Oueik v Chief Commissioner of State Revenue

Consideration

1. The Applicant bears the onus of proving his case on the balance of probabilities in an application for review s 100(3) TA Act.

Tax default

1. The Applicant appears to have misunderstood the relevant legislative scheme and the obligations imposed on taxpayers by both the LTMA and the TA Act. The Applicant contends that the onus was on the Chief Commissioner to assess land tax correctly and that he did not fail to furnish returns under s 12 of the LTMA, so that no tax default has been committed under s 72 of the LTMA.
2. There is no onus on the Respondent to issue correct assessments or to make its own enquiries of Land Title records or other sources of relevant information in order to do so: EK Anderson Investments Pty Ltd ATF Cacs Property Trust v Chief Commissioner of State Revenue [2012] NSWADT 132; see also Gupta v Chief Commissioner of State Revenue [2006] NSWADT 187 at [33-34] and [40].
3. Section 12 of the LTMA, which enables the Respondent to require taxpayers to furnish land tax returns which set out a full and complete statement of all land owned by them, underscores that the regime relies upon taxpayers furnishing all relevant information to the Chief Commissioner. This is made clear also by s 10 of the TA Act which provides that a person who is liable to pay tax must, before or at the time of the assessment, fully and truly disclose to the Chief Commissioner all facts and circumstances relevant to the tax liability and s 9(5) of the TA Act which allows the Respondent to reassess tax at any time if there has been a failure to do so.
4. The Applicant in his written submissions suggested that there is no system for lodging a return for land tax purposes. This submission cannot be accepted. The requirement for a taxpayer to lodge a return under s 12 of the LTMA is notified in the Gazettes. The Respondent included in its tender bundle a copy of a page of the Respondent's website entitled "Land Tax online" which, the Respondent says, demonstrates how returns can be completed on-line. The Respondent also submitted, and I accept, that in any event, even if the Applicant did not know how to submit a return online it was open to him to email or phone the Respondent as his representative had done in March 2020 in respect of the omission of different property.
5. The Applicant submitted at the hearing that the Gazettes identified by the Respondent did not require the Applicant to lodge a notice of variation because, he said, the Gazettes only apply in circumstances where land has been acquired. Here, the Applicant says, the land was acquired some time earlier, not in the 2018 - 2021 years. However, that is to overlook those paragraphs of the Gazettes which are identified at paragraph [40] above which clearly require a person who has received an incorrect notice of assessment to lodge a variation return. Those paragraphs make it clear that one of the potential errors that may result in an incorrect notice may be that the details of the land owned by the person as shown on the notice are incorrect. It is not limited to identifying property which has only been acquired in the last land tax period.
6. The Gazettes imposed a clear obligation upon the Applicant to review his land tax assessments carefully, to identify whether there was any property which the Applicant owned which was missing and, if so, to lodge notices of variation.
7. The 2018 - 2021 notices of assessment were clearly incorrect as they omitted the Property. It is not to the point that the Applicant had originally advised the Respondent about the acquisition of the original properties. Nor is the reason why the Property was omitted from the notices of assessment relevant. The Applicant did not lodge notices of variation as required in respect of the 2018-2020 years at all, and in respect of the 2021 year, if the notice was lodged (which the Applicant disputes) within the time frame required by the Gazette.
8. As such, I find that the Applicant committed a tax default pursuant to s 72 of the LTMA in each of the 2018 to 2021 land tax years and interest was correctly imposed.

Remission

1. Section 25 of the TA Act provides that the Chief Commissioner may, in such circumstances as he considers appropriate, remit the market rate component or the premium rate component of interest or both by any amount.

Market Rate component

1. The authorities are clear that, as the market rate component of the interest imposed by the Respondent is intended to compensate the Respondent for not having the benefit of the tax payment from the time it was due, it is a component that would rarely be waived, otherwise tax would be being paid at a discounted amount which would be unfair to taxpayers who pay their tax on time. Only exceptional circumstances would justify remission, 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: Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 at [60]; Lease A Leaf Property Pty Limited v Chief Commissioner of State Revenue [2011] NSWADTAP 41 at [34], Trust Co of Australia Ltd v Chief Commissioner of State Revenue [2002] NSWADT 21, Adams Bidco Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 702 at [163].
2. The Applicant submits that the Respondent made a mistake in not including the Property in the assessments. However, as set out above, there was a clear obligation on the Applicant to review his tax assessments carefully, to identify whether there was any property which the Applicant owned which was missing and, if so, to lodge notices of variation. As such, to the extent there may have been a mistake on the part of the Respondent, I do not consider that it is one which caused the tax default to occur. Further, the Applicant has not established on the evidence before the Tribunal, that the Respondent in fact made an error on the information available to him. The effect of the consolidation of the five individual parcels into the one Property was that the folio identifiers for those previous properties ceased to exist and the new Property had a new folio identifier. There is no evidence that the Applicant registered those details with the Respondent and no evidence to support the Applicant's assertion that this information was provided to the Respondent by NSW Land Registry Services or Council. Nor is the fact that another taxpayer may have received a notice of assessment which included a property which had been the subject of amalgamation evidence of that. There is no evidence as to the information the Respondent may have been provided in respect of that assessment by that taxpayer or otherwise.
3. The Applicant has put forward no other circumstances which would justify remission of the market rate component of the interest.

Premium component

1. The premium component of the interest is a form of penalty. Its purpose is to provide an additional economic deterrent against taxpayers failing to meet their obligations on time: Incise Technologies at [61].
2. On the Respondent's website there is a Revenue NSW Fact Sheet on Interest and Penalty Tax which states: The premium rate of interest may be reduced if there is evidence you took reasonable care, or made a voluntary disclosure before the commencement of an investigation ...
3. As the Tribunal said in Laviva Nominees Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 84 the Tribunal is not bound by the Chief Commissioner's Guidelines, however there is a benefit in uniformity of application of tax laws.
4. In each case it is essentially a question of fact whether the taxpayer has taken reasonable care in complying with their tax obligations. In RVO Enterprises Pty Ltd v Chief Commissioner of State Revenue [2004] NSWADT 64, the Tribunal said at [23]: Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other inquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law.
5. In Incise Technologies the Appeal Panel considered four criteria as being relevant and appropriate to the consideration of remission of the premium component of the interest (although noting that there may be other circumstances which it may be appropriate also to take into account) and these criteria have been considered in a number of subsequent cases see eg Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 at [81], Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [178], namely: (1) all principal tax that has been assessed and is not in dispute has been fully paid at the time of the request for remission of interest; (2) there has been co-operation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments; (3) such co-operation by the taxpayer has occurred prior to any investigation being commenced by the Commissioner (voluntary disclosure) or, at the very least, within reasonable time after requests for information have been made by the Commissioner - i.e. the taxpayer has taken reasonable care; and (4) there has been no wilful default by the taxpayer in not paying tax on time.
6. The Applicant submits that he satisfies these criteria as he is paying the tax assessed by an agreed instalment plan, that he made disclosure of the omission of the Property through his representative in April 2021 prior to any investigation being commenced and because the Respondent has conceded, in the objection determination, that he did not intentionally disregard the law.
7. As to the notification by Ms Oueik on behalf of the Applicant in April 2021, however, there are a number of issues which the Applicant has failed to address. These include: whether there was any attempt to notify the Respondent of the consolidation of the Property at any time; why the Applicant did not notify the Respondent of the omission of the Property after receiving each of the 2018, 2019 and 2020 assessments; why the Applicant advised the Respondent on 12 March 2020 that certain other properties were not included in the 2017 to 2020 assessments but did not disclose at that time that the Property also was not included.
8. In submissions at the hearing, the Applicant's representative sought to rely upon a number of other matters in support of his argument that the Applicant had taken reasonable care, including: that the Applicant relied upon his bookkeeper and Ms Oueik to take care of his land tax affairs, that the Applicant's bookkeeper must not have identified the omission, that as soon as the omission was identified Ms Oueik notified the Respondent straight away and that the Applicant had always relied on what the Respondent sent by way of assessments as being correct. However, there was no evidence given by the Applicant, his bookkeeper or Ms Oueik to support any of these assertions and, as such, I am unable to accept them. Nor is there any evidence as to what attempts were made to comply with his obligations, whether any advice was sought or received by the Applicant as to his obligations or what other enquiries he or his representatives may have made to seek to ensure his compliance.
9. I also note that: 1. the amount of the 2018 assessment ($9,472.20) was significantly different from the 2017 assessment ($70,332,60); 2. the Applicant, through his representatives, had informed the Respondent that other properties had not been included in an earlier assessment and interest was remitted in respect of the re-assessments that then issued, so it is apparent that at least some attention was being paid to the Applicant's property which was included on his land tax assessments; 3. the Property comprises approximately 105 units and, according to the June 2021 assessment, is of significant value giving rise to a land tax liability of approximately $1,400,000 over a four year period.
10. In light of these matters it is very difficult to understand, in the absence of any evidence to assist the Tribunal, how the omission of the Property could have gone unnoticed for a period of over three years. I accept the Respondent's submission that the Applicant has not established that he notified the Respondent in a timely fashion or demonstrated reasonable care in making the disclosure which was made in April 2021.
11. The Respondent also submitted that, while the Respondent has accepted that the Applicant did not intentionally disregard his tax obligations, the concept of "wilful default" is broader than "intentional disregard" and would capture default in circumstances where the Applicant not only knew but ought to have known of his obligations and failed to comply with them. The Respondent did not cite authority for that proposition and it is not consistent with the way some Courts appear to have considered this criteria, see for example Antegra, where the Court stated at [180]: In that regard, the decision by the plaintiffs to not pay the assessed land tax cannot be anything other than "wilful" in the sense of being intentional.
12. I agree that the Applicant ought to have known he was required to lodge variation notices and did not do so. In light of the other findings I make as to whether the Applicant has established that he has taken reasonable care, whether that amounts to "wilful default" in the sense intended in Incise, is not a question I need to determine.
13. The onus is on the Applicant to prove his case on the balance of probablilities. He has not discharged that onus in this case. The Tribunal cannot, in the absence of evidence addressing the matters referred to above, be satisfied that the Applicant has taken reasonable care to comply with his obligations or that it is appropriate in the circumstances to remit any amount of the premium component of the interest imposed.

Orders 1. The decision under review is affirmed.

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: 26 April 2022