1. A hearing was held on 25 November 2013.
2. Mr Webster of Counsel appeared for the applicant, and Ms Katavic of Counsel, instructed by Ms Austen of ACT Government Solicitor, appeared for the respondent Commissioner.
3. Prior to the hearing, the parties lodged and exchanged Statements of Facts and Contentions including various supporting documents and also authorities that each party intended to rely on. The Commissioner's office prepared a folder of relevant documents known as the "T documents".
4. At the hearing the applicant, David Hay, gave evidence.
5. Due to the technical nature of many of the issues raised at the hearing, following the hearing, the applicant provided a further and final submission, and the respondent provided a further and final reply.
6. Certain issues and facts were agreed as follow:
   • (a) the property was rented for the 5 periods set out in the assessment (see paragraph 5 above) and the applicant is liable to pay land tax for these periods; and
   • (b) the applicant did not notify the Commissioner within 30 days of these rental periods and did not pay land tax for these periods when due. However, it was agreed that all land tax, penalty tax and interest was paid at the time of the hearing.
7. The contested issues and facts were as follows:
   • (a) whether the calculation of interest is within the jurisdiction of the Tribunal and whether the method of calculation is correct;
   • (b) whether the Commissioner must consider the imposition of land tax (and therefore, penalty tax and interest) for each quarter, or in the alternative for each of the 5 separate periods of rental;
   • (c) whether the penalty tax is a "penalty" such that the standard of proof is "comfortable satisfaction";
   • (d) whether the penalty tax rate for unpaid post-1 July 2004 land tax is appropriate, and whether it should be reduced to 25% (it being agreed that the penalty tax for unpaid pre-July 2004 land tax is set by statute at 200% unless remitted);
   • (e) whether the actions of the Commissioner effectively prevented the applicant from a reduction of penalty tax under section 33 of the Taxation Administration Act 1999 (TA Act) and whether this is an "exceptional circumstance" or is otherwise relevant to the decision about remission of penalty;
   • (f) whether the discretion to remit penalty tax pre-July 2004 set out in section 22EC of the RLT Act has been validly repealed and if not, whether the rate should be reduced to 100% of unpaid taxes; and
   • (g) whether the penalty tax should be remitted under section 37 of the TA Act and if so, whether it should be remitted by 20% or in the alternative, by $5000.

1. In summary, the grounds for imposition of land tax post-1 July 2004 are that the property is leased on the first day of the quarter and is rented at any time in the previous quarter. [2] The LT Act provides for a written notice to be given to the Commissioner[3] by the landowner or their agent about a property being rented and the date from which it is rented. If land tax is imposed and section 14 is not complied with, then interest and penalty tax apply in addition to the land tax payable.
2. Non-compliance is treated as a tax default under the TA Act. [4] The amount of penalty tax is payable at a statutory rate depending on the circumstances of the default[5] and in some circumstances, is not payable[6], can be reduced[7] and/or can be remitted[8].
3. For unpaid land tax payable for periods post-1 July 2004, the default rate of penalty tax is 25% [9] of the unpaid tax. The Commissioner can increase the rate to various higher levels depending on the circumstances. In this case, the Commissioner increased the rate of penalty tax to 50%, which applies if the default was "caused wholly or partly by a failure by the taxpayer...to take reasonable care". [10] This higher rate applies unless there is a "reasonable excuse"[11], the tax default "happened solely because of circumstances beyond the taxpayer's control"[12] or the penalty tax is remitted. [13]
4. While not relevant to this case, where there is an intentional disregard of a tax law, the rate increases to 75%. The rate of 90% applies if the taxpayer or their agent conducts themselves in various unsatisfactory ways after being notified that an investigation is to be a carried out. [14]
5. The amount of interest payable for a tax default is set out in the legislation. [15] The Commissioner can remit all or part of the interest in certain circumstances.[16]
6. Transitional provisions of the LT Act as it stood at 1 July 2004[17] preserved liabilities for land tax payable before July 2004. The transitional provisions provided that if land tax, penalty tax, or interest was payable but not paid prior to 1 July 2004, then the liabilities were payable as per the set amounts under the RLT Act. Under the RLT Act, penalty tax was set at a statutory rate of 200% of unpaid tax[18] and no interest was payable.
7. There is a power for the Commissioner to remit the unpaid pre-July 2004 penalty tax, although the parties disputed the statutory basis for this (see paragraphs 37, 38 and 57 and 58 below).

1. The "burden" of showing that an "objection should be sustained" is with the taxpayer, the applicant in this case[19] (see discussion below at paragraphs 64 to 67 below). The Tribunal's main task in this case is to decide if the taxpayer has shown that the objection should be sustained. [20]
2. The Tribunal may confirm, vary or set aside the decision being reviewed. If the decision is set aside, the Tribunal may make a substitute decision or remit the matter for decision back to the decision-maker in accordance with any directions or recommendations of the Tribunal. [21]
3. As explained in paragraph 18 above, where a taxpayer defaults on their tax liabilities, interest is payable, and may be remitted. However, decisions about interest and any remittal are not reviewable by the Tribunal. [22]

1. The applicant's contentions against each of the 7 contested issues (a) to (g) listed in paragraph 13 above are summarised below.
   1. The calculation of interest is within jurisdiction for the Tribunal and is incorrect
2. The applicant contended that a decision about interest was within the jurisdiction of the Tribunal for the following reasons:
   • (a) the decision being reviewed is associated with the imposition of a penalty tax which is a reviewable decision[23];
   • (b) the grounds considered in the review are not limited to those in the grounds considered in the objection[24];
   • (c) the objects of the ACT Civil and Administrative Tribunal[25] favour finding that this issue is within the jurisdiction of the Tribunal; and
   • (d) what is at issue is the legislative interpretation of the method for calculating the interest, not the decision to impose interest as such, thus previous authorities do not address the jurisdictional issue here.
3. The applicant contended that if the imposition of land tax is made quarterly or in the alternative, for each separate rental period (see paragraphs 27 and 28 below), then the interest free month[26] applied multiple times. On this view, the applicant had been overcharged interest for unpaid land tax post-1 July 2004.
   1. A decision to impose land tax (and any associated penalties for unpaid taxes and interest) is for each quarter, or in the alternative is for each separate period of rental
4. The Applicant contended that the imposition of land tax occurred quarterly, based on the plain meaning of section 9(1)(a) of the LT Act, other sections of the LT Act and the Explanatory Memorandum. On this view penalty and interest provisions for any unpaid land tax should be re-applied each quarter. Thus it was contended that the decisions about penalty tax and the calculation of interest were flawed; the Commissioner would need to consider the appropriate rate of penalty tax[27] and whether to remit the penalty tax[28] for each quarter. Similarly, the benefit of the one month interest-free period[29] would apply multiple times (see paragraph 26 above).
5. In the alternative, the applicant contended that the imposition of land tax occurred for each of the 5 separate rental periods, and the provisions on penalty and interest therefore apply afresh for each period.
   1. Penalty tax is a "penalty" such that the standard of proof is "comfortable satisfaction"
6. The applicant contended that the decision-maker must be "comfortably satisfied" of its decision to impose the rate of penalty tax. This standard is commonly referred to as the 'Briginshaw principle'[30]. He argued that the Briginshaw principles apply in this matter since the penalty tax imposed under the LT Act can be characterised as a "penalty", punitive in nature, rather than a tax. He contended that the standard was not met.
   1. A penalty tax rate of 50% for unpaid post 1 July 2004 land tax is not appropriate, and it should be reduced to 25% (it being agreed that the penalty tax for unpaid pre-July land tax is set by statue at 200% unless remitted)
7. The applicant contended that the Commissioner should make a decision about the appropriate level of penalty tax each time there was an imposition of land tax, namely quarterly or, in the alternative, for each of the 5 separate periods of rental (see paragraphs 27 and 28 above). The applicant argued that the Commissioner did not properly consider the applicant's personal circumstances for each quarter and/or for each of the rental periods.
8. While this hearing requires a review of the Commissioner's decision on its merits and is not a judicial review, the applicant presented some contentions more relevant to the latter. He contended that the Reasons Statement is flawed because various elements of the provisions relevant to penalties and remission are conflated. He said that the reasons are, as a result, inadequate; there is an error of law and the decision should therefore, be set aside.
9. The applicant contended that the Commissioner had applied a "blanket approach" to consideration of the appropriate rate of penalty tax and any reductions or remission to penalty tax over the period 2002 and 2012, and that this approach is inadequate under the legislation.[31]
10. The applicant gave detailed evidence at the hearing about his circumstances from 2002 to 2012, which, in the applicant's view, justify a reduction in penalty tax and/or a remission of it (see paragraphs 71 and 72 below). This evidence included his ignorance of his land tax liabilities until 2012, the severe mental illness of a relative for whom he cared, the ill-health and medical emergencies of another relative for whom he also cared, his family and work responsibilities, and the impact on him of each of these circumstances and the totality of these circumstances.
    1. The Commissioner's actions effectively prevented the applicant from a reduction of penalty tax and this should be taken into account in considering any remission of penalty tax
11. Section 33 of TA Act provides for a reduction in penalty tax of 20% if the taxpayer voluntarily discloses the nature and extent of the tax default after the Commissioner informs the taxpayer that an investigation is to be carried out and before it is commenced. In this case, the taxpayer was not told that an investigation was going to be carried out. The applicant only received notice from the Commissioner after an investigation was underway.
12. The applicant contended that the statutory purpose of the relevant section is clear and the Commissioner should not have jumped to the issuing of a section 82 Notice. The applicant relied on the authority of the ACT Court of Appeal in the Dataflex case in which the Court said[32]:

we agree that the sections appear to indicate that generally the commissioner will inform the taxpayer that an investigation will be carried out before the commissioner embarks on one. Nevertheless, there is no requirement that the commissioner does so....

1. The applicant contended that the failure to give him a chance to voluntarily disclose the tax default is an "exceptional circumstance" under section 37 of the TA Act.
   1. The discretion to remit penalty tax pre-July should be dealt with under the former RLT Act, in particular section 22EC, since this section has not been validly repealed
2. Prior to the LT Act 2004, land tax was dealt with under the RLT Act (the former land tax arrangements). Under these former land tax arrangements, penalty tax was fixed at 200% of the unpaid tax[33] and the Commissioner had a broad power to remit it if "it is fair and reasonable"[34].
3. The applicant contended that section 22EC of the RLT Act (being a broad discretion of the Commissioner to remit penalty tax) was not validly repealed by section 48 of the LT Act at 1 July 2004. The applicant referred to the wording of section 48, elements of the Explanatory Memorandum and the requirements of the Legislation Act 2001[35].
   1. The penalty tax should be remitted by 20% for post 1 July tax and by 100% for pre-July 2004 penalty tax.
4. The applicant argued that the circumstances of the applicant were not properly considered in a detailed manner. The applicant gave evidence at the hearing to present his circumstances from 2002 to 2012 in more detail (see paragraphs 33 above and 71 and 72 below). Given these circumstances, the applicant contended that the penalty tax should be remitted under section 37 of the LT Act.
5. The applicant contended that not being given a chance to voluntarily disclose the tax default (see paragraphs 34 to 36 above) is an "exceptional circumstance" relevant to remitting penalty tax.
6. The applicant also contended that the Commissioner had to be satisfied that a remission was not justified for each and every default (see paragraphs 27 to 28 above) but in his case, had not considered each default separately.
7. Considering the pre-July 2004 penalty tax, the applicant contended that section 22EC of the RLT Act continued to apply (see paragraphs 37 to 38 above). He contended that his circumstances were such that it is fair and reasonable for the penalty tax to be reduced from the statutory 200% to 100% due to the level of his culpability of the applicant - he had not concealed facts but had failed to take reasonable care.

1. The respondent's contentions against each of the 7 contested issues (a) to (g) listed in paragraph 13 above are summarised below.
   1. The calculation of interest is correct and in any case this decision is not within jurisdiction for the Tribunal
2. The respondent contended that any issue about interest or its remittal, including its calculation method, is not reviewable by the tribunal. This is well established by authorities and consistent with the purpose of the TA Act, the LT Act and the ordinary meaning of the relevant provisions.
3. Interest is payable on unpaid overdue land tax and is imposed from the "end of 30 days after the 1st day of the 1st quarter for which the tax is imposed"[36]. The 1st quarter in this case occurred in 2002/2003 and there is only one 1st quarter for the purposes of the determining the land tax payable and hence the interest payable. On this view, there is only one interest free period applicable in calculating the total interest payable by the applicant.
4. The respondent noted that in reviewing the interest calculations for this review an error of $13.35 was discovered, due to the omission of the interest-free month under section 19A(2) of the LT Act.[37]
   1. An assessment of land tax and any associated penalties for unpaid taxes can be validly made for any period
5. The respondent contended that the applicant misconstrues the nature of land tax under the LT Act and in particular under section 9 of the LT Act and stated:

There is no decision to impose land tax for each quarter...the rental status of the property drives the liability to pay land tax and the payment of such a liability occurs, in ordinary circumstances, quarterly.

1. The respondent contended that in this case, where the liability for land tax has been outstanding for many years and relates to 5 non-contiguous periods during that time, the Commissioner issued one assessment for the whole period for which land tax was payable. One assessment for the whole period is validly made under section 7 of the TA Act, which is a general power for assessing a tax liability.
   1. Penalty tax is not a "penalty" such that the standard of proof is "comfortable satisfaction"
2. The respondent contended that penalty tax is not a "penalty" but is defined to be a tax by section 2 and the Dictionary definition of tax in the TA Act. The argument and authorities presented by the applicant were said to be irrelevant on the grounds that they relate to the difference between a penalty and a tax under section 55 of the Australian Constitution.
3. The threshold for circumstances justifying reductions and/or remissions in penalty tax is that applied in various Tribunal cases that have considered penalty tax under the TA Act and LT Act. The respondent argued that there is no basis for departing from the Tribunal decisions in those cases (see the cases referred to in paragraph 73 below).
   1. Penalty tax rate for unpaid post 1 July 2004 land tax is appropriate (it being agreed that the penalty tax for unpaid pre-July land tax is set by statue at 200% unless remitted)
4. The respondent relied on the Reasons Statement dated 24 May 2013.
5. In summary, the respondent contended that 50% penalty tax for unpaid tax post1 July 2004 was the correct and preferable decision. The respondent's argument was that the applicant failed to take reasonable care[38] in that he failed to make enquiries about his land tax obligations, failed to read notices about land tax included in his rate notices, failed to make a voluntary disclosure, only disclosed the default after the respondent began an investigation and had a positive obligation to ascertain what his liabilities were.
6. The respondent contended that the applicant's circumstances (see paragraphs 33 above, 71 and 72 below) relevant to a reduction of penalty tax under sections 31(3) and 31 (6) of the TA Act (and also relevant to any remission under section 37, see paragraph 59 below) were such that a reduction of penalty tax was not justified. Ignorance of the law is not a defence and the applicant's circumstances were not exceptional. The respondent cited a number of authorities which it contended involved taxpayers with comparable circumstances to the applicant, and where no reduction (or remittal) of penalty tax was found to be justified by the Tribunal (see the cases referred to in paragraph 73 below).
7. The respondent also contended that general deterrence is a relevant consideration. The respondent argued that a person who does comply with their tax liabilities should not be at a disadvantage for having done so. Fairness will involve considering what is fair to compliant taxpayers as well as the comparability of circumstances of other non-compliant taxpayers.[39]
   1. A reduction of penalty tax under section 33, TA Act is not applicable and this is not relevant to the decision about appropriate rate of penalty tax and any remission of penalty
8. The respondent contended that because the applicant did not voluntarily disclose the default prior to the investigation being initiated then a reduction of penalty tax under sections 32 and 33 of the TA Act is not justified. The trigger for the investigation was documentation received by the Commissioner from a third party in the course of a conveyance, not a disclosure by the Applicant to the Commissioner. Thus, sections 32 and 33 were not relevant in this case.
9. The respondent contended that the Commissioner's decision to proceed to an investigation without giving the applicant notice of an investigation was not a ground for remission under section 37 of the TA Act. The Commissioner is not required to give notice of an investigation (citing Dataflex).[40] Furthermore, the Commissioner does not require "good reasons" for deciding not to provide advance notice of an investigation.[41]
   1. The discretion for the Commissioner to remit penalty tax pre-July (section 22EC, RLT Act) has been validly repealed
10. The Commissioner submitted that section 48 of the LT Act as it was at 1 July 2004 imported the Applicant's pre-July liability for land tax into the LT Act arrangements, except in regard to section 22EC of the RLT Act (a broad discretion for the Commissioner to remit penalty tax). While section 48 only operated for 12 months, as a transitional provision, it continues to operate by virtue of section 88 of the Legislation Act 2001.
11. Section 22EC of the RLT Act which provides for the discretion to remit penalty tax was replaced by a discretion for the Commissioner to remit penalty tax under the LT Act[42]. Thus, there has not been a "total deprivation"[43] of a discretion to remit penalty tax although the discretion is not as broad as it was, and, on this view, the requirements of the Legislation Act for repeal of section 22EC of the RLT Act have been met.
    1. The penalty tax should not be remitted (under section 37, TA Act)
12. The respondent contended that the applicant's circumstances (see paragraphs 71 and 72 below) relevant to a remission and to a reduction of penalty tax were such that a remission was not justified. As set out above, the respondent contended that ignorance of the law is not a defence. Also, the applicant's circumstances were not exceptional and did not support any reduction of penalty tax.

1. The Tribunal's consideration of each of the 7 contested issues (a) to (g) listed in paragraph 13 above is discussed below.
   1. Calculation of interest is not within jurisdiction for the Tribunal
2. The Tribunal agrees with the contentions of the respondent on this issue (see paragraphs 44 to 46 above), and finds that the Commissioner's decision to impose interest including its calculation method is not reviewable by the Tribunal. This is well established by authorities and consistent with the purpose of the TA Act, the LT Act and the ordinary meaning of the relevant provisions.
3. Given that the Tribunal has no jurisdiction on this issue, it makes no findings about the accuracy of the calculation of the interest payable. However, it notes that the respondent has agreed that there is an error in the calculation of interest and that a refund is due to the applicant.[44]
   1. An assessment of land tax and any associated penalties for unpaid taxes can be validly made for any period
4. The Tribunal agrees with the contentions of the respondent on this issue (see paragraphs 47 to 48 above), and finds that the assessment for the whole period that the property was rented was validly made under section 7 of the TA Act.
   1. Briginshaw principles apply as a guide only
5. For the Briginshaw principles to apply there must be a "standard of proof". However, in most merits review matters "there is no burden of proof or onus, civil or criminal... [and also] proceedings are inquisitorial"[45].
6. The question of whether the Briginshaw principles apply to merits reviews of decisions made under tax legislation is more complicated. As Kerr J points out, at the Commonwealth level the taxpayer usually has the burden of showing that an objection should be sustained. This is also the case under the LT Act (see paragraph 21 above).
7. Nonetheless in regard to merits review generally, Kerr J says:

...proper regard for the seriousness of the consequences...is inherent in the statutory duty and does not depend on the Briginshaw principles which turn on the boundaries between egregious and non-egregious conduct. In many statutory contexts there will not be any policy reason for an administrative decision maker to apply that distinction...[a] tribunal determines matters by reference to 'the statutes under which it is operating, or in consideration of natural justice or common sense, [rather] than in the technical rules relating to onus of proof developed by the courts[46].

..on review "both the severity of the potential consequences for the applicant and the protective nature of the power conferred on the regulator will be relevant factors; neither of which is to be ignored by a merits review tribunal in its task of reaching the correct and preferable decision"[47].

1. The Tribunal accepts that this is the appropriate approach and concludes that the Briginshaw principles offer guidance only in this matter. This conclusion is further supported by the fact that there are no allegations of concealment or evasion in this case. The allegation is that the applicant failed to take reasonable care. If the decision being reviewed involved allegations of "moral opprobrium" such as where concealment is alleged and the higher penalty of 90% of unpaid tax was at issue, then the Briginshaw principles would be of greater relevance.
   1. A penalty tax rate of 50% is not appropriate for the whole period, and it should be reduced for some periods between 8 October 2002 and 11 December 2012
2. The Tribunal considered the severity of the consequences of the decision on the applicant, the protective nature of the relevant legislation, and the applicant's varying circumstances between 2002 to 2012, among other matters, in its review. The Tribunal agrees with the applicant's contention that the circumstances of the applicant were considered by the Commissioner in a "blanket" fashion and that this is not adequate under the legislation (see paragraph 32 above).
3. A decision about what is the most appropriate penalty tax and whether a remission is justified needs to consider the varying circumstances of the applicant over the whole period. While the Tribunal finds that the Commissioner can issue one assessment for the whole period for which land tax was payable, this does not diminish the requirement for the decision-maker to consider the varying circumstances of a taxpayer over the whole period of liability. The respondent agreed at the hearing that some situations might lead to a remission under section 37 of the LT Act being applied "proportionately to what is considered reasonable for that [situation]"; for example, "somebody that might be incapacitated for a period of time".[48] Considering any variations in circumstances over the whole period and whether any variation warrants a reduction in penalty and/or remission is especially likely to be important where the relevant period is long, as in this case.
4. The Tribunal finds that the varying circumstances of the applicant between 2002 and 2012 were not considered and that some of these circumstances justify a reduction in penalty (and/or a remission, see paragraphs 76 and 77 below) for some periods.
5. The Tribunal finds that the applicant is an honest person. For example, he voluntarily gave information about the 5 rental periods when the electricity search undertaken by the Commissioner only disclosed possible rental periods of a much shorter duration and thus a lower tax liability.[49] The Tribunal accepts the matters raised by the Applicant in paragraph 72 below as a true account of his circumstances, which he has recalled to the best of his ability, with some exact dates not able to be recalled by him due to the passage of time.
6. When considering the varying circumstances of the applicant relevant to the rate of penalty tax and remission between 2002 and 2012, the circumstances summarised below were of particular significance:

• (a) In 2002, the applicant became aware that a close relative was mentally ill. In 2003/4, the situation "got extreme"[50] in that the relative threatened him, his family and his property, caused significant damage to a house the applicant owned and was violent "a lot of times".[51] The police intervened "a lot of times"[52] and the applicant facilitated crisis medical interventions for the relative. The applicant became his relative's primary carer. In 2004/5, the Applicant took on various legal responsibilities for the relative which required his active attention, including selling real estate held by the relative. There has been improvement in the situation over the last 2 to 3 years.[53]

1. Related to the circumstances of the applicant in (a) above, another close family member became distressed and "scared".[54] This family member also had significant medical issues in 2005/6 requiring interventions, rehabilitation and care by the applicant. 2. The impact of the totality of the above circumstances on the applicant, who was also working and raising a family, was like an emotional "rollercoaster"[55] and he felt depressed. The circumstances have impacted adversely on his marriage, his finances and his business. The circumstances required the applicant to take on significant extra responsibilities and to deal with very challenging situations on a day to day basis, for reasons beyond his control.
2. The circumstances of this case can be distinguished from those in the authorities cited by the respondent, being James v Commissioner for ACT Revenue[56], Theron v Commissioner for ACT Revenue[57], Pazios v Commissioner for ACT Revenue[58], Scott v Commissioner for ACT Revenue[59], and Steele v Commissioner for ACT Revenue[60]. The applicant in the Theron case did not get a reduction in penalty tax, despite evidence of a range of social stressors; for example, her focus on study coupled with social isolation. Compared to the applicant in Theron and other authorities cited by the respondent, the circumstances of the applicant in this case are more extreme in nature, impacted the applicant for a longer period of time, have adversely impacted his business, finances, family relationships as well as his own health and were beyond his control. There are multiple circumstances which in their totality justify a reduction in penalty tax.
3. The Tribunal has considered the issue of deterrence as raised by the respondent and balanced this with the requirement to determine the correct or preferable decision. In this case, even with a reduction and remission of penalty tax, some penalty tax is payable for every period of unpaid land tax. Further, the interest imposed on the applicant is a deterrent to non-compliance.[61]
4. Given the circumstances set out in paragraph 72 above, I find that the applicant had a reasonable excuse for the failure to pay land tax from 1 July 2004 to 31 December 2006, and the penalty tax for this period should be reduced from 50% to 25%.
   1. A reduction of penalty tax under section 33, TA ACT
5. Not all decisions under the TA Act and LT Act are reviewable by the Tribunal. Section 33 is not listed in Schedule 1 of the TA Act and therefore a decision under section 33 is not reviewable.
6. In any case, section 33 is only triggered if the taxpayer discloses the necessary information to the Commissioner after they are notified of a pending investigation and before it begins; this did not occur and could not have occurred in this case since the Commissioner did not give the Applicant notice of a planned investigation, only a notice that an investigation was underway.
7. The discretions under sections 31 and 37 of the TA Act allow consideration by the Tribunal of the behaviour of the taxpayer and the Commissioner, including behaviour up to the initiation of an investigation. There may be cases in which it is appropriate to reduce or remit penalty tax when the Commissioner has conducted an investigation without notice to the taxpayer. While the Commissioner is not required to give notice of an investigation, the actions of the Commissioner's office before and after an investigation are relevant factors to be considered when making decisions under sections 31 and 37 of the TA Act.
8. In this case, the Commissioner's decision to investigate without notice was reasonable. The conveyance enquiry reasonably led the Commissioner's office to suspect a lengthy period of non-compliance. As the respondent pointed out, the Commissioner "doesn't know what he doesn't know"[62]; the Commissioner's office could not have been reasonably expected to know about the honesty of the applicant and the circumstances that contributed to his default. In this case, the mere fact that a decision was taken to investigate without notice does not justify a reduction or remission of penalty tax.
   1. The power to remit penalty tax under the RLT Act (section 22EC) has been validly repealed and LT Act (section 37) applies to unpaid land tax from pre-July 2004.
9. In the ACT the preferred interpretation of a provision is that which best achieves the purpose of the Act.[63] Where the meaning of a provision is open, extrinsic material such as the Explanatory Memorandum may be considered to understand context.[64]
10. Considering the purpose of the LT Act, the purpose of the transitional provisions of that Act and in this context, the ordinary meaning of the words of section 48 of the LT Act, the Tribunal concludes that the LT Act validly imported the applicant's pre-July 2004 liability for land tax into the LT Act arrangements and validly repealed the remission power of the Commissioner in relation to penalty tax under section 22EC of the RLT Act. To the extent there may be ambiguity about aspects of the LT Act relevant to the remission powers of the Commissioner, the Comparative Sections Table in the Explanatory Memorandum to the Land Tax Bill 2003 makes explicit that the power to remit under section 37 of the LT Act is intended to replace section 22EC of the RLT Act.
    1. The penalty tax should be remitted under section 37 of the TA Act by 20% for post 1 July tax, and by 100% for pre-July 2004 penalty tax.
11. As a consequence of the finding in paragraph 81 above, the power to remit penalty tax under the TA Act applies to unpaid land tax from pre-July 2004. There was no dispute that section 37 of the TA Act provides a discretion for the Commissioner to remit penalty tax for unpaid post-1 July tax.
12. Given the circumstances set out in paragraphs 72 and 73 above, the Tribunal finds that the applicant's circumstances were exceptional and that it would be fair and reasonable to remit part of the penalty tax for periods between 2002 and 2012. Specifically, the Tribunal finds that the penalty tax should be remitted by reducing it from 200% to 25% from 8 October 2002 to 30 June 2004 and from 50% to 30% from 1 January 2007 to 31 December 2010.

1. Having regard to all of the matters before the Tribunal, the Tribunal concludes as follows:
   • (a) The Commissioner's decision to impose interest including its calculation method is not reviewable by the Tribunal, but the Tribunal notes that the respondent has agreed that there is an error in the calculation of interest under section 19A of the LT Act, and a refund is due to the applicant.
   • (b) The Commissioner's assessment for the whole period that the property was rented was validly made under section 7 of the TA Act.
   • (c) The Briginshaw principles offer guidance in a merits review matter and provide no basis for overturning the decision in this case.
   • (d) The Commissioner's decision to jump to an investigation was reasonable in this case and in this case the action by the Commissioner's office to not issue any notice to the applicant about initiating an investigation raises no issues relevant for the purposes of sections 31 and 37 of the TA Act.
   • (e) The varying circumstances of the applicant between 2002 and 2012 were not adequately considered by the Commissioner. These circumstances justify a reduction in penalty tax and/or a remission of penalty tax as follows:
     1. penalty tax is remitted by reducing it from 200% to 25% for the period 8 October 2002 to 30 June 2004 pursuant to section 37(a)(ii) and (b) of the Taxation Administration Act 1999;
     2. penalty tax is reduced from 50% to 25% for the period 1 July 2004 to 31 December 2006 pursuant to section 31(3) of the Taxation Administration Act 1999; and
     3. penalty tax is remitted by reducing it from 50% to 30% for the period 1 January 2007 to 31 December 2010 pursuant to section 37(a)(ii) and (b) of the Taxation Administration Act 1999.

Taxation Administration Act 1999

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

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

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

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

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

(2) The amount of penalty tax payable in relation to a tax default is 50% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by a failure by the taxpayer (or a person acting on behalf of the taxpayer) to take reasonable care to fulfil the taxpayer's obligations under a tax law.

(3) Subsection (2) does not apply if the tax payer satisfies the commissioner that the taxpayer (or a person acting on behalf of the taxpayer) had a reasonable excuse for the failure.

(4) Subsections (2) and (3) apply to a tax default that happened before their commencement in the same way as they apply to a tax default that happened after their commencement.

(5) The amount of penalty tax payable in relation to a tax default is 75% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a tax law.

(6) No penalty tax is payable in relation to a tax default if the commissioner is satisfied that -

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

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

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

1. Reduction in penalty tax for voluntary disclosure

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

1. Reduction in penalty tax for disclosure before investigation

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

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

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

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

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

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

Land Tax Act 2004 (as at 1 July 2004)

(a) land tax (including penalty tax and interest) was payable under the repealed Act [the Rates and Land Tax Act 1926 (repealed)]; and

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

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

[1] Reasons Statement, Tribunal documents, page 2

[15] section 19A, LT Act and section 26, TA Act

[20] Rawson Finances Pty Ltd v Commissioner of Taxation (2013) FCAFC 26; Touma v Chief Commissioner of State Revenue [2012] NSWADT 2

[21] section 68, ACT Civil and Administrative Tribunal Act 2008

[22] Scott and Anor v Commissioner of ACT Revenue [2013] ACAT 73, at paragraph 11

[23] section 107A and Schedule 1, TA Act

[25] section 6, ACT Civil and Administrative Tribunal Act 2008

[30] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 350

[32] Commissioner for ACT Revenue v Dataflex Pty Ltd and ACT Civil Administrative Tribunal [2011] ACTCA 14 (28 July 2011) at paragraph 47

[37] Respondent's Submissions in Reply, paragraph 23

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

[41] Respondent's Submissions in Reply, page 6

1. [43]Respondent's Submissions in Reply, page 5 (paragraph 30)

[44] Respondent's Submissions in Reply, page 4 (paragraph 23)

[45] Hon Justice Duncan Kerr, A Freedom to be Fair, Excellence in Government Decision-making, AGS Symposium, Canberra 21 June 2013 at page 10, citing Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408; and Minister for Immigration and Citizenship v Li [2013] HCA 18

[46] ibid page 10_,_ quoting from Woodward J in McDonald v Director General of Social Security [1984] FCA 57; (1984) 1 FCR 354 at 356

1. [48]Transcript, page 82
2. [49]Respondent's Land Tax Report, 11/12/2012, page 2, (Tribunal documents, page 44)

1. [54]Transcript, page 91
2. [55]Transcript, page 89

[56] [2013] ACAT 32

[57] [2013] ACAT 33 at [39]

[58] [2013] ACAT 48

[59] [2013] ACAT 73

[60] [2010] ACAT 15

[61] Riverland Retreat Pty Ltd v Commissioner of State Revenue [2004] VCAT 1366 at [32]

[63] section 139, Legislation Act 2001

[64] Newcastle City Council v GIO General Limited [1997] HCA 53; (1997) 191 CLR 85