Laviva Nominees Pty Ltd v Chief Commissioner of State Revenue  NSWCATAD 84
|Date of judgement||20 June 2014||Proceeding No.||1410054|
|Judge(s)||NS Isenberg, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal – Administrative and Equal Opportunity Division|
|Legislation cited||Administrative Decisions Review Act 1997
Civil and Administrative Tribunal Act 2013
Land Tax Act 1956
Land Tax Management Act 1956
Taxation Administration Act 1996 (NSW)
|Catchwords||Land Tax; special trust; remission of market and premium interest s72 Land Tax Management Act 1956 - ss 21, 22, 25 Taxation Administration Act 1996|
|Cases cited||B & L Linings Pty Ltd v Chief Commissioner of State Revenue  NSWCA 187
Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor  NSWADTAP 19
Commissioner of Taxation v Dalco (1990) 168 CLR 614
Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD)  NSWADTAP 25
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
Trust Co of Australia v Chief Commissioner of State Revenue  NSWADT 21
The Taxpayer sought a review of the Chief Commissioner’s decision to refuse to remit interest imposed in respect of land tax assessments for the 2009 to 2013 tax years. Both the market and premium interest rates were imposed on the basis that the taxpayer had committed a tax default by failing to lodge correct land tax returns disclosing its interests as trustee of a special trust.
The Tribunal found that the taxpayer had failed to lodge complete land tax returns, which constituted tax defaults; that the Chief Commissioner had not contributed to the tax defaults, that the Taxpayer failed to take reasonable care to comply with the relevant taxation laws, and upheld the Chief Commissioner’s refusal to remit market and premium interest.
Creation of the Laviva Trust
In May 2007, the Taxpayer company was registered, the Laviva Trust was settled, duty was paid, and the Taxpayer was appointed trustee of the Trust. Mr Hassan was the sole director, company secretary and sole shareholder in relation to the relevant tax years.
Taxpayer’s acquisition of land
In September 2008, the Taxpayer purchased a property at Merrylands, with the purchaser described in the contract as “Laviva Nominees Pty Ltd”.
In about May 2012, the Taxpayer purchased a second property at Maroubra, as trustee, with MilenaTrajilovic, but the trust was not named or described in the purchase contract.
Land tax registration and initial assessments
In April 2009, the Taxpayer lodged an initial land tax return for the 2009 land tax year, disclosing its interest in the Merrylands property.
In December 2009, the Chief Commissioner sent the Taxpayer a letter along with a 2009 Land Tax guide, as well as details of the taxpayer’s ownership of the Merrylands property disclosed in the Taxpayer’s return. The letter advised the Taxpayer to contact the NSW Office of State Revenue (“OSR”) if any of the details were incorrect. The Taxpayer did not respond to the letter and so in February 2010, was issued with a land tax assessment notice for 2009 and 2010. Assessments for 2011, 2012 and 2013 were subsequently made and notices issued for each tax year. In all cases, tax was calculated on the basis that the Taxpayer was entitled to the tax-free threshold.
In April 2013, OSR received an initial land tax return for the Maroubra property stating that the owners were Milena Trajilovic and the Taxpayer (Laviva Nominees Pty Ltd). The return was incomplete and did not disclose the existence or details of the trust.
In August 2013 OSR requested that the Taxpayer provide additional information about the ownership of the Maroubra property. The document was returned, but questions about whether a trust had an interest in the land were not answered. Consequently, in September 2013, the taxpayer was re-assessed as a special trust for the 2009 to 2103 tax years, and both the market and premium rates of interest were imposed. The Chief Commissioner contended that the Taxpayer had committed tax defaults by failing to furnish complete land tax returns for the relevant tax years.
The Chief Commissioner subsequently refused an application by the Taxpayer for remission of interest because the Taxpayer had not taken reasonable care when complying with the relevant taxation laws.
The issues for determination by the tribunal were:
Whether the Taxpayer failed to furnish land tax returns for the relevant period;
If so, did such failure constitute tax defaults;
If so, had the Taxpayer taken reasonable care to prevent the tax defaults; and,
Did the Chief Commissioner properly refuse to exercise his discretion to remit the interest components of the Assessment?
The Tribunal had regard to evidence presented and assertions by Mr Hassan that:
he did not read correspondence from the OSR because he did not need to, and it was not important that he do so (paragraphs 38, 48 and 52);
he did not think it was necessary to provide details of the trust to the Chief Commissioner because he thought a company can only be trustee of one trust, although he was not sure what the basis of that erroneous belief was (paragraph 50);
he had not sought legal advice in relation to land tax because in his opinion, he did not need to (paragraph 50);
he did not know what a special trust was nor did his accountant call the trust a special trust (paragraph 55);
OSR never asked whether the Taxpayer was a trust (paragraph 60).
The Tribunal noted that there was no obligation on the Chief Commissioner to justify the assessment, and the fact that the deed settling the Trust was stamped by OSR (before it acquired any land) did not impose any relevant obligation on the Chief Commissioner.
The Tribunal determined that:
the Taxpayer had failed to prove it had lodged complete returns required under the legislation in respect of the 2009 to 2013 tax years (paragraphs 55 to 57);
such failures were tax defaults (paragraph 58);
the taxpayer had not satisfied the Tribunal that the Chief Commissioner had contributed to the default, and therefore the market rate of interest should not be waived (paragraphs 65-66);
the evidence does not disclose any relevant voluntary disclosure, but does show failures to make disclosure when asked (paragraph 69).
the Tribunal was not satisfied on the balance of probability that the Applicant took reasonable care to comply with the relevant taxation laws, and accordingly there was no good reason to remit the premium rate component of the interest (paragraph 70).
The Tribunal confirmed the decision of the Chief Commissioner not to remit market and premium interest.