Nguyen v Chief Commissioner of State Revenue [2025] NSWCATAD 99

You may be liable for Surcharge Purchaser Duty to the above property if (sic) were not in Australia for at least 200 days within the 12 months prior to the transaction date (e.g. the date the Contract for Sale was exchanged). Permanent residents may be eligible for an exemption from Surcharge Purchaser Duty if the property was their principal place of residence for a continuous period of 200 days within 12 months from the transaction date.

1. In response, Ms Ha she stated that the reason why the family including the applicant never moved into the Property was because of the applicant's serious illness, travel restrictions during Covid lockdown, Ms Ha's work commitments and taking care of the four children.
2. On 4 July 2024, after the applicant received a Duties Notice of Assessment, Ms Ha wrote to the respondent pointing out that surcharge purchaser duty should not have been applied to 100% of the Property as the applicant only owned 50% of the Property.
3. On 9 July 2024, Ms Ha asked the respondent to consider remitting the $15 768.38 interest based on circumstances outside of the applicant's control and financial hardship due to the applicant's illness. The respondent determined to remit full penalty but charge interest because the Property was rented; (letter dated 10 July 2024). The total amount of $55 368.38 was due to be paid by 31 July 2024.
4. On 10 July 2024 the respondent issued a Notice of Assessment for $44 368.38 and remitted the penalty in full. The applicant failed to pay the duty and the accrued interest.
5. On 17 July 2024, Ms Ha sent the respondent an email:

Thank you for sending the updated assessment. However there is no reason for my husband to get the fine from Revenue because he didn't break any rule and the circumstances outside the control of my husband have not been considered for interest exempt as the ruling that I sent in my email below. I will lodge the objection to the Chief Commissioner of NSW Revenue.

1. On 31 July 2024 the applicant wrote to the respondent that he could not live in the Property for at least 200 days within the 12 months after buying the property and sought a reassessment of the surcharge purchaser duty and a remission of the interest on the basis of natural disaster (Covid 19) and illness (from about May 2020 onwards).
2. On 8 August 2024 the respondent provided an objection determination notice. The notice explained that the respondent had no discretion to remit the surcharge purchaser duty and referred to decisions of this Tribunal. As to the interest, the respondent stated that the tax default occurred as the surcharge purchaser duty was not paid within three months of the liability arising.

1. The applicant applies pursuant to s 96 of the Taxation Administration Act for an administrative review of the Decision. The Tribunal is to decide what the correct and preferable decision is, having regard to any relevant factual material and any applicable law; s 63 of the Administrative Decisions Review Act 1997 (NSW). In undertaking this task, the applicant has the onus of proving the applicant's case; s 100(3) Taxation Administration Act.
2. Surcharge purchaser duty applies to relevant transfers of "residential related property". "Residential related property" includes certain "residential land" in New South Wales; s 104K(a) of the Duties Act 1997 (NSW). The Property was "residential land".
3. A liability for surcharge purchaser duty arises if the applicant was a "foreign person"; s 104J(1) of the Duties Act. Liability for duty arises in the case of a transfer, when the transfer of dutiable property occurs; s 12(1) of the Duties Act. In this case, liability for duty arose on 29 February 2020. On this date the applicant was a "foreign person", and surcharge purchaser duty applied.
4. The applicable definition of "foreign person" is contained in Chapter 2A of the Duties Act. Section 104J provides that a "foreign person" means a person who is a "foreign person_"_ within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) ("FATA"), as modified by section 104J of the Duties Act. Section 4 of the FATA defines a "foreign person" as an individual not "ordinarily resident" in Australia. Section 5 of the FATA goes on to provide as follows:

(1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:

(a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and

(b) at that time:

(i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law; or

(ii) the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law".

1. If a liability for surcharge purchaser duty arises, the Duties Act provides an exemption for certain permanent residents. That exemption is relevantly set out in s 104ZKA of the Duties Act is in the following terms:

(1) No surcharge purchaser duty is chargeable on a transfer, or an agreement for the sale or transfer, of residential-related property if each transferee under the transfer or agreement who would otherwise be liable to pay that duty is an exempt permanent resident.

(2) A transferee under a transfer or agreement is an exempt permanent resident if -

(a) the transferee is a permanent resident when a liability for duty charged by Chapter 2 on the transfer or agreement arises (or would arise but for a concession or exemption from duty under that Chapter), and

(b) the Chief Commissioner is satisfied that the transferee intends to use and occupy the residential land to which the residential-related property relates as a principal place of residence in accordance with the residence requirement.

(3) If there is more than one transferee under the transfer or agreement who is a foreign person (a foreign transferee) and the Chief Commissioner is satisfied that at least one, but not all, of those transferees is an exempt permanent resident -

(a) surcharge purchaser duty is to be reduced in proportion to the share or shares in the residential-related property transferred to foreign transferees who are exempt permanent residents, and

(b) none of those exempt permanent residents is liable to pay surcharge purchaser duty on the transfer or agreement.

(4) The residential land must be used and occupied by the exempt permanent resident as his or her principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date. This requirement is referred to as the residence requirement.

(5) The liability date is the date on which liability to surcharge purchaser duty first arose in respect of the share in the residential-related property transferred, or agreed to be transferred, to the exempt permanent resident".

1. Section 140ZKA(6) requires the respondent to assess or reassess the surcharge purchaser duty chargeable if the residence requirement is not complied with in relation to the residential land.
2. Section 104W of the Duties Act provides that surcharge purchaser duty is to be paid within three months after the liability to pay the duty arises. In circumstances where a tax liability has not been discharged within the required period, a tax default arises; s 21 Taxation Administration Act 1996 (NSW). Interest accrues at both the market and the premium rate; s 22 Taxation Administration Act.
3. Section 25 of the Taxation Administration Act gives the respondent discretion to remit interest. Section 25 in its current form came into effect on 1 February 2024:

(1) The Chief Commissioner may remit interest.

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

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

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

1. Section 25(2) allows the use of guidelines for remittal of interest. No guidelines have been issued on or after 1 February 2024. The respondent has previously issued a guideline; Practice Note CPN 024 as to how he will exercise his powers of remission. These guidelines were issued in June 2022 but remain current. Relevantly, they provide as follows:

When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid.

The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only.

........

Circumstances outside the control of a taxpayer

Where there is evidence that the default was outside the control of the taxpayer (or their representative), the Chief Commissioner may remit interest. Events over which a taxpayer has no control include but are not limited to:

a. natural disasters such as fire or flood

b. computer system breakdowns including third party systems such as electronic funds transfer systems

c. illness or death of a principal taxpayer

d. Revenue NSW fault affecting receipt of payment, including processing problems

e. circumstances where it is impossible to lodge or pay on time (excluding financial incapacity including hardship)

In cases of financial incapacity, taxpayers may apply for relief in the form of an extension of time to pay, including an instalment arrangement

Reasonable care taken by the taxpayer

Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to):

a. being honest and forthright when dealing with the Chief Commissioner

b. cooperation with the Chief Commissioner

c. the default is attributable to calculation errors

d. making diligent efforts to understand and comply with the law

e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer's obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits

f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements

g. applying any relevant revenue rulings in good faith

h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling

i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability

j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party.

Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration.

Note: Remission of the premium rate will only occur in special circumstances.

1. For the purpose of surcharge purchaser duty, the applicant was a foreign person; s 104J Duties Act, this is because on the date the Property was purchased the applicant was not an Australian citizen or an ordinary resident.
2. The applicant was not an ordinary resident because he was not in Australia during 200 or more days in the period of 12 months immediately preceding the time at which ordinary residency is tested, which is the date the contract for the Property was entered; s 5 FATA.
3. The applicant was in Australia for 159 days in the period of 12 months immediately preceding the date the contract for the Property was entered and as such he does not comply with the first requirement. It follows that the applicant remained a foreign person as at 29 February 2020 and a tax default has arisen, namely non-payment of surcharge purchaser duty when due.
4. The applicant relied on the exemption in s 104ZKA. The requirement in s 104ZKA(4) is for the residential land to be "used and occupied" as the "principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date".
5. An exemption to the liability for surcharge purchaser duty would arise for the applicant if he used and occupied by the Property as his principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date, which is by 28 February 2021. There was no dispute between the parties that the applicant did not use or occupy the Property. The Property was rented out to tenants.
6. There is no discretion in the legislation to grant an exemption from surcharge purchaser duty where a person intended to live in the property as their principal place of residence for a continuous period of at least 200 days within the first 12 months but did not do so for any reason.
7. As the applicant did not commence to live or use the Property from 2 June 2020, no exemption in s104ZKA was available and the surcharge purchaser duty was payable within 3 months after the liability date of 29 February 2020; s 17 Duties Act. The surcharge purchaser duty was not paid, and interest became payable on the tax default on 29 May 2020. The interest charge commenced from 2 June 2020.
8. The next part of the decision deals with the question as to what circumstances may render it appropriate to remit the interest, whether market or premium, whether in whole or in part.

1. Section 25 of the Taxation Administration Act allows for there to be a partial or full remission of interest. There are numerous factors that may justify remission of interest, as set out in CPN 024.
2. The market rate interest arises to compensate the respondent from not having the benefit of the tax payment and is it is rarely waived as otherwise it would have the perverse effect of being unfair to taxpayers who pay taxation on time; Oueik v Chief Commissioner of State Revenue [2022] NSWCATAD 132 at [56]. For this reason, factors such as fault or delay caused by the respondent or situations completely out of the control of the taxpayer are often used as examples of factors that might warrant the exercise of the discretion to remit market interest. Given the purpose of market rate interest, it is apt to look for "exceptional circumstances" to warrant remission; Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54 [64].
3. The premium component of interest is a form of penalty. It may be reduced where less than reasonable care has been taken but there is some evidence of care taken; Wan [64].
4. To determine whether there is a basis to exercise the discretion to remit the market rate component of interest it is necessary to understand the subject matter, scope and purpose of the provision: Wan at [67]. In this case, the interest was imposed because the surcharge property duty was not paid within 3 months of the liability arising; s 104W of the Duties Act. It is the circumstances affecting the tax default that are relevant.
5. On 11 April 2024 the respondent advised the applicant that surcharge purchaser duty was payable because the Contract for Sale was exchanged on 29 February 2020. Secondly, that the applicant was not in Australia for at least 200 days within the 12 months prior to 29 February 2020 and thirdly that the applicant had not resided at the Property for a continuous period of 200 days within 12 months from 29 February 2020.
6. Despite there being no disagreement with the facts above, the applicant did not seek any advice as to ensuring that it complied with the payment of tax. On 27 May 2024, Ms Ha sent an email to the respondent setting out that the applicant intended to live at the Property as a principal place of residence but did not because of Covid and the applicant's illness.
7. The correspondence between Ms Ha and the respondent demonstrates that Ms Ha did access the website of NSW Revenue. In the email dated 5 July 2024 she correctly asserted that she was not required to pay surcharge purchase duty because she was an ordinary resident and asked for a breakdown of the interest and on 9 July 2024 provided the respondent with a link to CPN 024 and asked the respondent to remit all premium and market rate interest charged on the applicant's surcharge purchaser duty based on circumstances outside of his control. The circumstances referred to be the applicant's illness which required him to cease working resulting on financial strain on the family finances.
8. The tax default occurred on 2 June 2020. The question relevant for considering whether interest should be remitted is why the applicant did not make a voluntary disclosure about his liability to pay the surcharge purchaser duty and pay the surcharge purchaser duty by this date.
9. The respondent stated that it did not consider that there were factors outside of the applicant's control as he could have notified the respondent and paid the surcharge purchaser duty by 2 June 2020 regardless of Covid-19 and his illness. The respondent also stated that there was no evidence that the applicant took reasonable care to ensure compliance with the tax laws.
10. The respondent in its written submissions stated that while Covid-19 was a natural disaster which was a circumstance outside of the applicant's control, there was no evidence that the applicant purchased a ticket to return to Australia or had any intention to return to Australia prior to deciding to rent the property to tenants on 21 April 2020. In May 2020 the property was leased and the tax default was due by 29 May 2020.
11. I find that it was the respondent's intention at the time of purchasing the Property to live in it as his principal place of residence. The reason why he did not live in the property was because of Covid-19. In March 2020 there was in Sydney a large outbreak of Covid-19 cases. Many of those were from overseas arrivals. At this time, there were no vaccinations and there was significant concern in the community about public safety.
12. I am satisfied that the reason why the applicant did not live in the Property was because he decided that it was not safe for him to return to Australia from Vietnam because of Covid-19. In April 2020 the applicant became unwell. I accept the applicant's evidence that the reason he decided to rent the Property to tenants in April 2020 was because of issues associated with Covid-19.
13. However, the reason why there arose a liability for surcharge purchaser duty was not because the applicant did not move into the property but because he failed to notify the respondent before 2 June 2020 that the surcharge purchaser duty was payable.
14. By 21 April 2020 the applicant had determined to rent the Property out for 12 months. This occurred on 12 May 2020. The lease was signed for a period of 12 months. There is no evidence that the applicant at any stage reconsidered this decision. The residential requirement the applicant was required to comply with would not have been likely with the decision to rent the Property out for 12 months.
15. In determining whether interest ought to be remitted will depend on the circumstances affecting the tax default. The tax default occurred on 2 June 2020.
16. There is no evidence before the Tribunal that the applicant sought any legal advice or advice from an accountant about his liability to pay the surcharge purchaser duty at this or any other time. There is no evidence as to why the applicant failed to notify the respondent that he would not be residing at the Property due to Covid-19 or illness. As noted earlier, Ms Ha, the applicant's wife is an accountant and was the person communicating with the respondent once the issue was raised in 2024.
17. Had the applicant notified the respondent any time prior to 2 June 2020 that the residential requirement would not be complied with, there would have been no charge of interest. In making the decision, I also take into account the fact the applicant has not paid the surcharge purchaser duty and remains in tax default.
18. The applicant has failed to satisfy the Tribunal that there are exceptional circumstances as submitted, including factors beyond the control of the applicant that would warrant remitting the market rate component of interest or the premium rate of interest.
19. I find that the applicant has failed to establish any grounds on which the discretion in section 25 of the Taxation Administration Act should be exercised in his favour for the market and premium interest to be remitted in part or whole. I find that the interest, as assessed in the Decision is the correct and preferred decision.
20. I make the following Order:

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.