Khatiz v Chief Commissioner of State Revenue [2019] NSWCATAD 121

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Khatiz v Chief Commissioner of State Revenue [2019] NSWCATAD 121 Hearing dates: 17 May 2019 Date of orders: 18 June 2019 Decision date: 18 June 2019 Jurisdiction: Administrative and Equal Opportunity Division Before: R L Hamilton SC, Senior Member Decision: Respondent's decision affirmed. Catchwords: TAXES AND DUTIES-land tax-objections- out of time- no extension- must be in writing-time limits on power to reassess Legislation Cited: Administrative Decisions Review Act 1997 Land Tax Management Act 1956 Taxation Administration Act 1996 Category: Principal judgment Parties: Mr J Khatiz (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Jowed Khatiz (Applicant self-represented) E Graham (Respondent)

Solicitors: Crown Solicitors (Respondent) File Number(s): 2018/322451 Publication restriction: Nil

REASONS FOR DECISION 1. Mr Khatiz owned an interest in the relevant property in Quakers Road Marayong in 2010. 2. The property was a licensed childcare centre. Childcare centres could be exempt from land tax pursuant to s10(1)(g) (now s10(1)(u)) of the Land Tax Management Act 1956 (LTMA). The taxpayer made no application for exemption until May 2018. 3. He lodged an objection against assessments for the years 2010 – 2018 in June 2018.The objections against the 2010-2013 years were disallowed. The Tribunal has jurisdiction by virtue of s96(1) Taxation Administration Act 1996 (TAA) and s9 of the Administrative Decisions Review Act 1997. The taxpayer bears the onus of proof –s100(3) TAA. 4. For the 2010 land tax year the property was identified in a schedule to the land tax notice of assessment for that year. It was not treated as exempt but its value was below the land tax threshold. 5. The property was mentioned in the supporting information to the notice of assessment in the 2011 land tax year. The value of the taxpayer's land holdings exceeded the threshold and tax was payable. In August 2011 the Chief Commissioner sent a letter to the taxpayer stating that his property may be liable to land tax and if the taxpayer wished to claim an exemption or dispute this it was necessary to be in touch with the Office of State Revenue. 6. The same situation as in 2011 applied in relation to the notice of assessment for the 2012 land tax year. 7. For the 2013 land tax year the first notice of assessment dated 6 February 2013 was sent to the taxpayer. The property was omitted from the schedule attached to the first notice of assessment. 8. Mr Khatiz called the Office of State Revenue (OSR) on 11 February 2013. He says he advised the officer of the omission of the property and requested that it be assessed to the "proper amount of land tax". Mr Khatiz says that he stated that the property was used as a childcare centre in that telephone call. 9. The OSR notes of the call make no mention of this. 10. Mr Khatiz says he did not ask for an exemption. He says he did not know of the exemption at the time of the telephone call. He says that the OSR officer advised him it was not necessary for him to put anything in writing and that the Office of State Revenue would correct the position. 11. Following the phone conversation the Office of State Revenue issued the second (replacement) notice of assessment for the 2013 land tax year dated 11 February 2013 which included the property in the assessment. The second notice stated that the reason for the reassessment was due to an 'objection/review'. 12. Mr Khatiz said at the hearing that he thought he had received the proper assessment as the Valuer General's land value used for the assessment was less than a commercial valuation figure which Mr Khatiz had. 13. Mr Khatiz accepted the second notice of assessment at the time and paid the land tax. He did not lodge an objection in writing within 60 days as required by s89 of the TAA. 14. For the 2014 to 2018 land tax years, notices of assessment were issued showing the ownership of the property. These were not disputed until June 2018. Mr Khatiz became aware of the land tax exemption and lodged a written objection claiming exemption from land tax in respect of the property back to 2010. 15. The Chief Commissioner allowed the objection for the 2014 to 2018 land tax years even though the 2014 to 2017 objections were out of time. 16. The Chief Commissioner denied the exemption claim for the 2013 and prior years on the basis that s9(3)(a) and s9(3)(d) of the Taxation Administration Act 1996 (TAA) prevented him from reassessing the liability in these circumstances. 17. The statutory provisions are as follows: "9 REASSESSMENT (1) The Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer. (2) … (3) The Chief Commissioner cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability, unless: (a) the reassessment is to adjust tax to give effect to a decision on an objection or review as to the initial assessment, or (b) … (c)… (d) the reassessment is made as a consequence of an application by a taxpayer, being an application made within 5 years after the initial assessment of the liability, and the reassessment reduces the tax liability. 1. The taxpayer faces multiple hurdles. In the first place for the 2013 land tax year the second notice of assessment was issued on 11 February 2013 and that was the initial assessment of the relevant property for that land tax year. The property had not been included in the first notice of assessment for that land tax year. Mr Khatiz made the phone call before the issue of the second notice of assessment. The phone call cannot be an objection for the simple reason that there was nothing to object to. The objection must be to an assessment in this case (see s89 of the TAA). It is not possible to object in advance to an assessment that might be made. Objections must be writing in any case (s86TAA). 2. In the second place the written objection against the second notice of assessment for 2013 was lodged on 7 June 2018. This is outside the 60 day objection period in s89 TAA (and no extension has been granted by The Chief Commissioner under s90 TAA), and outside the 5 year reassessment period specified by s9(3)(d) of the TAA. Accordingly the Chief Commissioner had no power to reassess the 2013 land tax year. 3. For the 2010 land tax year there was no assessment to land tax because the value of the taxpayer's land did not exceed the taxable threshold. Therefore no issue arises. It is not possible to object unless there is an assessment requiring payment of land tax. 4. For the 2011 and 2012 land tax years the written objection was lodged on 7 June 2018. The time bars applicable to the objection against the 2013 assessment are equally applicable. 5. If, for argument's sake, the phone call on 11 February 2013 could be treated as an "objection to the 2011 and 2012 assessments", as submitted by Mr Khatiz this suffers from a number of defects. First, objections are required to be in writing (s86 TAA). A phone call is not enough. In the second place objections must be lodged in writing within 60 days of the assessment unless the Chief Commissioner allows them to be lodged out of time (ss89 and 90 TAA). Here no extension has been allowed for the 2011 and 2012 'verbal objections' which were out of time. 6. Counsel for the Chief Commissioner points out that the Chief Commissioner is not estopped from carrying out his statutory duty by representations made by his officers such as there being no necessity to put anything in writing, if indeed this was said by one of his officers – though there is no record of this. 7. Counsel for the Chief Commissioner also drew attention to the requirements of s12 of the TAA. 8. This puts the onus on the taxpayer to provide all the relevant evidence to support a claim for exemption to the Chief Commissioner. The onus of proof of course carries over to proceedings in the Tribunal (s100(3) TAA). 9. Although the taxpayer relied in his written submissions on s9(3)(a) TAA, he did not press this ground in oral submissions. Counsel for the Chief Commissioner pointed out in written submissions that it was designed to deal with tribunal and court proceedings following objection which may cover assessments greater than 5 years old before they are finally determined.