Oueik v Chief Commissioner of State Revenue [2022] NSW CATAD 132

Background

The Applicant owned numerous parcels of land, including 5 parcels of land at Auburn, that were included in a 2017 land tax assessment issued by the Chief Commissioner.  In 2017 the 5 Auburn lots were consolidated into a single lot, and were omitted from subsequent assessment for, the 2018 to 2021 assessments issued by the Chief Commissioner.

On 21 June 2021, the Chief Commissioner issued a land tax notice of assessment notice to the Applicant for the 2018, 2019, 2020 and 2021 land tax years in the amount of $1,411,136.25, reassessing liability for the 2018 to 2021 land tax years to include the Auburn Property. The assessments included an amount of $120,260.37 in interest. No penalty tax was imposed.

The Applicant’s objection to the Chief Commissioner’s decision to impose interest was disallowed by the Chief Commissioner on 30 November 2021.  The Applicant filed an application to have the decision to include interest reviewed under s. 96 of the Taxation Administration Act TAA) on 14 December 2021.

The Statutory Framework

Section 72 of the LTMA provides that:

• a taxpayer who fails to furnish a land tax return or information required by the LTMA or the Chief Commissioner is taken to have committed a “tax default” for the purposes of the TAA;
• interest accrues on the land tax assessable to the taxpayer for the period commencing on the last day allowed for furnishing the return or information, or the correct particulars of land ownership, and ending on whichever of the following events first occurs:
  • the day on which the return or correct information is furnished; or
  • the day on which the assessment is made by the Chief Commissioner; or
  • the day on which the whole of the land tax is paid.

• penalty tax is payable under the TAA on the amount of tax unpaid.

Submissions

Applicant's Submissions

The Applicant submitted that:

1. No interest should have been imposed because he has not failed to furnish land tax returns and, accordingly, there has been no relevant tax default;  instead there has been an error on the Chief Commissioner’s part in omitting the Property from the assessments issued for each tax year; or
2. the Chief Commissioner ought to have remitted interest on the basis of the Chief Commissioner’s guidelines which state:  
   “the premium rate of interest may be reduced if there is evidence that the taxpayer took reasonable care or made a voluntary disclosure before the commencement of an investigation”.

Chief Commissioner's Submissions

The Chief Commissioner submitted:

1. By reason of notices published in the Government Gazette prior to the commencement of each tax year, the Applicant was made aware of the requirement to lodge a variation return in respect of each of the 2018, 2019, 2020 and 2021 land tax assessments because of the omission of the Auburn Property, by the date specified for payment of the first instalment in each notice of assessment .
2. As the Applicant did not lodge a variation return by any of the required dates, he 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 assessed.
3. Remission of the market rate of interest should rarely be waived, and would only be justified in limited circumstances such as where the tax default is due to the fault of the Chief Commissioner or situations beyond the taxpayer’s control;  there are no circumstances justifying remission in this case.
4. The Applicant has not established that he took reasonable care to comply with the taxation laws so that remission of the premium rate of interest is not warranted.

Decision

Issue of incorrect assessments

Senior Member Dunn noted that there is no onus on the Chief Commissioner to issue correct assessments or to make enquiries of Land Title records or other sources of relevant information in order to do so ; at [48].

The Senior Member noted that the 2018 – 2021 notices of assessment were clearly incorrect as they omitted the Auburn Property.  However, 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, within the time frame required by the Gazette Notice.

The Senior Member held that publication of the Gazette notices imposed a clear obligation upon the Applicant to review his land tax assessments carefully;  he committed a tax default and interest was correctly imposed under s. 72 of the LTMA; at [54].

Remission of interest

The Senior Member held at [58] that the Applicant had put forward no circumstances which would justify remission of the market rate component of the interest, quoting several cases.

The Senior Member found there was no evidence that the Applicant attempted to comply with his land tax obligations to advise the Chief Commissioner of the errors in the assessments, and found it very difficult to understand how the omission of the Auburn Property could have gone unnoticed for a period of over three years.  Accordingly, the Senior Member accepted the Applicant had not established that he notified the Chief Commissioner in a timely fashion or demonstrated reasonable care in making the disclosure in April 2021 .

The Senior Member noted at [71]:
“The onus is on the Applicant to prove his case on the balance of probabilities. 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

The decision under review is affirmed.

Link to decision