Land tax applies to ACT properties that aren’t the owner’s principal place of residence, including rented and vacant properties. Photo: Michelle Kroll.
The ACT Revenue Office (ACTRO) has been urged to ensure historic land tax debts are notified and collected “reasonably and fairly” after an ombudsman investigation found systemic improvements were needed.
ACT Ombudsman Iain Anderson and his office decided to investigate ACTRO’s processes for identifying and collecting historical land tax debts after receiving 10 complaints in 2024.
These complaints were about assessments issued for debts that ranged from six to 17 years old, and at times included backdated interest and penalty tax.
The investigation found ACTRO’s approach was not “customer-centric” and at times it didn’t give people adequate opportunity to provide all relevant information before issuing an assessment notice.
“Ultimately, the investigation found ACTRO lacks a fair and reasonable approach to addressing historical land tax,” Mr Anderson said.
Impersonal communications and insufficient responsiveness to enquiries during the request-for-information stage were concerns, and there appeared to be an “inadequate response” for managing increased objections.
One example in the report was of a man, Kai, who received notice he owed more than $14,000 in land tax after receiving an assessment from 2008-09 and 2012-13.
No penalty tax or back interest had been applied because Kai provided proof he’d told ACTRO he was renting out his property in 2008. ACTRO did not raise the land tax at this time.
“Kai indicated he was denied the opportunity to claim the land tax as a deduction in his annual tax returns. Kai felt a heavy burden to search for old records to provide evidence that he had correctly notified the ACTRO,” the report stated.
“Kai felt if he had not cooperated by providing information and evidence, he could have received high penalties and interest charges.”
He paid the assessment amount in full to avoid interest charges but also lodged an objection. It took ACTRO more than 12 months to respond.
Between 2023 and 2024, ACTRO only completed 45 per cent of objections within six months, and 97 per cent within 12 months.
During this time, interest keeps accruing on people’s debts.
“Keep in mind that despite your objection, you’re still responsible for paying all charges; if you don’t pay them while your objection is being considered, the charges will accrue interest,” ACTRO’s website stated.
The ombudsman found due dates on land tax assessments were being inconsistently applied.
The law requires due dates for payments not to be earlier than four weeks after the date of the assessment notice, and extensions can be requested.
However, there wasn’t clear information on the ACTRO website or assessment notices to let people know extensions are possible.
“We also discovered that some people were given shorter timeframes, such as 5 weeks, while others had been given significantly longer time, such as 14 weeks,” the report noted.
“We found ACTRO does not have a formal process outlining how to address requests for extensions of time to pay or how to determine due dates on assessment notices.”
Payment plans are an option if land tax and associated penalties cannot be paid in full by the due date, but interest is compounded monthly during the term of the payment plan (at 12.42 per cent).
The ombudsman noted that the due date set for an assessment notice required better internal guidance, highlighting the case of Charlotte.
She received a land tax assessment in 2023 with more than $5000 in land tax owed from 2011 to 2014 and more than $7000 owed in interest and penalty tax.
“Charlotte is on a pension and was experiencing financial hardship when she was required to pay over $12,000 within 5 weeks,” the report stated.
She went on a 12-month payment plan and objected to accruing interest during this time. She had to wait six months for a review decision, which resulted in a recalculation of the penalty tax and interest.
ACTRO began using “enhanced data matching techniques” in 2022 to rank cases in order of likelihood that debt exists and the value of the debt.
This information is provided to officers with delegated powers to determine which cases require further action, such as a request for further information.
The ombudsman found that while the AI and automation approaches were consistent with its Better Practice Guide, ACTRO had sent 5300 request for information emails between September 2022 and April 2024. These resulted in 1300 assessment notices.
“ACTRO’s data matching algorithm may be causing avoidable stress for individuals who do not have land tax debt but were required to comply with information gathering,” the report stated.
The ombudsman recommended that ACTRO improve the process for raising historical debts, reviewing and updating the collection processes, increasing communication and transparency around the debt recovery process, and improving timeframes for responding to objections.
A response from the ACT Revenue Commissioner, Kim Salisbury, agreed to all the recommendations with the aim of implementing them within 12 months.
“We need to ensure our staff are operating in a fair and balanced manner, while still ensuring that we identify and deter tax fraud, and recover revenue owed to the Territory in its land tax compliance program,” he wrote.
ACT Finance Minister Rachel Stephen-Smith plans to meet with ACTRO tomorrow (21 May) to see what resources will be needed to implement the recommendations.
She’s also seeking further policy advice from ACTRO and Treasury about possible improvements for processes around claiming concessions, undertaking compliance, and the application of penalties and interest for individual taxpayers, particularly where there may be a lack of clarity about their circumstances.
“In addition to the Ombudsman’s report, the experiences of Canberrans who have received reassessment notices related to the Home Buyer Concession Scheme have raised a range of complex issues,” she said.
“It is important that ACT Government agencies always treat Canberrans with fairness and respect, and the Revenue Office team has been reflecting on the feedback.
“I look forward to engaging with the Legislative Assembly Committee inquiry that was unanimously supported by Members last week, but I am keen to get on with making changes as quickly as possible to improve Revenue Office systems and processes.”
