 237 exemption necessarily negated the view that interstate registration followed by Victorian registration offered a legitimate option to a taxpayer which could not be regarded as the effectuation of a tax avoidance purpose.
4. Here, the evidence of all of the persons who had acted as director at the time was that the objectives of Driver was to register all of its buses in Victoria both because of the existence of its central management in Victoria and the desire to cope with a single registration and accreditation regime which, being in the place of central management, was most conveniently chosen as Victoria. Registration initially in South Australia, was, according to the same evidence, chosen simply because it offered the lowest cost. The cost differential was principally, and perhaps exclusively, the difference between the additional outlay constituted by the motor vehicle duty under Chapter 9 of the Duties Act charged in Victoria but having no counterpart in South Australia. The initial registration in South Australia was, in my view, clearly for a tax avoidance purpose. Subject to issues relative to the ability of the Commissioner to re-assess, the challenge to primary liability fails.

1. As to the circumstances of registration itself, a full and true disclosure was made by Driver to the Commissioner's delegate, RSI. The material prepared for the purposes of registration disclosed the previous registration in South Australia and also disclosed the date of manufacture of the relevant buses insofar as it showed the date of the compliance plates.
2. Mr Young submitted that it was incumbent on Driver to inform the Commissioner as to what use and in what territorial locations the buses had been and would be put to because those facts were relevant to whether or not the Commissioner could be satisfied of the absence of any purpose of tax avoidance in the initial registration in South Australia.
3. In one sense there is an air of unreality to all this. The evidence showed that RSI, which was the authority processing these applications, was unaware that the exemption required a determination of a lack of tax avoidance purpose in circumstances such as the present. If some covering letter had been furnished explaining the previous and intended use of the buses, it may simply have been ignored and either not passed on to anyone at all or passed on to VicRoads who might or might not have referred the matter to the Commissioner. All this is speculative however. In my view, it would be inappropriate for me to turn aside from a non-disclosure upon the speculative basis that it would not have effectively come to the attention of someone in the State Revenue Office desirous of forming an opinion for the purposes of Section 237(b) of the Act.
4. Again, the contention that non-disclosure of these matters constitutes a failure to make full and true disclosure is embarrassed by the fact that there are potentially so many matters that might, as a matter of law, be regarded as relevant to the existence or otherwise of the purpose of tax avoidance that it may be difficult to be precise as to the extent of disclosure required to meet the standard of full and true disclosure in this context. Nevertheless, contentions along the lines now put by the Commissioner have been advanced by revenue authorities in the past and accepted. In Daniels v The Commissioner of Taxation of the Commonwealth of Australia [1989] FCA 335; (1989) 20 ATR 1120 the taxpayer objected to a number of re-assessments of income by the Commissioner. Mr Daniels provided a drafting service. Following advice from an accountant, Mr Daniels established a trustee company as trustee of a family discretionary trust and interposed it as employer so that the employment which he had previously undertaken through an agency for an international company Bechtel Pacific Corporation Limited would henceforth be rendered and remunerated through the family trust company. Applying the well known cases relative to Section 260 of the Income Tax Assessment Act 1936, Sweeney J held that these arrangements were void against the Commissioner. The taxpayer contended that the ability of the Commissioner to reassess was limited by Section 170(3) of the Income Tax Assessment Act as it then stood to a period of three years in light of the 'full and true disclosure of all material facts which he said he had made'. His Honour rejected this contention, stating at paragraph [53]:
   1. Even if, on the view most favourable to the taxpayer, one reads the returns of the taxpayer, the Trust and the company together, one does not find in them any disclosure of the fact, known to the taxpayer, that he had entered into the "contract of employment" with the company pursuant to which it was agreed that the company was to use "its best endeavours to procure work" for him "in his capacity as a draftsman", to receive "all payments due under contracts performed by" him and to pay him "an annual fee as may be mutually agreed from time to time for the performance of the work contracted".

In Newton's case itself the same approach was adopted (1957) 96 CLR 527, 637 per Fullagar J.

1. I reach the conclusion that there has not been a full and true disclosure with some reluctance for the reasons already recited.
2. This conclusion necessarily precludes acceptance of the argument put by the taxpayer that it is simply to reassess the registration of a number of the buses in question here.

1. The issue of penalties is dealt with in the Taxation Administration Act 1997. If a tax default occurs, Section 29 imposes a liability for penalty tax. The amount of that tax is stipulated by Section 30 which provides, inter alia:

(1) The amount of penalty tax payable in respect of a tax default is 25% of the amount of tax unpaid, subject to this Division.

(2) The Commissioner may increase the amount of penalty tax payable in respect of a tax default to 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 taxation law.

(3) The Commissioner may determine that no penalty tax is payable in respect of a tax default or notification 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 taxation law; or

(b) the default occurred 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.

1. It will be recalled that the Commissioner in his initial determination imposed a penalty tax of 75% on the basis he was satisfied that the default was caused 'by the intentional disregard by the taxpayer ... of a taxation law' viz. Chapter 9 of the Duties Act. The Commissioner has a general discretion to remit duty under Section 35 of the Act and in his determination of Driver's objection, he exercised that power so as to reduce the penalty tax to 50% of the unpaid tax. He did not, however, step back from the finding that the tax default in question was the result of an intentional disregard by the taxpayer of a taxation law. At the hearing before me, as noted above, the Commissioner sought to defend that finding. On the other hand, Driver's counsel submitted that on the evidence there was no intentional disregard of the Duties Act. Both sides relied on the judgment of Collier J in the Federal Court of Australia in Price Street Professional Centre Pty Ltd v Federal Commissioner of Taxation [2007] FCA 345; (2007) 66 ATR 1, 19 where Her Honour dealt with the import of the same phrase under Section 226J of the Income Tax Assessment Act 1936. Both sides referred to paragraphs [42] and [43] of Her Honour's judgment which are as follows:

[42] The burden of proof is on the applicant to show that there was no intentional disregard of the ITAA 1936 or the regulations and that the penalty under s 226J should not have been imposed (cf Nozzi Pty Ltd Commissioner of Taxation [2003] FCA 356 at [12]).

[43] As made clear by the Explanatory Memorandum to the Taxation Laws Amendment (Self Assessment) Bill 1992 which introduced s 226J, s 226J requires knowledge by the taxpayer that, for example, it has claimed a deduction knowing that it is not allowable. Accordingly, "intentional disregard" of the ITAA 1936 or regulations requires, inter alia, an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer so as to flout the ITAA 1936 or regulations. The legislation treats "intentional disregard" differently from, and more seriously than, negligence to comply with the Act (cf s 226G) or recklessness with regard to the correct operation of the Act (cf s 226H).

1. The gravamen of the submission on behalf of the Commissioner is that, what Driver did was to engage in 'contrived' conduct which can therefore be characterised as intentional disregard. I accept the submissions made by Counsel for Driver that this view of the meaning of the phrase 'intentional disregard' finds no support in the relevant passages in the judgment of Collier J, nor, I might say, in the ordinary meaning of the words 'intentional disregard'. In the Price Street case, Her Honour said that there would be an intentional disregard if a taxpayer 'claimed a deduction knowing that it is not allowable'. Here, if the evidence showed that Driver sought exemption under Section 237 knowing that such exemption was not available, an intentional disregard of the Duties Act would be demonstrated. The evidence, however, does not support such a finding. All of the Driver witnesses said that they were unaware that to qualify for exemption under Section 237 of the Duties Act for a registration, not only was it necessary that there be a prior interstate registration, but further, that there be a finding by the Commissioner that there was no purpose of tax avoidance. In the absence of knowledge of this matter, there is no intention of claiming an exemption which was not in truth available. Section 30(2) therefore has no application to the present facts.
2. Likewise, in my view, Section 30(3) has no application on these facts. There was no suggestion that the default in question here took place because of circumstances beyond the taxpayer's control. Despite submissions to the contrary on behalf of Driver, I do not believe, in the circumstances, Driver took reasonable care in availing of what it believed to be an exemption under Section 237 of the Duties Act without consulting the text of the statute, itself, seeking legal or accounting advice or raising the matter with the State Revenue Office. True it is that raising this matter with RSI would not have led to a consideration of Section 237(b) of the Act because it appears the RSI officers were unaware of the existence of this paragraph in the Duties Act, however RSI's involvement in the scheme of collecting the Chapter 9 duty was obviously at a low level and on a ministerial basis. Any issues of policy guidance would appropriately come from the State Revenue Office itself and there was no attempt to obtain guidance from that quarter. I accept that there are occasions when matters are thought to be so notorious or well known that it is simply unnecessary for a taxpayer to seek guidance, either professionally or from the revenue authority, itself. This was not the present situation, however. There was obviously an element of contrivance in what Driver was doing. A responsible taxpayer would turn its mind to the propriety of such an arrangement and rely on it only after proper investigation.
3. By a process of exclusion this leaves the applicable provision of Section 30 to be sub-section (1) which sets the default tax at 25%.
4. But there must be a further reduction in penalty based on Section 31(1) of the Taxation Administration Act which provides as follows:

(1) The amount of penalty tax determined under section 30 is to be reduced by 80% if, before the Commissioner commences an investigation into a known or suspected tax default or notification default by the taxpayer, the taxpayer voluntarily discloses to the Commissioner, in writing, sufficient information to enable the nature and extent of the default to be determined.

1. It will be recalled that the Commissioner conceded that Driver displayed co-operation in the course of the investigation. The opening paragraph of the letter which initiated the investigation of Driver's affairs relative to the Duties Act was in materially identical terms as the opening paragraph of the letter in Liquid Rock which the Tribunal there found did not amount to an investigation 'into a known or suspected tax default'. Disclosures made in the course of such investigations are separately dealt with in Section 31(2). The result, then, is that the 25% penalty which would otherwise have been chargeable under Section 30(1) is to be reduced by some 80% under Section 31(1) of the Taxation Administration Act.
2. At this point I should note again a submission made in reply on behalf of Driver. It noted that penalty tax and interest under the Taxation Administration Act are levied by reference by what the Act defines as a 'tax default'. The definition in Section 3 is as follows:

tax default means a failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of tax that the taxpayer is liable to pay

1. Mr de Wijn submitted that, since the Commissioner was initially satisfied of a lack of a purpose of tax avoidance in accordance with Section 237(b) of the Duties Act there was, at the time of registration, no tax default and certainly no tax default until the Commissioner made his reassessment. For the purposes of consideration of penalty tax, that submission is, for present purposes, beside the point. Even if there was no tax default at the time of initial registration there has been a default following the reassessment. Driver has not paid any part of the additional duty assessed.
2. In the result therefore, the penalty tax should be fixed at 25% of the unpaid tax, reduced by 80%.

1. Section 24 of the Taxation Administration Act provides for payment of interest 'if a tax default occurs' calculated from the last day of payment until payment. Section 25 authorises the setting of the interest rate at a market rate calculated by reference to the yield rate on bank accepted bills as published by the Reserve Bank of Australia and a premium rate of 8%. Section 28 authorises the Commissioner to remit interest 'by any amount'. In the present instance the Commissioner has charged the market rate and remitted any interest representing the additional premium of 8% per annum.
2. Since the tax has not been paid the admitted fact that there has been a substantial delay in referring the taxpayer's objection to the Tribunal is neither here nor there. I accept the contention put by Mr Young for the Commissioner that levy of interest at the market rate represents an adjustment in favour of the Commissioner to reflect the Crown's being out of the revenue under the Duties Act which the law entitled it to and the taxpayer having the use of the money which should have been paid as duty.
3. It is at this point that the submission as to the occurrence or non-occurrence of a tax default at the time of initial assessment becomes pertinent. Acceptance of Driver's submission would have it that no tax default occurred until the passing of the due date for payment under the reassessment and therefore there can be no question of levying interest back to the date of the original assessments.
4. Mr Young on behalf of the Commissioner referred to the Court of Appeal's decision in the Gas Ban case where the Court stated that the reassessments in consideration there stood in place of the original assessments and had the same conclusive effect in law as would an original assessment. The Court did not state, and the matters before the Court did not require it to form an opinion, as to whether the reassessment should be regarded as 'dating back'.
5. In cases such as Newton, interest was customarily levied back to the date of original assessment, presumably on the footing that since the tax avoidance arrangements which were found to have been avoided by the operation of Section 260 were therefore treated, as far as the Commissioner's assessing power was concerned, as ineffective from the start. The higher levels of tax were properly assessable from the start. Here, the contention is that, since the assessment of duty was dependent upon the forming of an opinion by the Commissioner, and a favourable opinion was initially formed, no liability arose until after the Commissioner changed his opinion. With some hesitation, I conclude that in circumstances such as the present, such a view would be entirely artificial and inappropriate at least where the initially favourable opinion formed by the Commissioner on the exemption was reached in a circumstance where there had not been true and full disclosure of the circumstances to him. In my view, the interest is properly chargeable back to the date of the original assessments. In fact, Driver made no inquiries of the Commissioner as to the operation of the exemption. No advice was tendered either by the Commissioner, himself, or RSI. I reject the submission that the Commissioner `contributed' to this tax default.

1. The Tribunal's powers on review under Section 111 of the Taxation Administration Act are to 'confirm, reduce, increase or vary the assessment or decision'. For the reason which I gave in Cusmano v Commissioner of State Revenue [2010] VCAT 1056 and Roth v Commissioner of State Revenue [2006] VCAT 2356 I believe the Tribunal has, in addition to these powers under the Taxation Administration Act, the general powers possessed by it on administrative review under Section 51 of the Victorian Civil and Administrative Tribunal Act 1998. The parties were agreed that, given that there are some computations of potential complexity to be made, the convenient course is to remit the matter to the Commissioner for reassessment in accordance with the Tribunal's determination. Such a power is given by Section 51 of the Victorian Civil and Administrative Tribunal Act and I propose to exercise it.