“We don’t handle stamp duty assessments directly nor do we advise about this issue. We merely handle the conveyance and aren’t experts in surcharge duty implications.” That email came from the buyers’ own lawyers. It was in evidence. The buyers’ whole defence was that they relied on those lawyers.
The rule in one line
Reliance on an adviser can support remission of penalty tax and premium interest — but only where there is evidence of what was asked, what was advised and what was done in response. A belief that advice should have been given proves nothing.
The background
A foreign person buying residential land in New South Wales pays surcharge purchaser duty in addition to ordinary transfer duty. A permanent resident can be exempt where they use and occupy the property as their principal place of residence for a continuous period of 200 days within the first year, under section 104ZKA of the Duties Act 1997 (NSW). Purchasers sign a declaration stating their position.
In Rahman v Chief Commissioner of State Revenue [2026] NSWCATAD 172, two buyers purchased in 2021 and each declared themselves an exempt permanent resident. That was wrong, and nobody disputed it [67]. The surcharge went unpaid. Following an investigation, Revenue NSW assessed the surcharge in October 2024, with interest and penalty tax.
The buyers paid the surcharge. They contested only the interest and penalty tax, on the basis that they had relied on their lawyers.
Three separate amounts, three separate tests
This is worth setting out carefully, because these are frequently argued as one thing when they are three.
- Market rate interest compensates the revenue for being paid late. It is almost never remitted.
- Premium rate interest is an additional impost. It can be remitted where the taxpayer took reasonable care.
- Penalty tax is separate again — 25 per cent of the unpaid tax in this case, reduced to 20 per cent for disclosure during the investigation. It can be remitted in full where reasonable care was taken.
Everything turned on reasonable care. And the taxpayer bears the onus of establishing it.
Why the argument failed
The Tribunal accepted that lawyers had been engaged [51]. That was as far as it went.
No retainer was in evidence. Nothing showed what the lawyers had been asked about residency status, what the buyers told them, or what advice — if any — came back [53]–[54]. What there was: the email quoted above, disclaiming responsibility for surcharge duty, and a belief that advice ought to have been given.
A belief is not evidence [55]. No proof of advice, no reasonable care. The assessment was confirmed in full.
The contrast case
Compare Golden Age [2024] NSWSC 249. There the taxpayer proved that it had sought its solicitors’ advice and had acted on it. Premium interest was remitted entirely.
Three practical takeaways
- “My adviser should have told me” wins nothing. “Here is the advice I asked for, received and followed” wins. Keep the retainer, the question and the answer in writing, on the file, for as long as the assessment period runs — which in state taxes can be years after settlement.
- Somebody has to actually answer the question before the declaration is signed. Is this purchaser a foreign person? Conveyancing retainers very commonly exclude duty and tax advice. If the retainer excludes it, someone else has to be doing it, and that should be agreed in writing at the outset.
- Process failures may be forgiven. Evidentiary failures are not. These applicants filed in the wrong tribunal and were 275 days late, and were still heard, on account of a father’s illness and death and an absence of prejudice. They won the right to be heard and lost everything else.
What this means for advisers
The lesson is not that reliance arguments do not work. It is that they are evidentiary arguments dressed as legal ones. The material that decides them is created at the time of the transaction, by the professional who did or did not answer the question — not by counsel three years later.
For a conveyancing or advisory file, the practical protection is a short written record: what the client was asked about residency and foreign person status, what they said, what advice was given, and what the client was told to do. It takes minutes. It is the difference between the two cases above.
The practical point
When did you last see written proof of duty advice in a purchase file? If the answer is “not often”, that is the exposure — and it sits with both the purchaser and the adviser.
References
- Rahman v Chief Commissioner of State Revenue [2026] NSWCATAD 172
- Golden Age [2024] NSWSC 249
- Duties Act 1997 (NSW), s 104ZKA
- Taxation Administration Act 1996 (NSW), interest and penalty tax provisions
This article is general information only. It is current as at 12 June 2026 and the law may have changed since. It is not legal or tax advice, does not take account of your circumstances, and must not be relied upon as a substitute for advice on your own matter.