Edgely Pty Limited v Chief Commissioner of State Revenue  NSWCATAD 103
|Date of judgement||17 July 2014||Proceeding No.||116100|
|Court or Tribunal||NSW Civil and Administrative Tribunal - Administrative and Equal Opportunity Division|
|Legislation cited||Land Tax Management Act 1956
Taxation Administration Act 1996
|Catchwords||Whether assessment defective -- grouping of companies for the purposes of concessional status|
|Cases cited||Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243|
The Taxpayer (Edgely Pty Limited) argued that the 2010 land tax notice of assessment was not a valid assessment because the notice included amounts of land tax relating to the 2002 to 2009 land tax years alleged to be unpaid.
The Tribunal confirmed that the 2010 assessment was valid, noting that:
It was permissible for a notice of assessment to include references to other amounts relating to earlier tax years;
The inclusion of such references did not constitute reassessments of those earlier years’ liabilities;
The inclusion of a due date for payment on the cover page did not reset the date for the calculation of interest on unpaid earlier years’ liabilities.
The Taxpayer sought a review in the NSW Civil and Administrative Tribunal (“the Tribunal”) of an assessment of land tax for 2010 year (“the 2010 assessment”).
The proceedings arose in part from an audit/ investigation which commenced in 2006 and which grouped the taxpayer with three other entities for payroll tax and land tax purposes.
The relevant facts are outlined at paragraph 5 of the Tribunal’s decision.
The taxpayer submitted that the 2010 notice of assessment was incorrect because it included a summary of land tax for the 2002 to 2009 land tax years which had been assessed but had not been paid. The Taxpayer argued that the notice therefore substantially overstated the Taxpayer's liability for Land Tax for the 1010 tax year. The Taxpayer argued that the Chief Commissioner could not “"roll into" the 2010 notice of assessment other amounts referrable to other land tax years.
The Taxpayer also submitted that the inclusion of the other amounts “appear to … deny the Taxpayer the "threshold" in the tax rates imposed under the Land Tax Act 1956 in earlier years where tax had already been assessed and paid by the Taxpayer” (paragraph 7).
The Tribunal noted in paragraph 9, “in succinct terms the Taxpayer's case … is that the relevant assessment was flawed to such an extent that it did not in respect of the relevant (2010) year constitute a valid assessment.”
The Tribunal stated that a valid assessment “must be an assessment made by the Chief Commissioner as to the tax liability of a person” (s.3 of the Taxation Administration Act 1996 (“TAA”)) and set out the provisions of ss.14 and 15 of the Land Tax Management Act 1956 (“LTMA”), which govern what a notice of assessment should contain.
However, the Tribunal noted that even where the provisions of the TAA and the LTMA are not complied with, an assessment remains valid (s.16 TAA).
At paragraph 17, the Tribunal referred to Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 in relation to the meaning of “assessment:”
“"assessment" means, in my opinion, the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case.”
The Tribunal did not accept the taxpayer’s submission that it was impermissible to include reference to other outstanding amounts in relation to earlier land tax years, in the notice of assessment (at paragraph 23).
The Tribunal did not consider that inclusion of the other amounts in the 2010 assessment constituted a reassessment of land tax for 2002 to 2009 and stated:
“The land tax liability for each of those years was summarised in the 2010 land tax assessment but each respective liability remained unchanged from the earlier assessments. The fact that the assessed land tax liability recorded under the heading "total of other amounts - due and payable" remained identical to the earlier assessments of 20 September 2007, 14 January 2008 and 14 January 2009 compels the finding that there was no assessment or reassessment of the 2002 to 2009 land tax years in the assessment issued on 18 January 2010. Further, there is no evidence that the Chief Commissioner's considered any matters relevant to his power to reassess: s 9(3) TAA.”
The Tribunal also rejected the taxpayer’s submission that inserting a due date on the cover page reset the interest payable for the assessments of the 2002 to 2009 land tax years and constituted a reassessment. At paragraph 25, the Tribunal stated that:
“The Chief Commissioner's right to assess and reassess is limited to assessing a tax liability, in the present case land tax under s 7 of the LTMA: ss 8 and 9 TAA. He is not conferred power by Part 5 Division 1 of the TAA or elsewhere to assess interest, as distinct from his power to assess tax (s 8 TAA) and determine penalties (s 27 TAA). As interest arises by reason of the operation of s 21 TAA and is independent from any assessment by the Chief Commissioner (albeit that an assessment for land tax is a necessary antecedent to a liability for interest under s 21) it is not a tax liability capable of assessment by the Chief Commissioner, noting that he has power to remit all or part of the interest liability (s 25 TAA).”
The Tribunal agreed with the grouping decision of the Chief Commissioner, and concluded (at paragraph 28):
“… the Tribunal finds that the relevant assessment was not flawed as alleged by the Taxpayer; as to grouping the decision of the Chief Commissioner to deny concessional status to the Taxpayer in respect of the relevant year was correct and indeed and in closing argument the Taxpayer did not appear to press any argument to the contrary. In all the circumstances the decision under review is affirmed”