With today's (1 July 2025) publication of Revenue Guideline TAA 001(Guidelines), the Chief Commissioner of State Revenue in New South Wales has introduced significant changes to the process by which interest may be remitted. Broadly, other than in exceptional circumstances, a maximum of 25% of interest can be remitted under the Guidelines, even in circumstances outside of the taxpayer's control. Given the narrow circumstances in which interest will be remitted, it is important on significant, complex transactions to engage with Revenue to obtain, where appropriate, an extension of time to pay tax in order to mitigate the interest risk – for example, large M&A transactions may require formal valuation reports to substantiate the duty payment which can take significantly longer to obtain than the prescribed 3 month statutory deadline.
The changes were first foreshadowed in the FY2023-24 state budget, as discussed in our note here. In our commentary, we noted the significance of giving the guidelines statutory force, as it enables the Chief Commissioner to overcome existing Court and Tribunal decisions which prescribe the circumstances where interest should be remitted.
Legislative Changes
Prior to the implementation of the Treasury and Revenue Legislation Amendment Act 2023 (NSW) (Amendment Act), section 25 of the Taxation Administration Act 1996 (NSW) (TAA) permitted the Chief Commissioner to remit the market rate component or the premium component of interest "by any amount".
Following the introduction of the Amendment Act on 1 February 2024, section 25 of the TAA was amended to permit the Chief Commissioner to issue guidelines on how interest may be remitted, and to provide that, if guidelines are issued, interest may only be remitted in accordance with those guidelines.
Guidelines
The Guidelines were issued on 1 July 2025, and apply to all taxation laws and statutory obligations administered by Revenue NSW pursuant to the TAA. The Guidelines take effect from their date of issue, regardless of the date on which the liability for tax arose, or the date on which a notice of assessment was issued by the Chief Commissioner.
As prescribed by the Guidelines, the Chief Commissioner may remit interest only in the following circumstances:
- 25% Remission Criteria
The Chief Commissioner can remit up to 25% of the interest imposed in any of the following circumstances:
- the tax default was due to "Listed Circumstances", where a taxpayer has made an attempt but was unable to lodge or pay on time; Listed Circumstances being:
- postal or DX delays;
- key personnel of the taxpayer not being available due to sudden resignation, illness, or death;
- the taxpayer did not and could not reasonably be expected to know of the liability because their affairs are managed under protective guardianship; and
- industrial action impacted the ordinary administration of the taxpayer's taxation affairs.
- a taxpayer required to lodge and pay by way of monthly return has lodged or paid late on no more than 1 occasion within the last 24 months;
- the payment or lodgement is by a "New Land Tax Customer" and was received within 60 days of the prescribed due date; a New Land Tax Customer being a natural person who had, prior to the relevant assessment, had at least 3 continuous tax years with no liability to land tax; or
- the taxpayer has made a Voluntary Disclosure of a tax default before an investigation, and the Chief Commissioner is satisfied that the default was not within the control of the taxpayer; noting that "Voluntary Disclosure" does not include disclosures relating to the late lodgement of a return or late payment of duty in respect of a transfer duty liability or surcharge purchaser duty liability.
These reforms represent a significant departure from the existing law. The accepted test (as it relates to a remission of the premium component) was explained in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 where the Tribunal held that the following factors informed the discretion to remit (at [62]):
- all principal tax that is owing and not in dispute has been fully paid;
- there has been co-operation in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;
- such co-operation has occurred prior to any investigation being commenced by the Commissioner, or, at the very latest, within a reasonable time after a request for information had been made by the Commissioner; and
- there has been no wilful default in not paying tax on time.
These criteria (especially in respect of cooperation) reflected the clear penal nature of premium rate interest (with interest at the market rate being designed to compensate the State for the delay in receiving payment). They have uniformly been applied by the Tribunal and the Supreme Court of NSW since 2004 (see e.g. Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773).
The Guidelines no longer recognise the penal nature of premium interest and instead create a prescriptive set of criteria for the partial remission of interest generally. This is a disappointing development and turns a regime which should exist as a deterrent for poor taxpayer behaviour into a revenue raising regime.
- Exceptional Circumstances
The Chief Commissioner can remit up to 100% of the interest imposed where:
- the default is due to financial system network and / or payment platform failure;
- acts or omissions of Revenue NSW affected the receipt of payment;
- payment is not possible due to the direct impact of natural disaster; or
- a declaration has been made on the Revenue NSW website that no interest will apply to particular persons or classes of persons.
- Approved Payment Extensions & Approved Payment Plans
The Chief Commissioner may agree to extend a taxpayer's time for payment of tax that is not yet overdue.
Once a payment extension is approved, the Chief Commissioner may allow a payment plan, with or without interest. Payment plans may also be approved where a tax default has already occurred, although interest will continue to accrue during the payment plan period.
Other points to note in the Guidelines include:
- Requests for remission of interest must be made in writing to the Chief Commissioner and be supported by appropriate evidence to explain the default.
- The Guidelines have no relevance to the imposition or remission of penalty tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
