The Victorian Supreme Court has allowed a taxpayer’s appeal and held that it was entitled to a refund of land tax for the 2011 to 2014 years pursuant to Part 4 of the Taxation Administration Act 1997 (Vic) – which relates to ‘refunds’.
The Plaintiff paid amounts of land tax as assessed by the Commissioner which included amounts based on an incorrect taxable value of the Subject Land. The Commissioner’s assessments for the relevant years were based on City of Whittlesea valuations of the Subject Land which was agreed to be incorrect. They agreed that at all relevant times the site value and hence the taxable value, of the Subject Land was $1.00. It followed from the agreed value of the Subject Land that the land tax correctly imposed on the taxable value of the land under the Land Tax Act 2005, is negligible; as submitted by the Plaintiff, probably a fraction of one cent. Had the Plaintiff paid land tax in accordance with the correct taxable value of the Subject Land, it would have paid $244,486.87 less in land tax than it in fact paid.
There was no factual dispute between the parties and the factual matters which were set out in the Statement of Agreed Facts.
The issue for determination was whether the taxpayer was entitled to a refund under Part 4 of all or part of the amount of land tax paid under the Land Tax Act 2005 in respect of the subject land for the 2011 to 2014 tax years, notwithstanding that it did not object to the assessments pursuant to which the tax was paid.
The Supreme Court said the issue was “quite a narrow one” in that the taxpayer asserted its entitlement to a refund of land tax on the basis of a plain reading of Part 4, particularly sub-ss 18(2), 19(2A) and s 20. The Commissioner, on the other hand, argued that the existence of extant land tax assessments is a bar to a refund application under these provisions, particularly s 19(1).
Section 19 of the Taxation Administration Act 1997 provides as follows:
(1) If a taxpayer claims to be entitled to receive a refund of or to recover tax paid or purportedly paid under a taxation law, the taxpayer must lodge with the Commissioner within 5 years after the payment was made an application for the refund of the payment.
(2) An application for a refund cannot be made if the Commissioner has previously served a notice of assessment of the tax liability of the taxpayer in respect of the matter in respect of which the payment was made to the Commissioner.
(2A) Subsection (2) does not apply to an application for a refund of tax paid or purportedly paid under the Land Tax Act 2005 or a refund of a contribution paid or purportedly paid under Part 9B of the Planning and Environment Act 1987 .
The Court was of the view that it was clear that Part 4 was designed to permit an enquiry into whether a taxpayer was entitled to a refund; “Part 4 clearly authorises the bringing of proceedings to compel the payment of the refund of the tax in the event that the Commissioner refuses to refund the tax or does not respond to the request within the required period (and see sub-s 21(1) of the TAA); and sub-s 121(1)(a) of the TAA clearly authorises appropriations of funds for this purpose”.
The Supreme Court accepted the taxpayer’s submissions that “there is simply no substance nor any support for the contention by the Commissioner that a refund can only be paid, under s 19 of the TAA, if the Commissioner first issues a reassessment for a lesser amount. The observations in this respect contained in the Commissioner’s submissions are merely generalised propositions which fail to refer to, much less grapple with, the terms or effect of ss 19(1), (2) or (2A) of the TAA.”
After review, the Court found that the taxpayer was entitled to a refund pursuant to Part 4.
(North West Melbourne recycling Pty Ltd v Comr of State Revenue [2017] VSC 647, Vic Supreme Court, Croft J, 27 October 2017.)
[FJM; LTN 207, 30/10/17; TM Oct 2017]