The High Court of Australia has recently allowed an appeal against a decision of the Victorian Court of Appeal and found that the Commissioner of State Revenue (Commissioner) was not under a duty to issue amended assessments and refund an excess amount of land tax that had erroneously been paid by a taxpayer.
In Commissioner of State Revenue v ACN 005 057 349, the Commissioner informed the taxpayer that his property had been subjected to land tax twice and issued a refund cheque for excess land tax paid for the land tax assessment years 2008 to 2011. The taxpayer subsequently became aware that the 1990 to 2002 assessments contained the same duplication error and sought to lodge an objection to those assessments under section 24 of the Land Tax Act 1958 (LTA).
After his objection was refused by the Commissioner, the taxpayer commenced proceedings against the Commissioner in the Supreme Court of Victoria. The matter was dismissed by the primary judge but the Court of Appeal granted leave to the taxpayer. The High Court overturned the Court of Appeal’s decision and ordered the taxpayer to repay the Commissioner $1,248,753.38 in relation to the excess land tax and interest paid by the Commissioner to the taxpayer.
The High Court held that:
- the Court of Appeal erred in considering that the excess amount paid by the taxpayer was not land tax within the meaning of the LTA, as the Commissioner’s duplication error for the years 1990 to 2002 deprived the Commissioner of any authority to retain an excess amount of land tax. The High Court found that the excess land tax amount was “tax paid under, or purportedly paid under the LTA” as being paid in answer to an undisputed assessment;
- the Commissioner has a discretion, rather than a duty, to amend land tax assessments;
- an application for a refund of excess land tax must be made within 3 years of the payments of land tax being made; and
- as the Commissioner was under no duty to issue amended assessments, his refusal to amend did not amount to conscious maladministration.
The decision illustrates that proper care should be given to the issue of land tax assessments. Where a taxpayer wishes to object to an assessment, this process must be timely and properly followed with attention to the legislation applicable to the disputed assessment.
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