1. Mr Karaman did organize the purchase of a unit, the Applicant's statement continued, and a loan from the National Australia Bank through the broker "Community Mortgage" in Marrickville. He also organized for Mr Tom Zreika of the Melbourne solicitors Queen Street Chambers to act for the Applicant in the transaction. Unknown to her at the time, she told the Tribunal, Queen Street Chambers were also acting for Dominion Lifestyle Tower Apartments Pty Ltd - the vendor of the unit.

1. In early 2006, the Applicant entered a contract to purchase a property known as Unit 8.2, the Dominion Apartments 285-291 City Road, Southbank. She accepts that the Commissioner's document numbered T12 is a photocopy of Particulars of Sale referable to that contract ("the contract"). The particulars describe a sale of the unit to the Applicant for $542,000 on 12th February 2003 by a vendor named Melbourne Inner City Developments Pty Ltd. On 24th July 2003 the vendor changed its name to Dominion Lifestyle Tower Apartments Pty Ltd.

1. The Applicant gave evidence that Mr Karaman brought the documents for her to sign in Marrickville and that she "examined the documents closely". It was common ground that the contract was executed in August 2006. The Applicant said that she asked Mr Karaman about the discrepancy between the $340,000 price she had been quoted and the $542,000 contract price. She was apparently satisfied with the explanation that "vendor finance" covered the extra amount. Consistently with this, only $349,416 was provided to the Applicant by National Australia Bank and tendered on her behalf when the transaction was settled in August, 2006 (see document T20). Counsel for the Commissioner suggested that the Applicant knew that the contract was false and that the price had been inflated by $200,000.

1. Initials appear in the contract beside the longhand reference to 12th February 2003 as "DAY OF SALE". The Applicant acknowledged that she wrote the initials and that they referred to her.

1. In answer to a question put to her in cross-examination, the Applicant said that she "did not read" the contract which Mr Karaman brought her to sign. "He knew what he was talking about", she said, and was "well respected in the community." She could not recall whether the contract was dated when she signed it. Nor could she recall whether there was any handwritten date beside the words DAY OF SALE", adjacent to where she placed her initials. This exchange was inconsistent with her earlier evidence that she examined the contract closely before signing it.

1. In a letter from the National Bank dated 25 October 2006 there is reference to the Applicant borrowing a sum including $28,180 in respect of "Stamp Duty VIC Transfer of Land" and also to a $27,070 sum being "credited back to your account" by way of "refund" for "Stamp Duty VIC Transfer of Land" (see Document T21). By contrast, the "Settlement Statement of Account" supplied to the Applicant by her solicitors stated that only the sum of $108 was paid to "State Revenue Office" (see document T4). In cross-examination the Applicant agreed that there was a discrepancy and that she had been "careless" not to notice it.

1. The relevant transfer of land had a stated consideration of $542,000 and was dated 24 August 2006. When this document was lodged for stamping it was stamped with duty of $915 as upon a dutiable value of $46,478. An "off-the-plan" duty concession provided by s-s21(3) of the Duties Act 2000 ("DA") had been claimed by the Applicant's solicitors on her behalf. Uncontradicted evidence for the Commissioner was that the "off-the-plan" concession claim was facilitated by a false declaration made on behalf of the vendor. Mr Ali Moustafa declared that the value of the unit at the time of the contract was $46,478 and 100% of the construction work referable to the Applicant's unit was then yet to be completed.

1. It is common ground that the contract was executed in August 2006, that 100% of the construction works in respect of the unit had taken place at that time and that the Applicant was not entitled to the "off-the-plan" duty concession.

1. The Commissioner assessed the applicant for $27,265 duty on a transfer transaction where the consideration equalled $542,000 plus $20,448 penalty tax at a 75% rate for "intentional disregard of a tax law" under s30(2) of the Taxation Administration Act 1997 ("TAA"). The Commissioner has also claimed interest pursuant to TAA s24(1).

1. The Applicant accepts that she is liable to pay the balance of transfer duty referable to the higher consideration, but contests the appropriateness of the penalty tax and interest.

1. Relevantly to interest and penalties, the TAA at the relevant time provided:

(1) 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 that it is paid at the interest rate from time to time applying under this Division.

(2) . . .

The Commissioner, in such circumstances as the Commissioner considers appropriate, may remit interest payable by a taxpayer under this Division by any amount.

29. Penalty tax in respect of certain tax defaults

(1) if a tax default occurs, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.

(2) Penalty tax imposed under this Division is in addition to interest.

(3) . . .

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

(2) The Commissioner may increase the amount of penalty tax payable in respect of a tax default to 75% of the amount of the unpaid tax if the Commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or person acting on behalf of the taxpayer) of a taxation law.

(3) The Commissioner may determine that no penalty is payable in respect of a tax default if the Commissioner is satisfied that

• (a) the taxpayer (or person acting on behalf of the taxpayer) took reasonable care to comply with the taxation law; or
• (b) the tax default occurred 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.

The Commissioner, in such circumstances as the Commissioner thinks appropriate, may remit penalty tax by any amount.

1. I confirm the Commissioner's determination that the Applicant's tax default was wholly or partly caused by the intentional disregard of a taxation law by a person acting on her behalf and that a 75% penalty should be imposed.

1. Mainly for the following reasons, I find that the solicitors Queen Street Chambers intentionally disregarded the "off-the-plan" concession requirements in s-s21(3) of the DA in the relevant transaction:

1. the contract was backdated by more than three years; and

1. the solicitors sent an evidently false declaration to the Commissioner together with the Transfer of Land.

1. The Applicant's evidence was that she did not intentionally disregard Victorian stamp duty law and, instead, her solicitors Queen Street Chambers claimed the "off-the-plan" duty concession in her name without her knowledge or consent.

1. In these circumstances, s-s30(2) of the TAA makes the Applicant liable for her solicitor's intentional disregard of the terms of DA s-s21(3) subject to the Commissioner's determination under TAA s-s30(3) either that the taxpayer (or a person acting on her behalf) "took reasonable care to comply with the taxation law" or that the tax default occurred by reason of circumstances beyond the control of the taxpayer (or person acting on her behalf). No penalty is payable if the Commissioner is satisfied of either matter.

1. I do not believe that the Applicant took reasonable care to comply with Victoria's taxation laws. She became aware of (or chose to ignore) the falsity of contract terms of relevance to the state taxation authority. A reasonable person in her position would have suspected fraud.

1. Initialing a contract execution date backdated by three years is complicity in a fraud practiced by the vendor on a party who is not a party to the contract. The Applicant had some commercial experience. She was more likely than not to have been aware that the vendor was practising a deception on the Victorian taxation authority.

1. The Applicant protested her ignorance of Victorian stamp duty and its exceptions. In New South Wales, she said, there is no equivalent to the Victorian "off-the-plan" duty concession. There was "no doubt", she said, that she would qualify for the NSW stamp duty exemption for "new homes" and this, she thought, explained why there were references to duty "refunds" in transaction documents. This does not explain the backdating. I find that the Applicant's witting or careless participation in the backdating fraud amounted to a failure to take reasonable care to comply with Victoria's taxation laws.

1. The Applicant was also a knowing party to a contract of sale of land where the consideration was misstated by over $200,000. Stated consideration in a contract that effects a dutiable transaction is an essential integer of liability under DA Chapter 1. Necessarily the Applicant must have been aware that the Commissioner would be requested to levy duty on a false document. It is no answer to this allegation for the Applicant to allege that, by reason of the "off-the-plan" fraud, no further fraud on the revenue was likely. The issue is whether the Applicant took reasonable care to comply with Victoria's taxation laws. The DA is not complied with whether the contractual consideration in a dutiable transaction is overstated or understated.[1]

1. Has the Applicant necessarily taken "reasonable care" by reason of the fact that she followed the advice of her solicitors in connection with stamping of the transfer instrument? Deputy-President Macnamara in Loyalty Connection Pty Ltd v Commissioner of State Revenue [2011] VCAT 2422 at [57] observed that use of legal advisers is not an exculpation, before adding that care can be "reasonable" without being exemplary. Loyalty Connection concerned a legal mistake made in the absence of any falsehood or fraud. Facts of the case did not resemble the present facts.

1. I find that it was not reasonable for the Applicant to continue to rely on Mr Karaman and her solicitors after she became aware of there being something seriously untoward about the purchase transaction. The Applicant could not "shut her eyes" to evidence of falsity and/or fraud and continue to claim that she was taking reasonable care to comply with Victoria's taxation laws. See Re a taxpayer [2005] AATA 1156; (2005) 61 ATR 1086 at [48] per McCabe Sen Member - interpreting relevantly similar provisions in s226J of the Income Tax Assessment Act 1936 (Cwth).

1. Compare Pagone J's finding in Challenger Listed Investments Ltd (as trustee for Challenger Diversified Property Trust 1) v Commissioner of State Revenue [2010] VSC 464. In that case his Honour held that a TAA s-s30(3) determination was appropriate where companies in the Challenger Group followed stamp duty advice from Mallesons Stephen Jacques and that advice was alleged to be wrong, rather than false or fraudulent.

1. There is no basis upon which the penalty in this case should be reduced under TAA s31 consistently with published principles of how the Commissioner exercises his discretion under that section in Revenue Ruling TAA.007: Interest and Penalty Tax. It was not argued that the principles in that ruling were inappropriate. Reduction of penalty tax provides an inducement for taxpayers voluntarily to provide full details of tax defaults. There was no disclosure by the Applicant in this case.

1. I do not think that the penalty tax imposed on the Applicant in this case should be remitted under TAA s35. Following the observations of Megay, Sen Member, in Riverland Retreat Pty Ltd v Commissioner of State Revenue [2004] VCAT 1366 at [30], I note that the s35 discretion to remit penalty tax may be applied cumulatively to the preceding provisions in part 2 of the TAA and serve as a "catch-all" in relation to penalties. Riverland was a very different case to the one now before the Tribunal. Before setting aside the penalty in part, the learned Sen Member noted (at [31] and [35]) how there had been negligence only on the part of the solicitor and "no intentional disregard or deliberate neglect by the taxpayer".

1. The Applicant cannot satisfy the alternative basis of the TAA s-30(3) discretion in paragraph 30(3)(b). No evidence has shown the Tribunal that the tax default in this case occurred because of circumstances beyond the Applicant's control or beyond the control of her solicitors and advisers.

1. I confirm the Commissioner's determination that interest should not be remitted under s28 of the TAA. Interest in this case as been charged pursuant to TA s-s25(1) with both a market rate component and a premium rate component of 8%.

1. The market rate of interest is the cost to the Victorian government for the revenue forgone by reason of the tax default. Revenue Ruling TAA.007 sets out a principle that the market rate of interest should only be remitted in "exceptional circumstances" or where the SRO has contributed to the tax default. There is no evidence of such circumstances or contribution here.

1. The premium rate of interest is a form of (additional) penalty for late payment of tax. Revenue Ruling TAA.007 provides that it will only be remitted in full if the taxpayer can show that an additional penalty is not required. Partial remission is possible where the taxpayer can demonstrate that relative treatment of the taxpayer and other taxpayers who pay their tax on time does not require the compensation which the premium rate supplies. Neither full nor partial reduction of the premium rate was justified in this case.

[1] See DA s21 headed "What is the consideration for the transfer of dutiable property?"