Signing of the magna carta

What’s the significance of this scene?

What’s the significance of this scene?

Signing of the magna carta

Over 800 years ago the Magna Carta was sealed.

It was a time when the people of England were struggling for justice and freedom. For years they fought for fairness and equality- and in 1215 they found a way. A peace treaty, now called the Magna Carta, was made between the barons and the King ensuring, among many things:

  • all people, including those in power, were treated equally under the law;
  • fair and prompt trials;
  • access to independent and impartial justice.

This peace treaty was not perfect. It originally did not cover all people in England and it was quickly repudiated by the King. However, it provided a vision of justice and freedom grounded in the rule of law that the people of England adopted.

When the First Fleet arrived on the shores of Botany Bay, they also brought this vision. The spirit of the Magna Carta was part of the ‘invisible and inescapable cargo of English law’ that came with Arthur Phillip. The public declaration of the vision for the colony was made on 7th February 1788 at Sydney Cove … This vision of justice and freedom, with its genesis in the Magna Carta and confirmed with the landing of the First Fleet continues within Australia today. [Source: Rule of Law Institute]

Take the Rule of Law test!

In the March Issue of The Tax Reformer, the question asked was “States and Territories tax legislation and tax administration and the Rule of Law. Who cares?” Well, it so happens that every believer in constitutional democracy cares. Government and, in particular, the bureaucracy left unchecked by the Rule of Law will see us living by their tenents.

Last month in the March TTR Issue, there was a list from an article by Gleeson CJ (as he was) entitled Courts and the Rule of Law, Melbourne University, 7 November 2001. Subscribers were (and are) invited to consider them in the context of each of the States and Territories.

That Issue of TTR also showed prominently on the front page the Rule of Law Institute Wheel.

Now, go to the website and swing around that Wheel one by one, clicking on each of the segments for details on each. For example, click on:

  • “No Retrospective Laws Should be Made”. The Wheel then tells us: “Retrospective laws are laws that change what people’s rights and responsibilities were in the past. In other words, they are laws that are passed today that change what was legal or illegal yesterday” … and more. Queensland breaches this when an Administrative Arrangement is subsequently, but months later, the subject of an amendment to the Duties Act retrospectively after taxpayers have put commercial transactions in place. How do you untangle them? Who meets the cost? What are the flow on consequences?
  • “The Law is Known and Accessible.” The Wheel then tells us: “The law must be known and predictable so that all people are able to be guided by it and know clearly the consequence of their actions. The laws must also be comprehensible and clear with limited government discretion so that the laws are applied predictably and in a non-arbitrary manner.” … and more. Queensland breaches this when sections like section 124 or 70 are left unamended for years after the QRO knows about the deficiencies. Or when there are changes in assessing practice without any or any adequate advice to taxpayers. Or when a section, containing no discretions, is yet interpreted by the QRO to fit the “policy” behind the section because the section is deficient in its drafting. Or the taxpayer searching the QRO website finds a morass of unhelpful information or decision tress.
  • “Laws Must be Made in an Open and Transparent Way by the People”. The Wheel then tells us: “Laws must be made in an open and transparent way by the people as it gives members of society the right to participate in the creation of laws that regulate their behaviour and govern their actions.” … and more. Queensland breaches this when ex gratia payments are made for the benefit of certain unknown taxpayers, effectively changing the terms of the Act without anyone else knowing about it or being able to take advantage of it. There should be a public register of ex gratia payments. “Open and accountable government” demands it. Another example occurs when there is faux “consultation” on amendments.

QRO fails the test – 3/10 only

Being a generous marker at the time of writing, TTR marks the QRO for adherence to the Rule of Law at 3/10.

That may be harsh and some transgressions may not always happen. But none should ever happen! That’s the point. The score should always be 10/10.

Tell TTR of breaches in your jurisdiction

Subscribers, especially lawyers, are invited to email TTR on breaches of the Rule of Law in their jurisdiction. Only by giving them the power of sunlight will things be changed for the better.

More on the Rule of Law in later Issues of TTR.


Queensland Revenue Office Easter Eggs

Cartoons by Harry Bruce ©


Welcome to the seventh issue of The Tax Reformer.

TTR is delighted at the support received to date. Its correspondents across Australia attest to the value of its establishment. Now taxpayers and advisers have an avenue by which they can bring poorly drafted legislation and poor tax administration to open public attention without going through professional bodies. That is not to say the professional bodies don’t try hard. It’s simply a recognition that they are “commercially” limited in what they can say!



The Rule of Law

States & Territories tax legislation and tax administration and the Rule of Law. Who cares?

States & Territories tax legislation and tax administration and the Rule of Law. Who cares?

The Rule of Law

This is one attempt to diagrammatise the essential principles of the Rule of Law. Source: The Rule of Law Institute.

In January, the Queensland Treasurer, in answering the Question on Notice No. 1616 from the Honourable Tim Nicholls, Shadow Attorney General and Minister for Justice should have put shivers up the spines of those of us who require the Executive to comply with the Rule of Law.

It was a “She’ll be right mate! Trust us, we’re from the gov’ment!” answer. In DA00016.2, the Commissioner gave the Commissioner power to assess contrary to the Act, Parliament’s Act! What next? Expand the tax base, increase the rates?

So, if someone has to ask this “Who cares?” question, then there is something horribly wrong. Little by little, the line between Parliament’s function as the legislator and the revenue offices fades away. Your Executive Director has watched this over the more than 50 years he has been in practice. And when you think about it, it is so much easier to simply leave vital aspects of tax legislation and tax administration to the bureaucrats, default on the interpretation of legislation to the “policy” behind the relevant section, rely on retrospective legislation while taxpayers, practitioners and selfassessors are left to sort it out themselves, always working against a backdrop of penalties and client dissatisfaction. And so much more.

In passing, this passage from Trust Company Ltd. v. Chief Commissioner of State Revenue [2007] NSWCA 255 at [84] is spot on: “It can be misleading to speak of “the legislative intention” or “the purpose of Parliament”, although they are useful phrases if properly understood: see Mason, “The Intent of Legislation”, (2006) 27 Aust Bar Rev 253. The legislature may have a target, but the legislation must hit it. Assuming the purpose as submitted by the Chief Commissioner, the words of s 24 did not carry it into effect.” After all, the Executive can recommend to the Legislature in those cases that the Act be amended: see Commissioners for HM Revenue & Customs v. Mayes [2011] EWCA Civ 407at [20].

For example, the Queensland Office of Revenue is aware of deficiencies in many of the sections of the Duties Act, such as section 124, section 70. But “administrative adjustments” (to call them that) in the day to day operation of the Act to tweak the meaning or operation of a section to meet conveniently what the QRO wants the section to operate and sometimes “administrative arrangements” (which have been highlighted in The Tax Reformer) are called in aid to sweep the issue out of sight when there should be (sometimes) a full root and branch amendment of the section. Then there those euphemistically called “ex gratia payments”, done in secret. Is “secret’ too strong a word? Well, maybe, but why is there not a Register of Ex gratia Payments with a short statement of the facts (suitably redacted to preserve confidentiality) available so that all taxpayers, partitioners, and self-assessors know about them resulting in a level playing field. More on ex gratia payments later in the TTR.

So much has been written about the Rule of Law, one wonders why it has to be mentioned again and again. The short answer is to preserve constitutional democracy. References here include “The Rule of Law: Foundation of Constitutional Democracy”, Emeritus Professor Geoffrey de Q Walker, MUP 1988, “The Tax Wilderness: How to Restore the Rule of Law”, Emeritus Professor Geoffrey de Q Walker, The Centre for Independent Studies 2004, Courts and the Rule of Law, Murray Gleeson CJ (as he then was), Melbourne University, 2001; and The Rule of Law Association.

In the later article, there is a list. Consider that list against perceived tax legislation and tax administration issues about the Rule of Law in each of the States & Territories!

More on the Rule of Law in further Issues of the TTR.


Law and Justice

It's The Vibe Of It

It’s The Vibe Of It

BY VINCE BAILEY – 14 FEBRUARY 2022

A recent case1 in the Victorian Civil and Administrative Tribunal has highlighted the limits of the Commissioner’s unilateral taxation by policy and straying outside the law. The Rule of Law is paramount always.

Administrative arrangements

The Queensland Commissioner adopts the practice of publishing public rulings containing administrative arrangements which extend legislated duty exemptions and even promulgate new duty exemptions not contained in the legislation.

An example of extending duty exemptions is Public Ruling DA000.10.1 Transfer duty – relief for certain trust acquisitions, trust surrenders and partnership acquisitions. This Public Ruling essentially provides the Commissioner will disregard the express provisions of the legislation and treat trust interests and partnership interests as being dutiable property for the purposes of certain transfer duty exemptions.

To obtain this relief, the taxpayer must apply to the Commissioner. The Commissioner then decides on a case by case basis whether or not ex gratia relief from transfer duty should be granted. The published criteria to be satisfied to obtain a favourable decision from the Commissioner are that the exemption would apply but for the trust interest or partnership interest not being dutiable property and that the Commissioner is satisfied it is appropriate for the exemption to apply.

An example of making new duty exemptions is Public Ruling DA000.16.2 Administrative Arrangement – duty exemptions for eligible small business restructures. This Public Ruling expressly provides the Commissioner will administer the duty legislation as if the legislation contained the relevant exemptions.

To access these new exemptions, the taxpayer must apply to the Commissioner. The Ruling does not say ex gratia relief from transfer duty will be granted just that the Commissioner will assess duty on the basis the exemptions are law.

The VCAT case

Duty was assessed on a transfer of farming land from a farmer to a property trust the sole beneficiary of which was the farmer’s self-managed superannuation fund. The corporate trustee of the property trust was solely controlled and owned by the farmer. He was the sole member of the superannuation fund and the sole director and shareholder of its corporate trustee.

He transferred the land as part of his retirement and succession planning – he had made a binding death benefit nomination in favour of his two daughters so that his farm would stay in the family.

For the Victorian family farm exemption to apply, the transferee must be:-

  • a relative of the transfer or;
  • a fixed trust having beneficiaries limited to relatives and/or charities: or
  • a discretionary trust which did not allow capital distributions to persons other than relatives and/or charities.

The transferee property trust was not any of those entities.

The farmer submitted the Commissioner should extend the exemption to encompass the farmland transfer as it met the “spirit” and “intent” of the legislation and was in accord with the policy purpose of the exemption.

Unfortunately for the farmer, this submission did not meet with any success.

The Tribunal held the Victorian Commissioner did not have a discretionary power to waive or reduce the duty assessable by extending the “family farm” exemption.

The Queensland Commissioner’s authority

What legal authority does the Queensland Commissioner have to make and implement the administrative arrangements?
It’s the vibe of it. It’s the constitution. It’s Mabo. It’s justice. It’s law. It’s the vibe and ah, no that’s it. It’s the vibe. I rest my case.2

The constitution

Regardless of the Commissioner’s powers, the Queensland constitutional position is that taxation can only be imposed by legislation – not by administrative arrangement made by a statutory officer.

The power of the State of Queensland to impose taxation, subject to the operation of the Commonwealth Constitution, is regulated by the constitutional precept, accepted as settled since the fourth declaration contained in the Bill of Rights 1688 or 1689, that taxation must be imposed only under the authority of legislation.3

Only the State’s legislature has power to make laws dealing with taxation. This power has not been delegated or entrusted to the Commissioner under the Duties Act 2001, the Taxation Administration Act 2001 or the Regulations made under these Acts (“tax laws”). The Commissioner’s role is to administer and enforce the tax laws – not amend or make new tax laws.

Mabo

The Mabo4 decision did not empower the Commissioner in any way whatsoever.

Justice

It is submitted that justice and good governance is not promoted by a public service officer5 having the discretionary power to make taxation law by extending exemptions, making new exemptions or granting ex gratia relief from tax to certain taxpayers in certain situations where the officer considers it to be appropriate to do so.

Admittedly the Commissioner’s practice benefits the relevant taxpayer. It also benefits the Commissioner. It is much easier to simply publish a public ruling rather than engage in the parliamentary process required to enact new law. Putting the onus on individual taxpayers to apply for relief also gives the Commissioner a compliance opportunity to require extensive disclosure from the taxpayer.

But the practice leads to some taxpayers being treated differently to others with the taxation outcome being dependent on factors such as the skill or influence of the taxpayer’s representative or the views of the relevant assessing officer. In addition, aggrieved taxpayers have no path to appeal unfavourable decisions as the published exemptions do not exist at law and any appeal would be futile. Another problem is that the self-appointed discretionary powers could be used arbitrarily, capriciously, inconsistently or for ulterior purposes. It is not suggested this is happening only that it is possible.

A taxpayer’s obligation to pay tax should be clearly spelt out in legislation and not determined on application to, and at the discretion of, a government officer. There is no justice in taxation by decree with relief given on a case by case basis. This is why the Rule of Law is so important and fundamental to our system.

The law

The tax laws do not give the Commissioner any specific express powers to extend duty exemptions or make new exemptions.

The Commissioner’s function is to administer and enforce the tax laws6. To do this, the Commissioner must only exercise powers given under the tax laws which include the power to do all things necessary or convenient for performing the Commissioner’s function7.

It goes without saying the Commissioner is attempting to legislate new tax laws by extending exemptions or making new exemptions. This is not the Commissioner’s function. The Commissioner’s legislated function is to administer and enforce the tax laws as legislated. The Commissioner has no power to amend the tax laws or make new tax laws.

The vibe

What is left to justify the Commissioner’s practice?

It’s the vibe of it.

It’s the expediency of implementing what the Commissioner considers to be good policy or achieving what the Commissioner considers to be good taxation outcomes based on the Commissioner’s view of policy rather than the law.

But, as argued above, the practice breaches the rule of law and does not promote good governance.
And there is a simple remedy – if the law needs fixing, legislate.


1 ANO Property Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2022] VCAT 71 (20 January 2022)
2 The Castle – 1997 Australian comedy movie
3 Island Resorts (Apartments) Pty Ltd v Gold Coast City Council [2021] QCA 19 para [37]
4 Mabo v Queensland (No 2) (“Mabo case”) [1991] HCA 23
5 Section 7 Taxation Administration Act 2001
6 Section 8 Taxation Administration Act 2001
7 Section 9 ibid.


Vince Bailey, Principal at Vince Bailey Lawyer

Vince Bailey is the Principal at Vince Bailey Lawyer, Cairns and practises exclusively in estate planning.


Tax Reform

Question: Who’s getting frustrated?

Siege mentality? “Just because they want it, doesn’t mean you have to go it to them” mentality?

The Monthly Reports of September and October featured cartoons with revenue officers atop a castle. Why? Well, TTR’s efforts to get innocuous copies of Taxation Consultative Committee (TCC) agendas and minutes have been rebuffed by the OSR. And this, notwithstanding that they are not confidential. And to provide them would guide taxpayers and self-assessors as to issues before the TCC, is in line with the recent Right to Information statement on the disclosure required of the OSR and indeed the TCC’s terms of reference. Is it that many of the issues raised by members have been “in consideration” mode for a long time?

Remember “client centric”. What a joke!

Answer: TTR is frustrated. Another Right to Information application (RTI) and another $52.60. Is this proper tax administration? Let TTR know your view.

Read the RTI application at the Right to Information tab.


Right to Information application - TCC

RTI Ref: 272852

Which description most closely describes your application for access?

Some of the documents I'm applying for do not contain my personal information OR I'm acting on
someone's behalf and some of the documents I'm applying for don't contain that person's personal
information - RTI Act application, application fee payable

Are you seeking access to information on someone's behalf?

No

Are you seeking access for the use or benefit of another person, company or body (for example, a journalist applying for a media organisation)?

No

Which department are you applying to?

Queensland Treasury (Office of State Revenue)

Have you spoken to an RTI officer in the department about the information you seek?

No

Subject matter of the documents you are seeking:

The Taxation Consultative Committee (TCC) of the Office of State Revenue (OSR) was established many years ago. It operates regularly. Its members are drawn from the legal and accounting professions to discuss issues affecting the Queensland tax base, tax policy and tax administration. It provides Agenda to members and minutes of meetings. Its deliberations are not confidential. Those agendas and minutes are held by the Commissioner of State Revenue and minutes for the last 3 years.

The type of documents:

Agendas and minutes of the TCC.

The time period / date range you would like us to search within:

2016,2017,2018,2019,2020,2021.

Relevant document reference numbers:

Unknown

Where you think the documents may be located (e.g. Minister's Office, facility, business area, unit, person):

Commissioner of State Revenue and/or Chief Revenue Counsel

Any other details you believe will assist us in dealing with your application:

Nil

Preferred access type:

Copy of documents
Email


Duncan Bedford of McCullough Robertson

Interjurisdictional Cooperation on Consideration

Stamp duty expert, Duncan Bedford of McCullough Robertson presented a paper at the recent Tax Institute 21st Annual States Taxes Conference held on 3-4 November 2021 entitled “Identifying the ‘consideration for’ the transaction – Contemporary issues”. TTR asked Duncan these questions:

  • “Some [States] OSR’s have a ruling on consideration.
    Q. 1. For those which do, which (if any) in your view are a correct statement of the law?
  • Q. 2. Do you think that, in the spirit of harmonisation, let alone standardisation, all of the jurisdictions should agree on the interpretation and then publish a ruling?”

Duncan Bedford answered:

  • Q 1. The rulings which have been released , NSW and Victoria, are not consistent with the law as it stands;
  • Q. 2 As Consideration is nationwide, it would help to have a consistent approach by the revenue offices.

So, time for a MultiStates/Territories Tax commission? Yes, beyond doubt.


Queensland Office of State Revenue Office Bearers

Queensland Office of State Revenue Office Bearers

Queensland Office of State Revenue Office Bearers

Queensland Office of State Revenue Office Bearers

Innocuous Information Comes To Light

Talk about pulling teeth!

The innocuous information sought by TTR has finally come to light. But not without TTR going through all of the Government Gazettes since 1 January 2021 (for the names of the senior office bearers) and making an application under the RTI Act (for the Organisational Chart).

Time, trouble and cost! See the Right to Information tab for the Organisational Chart and the names of the Chief Revenue Counsel and two Deputy Commissioners discovered by Government Gazette searches. It is likely that the Assistant Commissioner positions have not been filled. One has to ask, why the non-co-operation, the secrecy?

And how did you go with the names of the Office bearers? More on this to come.

Right To Information

The Life and Death of a Self-Assessor

Life & Death of a Self-Assessor

Life & Death of a Self-Assessor

BY VINCE BAILEY – 1 NOVEMBER 2021

Self-assessment – beneficial but risky

The duty self-assessment regime in Queensland provides significant benefits to law firms, the Government and its revenue authority the Office of State Revenue (OSR).

It shifts the assessment and collection of duty from government to private enterprise resulting in significant cost-savings and efficiencies for the Government and relieves the OSR from a significant administrative burden.

It expedites the stamping process carried out by law firms for their clients as documents can be stamped “in-house” within very short timeframes.

One would have thought this “win-win” scenario would have engendered a co-operative, supportive and perhaps even a symbiotic relationship between the OSR and self-assessors. But, as demonstrated below, the current regime is dictatorial in nature and imposes unacceptable risks on self-assessors.

History of self-assessment in Queensland

Self-assessment in Queensland has an interesting history.

It was introduced when the former legislationi applied. Initially, it only applied to a very limited class of documents – essentially non-contentious residential conveyancing documents. The self-assessor had the option to self-assess or lodge with the then Stamp Duties Office for assessment. Queensland law firms warmly embraced this innovative change and implored the Commissioner to extend the class of documents which could be self-assessed.

Like all good regulators, the Commissioner sensed an opportunity to strengthen the integrity of the stamp duty collection system and, under the guise of enhancing the self-assessment process, a regulation was proclaimed making law firms liable for their client’s stamp duty liability on documents which came into the possession or control of the firm. The writer recalls protesting to local members of parliament who claimed they were completely unaware of such a draconian measure and receiving assurances from officers of the Stamp Duties Office that these powers would either never be enforced or alternatively would only be invoked in exceptional circumstances.

By the time the new Duties Act commenced, the Commissioner and the Government had realised it was a bit rich making lawyers liable for their client’s stamp duty and “reformed” this aspect of self-assessment.

Current statutory framework

Most law firms are mandated by the OSR to participate in the self-assessment regime. The OSR is empowered to force any firm to become a self-assessor.ii If the OSR registers the firm as a self-assessor, the law firm has no choice but to act as a self-assessor.

A self-assessor must self-assess all documents which the Commissioner has specified in the self-assessor’s notice of registration and must not lodge such documents with the OSR for assessment.iii Notwithstanding the Commissioner is empowered to assess such documentsiv, the Commissioner rarely exercises this power.v The Commissioner’s decision not to assess is not reviewable.vi

What does this mean in very simple terms? Firstly, if the Commissioner appoints a law firm as a self-assessor, the law firm must act and continue to act as a self-assessor – the law firm has no choice in the matter. Secondly, the self-assessor is prohibited from lodging with the OSR for assessment even if the self-assessor has doubts about the correct assessment.

Statutory duties

Specific duties are imposed on self-assessors by Chapter 12, Part 4 of the Duties Act 2001 in respect of:

  • lodging returns and accompanying documents;
  • paying duty, unpaid tax interest and penalty tax;
  • stamping documents;
  • endorsing stamped documents;
  • lodging transaction statements and accompanying documents;
  • stamping and endorsing documents relating to transaction documents.

Importantly, the self-assessor is not obliged to lodge returns, pay duty, interest or penalty tax or stamp documents where the self-assessor has not received payment from the person liable to pay.vii

A breach of any of these statutory duties renders the self-assessor liable to be prosecuted for a statutory offence. Alternatively, the Commissioner may impose a penalty on the self-assessor.viii

Chapter 12A imposes duties on parties to a transaction where a self-assessor is involved including duties to:

  • ensure the self-assessor is given all instruments and other relevant documents;
  • pay to the self-assessor the relevant amount of duty, interest and penalty tax;
  • not give documents to the self-assessor containing information the party knows, or should reasonably know, is false or misleading in a material particular (without informing the self-assessor of this or alternatively giving the correct information to the self-assessor);
  • not to give information to the self-assessor the party knows is false or misleading in a material particular.

The Taxation Administration Act 2001 also imposes duties on self-assessors in that the self-assessor must:

  • have regard to directions given by the Commissioner;ix
  • pay the tax payable in respect of a return lodged by the self-assessor on the date the return is required to be lodged;x
  • not give the Commissioner a document containing information the self-assessor knows, or should reasonably know, is false or misleading in a material particular without informing the Commissioner of the extent to which the document is false or misleading and to the extent the self-assessor has, or can reasonably get, the correct information; giving the correct information to the Commissioner;xi
  • not give any information to the Commissioner that the self-assessor knows is false or misleading in a material particular.xii

Section 488(1) of the Duties Act 2001 contains an interesting note which reads-

The self assessor does not commit an offence against the Administration Act sections 122 or 123, if the self assessor gives the Commissioner a return containing information provided by the taxpayer that the self assessor does not know, or could not reasonably know, is false or misleading.

Penalties

The acts or omissions of a self-assessor may result in the Commissioner imposing penalties on the self-assessor if the self-assessor:

  • fails to lodge a return or pay an amount as required;xiii
  • fails to lodge a transaction statement as required;xiv
  • lodges a return or transaction statement containing false or misleading information in contravention of sections 122 or 123 of the Taxation Administration Act 2001.xv

Criminal responsibility

A self-assessor (like any taxpayer) would be criminally responsible if the self-assessor commits a fraud against the revenue authority, attempts or conspires to do so or is an accessory after the fact in respect of the fraud.

An example is section 430 of the Queensland Criminal Code which relevantly states –

Any person who with intent to defraud…..gives any certificate or information that is false or misleading in a material particular…is guilty of a crime. Maximum penalty – 10 years imprisonment.

Legal capacity

The duties legislationxvi provides that a self-assessor acts as a tax agent.

A tax agent is defined as the person who, as agent for a taxpayer, is required or permitted to lodge a return or transaction statement.xvii

A self-assessor is relevantly defined as a tax agent required or permitted to lodge a return or transaction statement.xviii

Accordingly, the legal capacity in which a law firm acting as a self-assessor is as the agent of the client taxpayer and not as agent of the Commissioner. The law firm’s common law duty as agent to take the utmost due care is owed to the client – not the Commissioner.

Duties owed to the taxpayer client

In most self-assessment stamping situations involving a law firm as the self-assessor, the law firm’s client is the taxpayer.

Subject to the retainer agreement, some of the duties owed by the law firm to the client include duties to:

  • advise regarding compliance with the statutory duties imposed on the client under the duties legislation;
  • advise on ways to minimise the client’s duty liability;
  • protect the confidentiality of certain information given by the client to the law firm as part of the retainer.

These duties arise from the solicitor-client relationship and are in addition to the duties arising from the agency relationship created by the duties legislation.

Conflict of duty

Although there is a view there is minimal potential for conflicts between the statutory duties imposed on self-assessing law firms and the duties arising from the solicitor-client and agency relationships, conflicts do arise in practice.

An example is where an increase in duty liability depends on questions of degree or making an assessment by taking into account relevant circumstances (such as aggregation of transactions or determining which dutiable transaction is the most applicable). If the self-assessing law firm blindly follows a public ruling of the Commissioner without considering and advising the client on the lawfulness of the Commissioner’s view of the law then the law firm could be exposed to civil liability to the client.

Other examples are where the law firm has been instructed to advise on structuring a transaction to minimise duty or the client has given confidential information to the law firm which the client instructs (or the law firm considers should) not be disclosed to the Commissioner. In these scenarios the self-assessing law firm could be in breach of its statutory duties arising from being a self-assessor.

Duty to make enquiries

Another troublesome aspect of being a self-assessor is the uncertainty surrounding the extent to which the self-assessor is obliged to make enquiries of its principal taxpayer client, or from other sources, in order to comply with its statutory duties under the duties legislation.

In some circumstances it will not be sufficient for the self-assessor to show it did not have actual knowledge about some of the information contained in the documents lodged with the Commissioner or contained in statements made to the Commissioner being false or misleading in a material particular. Constructive knowledge is imputed to the self-assessor where the self-assessor should reasonably have known the relevant information was false or misleading.

Scenarios where this risk arises are where the parties are related parties, are not transacting on an arm’s length basis or have entered into a collateral agreement which is not disclosed to the self- assessor. Is the self-assessor obliged to make enquiries about whether any of these circumstances exist and, if so, is this obligation satisfied simply by asking the client? An example is where the stated contract price is either under or over the real price being paid by the client. Should the self-assessor make any enquiries at all about this possibility? What if the client or a third party tells the self-assessor about the “secret” cash component or discount?

Case study

Oscar and Lucinda owned neighbouring rural properties. They were long time neighbours. Lucinda negotiated the purchase of Oscar’s “bottom paddock”. Lucinda’s son was studying law and prepared a standard REIQ sale contract showing the price at $1m. Lucinda obtained quotes from several law firms for the conveyancing and went with the lowest quote from the law firm W&P (formerly Wing & A. Prayer Solicitors).

W&P assessed the contract as self-assessor and the conveyancing went thorough without a hitch. W&P did not make any enquiries of Lucinda or anyone else. W&P were more than surprised when a few months later Oscar’s executors contacted them seeking payment from Lucinda of the cash component of the land purchase and the sale price for 100 cattle under the terms of two handwritten sale contracts signed by Oscar & Lucinda. A term of one of these contracts was that Lucinda was to pay all rates and land tax (if any) on Oscar’s remaining land for 10 years.

W&P sought instructions from Lucinda and received instructions that the alleged transactions were “secret deals”, that she and Oscar had been in a long term secret spousal relationship, that these matters must remain confidential and that under no circumstances should W&P disclose any information about these highly sensitive matters to anyone.

W&P are in the unenviable position of either breaching their statutory duties as a self-assessor or breaching the duties they owe their client.

An easier life for self-assessors?

In view of the enormous financial savings which directly benefit the Queensland Government from self-assessment by law firms and the additional costs incurred by law firms acting as self-assessors, it is surprising that the Government and the OSR do not provide more support to self-assessors.

Suggested support could include:

  • direct hot line for technical support and guidance;
  • online training for self-assessors at commencement of registration;
  • regular ongoing training and practice support by webinar or in person visits.
  • notice of any change of practice by the OSR.

In addition, the OSR could provide greater certainty and transparency by permitting self-assessors to obtain timely private rulings on executed instruments to be assessed by self-assessors where any uncertainty regarding the application of the law to the particular facts exists.xix These private rulings could be published online so that they are available to all self-assessors.

Based on these private rulings issued to self-assessors, a collection of more comprehensive and helpful public rulings could be issued and compiled to assist self-assessors making assessments and to protect self-assessors from risk.

The OSR could adopt a more generous approach to exercising its discretion to assess transactions which are required or permitted to be assessed by self-assessors.xx

A better approach would be to amend the legislation to permit self-assessors as of right to lodge any instrument for assessment by the OSR where the assessment involves uncertainty surrounding the application of the law to the particular facts.

An even better approach would be to amend the legislation to permit self-assessors to opt out of the self-assessment regime. It would then be in the best interests of the OSR and the Queensland Government to make the regime better and less risky for self-assessors.


i Stamps Act 1894
ii Section 451 Duties Act 2001 (DA)
iii Section 454 DA.
iv Section 11(2)(a) Taxation Administration Act 2001 (TAA)
v See paragraph 14 Public Ruling DA000.2.9
vi Section 11(3) TAA
vii Section 455(3) DA
viii Sections 488 & 489 DA – essentially the penalty amount is 75% of the assessed duty
ix Section 15 TAA
x Section 30(1)(a) TAA
xi Section 122 TAA
xii Section 123 TAA
xiii Section 488(1)(a) DA
xiv Section 488(1)(b) DA
xv Section 488(1)(d)
xvi The Duties Act 2001 and the Taxation Administration Act 2001
xvii Schedule 2 TAA
xviii Schedule 2 TAA
xix Private Rulings on unexecuted documents and proposed transactions are for the most part issued at the Commissioner’s discretion in very limited circumstances – see Public Ruling DA000.1.3
xx The criteria set out in para. 14 of Public Ruling DA000.2.9 is far too restrictive


Vince Bailey, Principal at Vince Bailey Lawyer

Vince Bailey is the Principal at Vince Bailey Lawyer, Cairns and practises exclusively in estate planning.