Touma v Chief Commissioner of State Revenue [2012] NSWADT 2

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Touma v Chief Commissioner of State Revenue [2012] NSWADT 2 Hearing dates: 21 and 22 July 2011, Final submissions 16 August 2011 Decision date: 16 January 2012 Jurisdiction: Revenue Division Before: S Frost, Judicial Member Decision: Within 21 days of the publication of these reasons, the parties are to bring in short minutes of order to reflect the findings and reasons that follow. Catchwords: Land rich duty - sale of share in company - unencumbered value of land owned by company - tax default - when tax default occurs - whether taxpayer or person acting on behalf of taxpayer took reasonable care to comply with taxation law - whether intentional disregard of taxation law - whether taxpayer took steps to prevent or hinder the Chief Commissioner - onus of proof Legislation Cited: Duties Act 1997 Taxation Administration Act 1996 - s 26, 27, 30, 100(3) Administrative Decisions Tribunal Act 1997 - s 63 Cases Cited: Spencer v The Commonwealth (1907) 5 CLR 418 Category: Principal judgment Parties: Raymond Touma, Janette Touma, Charlie Touma, Maggie Touma, Norman Touma, Donna Touma, Joe Touma, Zakia Touma (Applicants); Chief Commissioner of State Revenue (Respondent) Representation: Counsel J Johnson (Applicants) K Richardson (Respondent) Thomas & Bisley Solicitors (Applicants) Crown Solicitor's Office (Respondent) File Number(s): 106063

Reasons for decision 1REVENUE DIVISION (S FROST (JUDICIAL MEMBER)): On 5 October 2007 (the Relevant Date) the Applicants purchased the only share in a company known as Pendle Hill Developments Pty Ltd (the Company). At the time of purchase of the share, the Company owned a commercial/residential development site in Pendle Hill which the Applicants now concede was worth more than $2 million. The Applicants also concede that that land holding of the Company comprised more than 60% of the unencumbered value of all its property. That rendered the Applicants liable to land rich duty under the then Part 2 of Chapter 4A of the Duties Act 1997 . 2The question is, how much duty is payable? 3The parties agree that duty is payable on the unencumbered value of the land at the time of acquisition of the share in the Company, but they are at odds as to what that value was. The Applicants say it was $2.4 million; the Respondent originally assessed duty on a value of $4.4 million (Exhibit B, p. 1096) but now contends that the proper value was $3.5 million. Resolving that valuation dispute is the first task of the Tribunal. 4The second task is to address the question of penalty. The Respondent has taken the view that penalty of 90% of the duty amount is payable - 75% because the "tax default" resulted from "intentional disregard" of a taxation law; and a 20% uplift because steps were taken to "prevent or hinder" the Respondent in his investigation of the transaction. The Applicants on the other hand submit that they took reasonable care to comply with the taxation law, and that no penalty is payable.