Nhem v Chief Commissioner of State Revenue

Background and agreed facts

1. The background to the matter is provided by the following facts which are apparently uncontested.
2. On 13 March 2020 contracts were exchanged for the purchase of the Canley Heights property by Mr Nhem and Ms Heng (the Canley Heights transaction). The Canley Heights transaction is central to the case, as it was the Chief Commissioner's investigation of it which culminated in the issue of the Assessment.
3. However by June 2021, there was in progress an investigation by the Chief Commissioner into an earlier separate transaction (the Oran Park transaction). That involved the purchase by Mr Nhem and Ms Heng in May 2018 of a property in Oran Park (the Oran Park property). On 16 March 2021 the Chief Commissioner had sent them a notice of investigation. It was included in the bundle of documents (the section 58 bundle) which was provided by the Chief Commissioner under section 58 of the Administrative Decisions Review Act 1997 (ADR Act). Relevantly, the notice of investigation stated: …it appears that you may be liable for Surcharge Purchaser Duty in relation to the (Oran Park Transaction)…On the transaction date (Mr Nhem) was a foreign person because (he was):- . (a) temporary resident of Australia…
4. Returning then to the Canley Heights transaction, on 21 June 2022 the Chief Commissioner sent a notice of investigation letter to Mr Nhem and Ms Heng. It identified Mr Nhem's potential liability for SP Duty in respect of the purchase of that property, on the basis that he was a foreign person because he was a temporary resident of Australia.
5. On 18 July 2022 in response to the Chief Commissioner's enquiries as part of his investigation of the Oran Park transaction, Ms Karen Nyitrai of John Joseph Solicitors (the law firm) which acted for Mr Nhem and Ms Heng in both the Oran Park and Canley Heights transactions emailed a "Purchaser/Transferee Declaration" in hard copy (the paper form) to Revenue NSW. The paper form had apparently been completed and signed by Mr Nhem over two years earlier, on 11 March 2020; that is, well prior to the Canley Heights transaction.
6. Ms Nyitrai was and remains an administrative assistant at that law firm and in that capacity she assisted the principal of the firm, Mr Andrew Joseph, in relation to the Canley Heights transaction. Ms Nyitrai was not then and is not now a qualified solicitor or conveyancer. I should add that I have seen nothing which establishes that it was Ms Nyitrai who was responsible for preparing or finalising the paper form in March 2020.
7. The paper form contained the following question: Is the purchaser/transferee a foreign person? (This excludes an Australian citizen and a person ordinarily resident in Australia)
8. The responses to questions in the paper form were made by ticking a box. Some boxes had accompanying text. In response to the question above the "Yes" box was ticked and the "No" box left blank. But the printed text next to the "No" box makes it clear that "No" is the appropriate answer (that is, that the purchaser/ transferee will not be a "foreign person") when the purchaser/ transferee is:

• an Australian citizen, or
• a person who is ordinarily resident in Australia (including a New Zealand citizen as per explanatory notes).

1. Turning now to the Canley Heights transaction. In Ms Nyitrai's written statement of 19 July 2023, on which she was cross-examined, she explained that she undertook the processing of stamp duty for the transaction by way of the law firm's online Electronic Duties Return portal (the online portal). She goes on to provide a detailed explanation of the facts and her actions in completing the information on the online portal. These are set out the relevant paragraphs from her statement. ……4. As part of that process,(that is, of assessment of stamp duty payable on the Canley heights transaction), I entered various (items of) information into the portal which had been provided to us in hard copy by (Mr Nhem). This included information provided on the Revenue NSW form ODA 076…which I have referred to hereafter as "the paper form". 5. One of the questions on (the paper) form is whether the purchaser/transferee is a foreign person. The box marked "Yes" had been checked on the paper form. 6. However, when it came to entering data into the online portal, I found that the questions on the online portal differed from the paper form. 7. In the paper form, you are only required to answer the question of whether a person is an Australian citizen or "ordinary resident" if the person is NOT a foreign person. 8. By contrast, in the online portal, once the citizenship of the person is entered, you are required to confirm whether they are "ordinarily resident" in Australia. No guidance is given on the form as to the definition of the term "ordinarily resident". There is no box to tick as to whether the person is a "foreign person". 9. I was aware that Mr Nhem resided with his wife and children in Sydney. I was aware that he did so permanently (and I use the word permanently in the sense that he lives in Australia full-time, has a house and a job here, and schools his children here, albeit that I am now aware his visa at the time was a temporary one) and that he had not left Australia for at least a year. I was aware that he intended (and as far as I am aware still intends) to apply for permanent residency and perhaps Australian citizenship. 10. Based on that knowledge I entered "Yes" to the question of whether he was ordinarily resident in Australia.
2. The making of an affirmative answer to the question referred to at [13] above was, of course, incorrect, which Ms Nyitrai now acknowledges.
3. Ms Nyitrai has given sworn evidence at the hearing. In it she has confirmed that her statement of 19 July 2023 was true and correct. She has been cross-examined in some detail and briefly re-examined. I comment on the reliability Ms Nyitrai's account of these matters further below, but I have referred to it here because it comprises a substantial and useful summary of the facts leading to the errors on the form; that is, on the online portal form of the Purchaser/Transferee declaration.
4. On the basis of the information on (the paper) form of the Purchaser/Transferee Declaration as completed on 17 March 2020 the Chief Commissioner issued the initial Notice of Assessment of duty on the purchase of the Canley Heights property of $46,922 shortly thereafter. However, some 17 months later, on 19 July 2022, the Chief Commissioner's office sent an email to Ms Nyitrai which confirmed that, on the basis of the paper form of the Purchaser/Transferee declaration: Surcharge Purchaser Duty was not calculated for (Mr Nhem) as details of (his) foreign status was (sic.) not disclosed …

Preliminary issue: Application lodged out of time

1. As noted above, Mr Nhem lodged his objection to the Chief Commissioner's assessment, insofar as it imposed penalty tax and interest, on13 October 2022. Mr Nhem's objection was determined and disallowed by notice of 1 February 2023 and he was notified of the disallowance on 6 February 2023. On 1 May 2023 he commenced these proceedings by lodging his Application with the Tribunal's registry. So the proceedings were commenced 89 days after notification of the Chief Commissioner's disallowance.
2. Section 99 of the Administration Act relevantly provides as follows: (1) An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period.
3. Clearly the application was lodged 29 days out of time.
4. Section 41 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) allows me to grant an extension of the period of time for doing anything under legislation under which the Tribunal has jurisdiction, despite anything to the contrary in that legislation. That clearly includes the Administration Act.
5. Notwithstanding that there has been a 29 day breach of the time limit, which is not a merely trivial or minimal default, I am inclined to grant an extension of time for the lodgment of the application up to the date on which it was actually made, being 1 May 2023, for the following reasons: 1. no objection to the application on the grounds of its having been filed out of time has been made by the Chief Commissioner; and, in any case 2. there appears to be no demonstrable prejudice to the Chief Commissioner, to his case, or to the process by which I will determine the matter which might be caused by allowing such an extension.
6. I will therefore order that the time for making the application is extended to 1 May 2023.

The Tribunal's role and the onus and standard of proof

1. The role of the Tribunal in determining an application for administrative review under section 63 of the ADR Act is: … to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law.
2. For the purpose of making its decision, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision: ADR Act s 63(2). The effect of that is that the Tribunal's role is to decide what the correct and preferable decision is, having regard to the material that is before it at the hearing. It follows that the Tribunal may take into account material that was not before the primary decision-maker.
3. As to the onus of proof, it is of fundamental importance that in a review of this nature the applicant taxpayer has the onus of proving their case: section 100(3) of the Administration Act , B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSW LR 481; Levitch Design Associates Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 215 (Levitch). The burden lies solely on Mr Nhem as the applicant. The legislation places no onus on the Chief Commissioner to prove his case: see Levitch at [7]
4. The standard of proof is the balance of probabilities. So in order to succeed Mr Nhem must prove on the balance of probabilities all the relevant facts on which he relies, so as to establish that the Chief Commissioner's decision to make his assessment and not to reduce further the penalty tax or to remit the interest, was neither the correct nor the preferable decision.

Relevant statutory provisions

1. The relevant statutory provisions are as follows: Taxation Administration Act, 1996 Part 5 Interest in respect of tax defaults Division 1 Interest 21 Interest in respect of tax defaults (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 it is paid at the interest rate from time to time applying under this Division. (2) Interest is payable under this section in respect of a tax default that consists of a failure to pay penalty tax under Division 2 but is not payable in respect of any failure to pay interest under this Division. 22 Interest rate (1) The interest rate is the sum of-- (a) the market rate component, and (b) the premium component. (2) The "market rate component" is-- (a) unless an order is in force under paragraph (b), the Bank Accepted Bill rate rounded to the second decimal place (rounding 0.005 upwards), or (b) the rate specified for the time being by order of the Minister published in the Gazette. (3) The "premium component" is 8% per annum. …. 25 Remission of interest The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount. 26 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) Penalty tax is not payable in respect of a tax default that consists of a failure to pay-- (a) interest under Division 1, or (b) penalty tax previously imposed under this Division. 27 Amount of penalty tax (1) The amount of penalty payable for a tax default is, subject to this Division-- (a) 25% of the amount of tax unpaid, or (b) if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth--50% of the amount of tax unpaid. (2) The Chief Commissioner may increase the amount of penalty tax payable in respect of a tax default to 75% of the amount of tax unpaid if the Chief 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 taxation law. (3) The Chief Commissioner may determine that no penalty tax is payable in respect of a tax default if the Chief Commissioner is satisfied that-- (a) the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the taxation law, or (b) the tax default occurred 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. 33 Remission of penalty tax The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit penalty tax by any amount.

Revenue NSW Practice Note CPN 024

1. Revenue NSW Practice Note CPN 024 "Interest and penalty tax guidelines" (CPN 024), came into effect from June 2022.
2. CPN 024 is an important element, because it is a recent statement of the Chief Commissioner's policy for determining whether interest will be remitted under section 25. It is a useful gauge of how the Chief Commissioner will exercise his section 25 discretion. It cites the recognised cases on the issue and it is generally consistent with the principles developed in them, and provides useful examples of how in practice the Chief Commissioner will apply those principles.
3. The relevant parts of CPN 024 are as follows: 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 the 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)…. 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: Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 at [81]….. ….Imposition of Penalty Tax (secs 26 & 27) Penalty tax is generally imposed after all the facts and circumstances surrounding the tax default are considered. In certain circumstances the Chief Commissioner may increase the rate of penalty tax or determine that no penalty tax is payable. A liability to penalty tax arises when a tax default occurs. Penalty tax is in addition to interest. The amount of penalty tax is 25% of the amount of unpaid tax or 50% if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth. The Chief Commissioner may increase the amount of penalty tax to 75% of the unpaid tax if the tax default was caused wholly or partly by the intentional disregard of the taxation law. Penalty tax may be reduced if a taxpayer makes or voluntary disclosure of a tax default before or during an investigation. Voluntary disclosure [Table omitted] The Chief Commissioner also has a general discretion to remit penalty tax by any amount in such circumstances as the Chief Commissioner considers appropriate (s 33 of the TAA). Where there is evidence that the taxpayer (or their representative) took reasonable care to comply with the taxation law, or the tax default occurred solely because of circumstances beyond their control (excluding financial incapacity), the Chief Commissioner will usually determine that no penalty tax is payable.

Documentary material, evidence at hearing and submissions

1. The following documentary material (omitting interlocutory material and procedural correspondence) has been made available. 1. For the Applicant, Mr Nhem: the Application (which attached the Chief Commissioner's notice of disallowance of objection),submissions lodged on 21 August 2023, statement by Mr Nhem dated 18 August 2023 and statement by Karen Anne Nyitrai dated 19 July 2023. 2. For the Chief Commissioner: the section 58 bundle, a supplementary section 58 bundle and written submissions lodged on 16 August 2023.
2. The parties have also helpfully provided a Joint Bundle of Authorities.
3. Each of Mr Nhem and Ms Nyitrai has given sworn testimony on which each of them has been cross-examined and re-examined.
4. Oral submissions have been made on behalf of each party.

Mr Nhem's case

1. Mr Nhem's case was set out in his solicitors' written submissions. As noted above, Mr Nhem does not challenge the imposition of SP duty or the quantum of the duty assessed. He disputes the penalty tax and the interest imposed, both as to their imposition and their quantum.
2. Mr Nhem contends that although it is conceded that an error that was made in failing to indicate correctly that Mr Nhem was a "foreign person" in online portal lodgment, regard should be had to the circumstances of the default and in particular the following facts. 1. There was no tardiness or undue delay by Mr Nhem in dealing with the enquiries made by the Chief Commissioner's staff and he has been co-operative with the process of investigation commenced by the Chief Commissioner. 2. The paper form of Form ODA 076 (that is, of the Purchaser/Transferee declaration) requires a person to disclose whether they are ordinarily resident of Australia(or alternatively, whether they are an Australian citizen) only if they are not a foreign person. 3. The online portal form however requires different information; namely the person's country of citizenship as well as confirmation as to whether or not they are ordinarily resident in Australia. 4. Ms Nyitrai based her completion of the online portal information on her assumption that because (as she was aware) Mr Nhem was residing in Sydney full-time and had established links with his local community, including sending his children to a school in Sydney and expressing an intention to become an Australian citizen, he was properly to be regarded as ordinarily resident in Australia. 5. No guidance was given on the online portal as to the definition of "ordinarily resident in Australia". 6. In any case the error in completion of the online portal "cannot in any reasonable sense be said to be the fault" of Mr Nhem.
3. On that basis and on the basis outlined by Mr Nhem's solicitor in his closing submissions I understand Mr Nhem's case to be that the degree of care which was reasonable in the circumstances was taken by him (and by the solicitor's firm representing him) to comply with the relevant taxation law and to ensure the payment of the full SP Duty and accordingly the penalty tax and the premium rate component of interest should be remitted in full; but that the remission of the market rate component of interest is not pressed.
4. For completeness, I will proceed on the basis that it is further submitted in the alternative that the Tribunal should exercise its discretion under section 25 of the Administration Act to remit part of interest charge, so that the amount of interest to be borne by Mr Nhem is, as it is expressed in those submissions: … a nominal amount which is fair and reasonable and properly reflects (his) degree of culpability…which, it is submitted, falls at the very lowest end of the scale of seriousness.

Ms Nyitrai's evidence

1. As noted above, the evidence of Ms Nyitrai, the legal assistant who completed and lodged the online portal return, is central to an understanding of the facts and the background as to how the answer on the online Duties Return lodged through the online portal came to be misleading. Her evidence was relied on by Mr Nhem. It is therefore appropriate that I comment here on the value of her evidence and the weight which I give it.
2. Ms Nyitrai gave sworn evidence, particularly as to her written statement of 19 July 2023 filed in these proceedings. She was then cross examined in some detail and then briefly re-examined. I found Ms Nyitrai to be a credible witness. Her account was a frank one. It was not substantially undermined by Ms Gollan's competent and proper cross-examination. Ms Nyitrai is not an admitted solicitor or conveyancer and although she appears to have had substantial paralegal experience.
3. Ms Nyitrai's error was a basic one. Doubts about the way she ultimately completed the online portal form might well have been expected to have arisen in her mind, by reason of the paper form having indicated clearly that in March 2020 Mr Nhem was a foreign person not ordinarily resident in Australia. She appears to have relied upon her personal knowledge of Mr Nhem's current local accommodation, employment as well as arrangements for the education of his children in assuming and recording that he was, by July 2022, ordinarily resident in Australia.
4. That was a legally incorrect assumption with serious consequences. She could have and in my view should have checked the position before making the online portal lodgment. Nevertheless, she accepts her error and appears to regret it.
5. In my assessment, Ms Nyitrai was an honest and reliable witness and so I give substantial weight to her testimony insofar as it relates to the manner in which and the steps by which the online portal form came to be completed and lodged.

The Chief Commissioner's case

1. The Chief Commissioner relies on CPN 024 and recognised case law. In summary, he contends as follows. 1. This is not a case where the tax default was due to circumstances outside the control of the taxpayer or their representative within the meaning of CPN 024, such that the Chief Commissioner could or would remit interest, including both the market rate component and the premium component. Moreover there are no exceptional circumstances of the type contemplated by the Practice Note. None of the particular exceptional circumstances which were identified in Oueik v Chief Commissioner of State Revenue [2022] NSWCATAD 22 (Oueik) and are referred to in CPN 024 (such as strikes, serious illness and natural disasters) are applicable here. The decided case law does not support a finding that Mr Nhem's default was due to circumstances beyond his control. 2. In respect of the imposition of each of the premium component of interest and penalty tax, Mr Nhem has not established to the requisite standard that reasonable care was taken to ensure payment of the tax by Mr Nhem himself or any person acting on his behalf either within the tests developed at common law or (in respect of any possible remission of penalty tax) for the purposes of section 27 (3)(a) of the Administration Act. The Chief Commissioner relies in particular on CPN 024. 3. The Chief Commissioner points out that Section 27 (3)(a) takes into account the actions and omissions of both the taxpayer and his advisers, so that if either of them failed to take reasonable care to comply with the taxation laws then the Chief Commissioner is justified in not remitting interest. The Chief Commissioner in this regard relies upon the decisions and reasoning in Touma v Chief Commissioner of State Revenue [2012] 86 ATR 1 (Touma) and O'Neill Tyres Gateshead & Cessnock Tyres Pty Ltd v Chief Commissioner of State Revenue[2020] NSWCATAD 314 (O'Neill Tyres). I have discussed the application of those cases below. 4. In particular, the Chief Commissioner draws attention to the train of events which I have summarised above, culminating in Ms Nyitrai's submission on 18 July 2022 of the online portal version of Mr Nhem's purchaser declaration. The significant point is that the paper form of the declaration had been completed on 11 March 2020 and therefore prior to the entry into of the contract for sale of the Canley Heights property. The critical question in the paper form was: Is the purchaser/transferee a foreign person? This excludes an Australian citizen and a person ordinarily resident in Australia 1. Mr Nhem ticked the "Yes" box. He left blank the box which could be used if a "No" answer had been given which would have advised that he was: a person ordinarily resident in Australia… 1. The paper form was in Ms Nyitrai's possession at the time she completed the online portal form. 2. The Chief Commissioner contends that it must follow that by 16 March 2021 Mr Nhem's solicitors had a clear indication that Mr Nhem was not ordinarily resident in Australia.
2. Mr Nhem has conceded in paragraph [17] of his written submissions that there was "an error in the transfer of the data" , which I take to be a reference to the failure to disclose that he was a "foreign person" in the return which was submitted by Ms Nyitrai by way of the online portal.

The real issues

1. It follows from the above and by reference sections 25 and 27 of the Administration Act and to CPN 024 that the real issues in this matter are: 1. whether the tax default occurred solely because of circumstances beyond the control of Mr Nhem as the taxpayer and beyond the control of the law firm as his representative: 2. whether Mr Nhem as the taxpayer and the law firm as his representative took reasonable care to comply with the taxation law by ensuring payment of the duty; and 3. whether there is any other basis upon which the Chief Commissioner's decision not to alter the assessment by remitting or reducing the interest or the penalty should be varied.
2. If I find that the tax default was beyond the control of Mr Nhem or of the law firm as his representative, then, standing in the shoes of the Chief Commissioner: 1. I may remit interest generally, as confirmed in CPN 024 at 3. However in order to consider remission of the premium component of interest I would need to be satisfied that there were special circumstances in order to do that: Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 (Incise Technologies) at [81]; and 2. I may also, by exercising the discretion available under section 26 (3) of the Administration Act, determine that no penalty tax is payable.
3. If I find that either Mr Nhem himself or the law firm as his representative took reasonable care to comply with the taxation law relevant to the case, then, standing in the shoes of the Chief Commissioner: 1. I may remit the premium component of interest, as confirmed in CPN 024 at 4. However, as explained above, in order to do so I would need to be satisfied that there were special circumstances, on the authority of the decision in Incise Technologies; and 2. I may, by exercising the discretion available under section 27 (3) of the Administration Act determine that no penalty tax is payable in respect of the tax default.

Consideration: Circumstances beyond the control of Mr Nhem or the law firm?

1. CPN 024 at 3 indicates that where there is evidence that the default was outside the control of the taxpayer (or their representative) the Chief Commissioner may remit interest.
2. Section 27 (3)(b) of the Administration Act relevantly allows the Chief Commissioner to determine that no penalty tax is payable, where: …(b) the tax default occurred 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)..
3. In Oueik at [56] it was said that "exceptional circumstances" include only circumstances such as: where the tax default is entirely due to a fault of the Chief Commissioner or in situations completely out of the control of the taxpayer such as postal strikes, serious illness and natural disasters.
4. That limitation is confirmed in CPN 024 at 3.
5. Even on a construction of the facts which is the most generous to Mr Nhem it cannot be concluded that his tax default was entirely due to the fault of the Chief Commissioner.
6. Nor was this a situation which arose because of circumstances beyond either Mr Nhem's or the law firm's control, for the following reasons. 1. As is noted above, Revenue NSW, having commenced its investigation into the duty attracted by the Oran Park Transaction, gave notice to Mr Nhem and Ms Heng on 16 March 2021 of its preliminary view that SP Duty liability on that transaction may have arisen, because on the transaction date Mr Nhem was a foreign person, being a temporary resident of Australia. So, from that date Mr Nhem was on notice of his potential liability for SP Duty on any acquisition which he might make of residential land in New South Wales. He remained on notice of that at the time at which each of the paper form and the online portal form of Purchaser Declaration were completed. So the tax default which gave rise to these proceedings was not beyond his control. 2. Mr Nhem's solicitors contend in their written submissions at [8]-[11] that confusion arose as to how the online portal form of the Purchaser Declaration was to be properly completed. The source of the asserted confusion was that the online portal form required different information to that required on the paper form declaration. Although this was not expressly contended, if it were to be argued that this difference placed proper and accurate completion of the form beyond the control of Mr Nhem, I reject that. On that basis Mr Nhem's case must fail. 3. I agree with Counsel for the Chief Commissioner that a contention that there were circumstances beyond the control of Mr Nhem and the law firm must be rejected, because in the paper form of the Purchaser Declaration as completed by Mr Nhem on 11 March 2020, he answered "Yes" to the question and narrative: "Is the purchaser/transferee a foreign person? This excludes and Australian citizen and a person ordinarily resident in Australia". That affirmative answer demonstrates that Mr Nhem believed he was a foreign person. It is suggested that the answer caused some confusion in the mind of Ms Nyitrai when, in completing the online portal form, she made reference to that answer and the fact that Mr Nhem had left blank the box in the paper form next to the words "a person who is ordinarily resident in Australia". 4. If such confusion did arise it was without logical foundation. Mr Nhem would have ticked that box only if he had answered in the negative the principal question cited above as to whether he was a foreign person. He answered that question in the affirmative. At the very least, as I have said above, some doubt may well have been expected to have arisen in Ms Nyitrai's mind by reason of the way Mr Nhem had completed the paper form.
7. I agree with the conclusion drawn in the Chief Commissioner's submissions at [26] that: ...the completion of the paper form Purchaser's Declaration in this manner and its production by Mr Nhem to his solicitors provided clear indication that he was not "ordinarily resident in Australia".
8. The tax default was not due to circumstances beyond the control of Mr Nhem or of the law firm.

Consideration: Reasonable care to ensure payment of the duty?

1. Section 27 (3)(a) of the Administration Act relevantly allows the Chief Commissioner to determine that no penalty tax is payable, where: (a) the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the taxation law…
2. In Touma at [50] the Tribunal expressed the view that whilst the discretion of the Chief Commissioner under paragraph (a) of the subsection is enlivened if either the taxpayer or a person acting on behalf of the taxpayer (here, the law firm) exercised reasonable care to comply with the taxation law. The Tribunal observed that: … a decision-maker would in many circumstances be entirely justified in refusing to exercise the discretion if any one of the relevant persons failed to take reasonable care. I am of that view here. In the circumstances, and given that as I have found [the accountant acting for the taxpayer] failed to take reasonable care, I decline to exercise the discretion in s 27(3)(a) of the TA Act in favour of the Applicants.
3. An additional justification for a refusal to exercise the discretion in those circumstances is obtained by having regard to the combined result of the behaviour (the acts and omissions) of the taxpayer and the person acting for them. If that combined result is that the Chief Commissioner is unable to make a proper assessment of duty because the relevant behaviour includes a failure to take reasonable care (as here) or a failure to provide complete and accurate information (as here) then, whether or not it was the intention of either of the relevant parties to mislead (and there was none established here), the Tribunal may be justified in refusing to interfere with the Chief Commissioner's decision not to exercise the section 27 (3) discretion.
4. Additionally, as was said in O'Neill Tyres at [57]: For taxpayers to escape penalty tax by the simple expedient of delegating to professional advisers management of their (tax or duty) affairs would undermine (the) policy (of promoting compliance with taxation laws by the imposition of penalty tax).
5. I find that the law firm did not take reasonable care to comply with the taxation law in respect of the due assessment of SP duty on the transfer to Mr Nhem and Ms Heng of the Canley Heights property, so the Chief Commissioner was justified in not exercising the discretion available under section 27 (3).

Other basis for reduction of interest or penalty duty?

1. There is no other ground raised and I cannot see any other proper basis for alteration of the Chief Commissioner's decision which is under review.

Conclusions and order

1. It must follow from my conclusions that the Chief Commissioner's decision is the correct and preferable one and so it must be affirmed. I make the following orders.

Orders

1. The time for making the application is extended to 1 May 2023.
2. The decision of the Chief Commissioner under review is affirmed and the assessment of surcharge purchaser duty is confirmed.

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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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 January 2024