|Date of judgement||25 July 2013|
|Court or Tribunal||Supreme Court of NSW|
TAXES AND DUTIES - taxation administration - reassessment of tax liability of taxpayer under s 9 of Taxation Administration Act 1996 - Chief Commissioner made reassessment after taxpayer began proceedings for review in Administrative Decisions Tribunal - whether existing proceedings in tribunal or court prevents Chief Commissioner from making a valid reassessment - ratio decidendi of St George Leagues Club Ltd v Commissioner of Land Tax  2 NSWLR 399
Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39
W & A McArthur Ltd v Federal Commissioner of Taxation (1930) 45 CLR 1
This matter related to an application by Metricon Qld Pty Ltd (“the Taxpayer”) for a review by the Supreme Court (“the Court”) of a decision by the Chief Commissioner of State Revenue (“the Chief Commissioner”) to make a reassessment of land tax before a review of the initial assessment requested by the Taxpayer had been determined by the Administrative Decisions Tribunal (“the Tribunal”). The Taxpayer contended, amongst other issues, that the reassessment issued before the review of the initial assessment was determined by the Tribunal was invalid
The Chief Commissioner applied for the determination of the validity of the reassessment as a separate question, pursuant to Rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW).
The Chief Commissioner contended that the reassessment was not invalid.
Justice White concluded that there was no implied limitation on the power of the Chief Commissioner to make a reassessment pursuant to s. 9 of the Act when review proceedings in relation to an initial assessment are pending.
On 8 December 2010 the Chief Commissioner issued to the Taxpayer a Land Tax Assessment Notice for the 2009 and 2010 land tax years, being an initial assessment pursuant to s. 9(3) and (4) of the TAA (“the Initial Assessment”). The Initial Assessment charged land tax for the 2010 land tax year on, relevantly, five properties owned by the Taxpayer whilst a further three properties were granted the primary production exemption from land tax pursuant to s. 10AA(2) and (3) of the LTMA.
The Taxpayer objected to the Initial Assessment and on 25 July 2012 filed an Application for Review under s. 96 of the TAA of the Initial Assessment in the Administrative Decisions Tribunal (“the Tribunal”).
On 9 August 2012 the Chief Commissioner issued a reassessment pursuant to s. 9 of the TAA (showing the amount of the reassessment) for the 2010 land tax year (“the 2010 Reassessment”). The three properties that formerly had been exempted from land tax were instead assessed as being liable for land tax. On the same day the Chief Commissioner issued to the Taxpayer an assessment for each of the 2011 and 2012 land tax years which taxed in each of those years, relevantly, all eight properties.
The Taxpayer objected to the 2010 Reassessment and to the initial assessments for the 2011 and 2012 land tax years. Subsequently, upon disallowance of that objection, on 23 April 2013 the Taxpayer filed an Application for Review in the Supreme Court, of the 2010 Reassessment and the 2011 and 2012 initial assessment, pursuant to s. 97 of the TAA.
By its Appeal Statement, the Taxpayer contended that the 2010 Reassessment is invalid or void because the Chief Commissioner cannot amend an assessment which is already the subject of a Part 10, TAA review proceeding, being the Review of the Initial Assessment before the Tribunal.
The Taxpayer relied upon the decision of Lee J in St George Leagues Club Ltd v Commissioner of Land Tax  2 NSWLR 399 (“the St George case”) in support of the contention that it was not open to the Commissioner to exercise the statutory powers affecting an assessment, once a statutory appeal had been initiated with respect to that assessment.
The St George case was based on the provisions of the LTMA concerning assessments, reassessments, objections and appeals as they stood at the time of that decision. Although those provisions were subsequently repealed and replaced by Pt 10 of the TAA, the Taxpayer submitted that there were close similarities between those provisions and the current provisions of the TAA. Therefore, by parity of reasoning, the effect of Div 2 of Pt 10 of the TAA was that once an application for review was made, it was for the Tribunal or Court to determine whether the assessment was to be confirmed, revoked or replaced and it was not open to the Chief Commissioner to issue a reassessment. The Taxpayer contended that there is an implied limitation on the Chief Commissioner's power under s. 9 of the TAA to this effect.
The Chief Commissioner contended that the 2010 Reassessment is validly made and issued within the reassessment power conferred by s. 9 of the TAA. It was submitted that the St George case was relevantly distinguishable both on its facts and because it was decided under a different legislative scheme, and was therefore not decisive of the Chief Commissioner’s power to make a reassessment notwithstanding the initial assessment is under review.
Emphasis was placed on the right of a taxpayer to object, under s. 87(2) of the TAA, in respect of “the extent of the reassessment”. It was contended that the initial assessment and the reassessment are supplementary to each other, and in combination give effect to the Chief Commissioner’s assessment of the tax liability of the taxpayer; the reassessment does not replace or supersede the initial assessment.
Justice White noted that the only express qualifications of the Chief Commissioner’s power to reassess were found in s. 9(3) (as to the time by which the Chief Commissioner can make a reassessment of a tax liability after the initial assessment) and s. 9(2) (as to how a reassessment of a tax liability is to be made). His Honour held that the limitation suggested by the Taxpayer could not be implied unless the exercise of the power under s. 9 to make a reassessment would compromise review proceedings.
His Honour found that, given the Taxpayer’s rights to object to the extent of the reassessment, and if the objection were unsuccessful, to apply for a review of the reassessment, review proceedings would not be compromised. His Honour noted that the applications for the review of the initial assessment and the reassessment can be heard together. The issues raised by a notice of reassessment could be ventilated in the proceedings for the review of the Chief Commissioner's decision to make the initial assessment. This would be so even if the times for objection to the reassessment and the making of a decision on the objection were still running, and that process had not run its course.
His Honour found that a reassessment is an amendment of the initial reassessment, not an independent and additional assessment. The decision of the Court or Tribunal on the review of the original assessment will conclusively determine (subject to appeal) the taxpayer's liability. Accordingly, the decision of the Court or Tribunal on review of the initial assessment will also determine the matters arising under a notice of reassessment.
Justice White concluded that there was nothing in the text or context or purpose of the TAA from which a limitation is to be implied on the power of the Chief Commissioner to make a reassessment pursuant to s. 9 of the Act when review proceedings are pending.
His Honour agreed with the Taxpayer’s submission that the powers of the Court or Tribunal under s. 101(1)(b) and (c) extend to making an assessment that increases the assessment the subject of review. But he did not accept the further proposition put by the Taxpayer that it follows that the Chief Commissioner therefore lacks the power to make a reassessment where review proceedings are pending.