Incise Technologies Pty Ltd & Anor v Chief Commissioner of State Revenue

Introduction 1 The applicants seek a review of an objection decision made by the Chief Commissioner of State Revenue (Chief Commissioner) in relation to payroll tax assessments for the financial years ending June 1998 and June 1999. The principal question at issue is whether the Chief Commissioner should remit the whole or part of the interest and penalties included in the assessments for failure to lodge payroll tax returns for the relevant years and, in particular, before commencement of investigations by the Chief Commissioner. 2 The review of the principal issue can only proceed if two preliminary matters are determined in favour of the applicants. The first preliminary matter that the Tribunal needs to rule on is whether the Tribunal has jurisdiction to review objection decisions made prior to the commencement of the Revenue Division of this Tribunal. If there is jurisdiction, the Tribunal needs then to consider whether there are grounds to exercise its discretion to extend time to allow the applicants to lodge the application well outside the period allowed by the legislation to seek a review in this Tribunal of an objection decision made by the Chief Commissioner. Background 3 The chronology of relevant events in respect of this matter commenced with a letter dated 30 October 1998 from the Chief Commissioner addressed to Incise Services Pty Ltd, a company related and at the relevant time part of the group of companies including the applicants. The letter sought in an attached questionnaire information relating to the payroll tax liabilities of the company. 4 The Chief Commissioner received no response from the company or any other company within the group of related companies. An officer of the Chief Commissioner made inquiries in October 1999, almost one year later, as to the failure by the company to respond to the letter dated 30 October 1998. The Chief Commissioner was informed by an employee of the company that the company had not received the original letter dated 30 October 1998.The Chief Commissioner, proceeded on 11 October 1999 to send by facsimile a copy of the letter including the questionnaire to Incise Service Pty Ltd. 5 On the basis of the information that was supplied subsequently by the applicants, the Chief Commissioner identified that in respect of the relevant years a group was in existence for the purposes of Part 4A of the Pay-roll Tax Act 1971 (PT Act) between the applicants and Incise Pty Ltd and Incise Service Pty Ltd, two other related companies. As a consequence, payroll tax assessments were issued on 20 April 2000 to both the applicants for financial years ending June 1998 and June 1999. The assessments included interest calculated at the full rate and a penalty tax of 20%. 6 The applicants accepted the liability to pay-roll tax but objected to the inclusion of penalties and interest in the assessments. 7 On 17 August 2000 the Chief Commissioner determined the objection by rejecting the grounds of objection advanced by the applicants and two other related companies. The Chief Commissioner's grounds for rejecting the objection were as follows: "Interest and penalties have been imposed in line with the Taxation Administration Act, 1996 and the business rules that support that legislation. You are advised that the basis for the business's non-compliance with their pay-roll tax obligations for the period detailed above, does not warrant any reduction or remission of the interest and penalties. As a consequence the objection has been wholly disallowed." 8 In his letter of the 17 August 2000, the Chief Commissioner also informed the applicants and the related companies that, if they were dissatisfied with his decision, they could lodge an appeal to the Supreme Court of New South Wales. 9 The applicants and the related companies did not lodge any appeals to the Supreme Court. The applicants did however submit a payment plan for the tax assessed and also sought further leniency for the penalties and interest imposed by the Chief Commissioner. On the 20 November 2000 the Chief Commissioner informed the applicants and the related companies that his objection decision stood, as they had advanced no new grounds. 10 The Chief Commissioner on 1 March 2001 lodged claims in the Parramatta Local Court against the two applicants for the outstanding pay-roll tax including penalties and interest. After service of the claims on the applicants, there was some correspondence between the parties as to payment options in respect of the claims in court. The payment proposal was not acceptable to the Chief Commissioner and the Chief Commissioner obtained judgments against the applicants on 28 November 2002, but gave an undertaking not to enforce the judgments pending the determination of an application to this Tribunal. 11 The applicants filed an application with the Tribunal on 4 December 2002 and on 16 December 2002 the Chief Commissioner lodged his statement of reasons as required by s 58 of the Administrative Decisions Act 1997 (the ADT Act). Jurisdiction of the Tribunal 12 The first question that I need to consider is whether the Tribunal can allow an application for review in respect of an objection decision made on 17 August 2000 and well before the conferment of jurisdiction to this Tribunal to review objection decisions made by the Chief Commissioner. 13 Jurisdiction was conferred on the Tribunal by amendments introduced by the Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 (NSW) to concurrently with the Supreme Court review objection decisions of the Chief Commissioner as from 1 July 2001. 14 The Taxation Administration Act 1996 (the TA Act) was also amended and Division 2 of Part 10 was inserted to provide for the new review provisions. Under these provisions, in particular s 96(1), a taxpayer may apply to this Tribunal for a review of a decision of the Chief Commissioner that has been subject of an objection. When these amendments were introduced, some savings and transitional provisions were also inserted into the ADT Act. The provisions relevant to the question raised in this matter are clauses 32 and 33 found in Schedule 5 Part 7 of the ADT Act. Clause 32 defines an "existing tax objection determination" as a "determination of an objection by the Chief Commissioner of State Revenue under Division 1 of Part 10 of the Taxation Administration Act 1996 before the repeal of the repealed appeal provisions by the amending Act". 15 Clause 33 of Part 7 to Schedule 5 of the ADT Act provides as follows: (1) This clause applies to any existing tax objection determination in respect of which: (a) an appeal to the Supreme Court could have been lodged under the repealed appeal provisions immediately before the repeal of those provisions by amending Act, and (b) no such appeal was lodged with the Supreme Court immediately before that repeal. (2) No appeal lies to the Supreme Court under the repealed appeal provisions in respect of an existing tax objection determination to which this clause applies. (3) However, the new review provisions apply to any such determination as if those provisions had been in force at the time the determination was made under the Taxation Administration Act 1996. 16 Clause 33 applies to existing tax objection determinations in respect of which an appeal to the Supreme Court could have been lodged under the repealed appeal provisions and where no such appeal was in fact lodged with the Supreme Court. The provisions contained in clause 33 apply to the applicants' objection determination, as the applicants did not lodge any appeal to the Supreme Court before jurisdiction was conferred to this Tribunal as from 1 July 2001. Accordingly, the Tribunal has jurisdiction in this matter. 17 The Chief Commissioner accepts that the Tribunal has jurisdiction in this matter and his position is summarised in the following paragraphs of his written submissions: "3. The effect of the application of clause 33 Part 7 Schedule 5 ADT Act to these proceedings is that no appeal lies to the Supreme Court under the repealed appeal provisions in respect of an objection determination to which clause 33 applied: clause 33(2) Part 7 Schedule 5 ADT Act. Significantly, the new review provisions (i.e. the existing provisions of Division 2 Part 10 Taxation Administration Act 1996 ("TAA") which provide for a right of review to the Administrative Decisions Tribunal) apply to the determination as if those provisions had been in force at the time the determination was made under the TAA - i.e. in this matter, on 17 August 2000: clause 33(3) Part 7 Schedule 5 ADT Act. 4. The net effect of all the above is that the Administrative Decisions Tribunal has jurisdiction to hear the matter and, indeed, the Supreme Court does not have jurisdiction in respect of this particular determination. Accordingly, the Respondent does not dispute the jurisdiction of the Tribunal to hear the matter. Application for extension of time 18 The next issue I need to consider is whether there are grounds to allow the applicants an extension of time to apply for a review to the Tribunal. 19 Under s 99(1) of the TA Act an application for review must be made to the Tribunal "not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection". The section also gives the Tribunal discretion to "allow a person to apply for a review after that 60- day period". 20 The Chief Commissioner opposes the Tribunal making any order for an extension of time because the application is significantly out of time, which the Chief Commissioner says is "approximately 2 years and two months out of time". The Chief Commissioner also opposes the extension of time on the ground that "no full and satisfactory explanation (or indeed any explanation at all) has been provided to the Tribunal". 21 Courts and Tribunals in evaluating applications for extension of time have generally relied on the principles outlined by Wilcox J in Hunter Valley Developments Pty Ltd v Chen, Minister for Home Affairs and Environment (1984) 3 FCR 344. These principles may be summarised as follows: 1.The prescribed period in the law should not be ignored and that as a prima facie rule proceedings outside the period should not be entertained. As a precondition to the exercise of the discretion to extend time in favour of the applicant, the applicant must give an acceptable explanation of the delay and the circumstances must warrant an extension of time. 2.Action taken by the applicant during the period of the delay is important and if it involved his or her continued assertion that the decision was unacceptable it would assist the applicant in getting an extension of time. 3.Any prejudice to the respondent in attending to the review of the substantive issue is a material factor against the grant of an extension. 4 In addition, it is necessary to consider the effect of the grant of extension of time to the public at large and the effect on established practices in finalising disputes that have been used in dealing with similar disputes. 5.The merits of the substantive issue for review are relevant. 6. The fairness as between the applicant and other persons otherwise in similar position is relevant in the exercise of the discretion. 22 In recent decisions some caution has been suggested in relying strictly only on the above principles. For example, in Zizza v Commissioner of Taxation [1999] FCA 848, the Full Federal Court stated that it would be an error in law to regard the above principles to be "exhaustive guidelines" applicable to all cases under all kinds of legislation. And in Brown v Commissioner of Taxation [1999] FCA 563, Hill J in considering these principles was critical that the Administrative Appeals Tribunal in considering the application for extension of time had in fact conducted a trial on the merits of the matter. His Honour, takes the view that "when a taxpayer seeks an extension of time in which to lodge an objection the following matters will require consideration: 1. The taxpayer's explanation for the delay in lodging an objection against the assessment within the time stipulated by Parliament. 2. The circumstances attendant upon that delay. 3.Whether the objection is one which, on its face, is frivolous or which in law must fail. Or, to the extent that this is indeed a different test, is one in which the taxpayer has no arguable case. This matter will be considered by reference to the objection itself and such other material as the taxpayer puts before the Commissioner. It will seldom, if ever, require the decision maker to consider matters such as credit or endeavour to reconcile the evidence which the taxpayer choses to rely upon with other factual material in the possession of the Commissioner. No doubt the stronger the case, the more likely that the discretion would be exercised in favour of a taxpayer even where the explanation for delay was thought not to be strong. Whether the converse is also the case need not here be considered. 4. Such other matters as the circumstances of the particular case make relevant, including, if prejudice as is shown to arise." 23 His Honour went on to make the following rather important observations as to how the discretion should in practical terms be exercised: "What is required is the balancing of the delay; the explanation for it, the circumstances which gave rise to it and such prejudice if any as may be shown to exist to the Commissioner against the prejudice which may arise to a taxpayer who has by reason of the failure to object in time lost the right to a review of the assessment. In this balancing process the Commissioner or the Tribunal on a review will be guided by what the justice of the case requires. The balancing process should be approached on the basis that while Parliament has stipulated a time in which objections are required to be lodged it has entrusted to the Commissioner a power to extend that time in appropriate circumstances. The decision maker should not lose sight of the fact that s 14ZW is an ameliorating provision designed to avoid injustice." 24 The observations made by the courts in Zizza and Brown along with the principles set out by Wilcox J in Hunter Valley Developments Pty Ltd provide ample guidelines to consider extension of time in particular cases. 25 As suggested in Zizza, each case must be considered in the context of the law in which the applicant is seeking an extension of time. In my view that is vital in this matter. The provisions that gave this Tribunal jurisdiction to review objection decisions were introduced in the words of the NSW Treasurer in his Second Reading speech for the following reasons: "It is anticipated that, by conferring concurrent jurisdiction on the Administrative Decisions Tribunal and the Supreme Court, taxpayers who are presently deterred from pursuing a review of the Chief Commissioner's decision past the objection stage because of the complexity, expense and delay associated with Supreme Court proceedings will take advantage of access to the cheap and flexible review mechanisms offered by the Administrative Decisions Tribunal. Conversely, those taxpayers who wish to access the judicial expertise of the Supreme Court because their particular matter involves highly technical and difficult legal issues or because the amount of tax in issue is substantial can do so." (Emphasis added) 26 In the present matter, when the Chief Commissioner made his determination in respect of the objection lodged by the applicants the only avenue of appeal, as was indicated in the Chief Commissioner's letter to the applicants conveying the decision, was by lodging an appeal in the Supreme Court of New South Wales. The applicants have submitted that they did not proceed to lodge an appeal to the Supreme Court because of the financial cost that would have been involved in prosecuting such an appeal. I accept that as a reasonable explanation as to why the applicants did not proceed to lodge any appeal to the Supreme Court. 27 The applicants only became aware of the jurisdiction with this Tribunal to review objection decisions made by the Chief Commissioner when the applicants were in court attending to recovery matters relating to the assessments. The applicants were informed of their rights to pursue with a review with this Tribunal by a representative of the Chief Commissioner on or about 28 November 2002 when the parties were in the Parramatta Local Court with the Chief Commissioner seeking judgments against the applicants. The applicants acted promptly by lodging an application for review with the Tribunal on 4 December 2002, within a few days of learning that a "cheap and flexible review mechanism" was available before this Tribunal. 28 The applicants had, during the period between the objection decision and this application, on several occasions in writing to the Chief Commissioner and at the hearing of the claims in the Parramatta Local Court, sought to have the issues before this Tribunal reviewed by the Chief Commissioner notwithstanding the Chief Commissioner's objection decision rejecting their claims. There is therefore evidence that the applicants kept their dispute "alive" during that period. 29 The substantive issue in this application relates to the imposition of interest and penalties by the Chief Commissioner. On the face of their objection there is clearly an arguable issue. Because all issues including the substantive issue were considered at the hearing, I was in a better position to decide that there was some substance to the grounds of objection lodged by the applicants. I am therefore satisfied that the merits of this matter along with other grounds support the applicants' case for extension of time. 30 Lastly, I need to consider whether there is any prejudice to the Chief Commissioner if the extension of time is granted to the applicants to lodge their application. The Chief Commissioner raised no such ground. The Chief Commissioner relies on the significant delay and lack of any explanation by the applicants for opposing this application for extension of time. As indicated above, I take the view that there was a reasonable explanation for not making this application any earlier. The Chief Commissioner has, in my view quite properly not raised prejudice as a ground. There is in my opinion no prejudice to the Chief Commissioner in arguing his case now rather than at any earlier time. 31 I must also add that the review provisions were at the relevant time not well known to taxpayers in relation to objection decisions made prior to the introduction of the provisions. The Chief Commissioner accepts that there is jurisdiction with this Tribunal to consider objection decisions made prior to the introduction of the jurisdiction where applicants can satisfy the "savings and transitional" provisions found in clauses 32 and 33 of Part 7 to Schedule 5 to the ADT Act. That position was, unfortunately, not made public by the Chief Commissioner or conveyed to the applicants until sometime in November 2002. 32 By applying the "balancing" test suggested by Hill J, the grounds when considered in this case as a whole warrant an extension of time. I will, accordingly, grant the necessary extension of time to allow the applicants' application to be considered by the Tribunal. Substantive issue - whether the interest and penalties included in the assessments should be remitted in full or in part. 33 The substantive issue in this matter relates to the imposition of interest and penalty tax in the 1998 and 1999 pay-roll tax assessments issued to the applicants on 20 April 2000. The Chief Commissioner included interest both at market and premium rate components calculated as from 30 October 1998 and also imposed a penalty tax of 20% because a tax default occurred by the failure on the part of the applicants to lodge the pay-roll tax returns for the relevant years. 34 Where a tax default occurs, the taxpayer is, under s 21 of the TA Act, 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. Under s 22 the interest rate is the sum of the market rate component and the premium component. The market rate component is the Treasury Note yield rate or the rate specified for the time being by order of the Minister published in the Gazette. The premium component is fixed at 8% per annum under s 22(3) of the TA Act. In the case of the applicants the Chief Commissioner included in the assessments the full interest as from 30 October 1998 at the rate of 16.8% per annum for the period up to 30 June 1999 and at the rate of 12.72% per annum for the relevant period after 30 June 1999. 35 The Chief Commissioner may, under s 25 of the TA Act, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium rate component of interest, or both, by any amount. In this review, the applicants submit that the interest be remitted by imposition of interest only from a period commencing on 11 October 1999. Alternatively, the applicants seek a remission of the premium component of the interest imposed. 36 In addition to including interest, the Chief Commissioner is also entitled under s 26 of the TA Act to impose a penalty tax where a tax default occurs. The amount of penalty tax in respect of a tax default is fixed by s 27(1) of the TA Act at 25% of the amount of tax unpaid. If there has been an intentional disregard by the taxpayer of the relevant taxation law, the penalty tax is increased under s 27(2) to 75% of the amount of tax unpaid. The Chief Commissioner may, however, determine under s 27(3) that no penalty tax is payable if the Chief Commissioner is satisfied that the taxpayer took reasonable care to comply with the taxation law or the tax default occurred solely because of circumstances beyond the taxpayer's control. 37 Further, the penalty tax determined under s 27 of the TA Act is to be reduced under s 28 by 80% if, before the Chief Commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out, the taxpayer discloses to the Chief Commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined. If, on the other hand, the taxpayer makes such disclosure during the investigation, the amount of penalty tax, s 29 allows the penalty tax determined under section 27 to be reduced by 20%. A table in the TA Act sets out the above rates where the tax default occurs because of a failure by the taxpayer to take reasonable care, but where there was no intentional disregard of the law, as being 5% before investigation and 20% during investigation. There is, however, a broad power found in s 33 of the TA Act that allows the Chief Commissioner in such circumstances as the Chief Commissioner considers appropriate to remit penalty tax by any amount. 38 In the present matter, the Chief Commissioner took the view that the tax default occurred because the taxpayer failed to take reasonable care and also that the disclosure of the information to assist the Chief Commissioner to issue the assessments was made during the investigation. The Chief Commissioner imposed a 20% penalty tax in those circumstances. The Chief Commissioner also rejected the objection on the grounds that the circumstances do not warrant the exercise of his powers found in s 33 to make any remission of the penalty tax imposed. 39 I will consider first the question as to whether there are grounds to remit any part of the interest that has been included in these assessments. It is unfortunate that the Chief Commissioner has not issued any public guidelines as to what circumstances would warrant remission of the interest or any part of it that a taxpayer becomes liable under s 22. 40 The applicants have advanced various grounds in their objection for the failure on their part to lodge the necessary pay-roll tax returns for the relevant years. Firstly, it was claimed that the "various technical issues in relation to the operation of the Pay-roll Act" which provide the basis for liability were not recognised by the applicants until they sought advice. In particular the definition of "wages" is complex and far wider than the definition used for income tax purposes. The threshold for liability was exceeded by the superannuation contributions and the provision of fringe benefits, but the applicants did not recognise the need for registration for pay-roll tax. 41 The other technical issue that the applicants failed to understand was in respect of the grouping provisions under the PT Act. The applicants had sought advice in an income tax content regarding the ability to transfer losses between the various companies within the group. Because they did not have a holding company structure they were advised that tax losses could not be transferred and that the related companies did not form a group for income tax purposes. This advice was taken by the applicants to also extend to the grouping provisions for purposes of the PT Act. 42 The applicants also highlighted the fact that the Chief Commissioner in his own letter that he sent with the questionnaire recognised that some employers were unaware of the implications of the grouping provisions and the wide definition of "wages" for pay-roll tax purposes. 43 It was also claimed by the applicants that the letter of 30 October 1998 sent to Incise Service Pty Limited was not received by the company. The applicants claim that until further inquiries by the Chief Commissioner in October 1999 when a copy of the original letter was sent by facsimile, the Chief Commissioner had not in any way acted upon his original inquiry. 44 The Chief Commissioner, in rejecting the applicants' objection on this issue, took the view that the applicants had failed to discharge the onus placed on them by s 100(3) of the TA Act because no grounds were provided by the applicants to warrant any remission of interest. The Chief Commissioner also took the view that whilst the pay-roll tax law contained complex provisions, his brochures on the operation of the law provided clear guidelines as to "what is taxed". 45 In his written submissions, the Chief Commissioner rejects the claim that his letter of the 30 October 1998 to Incise Services Pty Limited was not received by the company and submits that in any case "this is simply not a basis upon which any power should relevantly be exercised to remit penalty tax or interest". As to why no further action was taken for more than one year, the Chief Commissioner in his written submissions, makes the following submission: "There are no legislative requirements or duties vested in the Commissioner to follow up a relevant letter commencing an inquiry under the TAA. It is simply not a relevant factor to take into account for the purpose of exercising interest and penalty tax discretions." 46 Whilst I agree with the latter statement that there are no legislative provisions in the law, I am of the opinion that the general administration of the tax laws require the Chief Commissioner to have some effective system to ensure that where no response is received to his demands for information within a reasonable period, follow up action be taken promptly. 47 In this matter, the Chief Commissioner accepts that the applicants did not intentionally disregard the law and that their behaviour amounted to merely failure to take reasonable care to ensure compliance with the pay-roll tax law. That would, I think, provide a prima facie case for the imposition of interest at only the market rate. Premium rate component should, in my opinion, be included in more serious cases as a rule. 48 There are also other grounds that warrant a remission of the premium component of the interest in this review. In his letter of the 30 October 1998 to Incise Service Pty Ltd making inquiries as to pay-roll tax liabilities, the Chief Commissioner accepted that "many employers are unaware of the implications of" the grouping and wage definition provisions. In 1998 and 1999 years the applicants exceeded the threshold and, in both years, that was due to the law requiring the inclusion of superannuation contributions and fringe benefits. This "was not recognised" by the applicants and their related companies at the relevant time and that was the reason why no application was made for registration for pay-roll tax. 49 When all the circumstances are taken into account, there are grounds for remitting the interest imposed at the premium rate from the total interest included in the assessments. 50 There are, however, no grounds to remit the interest imposed at the market rate. In Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21 and Olah v Chief Commissioner of State Revenue [2002] NSWADT 22, I have stated that it is necessary to show that the tax default was contributed in some way by the Chief Commissioner to justify any remission of interest imposed at the market rate. The applicants have not advanced any such grounds. 51 With regard to the imposition of a penalty at the rate of 20%, the applicants submitted that the penalties should only be imposed at a rate of 5% and that there were grounds for the Chief Commissioner to exercise the discretion provided under s 33 of the Taxation Administration Act to remit the 20% penalty imposed and only impose a 5% penalty instead. 52 The Chief Commissioner submitted that "the discretion under section 28 of the TA Act" "only applies if before the Respondent informs the taxpayer that an investigation is to be carried out the taxpayer discloses to the Respondent sufficient information to enable the nature of the tax default to be determined". The Chief Commissioner makes the following additional submissions: "(d) There is absolutely no evidence in this case suggesting that prior to 30 October 1998 the Applicants in any way informed the Commissioner of sufficient information to enable the nature and extent of the tax default to be determined. There is no warrant for imposing a penalty tax of only 5% in the matter; (e) additionally, it is submitted by the Respondent that during the period October 1999-April 2000 (when the assessments were issued) the Applicant was very uncooperative in providing the information required and it took until April 2000 to obtain all the necessary detail to issue the information - ie a period of some 6 months. To exercise the power to remit either penalty tax or interest the intention of the TAA was to ensure, at the very least, some cooperation on behalf of the taxpayer. Such cooperation has been totally lacking in this case as there was a delay in the provision of relevant information and refusal to pay the principal amount of payroll tax; (f) furthermore, the whole history of these proceedings as indicated in the chronology tendered before the Tribunal shows a total lack of cooperation by the Applicant. Indeed, the evidence shows nothing but continuous delay and obstruction by the Applicant in the Respondent's efforts to obtain and seek to enforce a judgment in its favour for the relevant amounts of outstanding payroll tax owing to it (for both principal and interest amounts). In particular, to this day, the Respondent still has not been paid, at the very least, the principal amounts for payroll tax which were levied in respect of assessments issued on 20 April 2000 - some 3 years ago. The principal amount of payroll tax has never been in dispute. It still has not been paid. The lengthy history of the recovery proceedings issued against the Applicants by the Respondent in the Parramatta Local Court is clear evidence of sheer obstruction and delay by the Applicants in the payment of the substantive amounts of payroll tax. In such circumstances, it was legitimate for the Respondent not to exercise its discretion at all to remit either the market rate component or the premium component of the interest rate under section 25 nor to remit any further the penalty tax that was imposed under Division 2 Part 5 TAA." 53 Among the documents provided by the Chief Commissioner under s 58 of the ADT Act is a letter dated 17 October 2000 from Mr Galazzo, Managing Director of Incise Pty Ltd addressed to the Chief Commissioner in which the company, in seeking a further review of their case for remission of interest and penalties, among the grounds as to their behaviour which warranted a review, the company included the following matters: "2. Request for pay-roll tax information was first received in October 1999. In view of the confusion we had at that time regarding grouping we took appropriate and prompt action in getting expert advisers to establish the correct position. 3. Having received expert advise and understood our position regarding exposure to pay-roll tax, the company took prompt and all reasonable steps to report the liability to the OSR. 4. The structure of the company did not permit adequate man-power or quality personnel in the accounts department, which led to the delay in going through enormous volume of records and consultation with external advisers in the preparation of prior years pay-roll tax details to the OSR. 5. It is to be noted that once we became aware of the company's responsibilities and the timeliness of the payments, the company commenced making monthly pay-roll tax payment from January 2000." 54 The Chief Commissioner responded to this letter and raised no reservations about the behaviour of the applicants but merely indicated that, as no additional information had been provided, the original objection decision of 17 August 2000 would not be changed. 55 In considering this issue in the context of the objection decision made on 17 August 2000, I am of the opinion that there would be an error in law if I took into account events after 17 August 2000 unless they explained events that were relevant in making the objection decision. I will accordingly, disregard the submissions that the Chief Commissioner has made in relation to the behaviour of the applicants after the objection decision had been made in considering the substantive issue. 56 The real issue is whether the provisions of s 28 prevent the reduction in penalty tax in the case of the applicants. Section 28 is a statutory direction that penalty tax is to be reduced by 80% if, "before the Chief Commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out, the taxpayer discloses to the Chief Commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined". This as I say is a statutory direction and not a discretion to ensure that the severe penalties are only justified in cases where the information is not provided prior to the investigation. 57 The letter dated 30 October 1998 was addressed to "The Proper Officer" of Incise Service Pty Ltd. The letter refers to liabilities if any of "you", Incise Service Pty Ltd, the named company. No mention was made of the liability if any of any related company. I accept that the letter clearly indicated that an investigation relating to Incise Service Pty Ltd was to be carried out. But I am unable to construe a provision imposing a penalty to extend to related companies when no such notification was in fact given to the applicants. 58 Although the relevant information of the liability to pay-roll tax of the applicants was provided in consequence of the Chief Commissioner's inquiry addressed to Incise Service Pty Ltd, it was sufficient information in writing to determine the nature and extent of the tax default made prior to any notification to the applicants that an investigation was to be carried out. In fact no notification was sent as required because the information was provided by the applicants quite independently. 59 Section 28 of the TA Act is generally worded and is designed to apply to various taxation laws, including pay-roll tax law, which are administered by the Chief Commissioner. The section operates to allow a reduction in the penalties unless the Chief Commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out before the information is provided by the taxpayer. The term "taxpayer" is defined in s 3 of the TA Act to mean "a person who has been assessed as liable to pay an amount of tax, who has paid an amount as tax or who is liable or may be liable to pay tax". The definition does not include any group of taxpayers or related taxpayers to be treated as being a singular taxpayer for purposes of the TA Act. 60 There may be a lacuna in the law in relation to pay-roll tax liability of a group of related companies. On the other hand, if the Chief Commissioner had taken reasonable care and included all the companies in the group, including the applicants, in his letter of 30 October 1998, the provisions of s 28 would not have applied to allow the applicants a lower penalty rate. On the contrary, the Chief Commissioner did not act upon his original request for information for almost a year and there is no evidence before the Tribunal that at any stage prior to the furnishing of the information by the applicants the Chief Commissioner had indicated in writing or orally that the applicants or all the companies in the group were under investigation. The facsimile message sent by the Chief Commissioner of 11 October 1999 was only directed to Incise Service Pty Ltd. 61 Accordingly, I will reduce the penalty tax payable in the relevant two years by 80% as required by s 28 of the TA Act. In addition, as indicated above, the interest imposed in the relevant assessments should be reduced to the market rate interest as from the end of the last day of payment of the tax assessed in each assessment until the day the tax assessed is paid by the applicants.