CITATION: Ponticello -v- Chief Commissioner of State Revenue [2002] NSWADT 18 DIVISION: Revenue Division APPLICANT PARTIES: John Anthony Ponticello RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 016017 HEARING DATES: 04/02/2002 SUBMISSIONS CLOSED: 02/04/2002 DATE OF DECISION: 02/14/2002 BEFORE: Hole M - Judicial Member APPLICATION: Taxation Administration Act - liability to pay interest MATTER FOR DECISION: Principal matter LEGISLATION CITED : Taxation Administration Act 1996 CASES CITED: APPLICANT REPRESENTATION: In person RESPONDENT D Martin, solicitor ORDERS: 1. That the interest on late lodgement for the years 1998, 1999, 2000, 2001 was correctly assessed by the Commissioner and is payable by the Applicant.; 2. That the Commissioner retain the interest as paid by the Applicant. 1 The Applicant purchased a property on 7 January 1997. This property was purchased by the Applicant as an investment property, the Applicant resides elsewhere and has proceeded to have the property rented out since he purchased it. A land tax return was not completed and returned to the Office of State Revenue for the Land Tax years of 1998, 1999, 2000 and 2001. The Applicant and the Respondent agree that the property is one for which the Applicant needed to furnish a return to the Chief Commissioner pursuant to the requirements of the Land Tax Management Act , 1996 . 2 The Applicant was not aware of the need to furnish a return to the Commissioner and indeed was not aware of the liability to pay land tax. The Applicant had not seen any of the advertising by the Office of State Revenue in relation to the liability of land owners in respect of payment of land tax or providing to the Commissioner a return to enable Land Tax to be assessed. The Applicant did not receive any direct information from the Office of State Revenue until a survey was conducted by the Office of State Revenue in 2001 when the Office of State Revenue forwarded a letter to him requiring him to complete a Land Tax questionnaire. The Applicant completed the questionnaire and lodged same with the Office of State Revenue promptly on 30 July 2001. 3 The Commissioner proceeded to assess Land Tax on the property for the years 1998, 1999, 2000 and 2001 and included in the assessment amounts for interest on late lodgement in each year and penalty tax on each year. 4 The Applicant objected to the imposition of the penalty tax and the interest on late lodgment and the Commissioner remitted the penalty tax in full. 5 The Applicant has paid all remaining outstanding amounts of land tax up to and including the amount assessed for the 2001 tax year and including the interest on late lodgment. The total sum of the interest on late lodgment is $729.64. 6 The Applicant has lodged this application in relation to the interest on late lodgment and has submitted that the requirement for him to pay that interest on late lodgment is unfair as he had not received notice of any liability and was not aware of a liability to pay land tax on an investment property where the value was in excess of the then land tax threshold of $160,000.00. 7 The Applicant received a Notice of Valuation disclosing a land value as at a base date of 1 July 1997 at his home being an address other than the address of the property. That Notice of Valuation disclosed the land value as $191,000.00. 8 That notice draws attention to the use of the valuation by rating and taxing authorities and notes that any enquiries about rating or taxing matters should be directed to the relevant authority. The Notice of Valuation does not refer to land tax per se. 9 The interest on late lodgment is calculated at an amount of 4.89% being the equivalent to a variable market rate as assessed by the Commissioner. The representative of the Commissioner submitted that this is an amount calculated to compensate for the late payment of the land tax and represents a fair market return on the use of the money by the tax payer who has the obligation to pay. 10 From time to time the Commissioner remits the interest on late lodgment as, for example, where the land owner is unaware of the liability due to the land value increasing above the land tax threshold without the owner having been notified or where there has been unavoidable late or non lodgment due to circumstances beyond the control of parties such as industrial disputes/strikes and official postal delays etc. 11 The Applicant would not be the only person to find himself or herself in this position and for that reason the Commissioner has the ability to remit the penalty tax as the Commissioner has done in this instance. As a matter of public policy, the responsibility of the ownership of property including the necessity to be assessed and pay rates and taxes on property remains with the owner, this is a requirement of the Land Tax Management Act, 1996 which places the responsibility on a person who is or may be liable to pay land tax to furnish a return to the Commissioner to allow an assessment to be undertaken. 12 In this particular instance, the Applicant has submitted that he was not aware of his liability to pay land tax and submitted that his tax accountant had not advised him of the liability. 13 The representative of the Commissioner submitted that in accordance with the usual practice of the Office of State Revenue various advertisements are placed in the popular press and financial papers; particularly at the time of the year when land tax is due to be assessed and when land tax payers are liable to file a return. The Applicant submitted that he had not seen any of the advertisements and that he did not see any advertisement on the television in relation to liability for land tax. 14 The submissions by the Applicant and those by the representative of the Commissioner and the relevant legislation particularly Part 5 of the Taxation Administration Act, 1996 have been considered, noting that the Chief Commissioner has remitted all penalty tax payable and that in the event that the Applicant had been aware that land tax was assessable on the property there is no doubt that he would have completed a return and furnished it to the Commissioner. On the basis of the return which the Applicant would have then submitted he would have been required to pay the sums assessed for the years 1998, 1999, 2000 and 2001 at an earlier time. On that basis, he would not have had the use of that money for the period of time to when he paid it in 2001. It is also noted that the interest rate assessed on late lodgment is 4.89% being a figure over the years of 1998, 1999, 2000 and 2001 less than interest which would have been payable if the money had been borrowed from an independent source. 15 In consideration of the material referred to in paragraphs 1-14 inclusive I make the following Order: Orders 1. That the interest on late lodgment for the years 1998, 1999, 2000, 2001 was correctly assessed by the Commissioner and is payable by the Applicant. 2. That the Commissioner retain the interest as paid by the Applicant. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.