Goldfish Potts Point Pty Ltd v Chief Commissioner of State Revenue

Powers of Tribunal on review

1. A taxpayer may apply to the Tribunal for an administrative review of an assessment or other decision (the Chief Commissioner's Decision) that has been the subject of an objection under certain circumstances including if the taxpayer is dissatisfied with the Chief Commissioner's determination of the objection. On a review the Tribunal may confirm, revoke or make an assessment or other decision in place of the Chief Commissioner's Decision and make orders as to costs or otherwise as it thinks fit, s 101(1) of the Taxation Administration Act 1996 (TA Act).
2. In determining the application for review the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it including any relevant factual material (whether or not that material was before the Chief Commissioner when the Chief Commissioner's Decision was made) and any applicable written or unwritten law, s 63 Administrative Decisions Review Act 1997 (ADR Act).

Onus

1. The Applicant has the onus of proving its case in a review by the Tribunal, s. 100 of the TA Act. The requisite standard of proof in such a review is the "balance of probabilities" Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187.

Material before the Tribunal

1. The material before the Tribunal comprised: 1. documents filed by the Chief Commissioner under s 58 of the ADR Act in respect of this review and documents filed under that section in respect of the First Hearing; 2. an affidavit made 23 May 2016 by Wassim Arnaout, director of the Applicant; 3. written submissions on behalf of each of the Applicant (AS) and the Chief Commissioner (RS); and 4. oral submissions made during the hearing by Mr Lees, counsel for the Chief Commissioner and by Mr Manca, solicitor for the Applicant.
2. Unless stated to the contrary references in these Reasons to: 1. paragraph numbers of submissions by the Applicant and the Chief Commissioner are references to numbered paragraphs of AS and RS respectively, and 2. references to legislative provisions are to provisions of the GMT Act.

Chronology

1. There is no dispute between the parties as to the following events.
2. On 18 December 2012, the licence of the hotel was transferred to the Applicant, being initially held on behalf of the Applicant by Ramy Arnaout and then by Dylan Walters.
3. Prior to 18 December 2012 the first hotelier paid an instalment of GMT in the sum of $585,210.41 in respect of the quarter ending 30 September 2012.
4. Bank accounts of the Applicant were debited with instalments of relevant GMT: 1. on 21 January 2013, in respect of the quarter ending 31 December 2012, in the sum of $481,758.36; 2. on 22 April 2013, in respect of the quarter ending 31 March 2013, in the sum of $348,192.83; and 3. on 22 July 2013, in respect of the quarter ending 30 June 2013, in the sum of $344,108.13.
5. On 12 August 2013, the Chief Commissioner issued the NOA which stated: 1. GMT payable for the 2013 year was $1,699,078.47, 2. amounts previously paid in respect of that period totalled $1,759,269.73, 3. no further amount was payable, and 4. a refund cheque for $60,191.26 would be issued.
6. On 3 October 2013, a GMT - Hotels Refund Notice was issued for $60,191.26 with a cheque drawn in that sum in favour of "The Crest Hotel or order". I observe that the name under which the Applicant traded during the relevant period was "The Crest Hotel".
7. On 15 October 2013, the Office of State Revenue (OSR) informed Maxgaming NSW Pty Ltd that on 8 August 2013 the New South Wales Office of Liquor Gaming and Racing (OLGR) had requested OSR to issue the Chief Commissioner's refund to the Applicant in respect of an adjustment to GMT for the 2013 tax year. OSR stated that the premises had two hoteliers during that year and in order to enable the Chief Commissioner to apportion the refund under s 10 (3) of the GMT Act, information was required in respect of the profits for each quarter on which the quarterly assessment issued, if possible the profits for each hotelier for the period 1 December 2012 to 31 December 2012, and copies of assessments which issued for each quarter of the 2013 year.
8. On 16 October 2013, Maxgaming NSW Pty Ltd replied to the Chief Commissioner by email attaching a copy of CMS gaming tax invoices for each quarter during the 2013 year. The email stated: I'll leave you to handle the split of the $60,191.26 refund. You'll get a slightly different result depending on whether you use the Net profit or the Tax figure for your split between the two licensees Hope this makes sense.
9. On 24 October 2013, the OSR issued a letter to the Applicant headed "Notice to apportion GMT 2013 Annual Assessment refund" and required the Applicant to return the Overpayment to the Chief Commissioner within seven days. The letter included an apology for any inconvenience the Overpayment may have caused.
10. On 15 November 2013, the Applicant's lawyers wrote to the OSR asserting that the request for a repayment of the Overpayment was based on a simplistic assessment of the liability of the hoteliers and submitting that the Chief Commissioner should determine that there should be no apportionment of the Commissioner's refund and the Applicant should not be required to account for the money it had been requested to repay. The Applicant requested that the Chief Commissioner withdraw the request made in the 24 October letter or provide reasons for the apportionment including a detailed explanation of the methodology used.
11. On 29 November 2013, the OSR wrote to the Applicant's lawyers in response to the 15 November letter, outlined what the letter stated was the method of calculation of the apportionment and provided several alternate options considered by the Chief Commissioner, each of which was less favourable to the Applicant than the apportionment calculation used to determine the Overpayment. The letter stated that the Applicant had a right of objection.
12. On 17 December 2013, the Chief Commissioner received an objection dated 13 December 2013 in respect of the assessment/decision of 29 November 2013.
13. Between 16 October 2013 and at least 6 March 2014 further communications passed between the OSR and OLGR as to who was responsible to calculate the relevant refund due to each hotelier.
14. On 2 April 2014, the objection was disallowed. The Applicant then applied to the Tribunal for a review which was dealt with in the First Hearing.
15. The order made in the First Hearing was to remit the matter to the Chief Commissioner to apportion the refund in accordance with the assessment action as directed in the reasons for the Tribunal's decision.
16. On 27 March 2015, the Chief Commissioner wrote to the solicitors for the Applicant, stating amongst other matters: As you would be aware, Senior Member Verick ordered that this matter be remitted to the Chief Commissioner to make apportionment of the refund in accordance with the assessment action as directed (at [60] of the Tribunal's reasons). At [54], the Tribunal set out the course of action that the Chief Commissioner should follow, namely: 1. withdraw the previous assessment to your client under s 13 of the Taxation Administration Act 1996 (NSW) ('the TAA'), 2. apportion liability for tax between your client and the previous hotelier under s11 of the Gaming Machine Tax Act 2001 (NSW) (the GMTA'), 3. issue a reassessment of our client's liability under s 9 TAA, and only then, 4. "make any apportionment of the refund under s10(3)" GMTA.
17. The 27 March 2015 letter enclosed a notice of withdrawal of the NOA and the Assessment Summary requiring the repayment of the Overpayment of $33, 894.54 by 17 April 2015.
18. As noted above, the Applicant objected to the assessment in the Assessment Summary, the objection was disallowed and the Applicant again applied to the Tribunal.

Issues

1. The Chief Commissioner submitted at [2]: The underlying issue in the dispute is: how should the refund of $60,191.26 in gaming machine tax be apportioned between the Applicant and the previous hotelier, given that the tax instalments were paid by more than one hotelier?
2. I agree that these proceedings generally relate to the apportionment between the Applicant and the first hotelier. However, the specific concern of the Applicant, and the matter for determination, is how much, if any, of the Commissioner's refund, it can retain irrespective of any amount which may be retained or repaid by the first hotelier.

Method of calculation of the Overpayment

1. The Chief Commissioner submitted that there were several possible methods of calculating the amount of the Overpayment including those described in the 24 October 2013 and 29 November 2013 letters to the Applicant.
2. The Chief Commissioner submitted at [11] that his apportionment of the liability between the Applicant and the first hotelier was pursuant to s 11 of the GMT Act: on the basis that the Applicant had held the hotel licence for 0.436886073 of a full year, from 18 December 2012 to 30 June 2013 …
3. During the hearing, it became apparent that this was not the method used for apportionment by the Chief Commissioner if only because the said period exceeds 50% of the 2013 year and cannot be less than 44%. The method used is outlined at [40] below as the Chief Commissioner's alternate submission, other than that the Chief Commissioner's calculation used the total profit derived from electronic gaming machines (EGMs) rather than the net profit.
4. The Chief Commissioner's evidence was that the Overpayment had been calculated as follows and was based on the total profit for the 2013 year. Crest Hotel from to Total Profit Profit ratio Refund By Owner $6,311,955.45 $60,191.26

Prior owner 1/07/2012 17/12/2012 $3,554,350.02 0.563113927 $33,894.54

Goldfish 18/12/2012 30/06/2013 $2,757,605.43 0.436886073 $26,296.72

1. The parties agreed that the Total Profit in the above table comprised the 2013 EGM turnover minus the 2013 EGM total wins but did not have regard to the outgoing described as "Jackpot Link Prizes Paid" (Jackpot). The parties also agreed that that the net profit for the 2013 year, being the amount on which GMT of $1,759,269.73 was calculated, was $4,986,329.08 (the 2013 net profit).
2. There was no dispute that the difference between the tax paid by instalments for the 2013 year and the tax properly assessed as payable for the year was $60,191.26 and that this amount had been paid by the Chief Commissioner to the Applicant.

The Respondent's submissions

1. Mr Lees did not initially concede that the GMT Act assessed GMT on the 2013 net profit rather than the total profit, which excluded the Jackpot. Mr Lees submitted that the apportionment determination made by the Chief Commissioner was open to him in his broad discretion having regard to the scope and purpose of the GMT Act.
2. However, subsequently, and in my opinion properly, Mr Lees conceded that the Jackpot was an outgoing (and by necessary implication should be taken into account in calculating the GMT).
3. In his closing submissions, Mr Lees submitted that if the Tribunal did not accept the Chief Commissioner's calculation as set out in the above table then, in the alternate, the repayment by the Applicant to the Chief Commissioner should be based on the 2013 net profit instead of the 2013 total profit. On this basis, the Applicant would, instead of having an entitlement to retain 43.6886073% of $60,191.26, be entitled to retain a portion of $60,191.26 being the aggregate of: 1. the net profit of the third and fourth quarters, and 2. that proportion of the net profit of the second quarter which had regard to the number of days in that quarter in respect of which the Applicant held the licence (that is from 18 December 2012 to 31 December 2012 inclusive divided by the total number of days between 1 October 2012 and 31 December 2012 inclusive, namely 14 divided by 92), multiplied by the Chief Commissioner's refund of $60,191.26 divided by the 2013 net profit.
4. Mr Lees orally summarised the effect of this alternate submission by stating that on his calculations the approximate percentage of the Commissioner's refund retained by the Applicant would be 45% instead of 43.7%.
5. Mr Lees submitted that if the Tribunal did not accept either of the above submissions then as a second alternate, if the Tribunal held that GMT should be calculated on a segmented basis, that is quarterly rather than annually, the Applicant would be entitled to retain approximately 69% of the Commissioner's refund and required to repay approximately 31%.

The Applicant's case

1. The Assessment Summary, addressed to the Applicant by its trading name, relevantly stated: Your assessment details for the period 18 December 2012 to 30 June 2013 are: Tax payable $742,303.72 Less amounts previously paid $708,409.18 Total amount payable $ 33,894.54
2. The Applicant submitted that the Chief Commissioner had made several errors in the Assessment Summary and stated at [9]: The key objection to the [Assessment Summary] however is that it is absolutely wrong in relation to its record as to the amount of gaming tax that the Applicant actually paid in respect of the period between 18 December 2012 and 30 June 2013 …. … the Applicant paid a total amount of $1,174,059.32 in gaming tax in respect of the period between 18 December 2012 and 30 June 2013 by way of three instalments debited from bank accounts by the Chief Commissioner.
3. I observe that during the hearing Mr Lees conceded that the amount of GMT paid by the Applicant in instalments totalled $1,174,059.32, not $708,409.18.
4. The Applicant also submitted at [11] and [12]: The [Assessment summary] also purports to apportion liability in a manner which is inconsistent with the law and ignores the statutory liability of hoteliers to pay gaming tax by instalments. Section 7(4) of the Gaming Machine Tax Act deems a hotelier who holds the licence at the end of each quarter to be liable to pay tax at the end of each quarter… Section 11 (2) operates so as to restrict the power of the Chief Commissioner in relation to the apportionment of liability for tax between hoteliers, so that this power does not affect the liability of a hotelier who holds the relevant licence at the time that the instalment amount is due, to pay the instalment amount as required by s7(4). The effect is that the liability under s7(4) is paramount and cannot be disturbed by any subsequent apportionment by the Chief Commissioner. The protection available to hoteliers in circumstances where the aggregate of the instalment amounts is different to the final assessed amount for the relevant tax year is provided in s10, whereby an adjustment can be made and credit applied or refund paid.
5. Mr Manca submitted that there were a variety of different apportionment methods which could apply and all were reasonable.
6. The Applicant submitted: 13. If the annual profit method was applied and the actual tax paid by the Applicant acknowledged, it would be open for the Applicant to in fact argue that it is entitled to an even greater refund of a further $225,250.02. 14. The Applicant has merely contended so far that it should be entitled to retain the full refund of $60,191.26 paid to it in accordance with the NOA.
7. In the course of his oral submissions, Mr Manca conceded that the Applicant's maximum claim was to retain the whole $60,191.26 and submitted that an order should be made to that effect.
8. Mr Manca also submitted that if the Tribunal did not accept the preceding submission, then the Tribunal should apportion the $60,191.26 on a time basis and as the Applicant had paid for 3 of the 4 quarters it was entitled to retain 75% of the $60,191.26 and need only repay 25%.
9. The Applicant's second alternate submission was the same as the Chief Commissioner's second alternate submission, namely that GMT should be calculated on a segmented, quarterly, basis rather than on an annual basis. Accordingly, the Tribunal should order that the Applicant was entitled to retain some 69% of $60,191.26 and repay 31%.

Legislative scheme

1. The long title of the GMT Act provides that, amongst other purposes, it is an Act to consolidate existing provisions of two other Acts with respect to the imposition of tax on profits from poker machines and other gaming devices.
2. Section 6 of the GMT Act relevantly provides that GMT is payable by a hotelier on profits from gaming machines kept in a hotel. "Profits is defined in s 3, in relation to a gaming machine, as "the excess of revenue from the machine over outgoings in relation to the machine".
3. Section 7 provides that GMT is payable by quarterly instalments in arrears. The section relevantly states: 7 Payment by instalments (1) For the purposes of this Act: (a) each tax year of a hotelier is divided into 4 periods of 3 months commencing on 1 July, 1 October, 1 January and 1 April, and (b) … (2) Quarterly instalments of tax are payable by a hotelier … to the Chief Commissioner within 21 days after the end of each instalment period. (3) A hotelier … must: (a) before the end of each such 21-day period, deposit the amount payable in a bank or financial institution, and (b) make such arrangements with the Chief Commissioner as enable the Chief Commissioner to access or appropriate that amount (such as by way of direct debit from the account of the hotelier … concerned). Maximum penalty: 20 penalty units. (4) … the liability to pay such an instalment lies with the hotelier who holds the relevant hotel licence at the time the instalment is due.
4. In the First Hearing Verick SM dealt with the mechanics of ensuring that hoteliers pay the appropriate tax as follows: 18 The Independent Liquor and Gaming Authority constituted under the Gaming and Liquor Administration Act 2007 is the authority given the power to ensure that hoteliers … pay the proper gaming tax. The authority works in tandem with the Chief Commissioner. The Authority issues licences to hoteliers … to operate gaming machines. The Authority has under its legislation appointed Maxgaming NSW Pty Ltd as a licensee to operate a Centralised Monitoring System (CMS) that, subject to the supervision of the Authority, monitors and reports the performance of gaming machines in New South Wales. 19 The Authority is given power under s 8 of the Act to require hoteliers … to lodge with the CMS licensee returns in relation to the performance of gaming machines and the tax payable. The CMS licensee uses this information and information obtained from data supplied as a result of the direct connection of the machines with the CMS to assess the gaming machine tax due for each hotelier … in respect of each quarterly period: s 9 of the Act. The CMS licensee is also required to inform the Chief Commissioner and the hotelier of the calculated amount of tax payable. 20 Under s 9 of the Act, the Authority also supplies the Chief Commissioner with information, if any recalculation of tax is required in any particular case. The Chief Commissioner is required under s 9(2A) to notify the hotelier … concerned of any recalculation advised by the Authority. Under s 9(3) the Chief Commissioner 'is to assess or reassess, under Part 3 of the Taxation Administration Act 1996, tax liabilities according to calculations, and any recalculations, made under this section and any rebate available under Part 4'.
5. Section 10 provides for adjustments of tax, if requested by a hotelier after the end of a tax year. The section relevantly states: 10 Adjustments (1) Following the end of a tax year and after payment by a hotelier … of the instalment payable in respect of the last of the instalment periods for the tax year, the Authority must, on application by the hotelier (or any relevant previous hotelier) … concerned, make a comparison of the tax payable in respect of that tax year and the total of the relevant 4 quarterly instalments made, and advise the Chief Commissioner of the result of that comparison. (2) If the amount of tax assessed to be payable is less than the amount paid by the hotelier … for the tax year concerned, the Chief Commissioner may: (a) hold the difference in credit for the hotelier …, or (b) refund the difference in accordance with Part 4 of the Taxation Administration Act 1996. Part 4 of the Taxation Administration Act 1996 provides for refunds of tax overpayments. (3) In a case where the tax for the tax year concerned was paid by more than one hotelier, any credit or refund of tax may be apportioned among those hoteliers in such proportions as the Chief Commissioner considers appropriate.
6. Section 11 relevantly states: 11 Apportionment of liability for tax in certain circumstances (1) The Chief Commissioner may, in such manner as the Chief Commissioner considers appropriate: (a) apportion the liability for tax as between hoteliers: (i) in any case where there has been a change in the ownership of a hotel licence, or (ii) in such other circumstances as the Chief Commissioner considers appropriate, and (b) … (2) Subsection (1) (a) does not affect the operation of section 7 (4).

The First Hearing

1. Verick SM said at [1] and [2] that the First Hearing involved an application for a review of a decision by the Chief Commissioner to apportion a tax refund between the Applicant and the first hotelier pursuant to s 10 (3) in respect of the 2013 year. An additional issue arose as to whether the Chief Commissioner was entitled to exercise a discretion notwithstanding that an assessment had only been issued to the Applicant for the whole of the 2013 year for full liability under the Act.
2. In the First Hearing the Applicant's primary submission was that s 10 (2) should apply and it was entitled to the whole of the refund because only one assessment of annual tax liability had been issued and that was to the Applicant. The Applicant also submitted: 1. the Chief Commissioner should be bound by that assessment the effect of which was that the Applicant was entitled to the whole refund, and there was no evidence of any reassessment pursuant to s 9 of the TA Act [24], 2. it was necessary for the Chief Commissioner to apportion liability pursuant to s 11 prior to conducting any apportionment of a refund of tax as it would be inequitable to refund tax to a party which was not liable to pay it [25], 3. it was open to the Chief Commissioner to conduct an assessment as to the respective liabilities for tax between the hoteliers and conduct any apportionment around the time that the change of hoteliers took place; and any apportionment of liability for annual tax would necessarily have require the Chief Commissioner to employ a method which had regard to the respective profits obtained by the parties within the time that each was, or employed, the hotelier. The appropriate method to determine this is the average daily profit method projected on an annual basis [26], 4. if the Chief Commissioner was entitled to apportion the refund the method used should be the daily average profits determined by reference to the profits made by each hotelier within the time they were hoteliers, and 5. if the Applicant's average daily profits basis was not accepted, the Applicant was in any case entitled to a larger proportion of the refund than the Chief Commissioner had determined because the Applicant was the hotelier at the end of three out of the four quarters in the relevant year and as such it was deemed to have a greater liability to pay tax than the first hotelier and it would be entitled to ¾ of the tax overpaid.
3. At [30] to [35] Verick SM summarised the Chief Commissioner's submissions to the following effect: 1. The Chief Commissioner had acted under s 10 (3) and correctly apportioned the refund on the basis of the annual total profit method. The Chief Commissioner had regard to the total profit for the relevant period, the profit derived by the first hotelier from 1 July 2012 to 17 December 2012, and the profit derived by the Applicant for the period 18 December 2012 to 30 June 2013. These are percentages of profit derived by the hotelier divided by the total profit for the whole year. They have nothing to do with the duration of the relevant hotelier's periods as licensee other than in apportioning the profit derived in the quarter in respect of which the change of licensee occurred based on the number of days in that quarter in which the licence was held divided by the total number of days in the quarter so as to apportion the profits derived in that quarter between the parties and add that apportionment to the actual profits derived in quarters where only a single hotelier held the licence. 2. The amount of the refund cheque did not form part of an assessment because an assessment related to the taxpayer's tax liability and in the subject case the tax payable was less than an amount previously paid therefore the total amount payable was zero dollars and there was zero liability. Accordingly, the Chief Commissioner did not disturb the original assessment. 3. The refund apportionment did not depend on an assessment as GMT liability is not dependent on there being a notice of assessment. There was no requirement for the Chief Commissioner to have to apportion the liability between the hoteliers pursuant to s 11(1) as this ignores the clear words of s 10 (3) which operates independently of s 11. 4. The projection of the annual profit figure contended by the Applicant that might have hypothetically resulted if there had been one hotelier for the entire year was unnecessary because the actual amount of gaming machine profit for the year was known. 5. The Chief Commissioner made other submissions having regard to what he described as "effective tax rate figures". 6. The wording of s 10 (3) does not restrict the Chief Commissioner to allocating refunds between hoteliers on a quarterly basis and the Chief Commissioner has a broad discretion to apportion a refund between hoteliers in such proportions as he considers appropriate.
4. Verick SM said that the short question that arose was whether the Chief Commissioner was entitled to proceed under s 10 (3) to make an apportionment and seek refunds from both parties when the original assessment issued to the Applicant had not been amended or otherwise dealt with by the Chief Commissioner. Verick SM considered the Chief Commissioner's power to make assessments and reassessments and to withdraw assessments. He came to the conclusion at [51] "that the Chief Commissioner's arguments and contentions have no merit and should be rejected" and said: 52 The Applicant has correctly contended that in the absence of any further assessment action by the Chief Commissioner, the only assessment issued for the annual liability of the relevant period determined a refund of the full amount as payable to the Applicant. But the facts disclose that the Chief Commissioner erred in treating the Applicant as the sole hotelier when ascertaining the liability for the relevant period. The Applicant was in those circumstances not entitled to the full amount of the refund. 53 When the Chief Commissioner discovered that he had erred in paying the full refund to the Applicant and also a similar amount to the previous hotelier, the Chief Commissioner purported to act under s 10(3) to make an apportionment of the refund. 54 The proper course of action, in my opinion, required the withdrawal of the assessment issued to the Applicant under s 13 of the TA Act or the issue of a reassessment of the liability of the Applicant under s 9 of the TA Act. In addition, the Chief Commissioner was required to apportion the liability for tax as between the two hoteliers under s 11 of the Act. Only after having taken these steps, the Chief Commissioner was in a position to make any apportionment of the refund under s 10(3). 55 Accordingly, having regard to all the relevant facts, the relevant statutory provisions and case law, the correct and preferable decision is to remit this matter to the Chief Commissioner to take assessing action as identified above before making any apportionment of the refund between the parties.
5. I note that the wording of the order made in the First Hearing was: The matter is remitted to the Chief Commissioner to make the apportionment of the refund in accordance with the assessment action as directed.
6. Subsequently, as noted in the above chronology, the Chief Commissioner replaced the original assessment which had related to the whole 2013 year, with the Assessment Summary in respect of the period 18 December 2012 to 30 June 2013, determined tax payable by the Applicant in respect of that portion of the second quarter's total profits which related to the number of days in that quarter in respect of which the Applicant or its nominee held the hotel licence, together with the profit for the third and fourth quarters as a proportion of the total profit derived for the 2013 year and calculated that proportion of the Chief Commissioner's refund so as to determine the repayment required from the Applicant.
7. Notwithstanding that Verick SM had determined the correct and preferable decision at [55], he continued at [56]: Because of the view I take on the contentions made by the Chief Commissioner in relation to the assessment issued to the Applicant, it is really unnecessary for me to deal with the apportionment action taken by the Chief Commissioner. In passing, I will however make some short observations.
8. In his subsequent observations, from [57] to [59], Verick SM discussed issues concerning the width of discretions of decision-makers in the context of judicial review in taking into account irrelevant considerations or not taking into account relevant considerations.
9. To the extent that the observations do not form part of Verick SM's reasons for the First Hearing decision and to the extent that the Tribunal in these proceedings is conducting a merits review to decide the correct and preferable decision in place of the Chief Commissioner's decision rather than undertaking a judicial review, I am not bound by Verick SM's observations and I will not make observations on same at any length although I do refer below to some of the authorities to which he referred.

Analysis

1. There is no dispute that in respect of the 2013 year the GMT paid in instalments exceeded the GMT payable by $60,191.26. The dispute relates to the apportionment of that amount between the hoteliers and to the extent that the Applicant received an overpayment, the amount that the Applicant should repay to the Chief Commissioner.
2. GMT is calculated on the basis of net profit derived from EGMs. There is no dispute that the net profit is determined by subtracting total wins and the Jackpot from the turnover derived by the machines. Accordingly, to the extent that it is reasonable to have regard to profit in determining the apportionment between the hoteliers I accept the Applicant's submission that it is appropriate that the profit figures used, be the net profit not the total profit.
3. I note that Mr Lees submitted that, having regard to the broad discretion of the Chief Commissioner in respect of the scope and purpose of the GMT Act, the Chief Commissioner was entitled to use the total profit figure in his calculations rather than the net profit figure. I also observe that the parties agreed that the net liability for tax as between hoteliers was based on the liability for tax on the net profit and that profit had regard to Jackpots paid as an outgoing.
4. Although he was referring to the context of judicial review Mason J said at [15] in Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24: … in the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard ... By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject matter, scope and purpose of the Act.
5. I have commented above on the substantial difference between a judicial review context and the context of a merits review undertaken by the Tribunal. However, the issue of what is relevant and what is not relevant in making a decision is a live issue in these proceedings.
6. Section 10 (3) provides that in a case where the tax for the tax year concerned was paid by more than one hotelier, any credit or refund of tax may be apportioned amongst those hoteliers in such proportions as the Chief Commissioner considers appropriate. Section 11 (1) (a) provides that the Chief Commissioner may, in such manner as the Chief Commissioner considers appropriate, apportion liability for tax as between hoteliers in any case where there has been a change in the ownership of a hotel licence or in such other circumstances as to Chief Commissioner considers appropriate.
7. I have regard not only to the scope and purpose of the GMT Act as revenue legislation but also to the parties' agreement that the statutory tax liability is determined using the net profit not the total profit. Accordingly, I find that the Chief Commissioner, in exercising his discretion, and in this case the Tribunal in exercising its discretion, is bound to take into account the net profit in apportioning any relevant tax refund. Taking into account the total profit rather than the net profit disregards the statutory method of calculating GMT and has the potential to be manifestly unreasonable.
8. There is no dispute that the instalments of tax paid by the Applicant totalled $1,174,059.32. There is also no dispute that the quarterly components of this amount were appropriately calculated at the relevant time. It was only upon a calculation of the GMT for the whole of the 2013 year that the excess of tax paid over tax payable became apparent.
9. GMT is not calculated on a flat rate. Instead, it is calculated on an instalment basis in accordance with s 13 and on an annual basis in accordance with ss 12 and 13A. Like income tax the marginal GMT rates increase with increases in income / net profit.
10. For 2013 the annual GMT rate was zero up to $200,000 of net profit, increasing to a marginal rate of 50% of net profit in excess of $5 million. The quarterly instalment rates calculated in accordance with s 13, to determine the amount payable pursuant to s 7 understandably differ from the annual rates which represent the aggregate of the net profit derived over four quarters.
11. There is no dispute that tax instalments are payable within 21 days of the end of each quarter by the hotelier whose licensee held the relevant licence on the last day of each quarter, A J Holdings (NSW) Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAP 40 at [103].
12. I agree with the Applicant that the Assessment Summary does not specify the total tax paid by the Applicant in respect of the second third and fourth quarters. However, the amount referred to in the Assessment Summary as the amount previously paid should in my opinion have reflected the amount received by the Chief Commissioner in respect of tax for the period 18 December 2012 to 13 June 2013. The amount of $1,174,059.32 paid by the Applicant as instalments pursuant to s 7 related not to the period 18 December 2012 to 30 June 2013 as submitted by the Applicant at [9], rather the instalment payments related to the period 1 October 2012 to 30 June 2013.
13. Mr Manca submitted that what the Applicant and the first hotelier did between themselves in relation to the acquisition by the Applicant of the hotel licence does not and should not impact on action taken by the Chief Commissioner. I agree with that submission to the extent that the actions of the licensees and any financial adjustments between them do not affect the Chief Commissioner's requirements that instalments be paid in accordance with s 7 and that any relevant adjustments or apportionment of liabilities occur in accordance with ss 10 and 11 respectively.
14. The evidence before the Tribunal is that the whole of the third instalment was debited from a bank account of the Applicant. Mr Manca conceded that a prudent prospective hotelier would make arrangements to protect itself against liabilities incurred by the previous hotelier which may be required, after the licence has been transferred, to be paid by the new hotelier. Mr Manca submitted that private dealings between these parties could not impact their liability for tax.
15. I observe that the Applicant provided no evidence to the Tribunal as to any adjustments which took place between the Applicant and the first hotelier in respect of the transfer of the licence. It may be that there was no adjustment for outgoings including instalments of GMT. It may also be that there was an adjustment which took place on settlement or that money otherwise payable by the Applicant to the first hotelier was held in a trust account after settlement to be used to either adjust the contributions to the second quarter instalment or to adjust any additional tax or refund which may be payable or receivable and which would only be determined after the annual profit was known and the relevant tax calculated. It may be that a substantial portion of the payment of the second quarter instalment from the bank account of the Applicant was sourced from the first hotelier.
16. The Applicant chose not to place any evidence before the Tribunal in relation to the matters referred to in the immediately preceding paragraph. Any attempt by the Tribunal to determine what contribution if any to the payment of the second quarter instalment had been made by the first hotelier would be speculation and that is not an appropriate way to determine the correct and preferable decision in this matter.
17. I agree that it is appropriate that the Chief Commissioner, and in relation to these proceedings, that the Tribunal, have regard to the total instalment payments made by the Applicant. However, that regard relates to ensuring that the appropriate amount of tax in aggregate has been paid for the 2013 year. It does not necessarily relate to determining which of the parties' licensees should receive a refund and if so the amount of that refund.
18. In so far as the calculation used by the Chief Commissioner in determining the portion of the Overpayment to be repaid by the Applicant used total profit figures rather than net profit figures, the Chief Commissioner fell into error.
19. The second alternate submission of the Chief Commissioner is that GMT should be calculated on a segmented quarterly basis rather than on an annual basis. I observe that ss 12 and 13A require GMT to be determined on an annual basis. Quarterly instalments are intended to ensure that partial payment is made throughout the course of the year so as to protect the revenue. Accordingly, it is not appropriate for annual GMT to be calculated on a segmented quarterly basis and I reject the Chief Commissioner's second alternate submission.
20. The Applicant's submission that apportioning liability in a manner which ignores the statutory liability of hoteliers to pay gaming tax by instalments pursuant to s 7 is rejected. Section 7, and in particular s 7 (4), provides for quarterly payments of instalments. To the extent that the Chief Commissioner may apportion the liability for tax as between hoteliers pursuant to s 11 (1) (a) it is my opinion that that apportionment may relate to annual tax liability and there is no conflict with the obligations to make continuing quarterly instalments. If the only liability of hoteliers was to make quarterly instalments that would leave no relevant work for s 11. The late Block JM rejected a submission to this effect in Papacostas v Chief Commissioner of State Revenue [2006] NSWADT 57. His discussion on the point appears from [12] to [20].
21. Section 11 (1) (a) (i) specifically relates to an apportionment of the liability for tax as between hoteliers where there has been a change in the ownership of a hotel licence. In my opinion s 11 (2) applies to ensure that, however the liability for tax is apportioned in accordance with s 11 (1) (a) (i), the liability to pay the instalment which falls due at the end of any quarter in which a change in the ownership of a licence occurs, falls on the person who owns the licence on that date. To the extent that the parties agree that all relevant quarterly instalments were made at the relevant dates in 2012 and 2013 the Applicant's submissions on this point have no relevance to my decision in these proceedings.
22. The Applicant submitted that it was open to it to argue that it was entitled to a refund of an additional $225,250.02. However, the Applicant also conceded that the maximum refund it could claim was $60,191.26. Accordingly, there is no need for me to make any findings in relation to a hypothetical claim exceeding $60,191.26.
23. The Applicant's submission that it should retain the whole $60,191.26 refund appears to be based on its assertion that in paying the second quarter instalment it paid GMT on profits derived by its predecessor. This matter was considered in Papacostas where Block JM said at [25]: The Applicant contends that a taxpayer cannot be liable for tax on the profits of another. That contention … cannot be accepted.
24. It is clear that the Applicant as owner of the hotel on 31 December 2012 had a tax liability on that date in respect of the quarterly instalment for the second quarter. No evidence has been provided as to what contribution if any was made by the first hotelier to that quarterly instalment. The Applicant has not satisfied me on the balance of probability that the Chief Commissioner should make any concession to it in respect of the second quarter payment as asserted.
25. The Applicant's first alternate submission was that as it had paid for three of the four quarters' instalments it was entitled to retain 75% of the $60,191.26 refund and need only repay 25% of that amount. Having regard to the structure of the GMT Act and the statutory requirements in respect of calculation and payment of instalments and the provisions for adjustments, refunds and changes in the apportionment of tax liabilities the Applicant has not satisfied me on the balance of probability that the first alternate submission is correct. Accordingly, I reject that submission.
26. The Applicant's second alternate submission was the same as the Chief Commissioner's second alternate submission which I rejected for the reasons set out at [85] above.
27. I observe that the note at the foot of s 10 (2) states that Part 4 of the TA Act provides for refunds of tax overpayments and that s 10 (3) relevantly provides that where tax for the tax year concerned was paid by more than one hotelier, which is agreed to be the situation in these proceedings, the tax refund may be apportioned among those hoteliers in such proportions as the Chief Commissioner, or in this case as the Tribunal, considers appropriate.
28. Reference has been made above to the broad discretion which may be exercised by the Chief Commissioner / Tribunal.
29. Having regard to the above findings on the material before me the correct and preferable decision of the Tribunal is that the Assessment Summary issued 27 March 2015 is set aside and the matter is remitted to the Chief Commissioner for reconsideration pursuant to s 63(3)(d) of the ADR Act. The Chief Commissioner is to have regard to the above findings at [40] as to the method of calculation of the repayment required to be made by the Applicant to the Chief Commissioner in respect of the $60,191.26 payment by the Chief Commissioner to the Applicant. I direct that the Chief Commissioner use net profit rather than total profit in the calculations. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 January 2017