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Aurizon Operations Limited v Commissioner of State Revenue[2021] QCAT 338

Aurizon Operations Limited v Commissioner of State Revenue[2021] QCAT 338

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Aurizon Operations Limited v Commissioner of State Revenue; Australian Eastern Railroad Pty Ltd v Commissioner of State Revenue; Aurizon Network Pty Ltd v Commissioner of State Revenue [2021] QCAT 338

PARTIES:

In GAR165-19:

aurizon operations limited

(applicant)

 

v

 

COMMISSIONER OF STATE REVENUE

(respondent)

 

In GAR166-19:

AUSTRALIAN EASTERN RAILROAD PTY LTD

(applicant)

v

COMMISSIONER OF STATE REVENUE

(respondent)

In GAR167-19:

AURIZON NETWORK PTY LTD

(applicant)

v

COMMISSIONER OF STATE REVENUE

(respondent)

APPLICATION NO/S:

GAR165-19;  GAR166-19;  GAR167-19

MATTER TYPE:

General administrative review matters

DELIVERED ON:

30 September 2021

HEARING DATE:

15 April 2021

HEARD AT:

Brisbane

DECISION OF:

A/Senior Member Howe

ORDERS:

In GAR165-19, GAR166-19 & GAR167-19:

  1. The Commissioner’s payroll tax notices of reassessment dated 2 August 2018 are confirmed save that Unpaid Tax Interest is remitted in full.
  2. The parties may file and exchange any application for costs supported by evidence and written submissions by 4:00pm on 10 December 2021.

CATCHWORDS:

TAXES AND DUTIES – PAYROLL TAX – LIABILITY TO TAXATION – GROUPING OF EMPLOYERS – where payroll tax was paid by the wrong taxpayer in a group of employers – where voluntary disclosure was made – where the Commissioner issued reassessments – where the correct taxpayers paid the reassessed amount of tax – where there was overall significant overpayment of tax by the group and a refund made to some taxpayers of the group by the Commissioner – where the Commissioner charged the defaulting taxpayers unpaid tax interest – whether the overpayment of payroll tax by the group satisfied the payroll tax liability of the defaulting taxpayers such that no unpaid tax interest was due

TAXES AND DUTIES – PAYROLL TAX – LIABILITY TO TAXATION – GROUPING OF EMPLOYERS – where voluntary disclosure of error in payment of payroll tax was made – where all payroll tax was paid but by the wrong taxpayer in a group of taxpayers – whether the discretion to remit unpaid tax interest should be exercised

Payroll Tax Act 1971 (Qld) s 11, s 12, s 51A, s 63

Taxation Administration Act 2001 (Qld) s 54, S 71(2), s 71(3)

Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd [2017] NSWCA 184

Fyna Projects Pty Ltd v Chief Commissioner of State Revenue [2018] NSWCA 331

Luton v Lessels [2002] HCA 13

Orica IC Assets Pty Ltd & Anor v Commissioner of State Revenue [2011] QSC 1

Telgrove Pty Ltd t/as P & E Francis Plant Hire v Commissioner of State Revenue [2019] QCAT 199

WB Rural Pty Ltd v Commissioner of State Revenue [2018] QCA 255

WB Rural Pty Ltd v Commissioner of State Revenue [2017] QSC 141

Whitney v Commissioners of Inland Revenue [1926] AC 37

APPEARANCES &
REPRESENTATION:

 

Applicants:

H Lakis, instructed by PPM Tax & Legal

Respondent:

F Chen, instructed by inhouse legal, Office of State Revenue

REASONS FOR DECISION

  1. [1]
    The applicants (‘the taxpayers’) are companies which are members of the Aurizon group of companies (collectively ‘the Group’).
  2. [2]
    By applications made on 30 June 2017 and 13 March 2018, the Group requested a reassessment of its payroll tax liability and a refund of payroll tax paid on the basis of a net overpayment of payroll tax by the Group over the 2012 to 2016 financial years.
  3. [3]
    The respondent (‘the Commissioner’) issued separate reassessment notices dated 2 August 2018 to each member of the Group. Whilst some members of the Group were found to have overpaid their payroll tax liability, others were found to have underpaid.
  4. [4]
    The taxpayers were those found to have underpaid and were assessed as liable for interest on the unpaid tax pursuant to s 54(1) of the Taxation Administration Act 2001 (Qld) (‘TAA’).
  5. [5]
    Those companies which had overpaid were given a refund. All companies were treated on an individual basis, not collectively.
  6. [6]
    There was an overall overpayment of payroll tax by the Group of $2,362,948.39. The Commissioner imposed unpaid tax interest (‘UTI’) however on the taxpayers of $476,017.15, which meant an overall refund of overpaid tax to the group of $1,886,931.24. The Commissioner paid no interest to the overpaying taxpayers on the overpaid amounts.
  7. [7]
    The taxpayers object that there was never any payroll tax owing by the Group as a whole, and in fact a refund of tax was paid. Therefore they say there should be no interest payable by the taxpayers who were all members of the Group though they had individually underpaid.
  8. [8]
    The taxpayers say even if the Commissioner correctly levied UTI against them, the Commissioner should exercise the discretion available under s 60 TAA and remit the interest given the net effect of payment of payroll tax by the Group was an overpayment.

The grounds of review

  1. [9]
    The grounds of review are limited to the grounds of the objection[1] and the decision of the Tribunal is based on a reconsideration of the evidence before the Commissioner when the decision was made in accordance with the same law that applied to the making of the original decision.[2] The grounds of objection were:
    1. (a)
      The Commissioner erred in imposing unpaid tax interest pursuant to s 54 TAA in circumstances where there was no unpaid primary tax owed by the Group;
    2. (b)
      The Commissioner erred in failing to exercise its discretion in s 60 TAA to remit all unpaid tax interest;
    3. (c)
      The Commissioner erred in failing to exercise the discretion in s 60 TAA to remit part of the unpaid tax interest;
    4. (d)
      The Commissioner erred in failing to take into account relevant considerations and in failing to give appropriate weight to relevant considerations.
  2. [10]
    The applicants advised at hearing that the fourth ground was not being pursued.

Ground 1 - No unpaid primary tax owed by the Group

  1. [11]
    The taxpayers contend that for the purpose of calculating liability for UTI the relevant liability is the net liability of the Group as a whole rather than the individual liability of each member of the Group.
  2. [12]
    Section 51A Payroll Tax Act 1971 (Qld) (‘PTA’) has application in circumstances where a member of a group of employers fails to pay an amount required to be paid under that Act:

51A Joint and several liability of group members

  1. (1)
    This section applies if a member of a group fails to pay an amount the member is required to pay under this Act in respect of a period.
  1. (2)
    Every member of the group is liable jointly and severally to pay the amount, whether or not the member was an employer during the period to which the amount relates.
  1. (3)
    This section is subject to sections 34(2) and 42(2).
  1. [13]
    The grouping provisions were introduced to forestall the device of splitting businesses into separate corporate parts to obtain an advantage for each part of a threshold exemption for payment of payroll tax.
  2. [14]
    By s 54 TAA:

Unpaid tax interest

  1. (1)
    A taxpayer must pay interest (unpaid tax interest) on the amount of primary tax payable by the taxpayer and unpaid from time to time (unpaid primary tax).
  1. (2)
    Unpaid tax interest, other than late payment interest, accrues daily at the prescribed rate on the unpaid primary tax for the period starting on the start date and ending on the date the primary tax is paid in full, both dates inclusive.
  1. [15]
    Taxpayer is defined in the dictionary to TAA Schedule 2 as:

… a person who, under a tax law—

  1. (a)
    has or had a tax law liability; or
  1. (b)
    may have a tax law liability.
  1. [16]
    Primary tax is defined in the dictionary to TAA as meaning a tax, levy or duty imposed under a revenue law.
  2. [17]
    By s 11 of the Payroll Tax Act 1971 (Qld) (‘PTA’):

A liability for payroll tax imposed on taxable wages arises on the return date for lodgement by an employer of a return.

  1. [18]
    Accordingly the taxpayers say there is no action required to be taken by the Commissioner for liability to arise to pay payroll tax on the return date. Liability arises by virtue of the statutory provisions, not on any assessment or reassessment notice issued by the Commissioner.
  2. [19]
    By s 63 PTA an employer must, not later than 21 July immediately after the end of the year, lodge a return for taxable wages paid or payable by the employer for the year. That date, say the taxpayers, the return date, is when liability arises each year.
  3. [20]
    The New South Wales Court of Appeal in Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd [3] said this amongst other things about liability to pay payroll tax and grouping:

One consequence of grouping is that the members of the group cannot each take advantage of the tax threshold. Another – of crucial importance in this case – is that if any member of a group fails to pay an amount that the member is required to pay under the Payroll Tax Act in respect of any period, every member of the group is liable jointly and severally to pay that amount to the Chief Commissioner (subject to the Chief Commissioner’s power under s 79 to exclude persons from groups). Thus if Tri-City Trucks and Smeaton were part of the same group, Smeaton was jointly and severally liable with Tri-City Trucks to pay any amount the latter was required to pay but failed to do so.[4]  (underlining added)

  1. [21]
    As to who is liable to pay tax, by s 12 PTA:

Employer to pay payroll tax

Payroll tax shall be paid by the employer by whom the taxable wages are paid or payable.

  1. [22]
    Employer is defined in the schedule to PTA as:

… any person who pays or is liable to pay any wages and includes the Crown in right of the State of Queensland and any person taken to be an employer under another provision of this Act.[5]

  1. [23]
    The taxpayers maintain that it is no requirement of s 54(1) TAA that unpaid tax be unpaid by the taxpayer. Tax interest is simply charged on unpaid tax. All members of the Group are taxpayers. Section 51A PTA imposes joint and several liability on all members of the Group to pay the amount.
  2. [24]
    Accordingly on reassessment, from the date payroll tax became payable, unpaid payroll tax became due and owing and payable jointly and severally by every member of the Group by virtue of s 51A(2) PTA.
  3. [25]
    An excess of payroll tax had been paid to the Commissioner at that time by various other members of the Group. That overpayment immediately satisfied the joint and several liability which arose on reassessment when tax thereby became due amongst members of the Group.
  4. [26]
    The legislation treats all the members of the Group as jointly and severally responsible for payment of payroll tax and there is no discretion given the Commissioner to treat the group otherwise.
  5. [27]
    As contended, no reassessment was necessary to give effect to the tax liability that arose by operation of the joint and several liability provisions of the legislation.

The scheme of the Acts

  1. [28]
    Section 51A PTA has application in circumstances where a member of a group of employers fails to pay an amount required to be paid under that Act.
  2. [29]
    From outset it is to be noted that that scenario, a failure to pay an amount required to be paid but remedied by payment made by another member of the group, was never the case here. All amounts required to be paid by a member of the Group was paid by that particular member, albeit late.
  3. [30]
    Here each member of the Group was registered to pay payroll tax, lodged its own payroll tax return and paid its own payroll tax. Each member self-assessed the amount of tax that should be paid. Each annually filed a final end of year return based on self-assessment of payroll tax due.
  4. [31]
    The scheme of the payroll tax legislation is common across revenue laws in Queensland and was explained by Sofronoff P in WB Rural Pty Ltd v Commissioner of State Revenue.[6] There the Court of Appeal was concerned with Land Tax, but Land Tax is a revenue law,[7] as is the PTA,[8] and as such must be read together with the TAA as if they formed a single Act.[9] Sofronoff P explained as follows.
  5. [32]
    The main purpose of the TAA is to provide for the administration and enforcement of revenue laws.[10]
  6. [33]
    The Commissioner is responsible for the administration and enforcement of tax laws.[11]
  7. [34]
    If the Commissioner is satisfied a taxpayer has a liability for tax then the Commissioner must make an assessment,[12] even if the taxpayer’s liability for tax is nil.[13] The Commissioner may make a reassessment of a taxpayer’s liability for tax at any time.[14]
  8. [35]
    By s 26 TAA the Commissioner must give notice of an assessment (assessment includes a reassessment)[15] to the taxpayer.
  9. [36]
    The time for payment of tax payable under a tax law on a reassessment is the date stated in the reassessment notice.[16]
  10. [37]
    By s 54(1) TAA a taxpayer must pay UTI on primary tax payable and unpaid, and by s 54(2), UTI is payable from the “start date” until paid in full. For a return self-assessment, the start date is the date the return is or was required to be lodged.
  11. [38]
    For a reassessment, the unpaid primary tax is the amount of the reassessed primary tax that is unpaid.
  12. [39]
    Accordingly, in the matter at hand, UTI was payable on the unpaid primary tax from the start date until paid in full.
  13. [40]
    In WB Rural Pty Ltd v Commissioner of State Revenue[17], Sofronoff P went on to say:

[21]  Upon the basis that the taxpayer already has a “liability for land tax”, the appellant then argues that the “function of the Commissioner is merely to quantify that pre-existing liability”, a task that is no different from “the quantification exercises that a court would undertake in determining an ordinary debt claim (or indeed in assessing unliquidated damages)”.

[22] The argument is fallacious because it misconstrues the terms “liability” and “liable” as they are used in ss 7 and 8 of the Land Tax Act 2010.

[23]  The words “liable” and “liability” are flexible and chameleon-like. Their meaning depends entirely upon context.

[30]  The “liability for land tax” referred to in s 7 of the Land Tax Act 2010 which is said to arise at midnight on 30 June immediately preceding the financial year, is a liability that exposes the taxpayer to the exercise of the Commissioner’s power. That power, which is coupled with the duty to exercise it, arises if “the Commissioner is satisfied a taxpayer has a liability for tax”. Upon exercise of the power to make an assessment, there are created new rights and duties. In particular, a debt arises which the taxpayer owes to the State. That is to say, the taxpayer comes under a duty to the State to pay the tax. The State, by its functionary the Commissioner, has a corresponding right to recover that debt by action.

[32]  As McHugh J said in Luton v Lessels the assessment is the factum by reference to which the statute creates rights for the future which are then to be enforced by resort to the courts.

  1. [41]
    The statement in Luton v Lessels[18] referred to by Sofronoff P[19] was to following effect:

Several points emerge from an examination of these features of the Assessment Act. First, as mentioned at the outset, the Registrar's assessment, whether as an administrative assessment or as a departure determination, is the factum by reference to which the statute creates rights for the future which then are to be enforced by resort to the courts; the assessment does not adjudge existing rights.[20]  (underlining added)

  1. [42]
    Sofronoff P also noted that nothing he was saying about the Commissioner’s decision creating a new liability of a debt to the State was novel.[21]
  2. [43]
    Indeed in Fyna Projects Pty Ltd v Chief Commissioner of State Revenue[22] Barrett AJA referred to comments made nearly a century ago by Lord Dunedin in Whitney v Commissioners of Inland Revenue [1926] AC 37 at 52 as follows:

Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay.[23]

  1. [44]
    In the decision under appeal[24] in WB Rural Pty Ltd v Commissioner of State Revenue, Bond J at first instance said:

[21]  Although the Land Tax Act 2010 thus contains provisions which impose the liability and create a regime which by its own operation would render the amount of the liability calculable, the Land Tax Act 2010 does not itself contain the provisions which set out the mechanism by which tax is assessed, the time for payment is created, or a debt is established in relation to the tax.

[22]  Indeed, the Land Tax Act 2010 specifically recognizes that it does not contain all the provisions about land tax: s 4(1). It states that the Administration Act contains provisions dealing with the assessment of land tax, payment of tax, imposition of interest and penalty tax, objections and appeals against, and reviews of assessments of tax: s 4(2).[25]

[37]  The Trustee submitted that … the liability was created by the Land Tax Act 2010 and the decision of the Commissioner must be regarded as a decision about whether the existing right or duty actually exists.

[38]  I reject this argument.

[39]  The proposition that the Land Tax Act 2010 creates a liability is only part of the story: see [21] to [23] above. If the two statutes are read as a whole (as both statutes contemplate should be done) it is plain that it is the assessment by the Commissioner under the Administration Act which quantifies the amount owed, fixes the time by which it must be paid, and establishes the interest which must be paid. The assessment by the Commissioner, and whether it is paid within the time for which the assessment provides, together constitute the factum on which s 45(2) of the Assessment Actoperates, thereby creating new rights and obligation which are to govern the future (i.e. the debt payable to the State, which the Commissioner may http://www6.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QSC/2017/141.html - fn5 recover for the State).[26]

  1. [45]
    The foregoing has clear application to the matter at hand given the same TAA provisions apply to payroll tax as to land tax, both being revenue laws under the TAA.
  2. [46]
    An employer paying taxable wages is exposed to potential liability to pay payroll tax on the return date for lodgement of a return.[27]
  3. [47]
    Then, if the Commissioner is satisfied the taxpayer is so liable, the Commissioner makes an assessment, or here, a reassessment, and the liability then becomes fixed and recoverable as a debt. No amount is actually payable until the amount is fixed by assessment. Prior to assessment (or here, reassessment) there was no actionable debt due the Commissioner. Prior to the reassessment, there was no quantification of any amount of unpaid primary tax, no time stated when unpaid primary tax had to be paid and no UTI calculable on unpaid primary tax. What must follow is that, before the reassessment, there was no unpaid primary tax against which overpayments of payroll tax made by other members of the Group could be set off.
  4. [48]
    All members of the Group were liable to pay payroll tax unpaid by other members of the Group by virtue of s 51A(2) PTA. Whilst they were exposed to that potential liability, they had no actual liability to pay a debt due the Commissioner until the Commissioner took the necessary further step of reassessment.
  5. [49]
    Those members of the group reassessed and required to pay unpaid payroll tax in fact paid the reassessed amounts, including UTI. It was therefore unnecessary for the Commissioner to seek recovery of unpaid payroll tax from the pool of other potentially liable members of the Group.

New South Wales authorities

  1. [50]
    The Group argue that there is authority to contrary effect from other jurisdictions. They say that the notice of reassessment was merely the notification to the taxpayer of an existing liability, and issuing a notice of reassessment does not crystallise a tax liability that arose by operation of the legislation.
  2. [51]
    A number of decisions from New South Wales are referenced, including Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd.[28] The decisions relied on generally accord with comments made there by Sackville AJA to following effect:

141. As has been noted, the joint and several liability of a member of the same group as the employer arises as soon as the employer fails to pay the payroll tax due by it to the Chief Commissioner (s 81). Smeaton (assuming it to be part of the same group as Tri-City Trucks) became liable to pay to the Chief Commissioner the amounts of payroll tax due by Tri-City Trucks in respect of each financial year at the expiration of 21 days from the end of that financial year.[29]

  1. [52]
    Section 81 referred to is the New South Wales equivalent of s 51A TAA Queensland. The Group contend liability arises without the necessity of any action required on the part of the Commissioner:

The joint and several liability of group members for the tax liabilities of fellow group members itself arises under section 81 of the PTA without any intervention by the Respondent. So, if at a time at which a liability to PTA arises for a group member, all other group members at that time are jointly and severally liable of that PTA by force of section 81 alone.[30]

  1. [53]
    The context within which such remarks were made however, as explained by Sofronoff P in WB Rural Pty Ltd v Commissioner of State Revenue,[31] must be borne in mind. Sackville AJA explained the context within which he made his observations as follows:

[143]  Subject to this exception, the legislative scheme can only be given effect if the existence and composition of any group of which the employer forms part can be determined at the same time as the employer becomes liable to pay payroll tax to the Chief Commissioner. It is at that point, if the employer does not discharge its liability, that group members become jointly and severally liable to pay the Chief Commissioner the amount of payroll tax the employer has failed to pay. It is also at that point that the Chief Commissioner can enforce the group members’ liability. The legislative scheme would be unworkable unless the determination of group membership in accordance with s 72 of the Payroll Tax Act can be undertaken by reference to the legal relationships as they exist between the relevant parties at the time the employer’s liability to pay payroll tax arises. That determination must be made on the basis of the facts as they exist at the relevant time. (underlining added)

[144]  As has been seen, the legislation recognises that the existence and composition of a group may change during a given financial year.[32]

  1. [54]
    Key to context there, as with the other New South Wales cases relied on, was the issue of identity of those entities forming the group of members exposed to joint and several liability at the relevant time of the failure by a group member to pay payroll tax due.
  2. [55]
    The New South Wales cases all address a common circumstance of the revenue authority having issued a notice of assessment against a member of a Group[33] and on default of payment by the member of the group primarily liable, the other members challenge their liability arisen under the grouping provisions. That is the context within which remarks made about liability arising by virtue of the legislative provisions, such as made in Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd, is to be understood.
  3. [56]
    In the matter at hand there was no failure to pay unpaid payroll tax after reassessment by the taxpayer primarily liable and therefore no necessity to pursue other members of the Group to recover a delinquent payment.
  4. [57]
    The findings by the Queensland Courts in WB Rural Pty Ltd v Commissioner of State Revenue are not in conflict with the position taken in the New South Wales cases. Indeed in Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd Leeming JA said:

21. But all of the foregoing is subject to the operation of statute. As Sackville AJA has explained in more detail, the statutory provisions of present concern are drafted broadly and with a view to protecting the revenue where the primary taxpayer has failed to remit payroll tax. The status of being a member of a group is something which the respondents accepted gave rise, by dint of statute and statute alone, to the potential of liability pursuant to s 81 when another member of the group failed to pay an amount that it was required to pay under the Act in respect of any period.[34] (underlining added)

  1. [58]
    Similarly in Fyna Projects Pty Ltd v Chief Commissioner of State Revenue[35] Barrett AJA referred to the liability imposed on members of a group in consequence of the defaulting employer’s failure to pay as follows:

If the defaulting employer eventually pays the relevant amount, it will do so in satisfaction of its pre-existing liability. If another group member eventually pays the relevant amount, it will do so in satisfaction of the new PTA, s 81(1) liability.[36]

Always in credit

  1. [59]
    The Group also contend that they overpaid payroll tax as a Group and were always in credit overall in respect of payment of payroll tax. Indeed the result overall was a refund of payroll tax to the Group. They argue the overpayment by some members of the Group satisfied the underpayment by other members of the Group who underpaid.
  2. [60]
    This contention might hold true if, at the time of underpayment, there were available overpayments accessible by the Commissioner. However the argument is premised on the Commissioner holding or having to hand surplus payroll tax amounts prior to the reassessments which refunded overpaid payroll tax to some members of the Group.
  3. [61]
    The problem with this submission is that the entitlement to refund for various members of the Group only arose on reassessment by the Commissioner: [37]

37 Commissioner to refund tax and other amounts

  1. (1)
    An entitlement to a refund of an amount paid under a tax law arises if—
  1. (a)
    under a reassessment, a taxpayer’s liability for tax is decreased; or
  1. (b)
    the amount paid by a person is more than the amount stated in any notice as payable by the person under the tax law.
  1. (2)
    Subject to sections 38 and 39, the commissioner must refund the overpaid amount.
  1. [62]
    Prior to reassessment, there was no entitlement to any refund by any member of the Group. Section 38 makes provision for the Commissioner to apply refunds due to a taxpayer to current and future liabilities, but s 40(1)(c) states that an amount becoming available for application by the Commissioner under s 38 for a taxpayer’s tax law liability, is only available when the amount becomes available.
  2. [63]
    Prior to reassessment there were no refunds payable to the members of the Group and therefore available to the Commissioner to offset underpayments of payroll tax in the tax years preceding reassessment.
  3. [64]
    The group’s contention fails. The Commissioner’s reassessments were correct.

Grounds 2 and 3 – failure to remit all or part of UTI

  1. [65]
    These grounds are appropriately addressed together.
  2. [66]
    Section 54 TAA provides for the imposition of UTI. Section 60 TAA gives broad and unfettered discretion to remit it:

S 60(1) The commissioner may remit the whole or part of unpaid tax interest or penalty tax.

  1. [67]
    The Commissioner’s Public Ruling TAA060.1.6 Remission of Unpaid Tax Interest offers guidance as to circumstances where the Commissioner will exercise the discretion in favour of a taxpayer. Given the open nature of the discretion, a guideline may note relevant considerations and circumstances for consideration, but the circumstances noted are not necessarily exhaustive.
  2. [68]
    In Orica IC Assets Pty Ltd & Anor v Commissioner of State Revenue[38] McMurdo J observed:

[93] Within the Taxation Administration Act, there are no expressed considerations for the exercise of the discretion under s 60. The relevant considerations are confined only by the subject-matter, scope and purpose of the relevant legislation. The respective arguments agree that it is relevant and indeed necessary to consider the facts and circumstances which contributed to an assessment which had to be the subject of a reassessment. If the fault had been completely that of the Commissioner, there would be the strongest case for remission. If the taxpayer was at fault, by misstating the facts or not stating all of the relevant facts up to the time of the original assessment, then the case for remission would be weaker. In turn, it would be relevant to consider whether that misstatement or non-disclosure was made knowingly, or was instead inadvertent. It would also be relevant to consider whether it was made by the taxpayer in reasonable reliance upon professional advice.[39]

  1. [69]
    Generally speaking, in exercising the discretion, one must weigh matters of fault or error against matters of exculpation.
  2. [70]
    The principal error made by the taxpayers was identifying the correct taxpayer liable to pay payroll tax. The most significant aspect of that, involving 80 percent of UTI levied, was certain taxable wages declared and payroll tax for them paid by Aurizon Network Pty Ltd when the wages should have been declared and payroll tax paid by Aurizon Operations Ltd.
  3. [71]
    Certainly the errors made identifying the correct taxpayer is suggestive of a failure of care in administering financial affairs. That is a matter weighing against the taxpayers in exercising the discretion.
  4. [72]
    Would the remission of UTI provide an unfair advantage to the taxpayers here over other taxpayers in similar circumstances? That is one of the factors nominated in the Commissioner’s Public Ruling TAA060.1.6 Remission of Unpaid Tax Interest as an appropriate consideration in exercising the discretion. Given the parties are unable to point to any similar circumstance as this having previously occurred, the answer to that question is probably no.
  5. [73]
    The purpose of the UTI provisions is explained in the Explanatory Notes to the Taxation Administration Bill 2001(Qld) introducing the interest provision:

Unpaid tax interest and penalty tax

In the context of collecting State taxes, the policy objective in imposing interest is to encourage payment of tax on time and to compensate the State for the period that tax has been unpaid.[40]

  1. [74]
    The mistaken payments were voluntarily revealed by the taxpayers to the Commissioner after an in-house review of the tax liabilities of the Group. The review was a voluntary initiative of the Group and utilised external expert advisers. The audit revealed the mistakes about payment of payroll tax.  The taxpayers say the review was initiated by the Group to ensure compliance by the Group with their taxation obligations.
  2. [75]
    That voluntary disclosure, consequent on an investigation initiated in aid of compliance by the taxpayers, is a factor weighing in their favour in arguing for remission of interest.
  3. [76]
    The taxpayers also say there was never a debt owed to the State for unpaid payroll tax in terms of monies received. The State received full payment, in timely fashion, of all payroll tax levied on wages paid to employees of the taxpayers.
  4. [77]
    I note that the grounds given by the original decision maker in the office of the Commissioner for rejecting the “Group payment” submission by the taxpayers have been adopted here at hearing.[41] I also note the concession made by the original decision maker that “… there was no period during which the State had not received money owing.”[42]
  5. [78]
    That the State has never been out of pocket is a factor to be considered in favour of the taxpayers’ request for remission of UTI.
  6. [79]
    The taxpayers also direct attention to those circumstances mentioned in the Commissioner’s Public Ruling TAA060.1.6 Remission of Unpaid Tax Interest item 9(g) which the Commissioner has identified as worthy of exercise of discretion in favour of remission:

9(g) whether the taxpayer has paid tax in error to another state or territory and subsequently remedied this by paying the tax to the Commissioner. Factors considered by the Commissioner when deciding whether to remit UTI on this basis and, if UTI is remitted, the extent of the remission include the following:

  1. (i)
    the nature of the tax paid incorrectly to the other state or territory
  1. (ii)
    whether the tax was paid to the other state or territory on or before the due date for payment of the liability for tax in Queensland
  1. (iii)
    whether the tax paid to the other state or territory was equal to the actual liability for tax payable in Queensland
  1. [80]
    The taxpayers submit that if the Commissioner will accept this circumstance, of payroll tax being paid to the wrong Commissioner leaving the Commissioner out of pocket, as circumstances warranting remission of UTI, then similar consideration is warranted where payment is made to the correct Commissioner but by the wrong taxpayer amongst a group of companies.
  2. [81]
    The Commissioner rejects that claim and submits the circumstance justifying exercise of discretion in terms of paragraph 9(g) is based on recognition that employers may operate in multiple jurisdictions and therefore may need to account for payroll tax liabilities to more than one revenue authority.
  3. [82]
    It is not immediately clear why the complexity of identifying employees in circumstances of modern trans-state corporate operations is recognised as deserving of remission of UTI but modern trans-state group corporate identity issues are not.
  4. [83]
    The tax paid was payroll tax. The tax was paid, albeit by the wrong taxpayer, on or before the due date for payment. The tax paid exceeded the actual liability for tax payable by the taxpayer. The tax was paid to the correct Commissioner.
  5. [84]
    The taxpayers have already been granted remission of penalty tax of $1.75M. That remission suggests that the Commissioner has accepted the exculpatory reasons offered by the taxpayers why payroll tax was understated.
  6. [85]
    Taking these factors into consideration, I determine that on balance, the circumstances of this rather exceptional case favours remission of UTI but not payment of interest thereon.
  7. [86]
    Having concluded that UTI should be remitted it is unnecessary for me to consider the submission that the uplift factor of 8 percent of UTI charged is a penalty and that part of UTI should be remitted. I might mention however that the same submission was rejected by the Tribunal in Telgrove Pty Ltd t/as P & E Francis Plant Hire v Commissioner of State Revenue[43] and the taxpayers have repeated the argument here but without addressing the reasoning behind rejection of the contention explained there.[44]

Footnotes

[1] Taxation Administration Act 2001 (Qld) (‘TAA’), s 71(2)

[2] Ibid, s 71(3) – accordingly the law to be applied is as at 2 August 2018.

[3][2017] NSWCA 184

[4] Ibid, [126] (Sackville AJA)

[5] Payroll Tax Act 1971 (Qld) (‘PTA’), Schedule dictionary

[6] [2018] QCA 255

[7] TAA, s 6(4)

[8] Ibid, s 6(2)

[9] Ibid, s 3(3)

[10] Ibid, s 3(1)

[11] Ibid, s 8(1) T

[12] Ibid, s 11(1)(a)

[13] Ibid, s 11(2)(b)

[14] Ibid, s 17(1)

[15] Ibid, Schedule 2 Dictionary

[16] Ibid, s 30(1)(d)

[17] [2018] QCA 255,

[18] [2002] HCA 13

[19] Whilst attributed to McHugh J the comments appear in fact to have been made by Gaudron and Hayne JJ

[20] [76]

[21] [33]

[22] [2018] NSWCA 331(Barrett AJA)

[23] Ibid [41]

[24] WB Rural Pty Ltd v Commissioner of State Revenue [2017] QSC 141

[25] Ibid [21]-[22]

[26] Ibid [37]-[39]

[27] PTA, s 11

[28] [2017] NSWCA 184

[29] Ibid [141]

[30] Integrated Construction Equipment Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 131 [34(4)(c)]

[31] [2018] QCA 255

[32] Ibid [143] – [144]

[33] Similarly Fyna Projects Pty Ltd v Chief Commissioner of State Revenue [2018] NSWCA 33; Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127; Integrated Construction Equipment Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 131

[34] [2017] NSWCA 184, [21]

[35] [2018] NSWCA 331 (Barrett AJA)

[36] Ibid, 682

[37] TAA, s 37

[38] [2011] QSC 1

[39] Ibid, [93]

[40] Explanatory Notes, Taxation Administration Bill 2001 (Qld), 6

[41] Transcript 1-52, Line 36

[42] Exhibit 2, page 5 [16c]

[43] [2019] QCAT 199

[44] Ibid, [132]-[135]

Close

Editorial Notes

  • Published Case Name:

    Aurizon Operations Limited v Commissioner of State Revenue; Australian Eastern Railroad Pty Ltd v Commissioner of State Revenue; Aurizon Network Pty Ltd v Commissioner of State Revenue

  • Shortened Case Name:

    Aurizon Operations Limited v Commissioner of State Revenue

  • MNC:

    [2021] QCAT 338

  • Court:

    QCAT

  • Judge(s):

    A/Senior Member Howe

  • Date:

    30 Sep 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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