The Crest Hotel v Chief Commissioner of State Revenue [2015] NSWCATAD 3

Date of judgement 13 January 2015 Proceeding No. 1410274
Judge(s) A Verick
Court or Tribunal NSW Civil & Administrative Tribunal
Legislation cited Gaming and Liquor Administration Act 2007

Gaming Machine Tax Act 2001

Taxation Administration Act 1996
Catchwords TAXES AND DUTIES - Gaming Machine Tax – whether the Commissioner is entitled to make apportionment of refund – two hoteliers during the relevant period but assessment made against only one
Cases cited A J Holdings (NSW) Pty Limited v Chief Commissioner of State Revenue [2014] NSWCATAP 40

Federal Commissioner of Taxation v Ryan [2000] 201 CLR 109; 2000 ATC 4079; (2000) 43 ATR 694

Foster v Federal Commissioner of Taxation (1951) 82 CLR 606

R v Deputy Federal Commission of Taxation (SA); Ex parte Hooper (1926) 37 CLR 368

Spassked Pty Ltd v Federal Commissioner of Taxation  2003 ATC 4184; [2003] FCA 84; (2003) 52 ATR 337

Webb v Deputy Commissioner of Taxation (1993) 27 ATR 459


In these proceedings, The Crest Hotel (“the Taxpayer”), sought review of the Chief Commissioner’s decision to apportion a tax refund between the Taxpayer and another hotelier pursuant to s 10(3) of the Gaming Machine Tax Act 2001 (“the Act”) in respect of the period 1 July 2012 to 30 June 2013 (“the relevant period”).


Prior to 17 December 2012, Benchmark Hotels Pty Ltd owned the Crest Hotel (“the Previous Owner”).  Records from the Office of Liquor, Gaming and Racing (“OLGR”) showed that the ownership of the business was transferred to the new owner, Goldfish Potts Point Pty Ltd, on 17 December 2012. 

On 12 August 2013, the Chief Commissioner issued a Notice of Assessment to the Taxpayer showing an amount of $1.7 million as the tax payable for the relevant period.  However, after deducting the amounts already paid, the assessment showed that the the Taxpayer should receive a refund in the amount of $60,191.26.

The Chief Commissioner subsequently issued two refunds, one being the amount of $60,191.26 to the Previous Owner and a second refund of the same amount paid several weeks later to the Taxpayer. 

The Chief Commissioner subsequently became aware that there had been a duplicate refund, and also that the ownership of the Crest Hotel had changed during the relevant period. The Chief Commissioner determined that the refund amount of should $60,191.26 should have been apportioned between the Taxpayer and the Previous Owner, based on the split of the gaming machine profits between the two hoteliers, which was derived from the figures provided by the OLGR.  The Chief Commissioner then wrote to the Taxpayer, informing it that the Taxpayer had been overpaid by $33,894.54 and the Chief Commissioner sought repayment of that amount.

The Taxpayer lodged an objection to this decision and the Chief Commissioner disallowed the objection.

The Statutory Framework

The Independent Liquor and Gaming Authority, constituted under the Gaming and Liquor Administration Act 2007, has power to ensure that hoteliers and clubs pay gaming tax.  The Authority is given power to require hoteliers and clubs to lodge tax returns in relation to the performance of gaming machines and the tax payable. The Authority also supplies the Chief Commissioner with information, if any recalculation of tax is required in any particular case. 

Under s.10(3) of the Act the Chief Commissioner may, where tax is paid by more than one hotelier for the year concerned, apportion a refund among the hoteliers “as the Chief Commissioner considers appropriate”.  Under subsection 11(1) of the Act, where there has been a change in the ownership of a hotel licence, the Chief Commissioner is allowed to apportion liability for tax “as the Chief Commissioner considers appropriate”.


The Taxpayer contended that it was entitled to the whole refund because the evidence disclosed only one assessment of annual tax liability that had been issued, and it had been issued to the Taxpayer.  The Chief Commissioner ought to be bound by that assessment. 

The Taxpayer submitted that the Chief Commissioner was required to apportion liability pursuant to s11, prior to conducting any apportionment of a refund of tax and that the preferable method to apportion the liability was the daily average profits method. The Taxpayer submitted that it would be inequitable to refund tax to a party which was not liable to pay it.

The Chief Commissioner’s principal submission was that the Chief Commissioner was entitled to issue a refund on the basis of the annual total profit method and that the Chief Commissioner has a broad discretion to determine which apportionment method was considered to be appropriate. Further, the Chief Commissioner’s apportionment of the refund was consistent with the subject matter, scope and purpose of the Act and was therefore within power.

The Chief Commissioner contended that in apportioning the refund, the assessment was not disturbed because the amount of tax payable remained unchanged. It was further submitted that the refund cheque did not form part of the assessment.  The Chief Commissioner submitted that the purpose of s.10(3) is to apportion the refund, not the assessment.


Senior Member Verick found that the Chief Commissioner’s contentions that the liability is not dependent on there being a notice of assessment and that refund apportionment does not depend upon an assessment, ignores the scheme of the Act. He held that s.10(3) of the Act provides for the apportioning of a refund or credit in circumstances where there has been an assessment which discloses the refund or credit due.

In addition, Senior Member Verick set out the course of action the Chief Commissioner should have taken when issuing the assessment:

“The proper course of action, in my opinion, required the withdrawal of the assessment issued to the Taxpayer under s 13 of the TA Act or the issue of a reassessment of the liability of the Taxpayer under s 9 of the TA Act. In addition, the Chief Commissioner was required to apportion the liability for tax as between the two hoteliers under s 11 of the Act. Only after having taken these steps, the Chief Commissioner was in a position to make any apportionment of the refund under s 10(3).”

Senior Member Verick agreed with the Taxpayer that the only assessment issued for the annual liability of the relevant period was the one that gave a refund of the full amount payable to the Taxpayer. He therefore remitted the matter to the Chief Commissioner to take the assessment action set out above before making an apportionment of the refund between the parties.  

Senior Member Verick also made comments in obiter regarding the Chief Commissioner’s discretion to apportion tax liability between two hoteliers.  He agreed with the Chief Commissioner’s submissions that s.10(3) of the Act provides the Chief Commissioner with a wide discretion without any prescription and that this discretion can be challenged only in very narrow circumstances.  Senior Member Verick found that there was no evidence to demonstrate the Chief Commissioner failed to take into account any mandatory consideration or took into account an irrelevant consideration in the making of the apportionment on the basis of the annual profit method. This annual profit method was ‘well within the subject matter, scope and purpose of the Act’.


The matter was remitted to the Chief Commissioner to make the apportionment of the refund in accordance with the assessment action as directed.

Link to decision

The Crest Hotel v Chief Commissioner of State Revenue [2015] NSWCATAD 3

Last updated: 30 August 2018