Action by the Office of the Commissioner for ACT Revenue is driving car dealers out of business and threatening their employees’ jobs, according to the dealers.
They say they are being assessed for stamp duty which they have not collected from customers in cases of: interstate sales, sales to wreckers, sales to diplomats and on sales that later fell through.
One dealer has been hit with a bill of $93,000 and several notices threatening winding up. His assessment was for $40,000 in duty that he had not collected from customers and penalties in some cases of 140 per cent.
The dealer, Faiz Rizvi, who runs Braddon Auto Mart, challenged a number of assessments as test cases in the Administrative Appeals Tribunal. He won most of his case, but the commissioner is appealing to the ACT Supreme Court. He got notice of it this week. He says the legal costs are making him question whether he can stay in business.
There are more than 300 transactions in dispute.
The Deputy Leader of the Opposition, Tony de Domenico, said the commissioner should stop wasting public money with the appeal and sit down with the dealer and work the issue out.
The dealers say they have to bear the administrative cost of collecting stamp duty from car buyers and they are made liable for it. This burden had been put on them without consultation.
When the law was introduced in 1991, the government said that individuals were understating the value of vehicles, so it was better to levy the duty at point of sale based on the dealers’ invoices.
The commissioner, Gordon Faichney, said he could not discuss an individual case because of secrecy provisions in the law and because it was before the court. However, he was prepared to make general points about car stamp duty.
There was a problem with interstate purchases, he said. People resident interstate who bought at ACT-registered used car had to pay the two and a half per cent stamp duty in the ACT. They could claim an exemption when they registered the car in their home state.
However, when they bought a NSW-registered car in the ACT, they often had difficulty getting an exemption. In order to keep ACT dealers competitive the ACT has granted an exemption for interstate residents buying non-ACT registered cars in the ACT.
After a while the office had found a far higher percentage of these sales than expected.
“”We want adequate evidence that these were legitimate transaction by interstate buyers,” he said. “”We ask the dealers to keep records of their bona fides.”
The dealers say the requirements of the commissioner put out in official revenue circulars are too onerous; they require dealers to keep available for inspection copies of two forms of evidence of the non-ACT resident status.
The Administrative Appeals Tribunal ruled that the circulars did not have the force of law and the commissioner could not levy the duty just because they were absent, if there was other credible evidence.
On diplomats, Mr Faichney said dealers should ensure they buyer presents a certificate from Motor Registry otherwise they should collected the duty.
As to wrecks, Mr Faichney said they were still sales of vehicles and the duty was payable, though it would not amount to much because wrecks were not sold for much.
On deals that fall through, Mr Faichney said that, unlike with land, there were no refund provisions, and that if a deal were completed the duty was payable, even if the parties reversed the transaction later.
The tribunal ruled that a wreck had to be capable of being a means of conveyance before the duty could be levied. On deals that fall through, it depended when the parties intended “”property to pass” as to whether the duty applied.
It was a question of the facts in each case as to whether it was a wreck or a completed sale.
The dealers say the legal costs are too great to fight the thing case by case. They say their fundamental point is that they did not get the tax from the customers and now face paying it out of their own pockets. Dealer Col Cummins, who has 70 employees, said he faced a large bill following an audit and would await the Rizvi outcome anxiously.
Mr Faichney said his office had had extensive discussions with the Motor Trades Association and had sent out information to all dealers about the law.
His office would be looking at amendments to the law. At present, however, there were two cheap avenues of redress: internal review and the Administrative Appeals Tribunal.
Mr de Domenico said the tribunal was unsatisfactory because legal costs were still high. The real issue was the inflexibility of the commissioner. A flexible, non-legalistic approach was needed if business were not to be crushed by government-imposed burdens. He questioned why dealers had to become the government’s tax collectors and carry the administrative burden and the burden of paying penalties for any errors.
Mr Faichney said his office would continue to have discussions with dealers who had difficulty applying the law. He had to balance this with his job to look after the ACT revenue.