GWP v Chief Commissioner of State Revenue [2025] NSWCATAD 88

1. The task of the Tribunal is to decide what the correct and preferable decision is, having regard to any relevant factual material and any applicable law (s 63 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act)). In undertaking this task, the following issues require determination:
   • Issue 1: Are there exceptional circumstances, including factors beyond the control of the Applicants and/or Respondent, to warrant remitting the market rate component of interest?
   • Issue 2: Did the Applicants' circumstances, including whether they exercised reasonable care to comply with their tax obligations, warrant remitting the premium component of interest?

1. Section 83 of the Duties Act 1997 (NSW) defines an 'off the plan purchase' as an agreement for the sale or transfer of land in NSW that is intended to be used as the site of a new home, which is to be built before completion of the agreement.
2. An 'off the plan purchase agreement' is defined in s 49A(4) of the Duties Act as an agreement for the sale or transfer of dutiable property, being land on which a residence is to be erected or developed before completion of the agreement for the sale or transfer. Liability for duty on an off the plan purchase agreement arises from one of the following, whichever occurs first (Duties Act, s 49A(1)):

(a) On completion of the agreement, or

(b) On the assignment of the whole or any part of the purchaser's interest under the agreement, or

(c) On the expiration of 12 months after the date of the agreement.

1. Section 3(1) of the Taxation Administration Act 1996 (NSW) (TA Act) defines a 'tax default' as 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.
2. If a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate from time to time applying under Division 1 of Part 5 (Interest and penalty tax) of the TA Act (TA Act, s 21).
3. Section 22 of the TA Act provides that the interest rate is the sum of the market rate component and the premium rate component. The way that these rates are calculated are set out in s 22 of the TA Act.

1. Section 25 of the TA Act provides for the remission of interest by the Chief Commissioner as follows:

(1) The Chief Commissioner may remit interest.

(2) The Chief Commissioner may issue guidelines setting out how interest must be remitted under this division.

(3) If guidelines are issued, interest must be remitted only in accordance with the guidelines.

(4) The imposition or remission of penalty tax is not relevant to the imposition or remission of interest.

1. Section 25 of the TA Act was amended on 1 February 2024. There are currently no guidelines issued by the Respondent for the current form of s 25 of the TA Act.

1. In an application for administrative review to the Tribunal, the applicant has the onus of proof of proving the applicant's case (TA Act, s 100(3)).

(1) A letter to the Applicants from the developer/vendor dated 5 June 2024.

(2) An image of the floor plan of their off the plan unit and a computer-generated image of the development.

(3) Email correspondence between GWP and their solicitor dated 5 November 2024.

(4) GWP's statement filed on 28 February 2025.

(5) Submissions in response filed on 18 March 2025.

1. The Applicants seek that the total amount of interest, both the market rate component and the premium component, be remitted and did not make submissions that distinguished between the two components.
2. The Applicants stated the following in the objection they lodged with the Respondent on 5 November 2024, which was included in the Respondent's material:

(1) Due to circumstances beyond their control regarding the Development Application, they were unable to make the payment on time.

(2) The off the plan property purchase was contingent on the approval of the Development Application, which had been refused on 15 May 2024.

(3) The Applicants began working with the developer to rescind the contract, believing the project would not proceed. This negotiation took several months as the developer was not in favour of rescinding the contract.

(4) During negotiations with the developer, the developer appealed the Planning Panel's refusal.

(5) On 28 October 2024, the Planning Panel's refusal was overturned and the project received approval.

(6) Following this approval, the developer 'withdrew their consent to rescind the contract', thereby obligating the Applicants to proceed with the purchase.

(7) The Applicants promptly lodged the contract with the Respondent and paid the required transfer duty on 5 November 2024, despite having until 12 November 2024 to make the payment.

(8) The Applicants believed that the delay in payment was justified, as they acted on good faith based on the reasonable assumption that the contract would be rescinded.

(9) The Applicants could not have foreseen that the developer would both pursue and win an appeal, 'subsequently revoking their consent to terminate the contract'.

1. In GWP's statement which mostly comprised of submissions, they stated the following in relation to why interest should be remitted:

(1) 'Delays beyond my control' - the delay in paying transfer duty was 'due entirely to circumstances outside of my control' and that 'I was left in legal limbo, unsure whether the contract would proceed or be voided. This was not a delay caused by inaction or avoidance on my part but a lack of certainty surrounding the planning process and legal status of the development'.

(2) 'Reasonable misunderstanding' - it was reasonable to think that no duty was payable until a valid property could be delivered. Paying transfer duty on the chance that the development might one day be approved at an unforeseen date in the future is unreasonable, particularly given the substantial amount owed. The Applicants paid the duty immediately upon receiving conformation that the development had been approved.

(3) 'Significant hardship and unreasonable financial burden' - expecting the Applicants to pay transfer duty on a property that could not legally be built, and then imposing over $8,000 in interest, 'places a significant financial burden on me' and creates 'serious financial strain'.

1. During the hearing, GWP stated they knew that the duty was due on 1 September 2024 and had been 'checking in with' and having conversations with their solicitor. GWZ said that they gave more time to support the Development Application getting through by monitoring and participating in the hearing. GWP stated that they made submissions, both written and verbal, at the hearing of the appeal in 'trying to get this thing across the line'.
2. The Applicants submitted that the Respondent has discretion to remit interest charges 'where it is fair and reasonable to do so' and that the Respondent failed to apply this discretion. The Applicants submitted that charging interest in their circumstance is 'unjust and unfairly penalises' them for doing what 'any reasonable person would be expected to do in the same situation'.
3. The Applicants submitted that the 'core issue' is that there was no property to transact or 'no legal property that could be bought or sold' when the transfer duty was due. GWP stated that the refusal of the development application 'remained in force on 1 September, the date I was technically required to pay stamp duty, which is why I did not make the payment at that time'.

(1) The bundle of documents filed pursuant to s 58 of the ADR Act on 21 January 2025.

(2) An additional bundle of documents filed on 12 March 2025.

(3) Written submitted filed on 2 March 2025.

1. In relation to the market rate component of interest, the Respondent submitted that there were no exceptional circumstances in which the remission of interest would be justified. The Respondent submitted that even if the Modification Application had been refused, there were provisions in the contract that gave the vendor the right to rescind but not the purchaser, and the date for the condition precedent (obtaining or modifying the Development Application) to be satisfied was 30 June 2025, which had not yet passed. The Respondent submitted that the grant or refusal of the Development Application may have been outside of the Applicants' control, however that does not mean that the tax default was outside of the Applicants' control.
2. In relation to the premium component of interest, the Respondent submitted that the Applicants have not established that they took reasonable care to comply with their tax obligations.
3. In relation to the Applicants' assertion of suffering significant hardship and unreasonable financial burden, the Respondent submitted that the reasonableness of the financial burden is not the relevant test for the remission of the premium component of interest.
4. In relation to the Applicants' contention that the core issue is that there was no property to transact when the duty was due, the Respondent submitted that the fact that the property had not yet been built is the very nature of an off the plan purchase. The Respondent submitted that s 49A of the Duties Act provides that liability for duty arises for off the plan purchases regardless of whether the property has in fact been completed. The Respondent submitted that this is a complete answer to the Applicants' claim that there was no property to transact when the duty was due.
5. The Respondent submitted that there are practical risks, financial risks and legal risks inherent in off the plan purchases, which Parliament provided for in the differential treatment of liability under s 49A of the Duties Act. The Respondent submits, that once liability arises, Parliament has made no provision for interest to accrue or to be waived in a different fashion for off the plan purchases than any other purchase of property. The Respondent submitted that the fact that a risk which is inherent to the nature of an off the plan purchase materialised is not a basis to waive interest or justify special treatment in the Applicants' case.

Issue 1 - Are there exceptional circumstances, including factors beyond the control of the Applicants and/or Respondent, to warrant remitting the market rate component of interest?

1. To determine whether there is a basis to exercise the discretion to remit the market rate component of interest it is necessary to understand the subject matter, scope and purpose of the provision: Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54 at [67].
2. In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 at [60], the Appeal Panel considered the purpose of the market rate component of interest and stated that:

(1) It is intended to compensate the Commissioner for not having the benefit of the tax payment from the time it was due.

(2) It is a rate that fluctuates, and is connected to an external rate, the Reserve Bank's Accepted Bill rate.

(3) It is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time.

(4) To justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default.

1. In Trust Co of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21 at [27], the Tribunal stated that only exceptional circumstances would justify any remission of the market rate component of interest. The narrow category of circumstances would include cases where the tax default is entirely the fault of the Chief Commissioner or situations completely out of the control of the taxpayer.
2. In Wan v Chief Commissioner of State Revenue at [72], the Appeal Panel stated that the market rate interest arises to compensate the Commissioner from being out of pocket and accordingly, the purpose of the market rate provision is to limit the types of factors that might warrant a remission of market interest. Given the purpose of market rate interest, it is apt to look for 'exceptional circumstances' to warrant remission.
3. The Applicants submit that the delay in paying the transfer duty, which was due on 1 September 2024, was outside of their control because of the uncertainty of the development and whether the contract would proceed at that time.
4. The Tribunal does not accept this submission because:

(1) The contract had as a condition precedent that the obligation of the vendor to sell and the purchaser to purchase the property were subject to, amongst other matters, obtaining or modifying the Development Approval (meaning the development consent(s) in respect of the development, building and/or property as modified from time to time). If any of the condition precedents were not satisfied before 5pm on 30 June 2025 then the vendor could rescind the contract. The Applicants therefore had clarity from the terms of the contract of what could happen if the relevant development consent was not in place.

(2) As of 1 September 2024, when the transfer duty was due, there was a valid contract still in place for the off the plan property purchase. The Applicants did not lodge this contract with the Respondent on or before this date or otherwise notify or seek advice from the Respondent about their situation.

(3) GWP stated that they knew the due date for the payment of transfer duty was 1 September 2024. The Applicants made a conscious decision at this time not to lodge the contract with the Respondent and pay the transfer duty that was due.

(4) While the Applicants stated in the objection they lodged with the Respondent on 5 November 2024 that they had tried to rescind the contract after 15 May 2024 and the vendor was not in favour of this, there was no corroborative evidence of this before the Tribunal. The Applicants also stated in this objection that the developer had withdrawn /revoked consent to rescind the contract. This implies that the vendor had consented to rescind the contract, however there was not corroborative evidence before the Tribunal to support this submission.

(5) The vendor had in fact written to the Applicants on 1 June 2024 advising them that an appeal of the Planning Panel's refusal of the Modification Application had been lodged and they were committed to finishing what they started and seeing the project through to finality. This letter had a clear six-month timeframe (ending on 15 November 2024) for the outcome of the appeal. The letter also stated that if the appeal was not successful and the vendor decided not to proceed with the development, they would give purchasers the option to rescind their contract if they so wished.

(6) If the duty was paid and the contract was cancelled at a future date, the Applicants could have made an application for a refund, which the Respondent is obligated to assess and refund the duty if an application is made within five years of the initial assessment (Duties Act, s 50A(2)).

(7) GWP stated at the hearing that the Applicants were monitoring the appeal process in relation to the Modification Application and actively participated in the hearing. GWP stated that they did this to 'get this thing across the line'. This would imply that they were hopeful that the development would proceed.

(8) As submitted by the Respondent, there are numerous inherent risks in an off the plan property purchase, and these have been acknowledged both in s 49A of the Duties Act and provided for in the contract itself. The contract contemplated that there may be changes to the Development Application and approval for Development Applications and Modifications may take a period of time (up until 30 June 2025).

(9) Section 49A of the Duties Act provides that liability for transfer duty arises for off the plan purchase agreements even if the property has not been completed. In the Applicants' case this was on the expiration of 12 months from the date of the agreement, not the date that the property was completed. The Applicants had to pay the transfer duty by 1 September 2024 regardless of whether there was a development consent in place, or the property was not completed.

1. The Tribunal is persuaded by the Respondent's submission that although the Applicants could not control the outcome of the Modification Application, this did not mean that the tax default was outside of the Applicants' control.
2. There is no evidence before the Tribunal that there was any fault of the Chief Commissioner or any other situation completely out of the control of the Applicants that prevented them from paying the transfer duty on time.
3. The Tribunal is not satisfied that the Applicants have demonstrated any exceptional circumstances to warrant the remission of the market rate component of interest. The Tribunal is therefore of the view that the discretion to remit the market rate component of interest should not be exercised.

Issue 2: Did the Applicants' circumstances, including whether they exercised reasonable care to comply with their tax obligations, warrant remitting the premium component of interest?

1. Similar to the market rate component of interest, to determine whether there is a basis to exercise the discretion to remit the premium component of interest it is necessary to understand the subject matter, scope and purpose of the provision: Wan at [67].
2. In Incise Technologies at [61], the Appeal Panel stated that the premium component of interest is a form of penalty. Its purpose is to provide an additional economic deterrent against taxpayers failing to meet their obligations on time and is intended to operate as the key disincentive to delaying tax payments.
3. In Adams Bidco Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 702 at [157]- [158], the Supreme Court stated that the premium component of interest is a form of penalty that is imposed in order to deter conscious and willing tax defaults, in order to dissuade taxpayers who may otherwise defer payment of taxation in order to invest the money elsewhere to earn a return above the market interest component.
4. The Supreme Court in Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249 at [102], held the view that it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion.
5. The Supreme Court in Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd [2020] NSWCA 126 at [151] stated "I do not think there is any limit on the power of the Chief Commission to remit interest contained in s 25 of the TAA" (TA Act).
6. The Appeal Panel in Incise Technologies at [62]-[63], stated that the following four cumulative criteria are relevant and appropriate to the question of the circumstances in which the premium component of interest should be remitted:

(1) All principal tax that is owing and not in dispute has been fully paid.

(2) There has been co-operation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments.

(3) Such co-operation by the taxpayer has occurred prior to any investigation being commenced by the Commissioner (voluntary disclosure) or, at the very least, within reasonable time after requests for information have been made by the Commissioner - i.e. the taxpayer has taken reasonable care.

(4) There has been no wilful default by the taxpayer in not paying tax on time.

1. In relation to the fourth criterion identified by the Appeal Panel in Incise Technologies of 'wilful default', where the taxpayer has received advice that it has good prospects of challenging the assessment, there may not be a wilful default: Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 at [86].
2. These four criteria are not exhaustive and other relevant matters may be taken into account: Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [178].
3. The discretion conferred by s 25 of the TA Act is broad and must be exercised in accordance with the circumstances of the case: Downer EDI Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 743 at [185]-[186].
4. Whether a taxpayer has taken reasonable care is material to the question of remission: Golden Age at [106].
5. Whether the taxpayer has taken reasonable care to comply with the taxation law turns on whether the taxpayer has exercised the care that a reasonable person would be likely to have exercised in the circumstances of the taxpayer, and while this involves an objective standard, it also considers the subjective circumstances of the taxpayer: FCT v Traviati [2012] FCA 546 at [36] and [70].
6. In Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue; International Hotel Services Pty Ltd v Same [2019] NSWSC 657, at [114] and [297], the Supreme Court accepted the following statement in Qualdweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227 at [95] about the concept of reasonable care:

In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other inquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law.

1. There is no general discretion available to the Respondent or to the Tribunal based on "fairness" and even if an assessment was unfair or unjust, this does not affect the validity of the assessment: Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 at [43] and [48].
2. For the most part, criterion (1) to (3) from Incise Technologies, has been met by the Applicants. The transfer duty was paid in full on 5 November 2024, the date that the Applicants received the Duties Notice of Assessment. The Applicants provided the contract on 5 November 2024 to the Respondent to allow the Respondent to issue the assessment.
3. GWP submitted in their statement that the Applicants acted in good faith through the process, believing that the transfer duty would only be paid when there was a valid property which could be delivered. GWP also submitted that it was reasonable to think that no duty was payable until that situation changed. That is, they submit that they did not know transfer duty was payable until the Modification Application was approved. This is contrary to GWP's statement during the hearing that they knew that the transfer duty was due on 1 September 2024.
4. These submissions conflict with what the Applicants stated in their objection lodged with the Respondent on 5 November 2024 that the 'delay in payment' was 'justified' as they had acted in good faith based on the reasonable assumption that the contract would be rescinded and that they could not have foreseen that the developer would both pursue and win an appeal. They also referred to 'genuinely attempting to manage the situation responsibly based on the information available to us'. That is, they state that they delayed payment assuming that the contract would be rescinded. This is also at odds with GWP's statement that they were actively involved in the appeal process to support the Modification Application being approved.
5. As noted above, there was no evidence before the Tribunal to support the Applicants' submission that they had attempted to rescind the contract or that the vendor had consented at any point to rescind the contract. The Tribunal is therefore unable to place much weight on the Applicants' assertions that they attempted to rescind the contract or that the vendor was willing at any point to rescind the contract. The contract, as at 1 September 2024 when the transfer duty was due to be paid, was still in place.
6. The basis for the Applicants' belief that the vendor would not pursue or win an appeal is not clear from the evidence before the Tribunal. It is apparent from the letter from the vendor dated 1 June 2024, that the vendor disagreed with the refusal of the Modification Application, had good grounds for an appeal, and was committed to finishing the development. If the Modification Application was not approved on appeal to be finalised by 15 November 2024, then the vendor had flagged the option of purchasers being given the option of rescinding their contract if they wished.
7. On the material before the Tribunal, it is clear that GWP knew that the due date for the payment of transfer duty was 1 September 2024, however they made a conscious decision not to lodge the contract with the Respondent and pay the transfer duty that was due. As noted above, GWP stated that the refusal of the development application 'remained in force on 1 September, the date I was technically required to pay stamp duty, which is why I did not make the payment at that time'.
8. It follows that the Tribunal is not satisfied that there has been 'no wilful default' in not paying the transfer duty on time. Given this, the criteria in Incise Technologies have not been cumulatively met to provide a basis for remitting the premium component of interest.
9. In relation to the question of whether the Applicants exercised reasonable care to comply with their tax obligations, the Tribunal asked GWP during cross-examination whether he had contacted the Respondent prior to 5 November 2024 about their situation. GWP stated that he had not made any contact with the Respondent prior to 5 November 2024. There was no evidence before the Tribunal that the Applicants:

(1) Sought specific advice from their solicitor who was involved with the purchase of the property or any other lawyer about their tax obligations.

(2) Contacted the Respondent or accessed any of the information available to the public on the Respondent's website about their tax obligations or the application of s 49A of the Duties Act.

(3) Notified the Respondent of the situation they were in at any time before 1 September 2024 when the transfer duty was due to be paid or between 1 September 2024 and 5 November 2024 when the tax default occurred.

1. The Tribunal is of the view that a reasonable person in the Applicants' position would have pursued one or all of these actions. Particularly given the value of the property and risks involved, a reasonable person in the Applicants' position would have sought professional advice, attempted to inform themselves of their tax obligations, and contacted the Respondent about their tax obligations. These actions may have resulted in avoiding a tax default. The Respondent submitted that if the Applicant had contacted the Respondent before the transfer duty was due then the Respondent may have confirmed that the duty was due or may have been prepared to put a hold on liability. As there is no evidence before the Tribunal that the Applicants did any of this, the Tribunal is not satisfied that the Applicants exercised reasonable care to comply with their tax obligations to warrant the exercise of the discretion to remit the premium component of interest.
2. The Applicants have not provided any evidence to support their submission that they would suffer 'serious financial strain' by paying the interest for the tax default of transfer duty on their off the plan property that is valued over $6 million. Taking into account the Tribunal's comments in Gunasti, contentions that an assessment is unfair, unjust or presents financial hardship are not relevant to the validity of the assessment or the exercise of the discretion of the Tribunal to remit interest. The Tribunal therefore cannot accept the Applicants' submission that interest should be remitted on the grounds of significant hardship and unreasonable financial burden.

1. In all the circumstances, the Tribunal is not satisfied that there are exceptional circumstances, including factors beyond the control of the Applicants and/or Respondent, to warrant remitting the market rate component of interest.
2. The Tribunal is not satisfied that the Applicants' circumstances, including whether they exercised reasonable care to comply with their tax obligations, warrant remitting the premium component of interest.
3. The Tribunal therefore finds that the Applicants have not discharged the onus to prove that there is a basis for the Tribunal to exercise the discretion in s 25 of the TA Act by remitting the interest for not paying transfer duty between 1 September 2024 and 5 November 2024 for their off the plan property purchase.
4. For the reasons set out above, the Tribunal is of the view that the correct and preferable decision, is to affirm the Respondent's decision not to remit interest.

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.