This appeal is from a decision made in the Administrative and Equal Opportunity Division of the Tribunal in which the Applicant (now the Appellant) sought administrative review under the Administrative Decisions Review Act 1997 (NSW) (the ADR Act) of a decision made on 11 February 2021 by the Respondent. The Tribunal at first instance decided that the decision of the Respondent was the correct and preferable decision and ordered that the decision be affirmed. That decision was published on 18 August 2022 ( the Decision) and is the decision the subject of this appeal. The circumstances which led to the Appellant making the application for administrative review are summarised in the following paragraphs.
The Appellant was (and still is) the trustee of a trust owning real estate in New South Wales. In February 2021 the Respondent issued to the Appellant an assessment of surcharge land tax for the 2017-2021 land tax years (the Assessment). In circumstances explained later, the Appellant objected to the Assessment and submitted that the surcharge land tax should be waived because he was not made aware of amendments to the Land Tax Act 1956 (NSW) (the Land Tax Act).
The relevant amendments imposed surcharge land tax on the Appellant as trustee of the trust because the trust deed did not exclude foreign persons from the class of eligible beneficiaries. The Land Tax Act provided a mechanism to avoid the imposition of surcharge land tax which involved the trust deed being amended to expressly exclude foreign persons as eligible beneficiaries. The trust deed was indeed amended but after the relevant deadline such that the Respondent contended that surcharge land tax was payable and issued an assessment accordingly.
The Appellant contended that he took no steps within the relevant deadline to amend the trust deed because he was unaware of the need to do so and that that arose because of failures by the Respondent and/or the State government entity known as Service NSW to inform him prior to the relevant deadline of the changes to the legislation requiring an amendment to the trust deed to be made in order to avoid the imposition of surcharge land tax.
The Appellant objected to the Assessment and that objection was disallowed. The Appellant bought proceedings to the Tribunal for administrative review of the Respondent's decision to disallow the Appellant's objection. The decision under review was the Respondent's decision to issue the Assessment - see [11] of the Decision.
There was no dispute that, until it was amended, the trust deed gave the Appellant, as trustee, discretion to distribute income of the trust fund and that the class of beneficiaries did not exclude foreign persons. The amendments to the Land Tax Act required amendments to trust deeds to be made prior to 31st December 2020. The Appellant's trust deed was amended in October 2021.
The Respondent contended that information in writing had been sent to the Appellant advising of the legislative changes and the Appellant contended that he did not receive any such communications from the Respondent.
On 11 February 2021 the Respondent issued the Assessment. In June 2021 the Appellant's accountant sought a remission of the surcharge land tax. That application was unsuccessful, although interest on the land tax has been waived. As stated above on 8 October 2021 the trust deed was amended in the manner required to avoid the imposition of further surcharge land tax.
The source of the power to impose surcharge land tax in the circumstances applicable to the Appellant is s 5D of the Land Tax Act, which came into effect in June 2020. It provided that the trustee of a discretionary trust is taken to be a foreign person for the purposes of s 5A if the trust does not prevent a foreign person from being a beneficiary of the trust. Section 5A (introduced at an earlier time) imposed surcharge land tax in respect of land owned by a foreign person. However, s 5D provided that if a discretionary trust prevents a foreign person from being a beneficiary then the trustee is not considered to be a foreign person.
Included with the introduction of s 5D were transitional provisions (contained in schedule 2 to the Land Tax Act) which provided that if a trust deed is amended prior to 31 December 2020 so as to prevent foreign persons from being a beneficiary then s 5D(2) is engaged (by which the trustee is not considered to be a foreign person).
The Decision records the Appellant's case, which may be summarised as follows:
1. The Assessment was not correct in circumstances where the Appellant was not made aware of the effect of the changes made to the Land Tax Act or of the need to amend the trust deed in the manner described above.
2. The failure of the Respondent or another government entity to make him aware of the amendments referred to is unfair and that that failure constitutes an estoppel against the Respondent issuing the Assessment.
In addition, the Tribunal considered an argument, not in fact raised by the Appellant. That involved a consideration of whether the Respondent owed a duty to those who are affected by the Respondent's decisions and in this case that duty (if it existed) is a duty to warn a taxpayer of possible liability for a newly imposed duty.
The Tribunal held that there was no legal basis to uphold the Appellant's contentions on the basis of fairness or justice. The Tribunal referred to a number of cases in support of that proposition, namely Commissioner of Taxation v Ryan (2000) 201 CLR 109, Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218, Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67 and Strathavon Resort Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 200.
In short, the Tribunal held that concepts such as fairness and justice cannot intrude into the legislative taxation scheme, notwithstanding the fact that such a scheme might in certain circumstances operate harshly [33].
With respect to the estoppel argument the Tribunal held at [37] that no conduct or representation by or on behalf of the Respondent will be regarded at law as constituting an estoppel such as to prevent the Respondent from issuing an assessment in the course of carrying out its functions and duties in administering the revenue laws of New South Wales. The Tribunal referred to and relied upon BBLT Pty Ltd v Commissioner of State Revenue [2003] NSWSC 1003 and the Gunasti case cited above.
The Tribunal also considered the alleged duty to warn tax payers or protect the liability of taxpayers. The Tribunal held that there was no authority which would impose a duty on public authorities to warn potential taxpayers of an impending tax. In particular, the Tribunal held that the Respondent and the related government entity Revenue NSW had no duty to "resolve or protect' or be liable for omitting to protect taxpayers.
At [42] the Tribunal concluded that the quantum of the duty was properly and correctly assessed and in the following paragraphs the Tribunal concluded that the Assessment was the correct decision. At [47] the Tribunal concluded that the Assessment was also the preferable decision in circumstances where the Respondent had no power other than to issue the Assessment.
[2]
Notice of Appeal
The Appellant lodged a Notice of Appeal. On 20 October 2022.
The appeal was required to be lodged within 28 days of the publication of the Decision: see clause 25 of the Civil & Administrative Tribunal Rules 2014 (the Rules). This meant that the appeal should have been filed on or before approximately 18 September but was filed approximately a month later. The Notice of Appeal did not seek an order that time be extended.
During the hearing of the appeal, the Appellant stated that he was awaiting determination of whether the Decision would be amended. This was a reference to correspondence sent to the Tribunal in which a number of typographical errors were pointed out and which resulted in the Tribunal making amendments to the Decision on or about 15 September 2022. The amendments were, in our opinion, inconsequential in that they corrected mistaken references to surcharge purchaser tax by altering those references to surcharge land tax. It is our view that the Decision was clear in being solely concerned with surcharge land tax and not surcharge purchaser tax.
The further reason for the delay in lodging the appeal was the fact that the Appellant initially made a complaint to the Registrar of the Tribunal who advised that the appropriate course was to lodge an appeal.
The Respondent stated during the hearing of the appeal that it consented to time being extended for the lodgment of the appeal.
The grounds of the appeal may be summarised as follows:
1. The Assessment and the Decision affirming the Assessment were unfair given the Appellant's record of always complying with his legal obligations and given the fact that he was not made aware of the changes to the Land Tax Act, which omission had the effect of adversely impacting upon his liability for land tax.
2. He suffered procedural unfairness because he had raised a number of questions concerning the conduct of officers of the Respondent and his interactions with those officers but answers to those questions have not been forthcoming, and he was not permitted to require his questions to be addressed by the Respondent.
The Respondent lodged a Reply to Appeal. The Respondent contended that the Appellant did not suffer procedural unfairness. The Tribunal was not required to answer or to direct the Respondent to answer the questions set out by the Appellant in the Appellant's written submissions. No error of law has been demonstrated by the Appellants.
[3]
Appellant's submissions
The Appellant's submissions are summarised in the following paragraphs:
1. The Appellant submitted that he had put to the Respondent and to the Respondent's legal representatives, a number of questions and he has been denied answers to those questions. The questions concern the failure of the Respondent to send communications to the Appellant at his email address rather than to another address by post, and to the more general failure of the Respondent to take steps to inform the Appellant of the ramifications caused by the introduction of s 5D. The Appellant submitted that at the hearing, at first instance, he was denied the opportunity to ask the legal representative of the Respondent for answers to the questions he had previously put and the denial of that opportunity constituted procedural unfairness.
2. The Appellant also submitted that, having regard to his excellent record as a law-abiding citizen and the fact that his profession required him to travel extensively, the Respondent should have waived the imposition of surcharge land tax, particularly given the Respondent's failure to ensure that he had received the relevant communications concerning s 5D.
The Respondent provided written submissions opposing the appeal. There is no need for us to repeat those submissions in this decision.
[4]
Consideration
Appeals in the Tribunal are regulated by s 80 of the Civil & Administrative Tribunal Act, 2013 (NSW) (the NCAT Act). That section provides that an appeal may be made as of right on any question of law or with the leave of the Appeal Panel on any other grounds.
The Appellant submitted that he was denied procedural fairness because of the failure of the Respondent to reply to the questions he had put in correspondence as well as the denial by the Tribunal to permit the Appellant to ask those questions or to require the Respondent to answer those questions at the first instance hearing.
In our view the questions put by the Appellant were not questions the Respondent was obliged to answer. As previously stated, the questions concerned the attempts by the Appellant to ensure that the Respondent communicated with him by email and not by post, which had proved to have been unreliable. The questions also concerned why the Respondent had not waived the surcharge land tax in circumstances where it was unfair upon the Appellant to be imposed with the surcharge land tax not having had the relevant information enabling him to amend the trust deed before the deadline.
We are in agreement with the Respondent's submissions that to constitute an error of law it must be established that the Respondent failed to comply with a duty to answer the questions put or that the Tribunal failed to consider that duty by permitting the Appellant to require answers to the questions which he had put.
The Respondent contended that it had no duty to notify individual taxpayers of the legislative amendments that introduced s 5D and that it did not have a discretion to waive surcharge land tax. We were not taken to any provision in the Land Tax Act that may have given the Commissioner a discretion to waive the tax (other than interest on unpaid tax which was waived).
We are in agreement with the Respondent's submissions and therefore we are of the opinion that the Appellant cannot point to a denial of procedural fairness in the conduct of the first instance hearing or in the fact that he has not been provided with answers to the questions which he had put to the Respondent.
In our view the Tribunal correctly and without error dealt with the relevant issues. In summary, these were that matters relating to unfairness are not a basis to set aside an assessment, no conduct or representation by the Respondent can estop the Respondent from issuing an assessment and that there is no duty on the Respondent to protect a taxpayer or to warn a taxpayer of a new duty.
In short, we are of the opinion that the Appellant has not identified any question of law.
In some circumstances leave to appeal may be granted where there is no identified error of law. This is not one of those cases because the Decision was made consistently with principle and in conformity with judicial authority.
The Appellant said that one purpose of the appeal was to clear his good name. That reveals a misunderstanding by the Appellant. His good name was never in issue and is not an issue in the appeal.
A question arises as to whether we should extend time for the lodgment of the appeal. There are many cases in the Tribunal which have dealt with such a question and the relevant considerations are well established. There are three considerations: the length of the delay, the reason for the delay and whether refusal to extend time would cause a clear injustice.
The length of the delay was not inconsiderable, a matter of approximately two months. The reason for the delay was twofold. First, the Appellant elected to lodge a complaint rather than to appeal. Secondly, he submitted that he was awaiting the decision of the Tribunal as to whether or not to make amendments to the Decision. In our view, the amendments were inconsequential and clearly the mere correction of typographical errors.
In favour of extending time is the fact that the Respondent consents to time be extended.
However, two matters are relevant in our conclusion that time should not be extended. Firstly, in our view, the appeal has no merit for the reasons already indicated in the earlier paragraphs. Secondly, time limits are imposed to ensure that proceedings are not unduly prolonged and come to finality within a reasonable timeframe. In the circumstances of this matter, we may have been inclined to extend time had the appeal demonstrated merit but in view of our opinion about the merits of the appeal, we are of the view that it would not be appropriate to extend time.
It follows that we make the following orders:
1. An extension of time for the lodgement of the appeal is refused.
2. Appeal dismissed.
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 03 February 2023