|Date of judgement||1 June 2018|
|Court or Tribunal||Supreme Court of NSW|
TAXES AND DUTIES – Chief Commissioner of State Revenue declined to grant exemption under s 163H of the Duties Act 1997 (NSW) – whether application of Ch 4 of the Duties Act 1997 (NSW) would not be just and reasonable
TAXES AND DUTIES – Chief Commissioner of State Revenue declined to remit interest under s 25 of the Taxation Administration Act 1996 (NSW) – whether appropriate case to remit the market component of the interest for defined period – whether appropriate case to remit premium component of interest
In these proceedings the plaintiff sought review of a landholder duty assessment issued by the Chief Commissioner in the amount of $2,016,548.49 in respect of the plaintiff’s acquisition of shares in Macs Pty Ltd (“Macs”) from Town and Country Land Pty Ltd (“TCL”) on 30 November 2015 (the “Acquisition”). The plaintiff contended that the “not just and reasonable” landholder duty exemption contained in s. 163H(1) of the Duties Act 1997 (“Duties Act”) should be available to exempt the Acquisition, and that the interest imposed should be remitted.
Section 163H(1) of the Duties Act provided (in part):
The plaintiff’s principal submission was that the Acquisition did not result in a change in the “underlying beneficial or economic ownership of land”. This submission was based on the plaintiff’s contention that both before and after the Acquisition, the plaintiff at all relevant times maintained “control” over the land held by Macs. Before the Acquisition the plaintiff maintained control through his ownership of TCL (being an intermediary company, which in turn owned Macs), and after the Acquisition the plaintiff maintained control through his direct ownership of Macs.
Emmett AJA noted that in determining whether it was “not just and reasonable” to tax a transaction, “the taxing authority must be guided and controlled by the policy and purpose of the legislation, so far as that is manifest in the legislation” (at ). In this regard his Honour made the following key observations:
His Honour considered the following factors to be relevant in finding that the “not just and reasonable” exemption was not available in this case:
In relation to the remission of interest, Emmett AJA found there was no basis for a remission of interest in this case. In this regard his Honour characterised the relevant tax default as “wilful”, on the basis that the plaintiff was aware that the Chief Commissioner had assessed the Acquisition to duty under Ch 4, and the plaintiff had not paid that duty. In seeking a remission of interest, the plaintiff sought to rely on the fact that he had obtained tax advice prior to the Acquisition. However, his Honour refused to draw an inference that the plaintiff acted in good faith in circumstances where the plaintiff elected not to disclose the contents of the tax advice he had received prior to the Acquisition. His Honour noted that the position in respect of interest “might have been different if there were evidence that the Taxpayer had been advised that there were good prospects of persuading the Commissioner that he should be satisfied as to the application of s 163H” (at ).
Accordingly, Emmett AJA ordered that the proceedings should be dismissed, and the plaintiff should pay the Chief Commissioner’s costs.