Tax Case Summaries – February 2023

Matiushenko v Chief Commissioner of State Revenue – [2023] NSWCATAD 25 (01 February 2023) (J Gatland, Senior Member)

APPEAL – Land tax – Where taxpayer defaulted in payment of land tax – Where Tribunal affirmed respondent’s decision not to remit premium component of land tax – Whether Tribunal misunderstood its role – Whether Tribunal erred in exercise of discretion – Whether Tribunal misconstrued s 25 of Taxation Administration Act 1996 (NSW) by failing to recognise that it confers a broad discretion. Decision – Appeal dismissed.

REASONS FOR DECISION

1. 1. The appellant, a taxpayer, defaulted on the payment of land tax, but voluntarily notified the respondent (“the Chief Commissioner”) of the omission to include a valuable property in his land tax returns for a number of years. After the Chief Commissioner had reassessed the amount of land tax payable, he decided not to remit the market or premium components of interest payable. The Tribunal affirmed that decision.
   2. The appellant appealed from the Tribunal’s decision not to remit the premium component of interest, contending that the Tribunal had not properly understood its role in reviewing the Chief Commissioner’s decision, that it had not correctly applied the relevant legal principles, that it had misconstrued the provision conferring a discretion to remit the premium component of interest and that it had unlawfully constrained the exercise of that discretion.
   3. We are not persuaded that the Tribunal made any of these errors and, accordingly, have dismissed the appeal.

Tax Practitioners Board v Williams – [2023] FCA 63 (08 February 2023) (Charlesworth J)

CONTEMPT – breach by the respondent of an interlocutory injunction granted under s 70-5(1) of the Tax Agent Services Act 2009 (Cth) – contempt occurring in circumstances where respondent was conscious that his conduct contravened the Act – respondent aware of Court’s order – no adequate explanation for the contempt other than lack of appreciation that the Court would view the contravening conduct seriously – respondent generally cooperative in the proceedings – heightened need for general deterrence – imposition of a fine not appropriate – short term of imprisonment imposed.

TAXATION – application for civil penalties to be imposed for multiple breaches of s 50-5(1) of the Tax Agent Services Act 2009 (Cth) [unregistered practising] – respondent conscious of wrongdoing – respondent continuing to breach the Act after becoming aware initial contraventions had been detected – lack of adequate explanation – weight to be given to cooperation in proceedings generally when assessing need for specific deterrence – need for specific and general deterrence in respect of future contraventions of critical provision of the Act – fine imposed commensurate with evidence of respondent’s financial means – risk of loss of assets and bankruptcy considered.

Applications 2016/2809, 2016/2810, 2016/2811

The objection decision is varied in relation to the 2009, 2010 and 2011 default assessments to allow the objection to the inclusion of eight properties the subject of the proceedings in the default assessments.

The objection decision is varied in relation to the 2009, 2010 and 2011 default assessments to allow the objection to the inclusion of money passing through the NAB Flexi Account and the Bendigo Bank accounts ending in —-8627 and —-2227 as the Applicant’s income or the Applicant’s property in the default assessments.

The objection decision is varied in relation to the 2010 and 2011 default assessments to allow the objection to the 20 per cent uplift to the penalties under s 284-220 of the Taxation Administration Act 1953 (Cth).

The objection decision is varied to remit the penalty imposed in respect of the shortfall in the 2011 year caused by director’s fees being returned a year early.

Application 2017/7664

The objection decision in relation to the 2016 special assessment is varied to allow the objection to inclusion of 676 (Lot 3) Anketell Road, Anketell in the special assessment.

TAXES AND DUTIES — Surcharge land tax — whether Applicants were foreign persons — whether Applicants were ordinarily resident — Applicants on bridging visasDecision – The Chief Commissioner’s decision under review is confirmed

TAXES AND DUTIES – STAMP DUTIES – where the second defendant claimed an interest in land through exercise of rights under a call option deed – where it lodged a caveat in support of that interest – where the caveat lapsed – where the second defendant sought leave to lodge a second caveat – where the call option deed was not stamped – where an undertaking to produce it for stamping was given – where the plaintiffs concede that undertaking makes the document admissible in evidence – whether on a proper construction of s 487 of the Duties Act 2001 the unstamped document can found an interest to support a caveat

REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS – where the parties executed a call option deed – where the call option deed gave the second defendant an option to purchase land at Yatula – where the plaintiffs purported to rescind the call option deed – where the second defendant purported to exercise the option – where the second defendant lodged a caveat – where the second defendant counterclaimed in existing proceeding claiming specific performance – where the second defendant did not notify the Registrar of Titles of the counterclaim – where the caveat lapsed – where the second defendant seeks leave to lodge a second caveat based on the same interest as the first – where the plaintiffs say the second defendant is not entitled to specific performance of the contract pursuant to the call option deed – where the plaintiffs claim prejudice – whether the prejudice is loss to be suffered from the lodging of the second caveat – whether in exercise of discretion leave to lodge a second caveat should be given

DECISION – It is ordered: 1. That Rocky Point Holdings Pty Ltd have leave pursuant to s 129 of the Land Title Act 1994 to lodge a further caveat over the real property described in the Land Title Register as Lot 10 on SP 296020, Title Reference 51250454 claiming the same interest as claimed under caveat number 721846160.

APPEAL – no errors of law – leave to appeal on the merits refused – appeal dismissed

REVENUE LAW – Land Tax – exemption for land used for primary production under s 10AA of the Land Tax Management Act 1956 – onus of proof under s 100(3) Taxation Administration Act 1996 – whether dominant use was the maintenance of horses for the purpose of selling them or their natural increase – relevance of intention – whether the use of the land has a significant and substantial commercial purpose or character, and is engaged in for the purpose of profit on a continuous or repetitive basis

Zwolinski v Chief Commissioner of State Revenue – [2023] NSWCATAD 42 (23 February 2023) (S Dunn, Senior Member)

TAXES AND DUTIES – landholder duty – surcharge duty – residential landholdings – whether Applicant a foreign person – whether Applicant ordinarily resident – Applicant not in Australia during 200 or more days – principal place of residence exemption does not apply – no discretion – dismissal application – proceedings misconceived or lacking in substance

Commissioner of Taxation v Complete Success Solutions Pty Ltd ATF Complete Success Solutions Trust – [2023] FCAFC 19 (23 February 2023) (Moshinsky, Thawley and Hespe JJ)

TAXATION – goods and services tax – precious metal – scrap gold – appeal and cross-appeal – where Administrative Appeals Tribunal considered taxpayer’s entitlement to input tax credits in the periods 1 August 2016 to 30 November 2016 (First Period) and 1 December 2016 to 31 January 2017 (Second Period) – where Commissioner accepted that some supplies made to a “dealer in precious metal” within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) – First Period remitted for reconsideration – Div 165 of the GST Act – whether the Tribunal erred in its approach to Div 165 – Second Period remitted for reconsideration.

[Tax Month – February 2023; next month – 15.4.23]