Bremner and Commissioner Of State Revenue

[2005] WASAT 328

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION:   BREMNER and COMMISSIONER OF STATE REVENUE [2005] WASAT 328

MEMBER:   JUSTICE M L BARKER (PRESIDENT)

HEARD:   DECISION ON THE PAPERS

DELIVERED          :   12 DECEMBER 2005

FILE NO/S:   CC 25 of 2004

BETWEEN:   NEIL BREMNER

Applicant

AND

COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

State revenue - Land tax assessment - Land Tax Assessment Act 1976 (WA) - Land Tax Assessment Act 2002 (WA) - Taxation Administration Act 2003 (WA) - Whether residential property exemptions applied - Turns on own facts

Legislation:

Land Tax Assessment Act 1976 (WA), s 13, s 14, s 15(1), s 17, s 18, s 20, s 20(1), s 20(2), s 20(5), s 21, s 31, s 31(1), s 31(5), Schedule Pt 1 cl 9(a)(i)

Land Tax Assessment Act 2002 (WA), s 5, s 7(1), s 8, s 9, s 9(1), s 9(3), Pt 3, s 17, s 20, 21, s 26, Glossary
Strata Titles Act 1985 (WA), s 4
Taxataion Administration Regulations 2003 (WA), r 6

Taxation Administration Act 2003 (WA), s 56(1), s 57(1), s 57(2)

Result:

Decision of the Commissioner affirmed and application of the applicant dismissed

Category:    B

Representation:

Counsel:

Applicant:     Self-represented

Respondent:     Ms F Seaward

Solicitors:

Applicant:     Self-represented

Respondent:     State Solicitor's Office

Case(s) referred to in decision(s):

Nil

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The Commissioner of State Taxation assessed land registered in the name of the applicant for land tax in the 2002/2003 and 2003/2004 assessment years.

2. The applicant considered that the land was not assessable primarily because he claimed he had made arrangements with his son for the land to be transferred to his son and to be occupied by his son as his principal residence.

3. The Tribunal found that, at material times, the land was registered in the name of the applicant, there was no compelling evidence to show that the applicant held the land in trust for his son or that the land was occupied by the applicant's son as his principal place of residence. 

4. In those circumstances, the Tribunal affirmed the Commissioner's decision that the land was subject to land tax in the assessment years and dismissed the application for review.

Decision under review

1. This is an application for review of the Commissioner's decision to:

   (a)Refuse to grant the applicant (Mr Bremner) a refund for his land tax assessment for the 2002/2003 assessment year issued on 18 September 2002, which Mr Bremner paid on 14 October 2002; and

   (b)Refuse to grant Mr Bremner an exemption for his land tax assessment for the 2003/2004 assessment year, issued on 2 October 2003 (together refer as "the decision").

2. The decision was reached by the Commissioner on the basis that in accordance with the Land Tax Assessment Act 1976 (WA), the Land Tax Assessment Act 2002 (WA) and the Taxation Administration Act 2003 (WA), Mr Bremner:

   (1)is required to pay land tax on the relevant property for the relevant assessment years;

   (2)does not satisfy the relevant criteria to enable the Commissioner to grant Mr Bremner a refund for the land tax paid for the 2002/2003 assessment year; and

   (3)does not satisfy the relevant criteria to enable the Commissioner to grant Mr Bremner an exemption for the 2002/2003 and/or 2003/2004 assessment years.

Issues

1. The central issue in this application is whether or not the decision should be affirmed, varied or set aside.

2. To deal with the central issue the following sub-issues must be considered:

   (1)Whether Mr Bremner is required to pay land tax on the land located at Lot 12 on strata plan 40941, commonly known as 101A Tweeddale Road Applecross (the land) for the assessment years 2002/2003 and 2003/2004.

   (2)Whether the respondent has any discretion to grant the applicant a refund for the land tax paid in relation to the land for the 2002/2003 assessment year; and

   (3)whether Mr Bremner is entitled to an exemption from the requirement to pay land tax for the 2002/2003 and 2003/2004 assessments years.

Facts

1. On 9 December 1987 Mr Bremner purchased a property located at 101 Tweeddale Road Applecross, on which one house was located.

2. On 10 June 1991 the State Planning Commission (as it was then known) approved a strata plan application submitted by Mr Bremner to divide 101 Tweeddale Road into two properties.  The certificate of approval by the Commission also drew to the attention of Mr Bremner the fact that approval for the strata scheme was also required from the local governmental authority.

3. According to information provided by Mr Bremner to the Commissioner:

   (1) In April 1993 he obtained a "non-repayable until death loan" to enable a second house to be built on 101 Tweeddale Road Applecross;

   (2) On 13 October 1993 the City of Melville approved the applicant's proposed house plans for the second house on 101 Tweeddale Road. 

   (3) In August 1994 his son moved into the second house.

4. On 12 November 2001 the local government authority - the City of Melville - approved the applicant's application for permission to sub-divide 101 Tweeddale Road into two properties.

5. On 29 November 2001, Mr Bremner submitted to the Registrar of Titles an application for the registration of the strata plan for lots 1 and 2 at 101 Tweeddale Road, Applecross.

6. On 30 November 2001 the Registrar of Titles registered the strata plan for lots 1 and 2 at 101 Tweeddale Road Applecross in accordance with s 4 of the Strata Titles Act 1985 (WA). Two separate lots were then created, being lots 1 and 2 on strata plan 40941 (commonly known as 101 and 101A Tweeddale Road, Applecross).

7. As at midnight on 30 June 2002, the applicant was the registered proprietor of the land, comprising both lots 1 and 2.

8. On 18 September 2002 the Commissioner of State Revenue issued a Land Tax Notice of Assessment in the amount of $1471.95.

9. On 14 October 2002 Mr Bremner paid the Land Tax Notice of Assessment.

10. As at midnight on 30 June 2003, Mr Bremner was the registered proprietor of the land.

11. On 2 October 2003 the Commissioner issued a Land Tax Notice of Assessment for the land in the amount of $1571.40.

12. On 15 November 2003 Mr Bremner and his son signed a Transfer of Land Form, transferring 101A Tweeddale Road, Applecross to the applicant's son for "natural love and affection".

13. On 12 January 2004 the transfer referred to was stamped by the Office of State Revenue after the payment of $12 605 in stamp duty.

14. On 15 January 2004 the transfer was registered by the Registrar of Titles.

15. On 10 February 2004 a Certificate of Title was issued by the Registrar of Titles for 101A Tweeddale Road, Applecross.

16. The Commissioner and Mr Bremner engaged in written correspondence regarding Mr Bremner's liability for land tax in the 2002/2003 and 2003/2004 assessment years.

17. In the letters, the Commissioner sought written confirmation from Mr Bremner of the arrangements he had entered into with his son regarding the land: see letter of 23 April 2004.

18. The applicant did not provide any written proof of the arrangement he had entered into with his son until a "Statement of Intent" dated 20 September 1996 was enclosed in a letter from Mr Bremner dated 7 July 2004.

Decision-making context

1. Section 13 of the Land Tax Assessment Act 1976 (the Old Act) provides that land tax is payable on all land in the State that is not exempt land.

2. Section 14 of the Old Act provides that land tax shall be charged on land as owned at midnight on 30 June immediately preceding the assessment year.

3. Section 15(1) of the Old Act provides that land tax is payable by the owner of the land.

4. Section 20 of the Old Act sets out the procedure to be followed in relation to the assessment of land tax in relation to persons holding land as a trustee.

5. Section 20(1) of the Old Act provides that trustees of any land subject to land tax shall be assessed in respect of such land. Section 20(2) provides that any trustee shall be chargeable with the land tax payable in respect of such land in the same manner as if such land was his or her own. Section 20(5) provides that a trustee is authorised to recover the amount of land tax so paid from any person for whom or on whose behalf he or she is compelled to pay land tax.

6. Sections 17 and 18 of the Old Act provide that where any agreement has been made for the sale of land (whether before or after the coming into operation of the Old Act):

   (1)The seller shall be deemed to remain the owner of the land for the purposes of the Old Act until possession of the land has been delivered to the purchaser; and

   (2)The purchaser shall be deemed to be the owner of the land for the purposes of the Old Act as soon as he or she has obtained possession of the land.

7. Section 21 of the Old Act provides that those classes of land specified in Part 1 of the Schedule to the Old Act are exempt from assessment and taxation for land tax, subject to the qualifications contained in the Schedule.

8. The only exemption contained in Part 1 of the Schedule to the Old Act which is potentially relevant to the land is as follows:

   (1) Clause 9(a)(i): private residential property owned by an individual

9. The only provision of the Old Act which deals with a refund of land tax is s 31. Section 31(1) provides that the Commissioner may, of his own motion, or upon an application from a taxpayer, amend any assessment to ensure its completeness and accuracy. Section 31(5) provides that where an alteration in an assessment has the effect of reducing a taxpayer's liability, the Commissioner shall refund any land tax overpaid.

10. On 1 July 2003, the Land Tax Assessment Act 2002 (the New Act) commenced and the Old Act was repealed.

11. On 1 July 2003, the Taxation Administration Act 2003 (WA) commenced.

12. Section 5 of the New Act provides that land tax is payable for each financial year for all land in the State except land exempt under s 17.

13. Section 7(1) of the New Act provides that land tax payable on land for an assessment year is payable by the person who is or was the owner of the land at midnight on 30 June in the previous financial year.

14. Section 8 of the New Act provides that where any agreement has been made for the sale of land (whether before or after the coming into operation of the New Act) then for the purpose of ascertaining who is liable to pay land tax on the land:

    (1)The vendor is taken to be the owner of the land until the purchaser obtains possession of the land; and

    (2)The purchaser is taken to become the owner of the land when the purchaser obtains possession.

15. Section 9 of the New Act sets out the procedure to be followed in relation to the assessment of land tax in relation to persons holding land as a trustee. Section 9(1) provides that a trustee in whom the legal estate of taxable land is vested, is liable for the land tax payable on the land. Section 9(3) goes on to provide that if the trustee has paid land tax in relation to such land, the trustee is entitled to recover an equal amount from the beneficiary.

16. Section 17 of the New Act states that land is exempt from land tax if the Commissioner grants an exemption for the assessment year under s 20 or if the land is exempt under another provision of Part 3 of the New Act.

17. The Commissioner has not granted an exemption in relation to the land.

18. The only exemptions contained in Part 3 of the New Act which are potentially relevant to the land are as follows:

    (1)Section 21: private residential property owned by  individuals; and

    (2)Section 26: exemption for trust property used by disabled beneficiary.

19. Section 21 of the New Act provides that private residential property is exempt from assessment for land tax for an assessment year if, at midnight on 30 June in the financial year before the assessment year, it is owned by (amongst others) an individual who uses it as his or her primary residence.

20. "Primary residence" is defined in the Glossary of the New Act to mean "the individual's sole or principal place of residence".

21. Section 26 of the New Act provides that private residential property held in trust is exempt for an assessment year if, at midnight on 30 June in the financial year before the assessment year:

    (1)The land is owned by a trustee who holds the land in trust for one or more disabled beneficiaries; and

    (2)At least one disabled beneficiary of the trust uses the property as his or her primary residence.

22. Section 56(1) of the Taxation Administration Act 2003 provides that the Commissioner may waive the payment of tax or another amount payable under a taxation Act up to a prescribed limit.  Regulation 6 of the Taxation Administration Regulations 2003(WA) provides that the prescribed limit is $20.

23. Section 57(1) of the Taxation Administration Act 2003 provides that the Commissioner may write off a tax liability, or a liability to pay another amount under a taxation Act, if satisfied that action or further action to recover the tax or other amount is impracticable or unwarranted. However, s 57(2) provides that writing off a liability does not extinguish the liability or preclude the Commissioner from taking action at a later time to recover the amount of the liability.

Contentions of Commissioner

1. In respect of the 2002/2003 assessment year the Commissioner says the land tax notice of assessment was validly issued and land tax properly levied against the land in accordance with the imposition of taxes under the Land Tax Assessment Act 1976.  The Commissioner says that as at midnight on 30 June 2002, the applicant was the registered proprietor of the land.

2. There is no contention by Mr Bremner that the amount of the assessment is incorrect.

3. Nor has the applicant submitted that he held the land on trust for his son. However, even if Mr Bremner did hold the land on trust for his son, in accordance with s 20 of the Old Act, the Commissioner is required to assess the amount of land tax payable on the land and Mr Bremner is required to pay the amount of land tax so assessed. Further, in accordance with s 20(5) of the Old Act the applicant may then recover the amount of land tax from his son, the beneficiary. There are no other provisions in the Old Act dealing with the assessment of land tax on property held by a trustee other than s 20.

4. The Commissioner says the primary residence exemption contained in cl 9(a)(i) of the Schedule to the Old Act does not apply to the land as the land was not as at midnight on 30 June 2002 the applicant's sole or principal place of residence. The applicant has admitted that his son resided in the house on the land at the relevant time.

5. The Commissioner says he is not able to refund the land tax paid by Mr Bremner unless the Commissioner amends the original land tax assessment in such a way as to reduce Mr Bremner's land tax liability.  As there has been no amendment, the Commissioner is not able to refund the land tax for the 2002/2003 assessment year.  Further, in the circumstances there is no scope for the Commissioner to amend the assessment.

6. In respect of the 2003/2004 assessment year, the Commissioner again contends that the land tax notice of assessment was validly issued and land tax properly levied against the land in accordance with the imposition of taxes under s 5 of the Land Tax Assessment Act 2002.

7. As at midnight on 30 June 2003, the applicant was the registered proprietor of the land.

8. There is no contention by Mr Bremner that the amount of the assessment is not correct.

9. The Commissioner has not granted an exemption in relation to the land in accordance with s 20 of the New Act.

10. The primary residence exemption contained in s 21 of the New Act does not apply to the land as the land was not as at midnight on 30 June 2003, the applicant's sole or principal place of residence. The applicant has admitted that his son resided in the house on the land at the relevant time. The trust property exemption contained in s 26 of the New Act does not apply to the land as there is no evidence that the applicant held the land on trust for his son and, in any event, there is no evidence that the applicant's son is in any way disabled.

11. The Commissioner says that in the event that Mr Bremner held the land on trust for his son, as the trustee exemption contained in s 26 of the New Act does not apply, in accordance with s 9 of the New Act the applicant is required to pay the land tax assessed and then seek reimbursement from his son.

12. The Commissioner is not able to waive the requirement for Mr Bremner to pay land tax for the 2003/2004 assessment year as the amount of tax assessed ($1571.40) is above the prescribed limit of $20.

13. The respondent does not consider there is anything, in the circumstances of the case, that renders recovery of the unpaid land tax for the 2003/2004 assessment year impracticable or unwarranted.

14. In any event, the Commissioner says if the land tax liability is "written off" under s 57(1) of the Taxation Administration Act this will not address the applicant's ground of review on the basis that under s 57(2) writing off a liability does not extinguish the liability or preclude the Commissioner from taking action at a later time to recover the amount of outstanding land tax.

Effect of the Statement of Intent

1. The Commissioner does not accept that the Statement of Intent was signed on 20 September 1996 for the following reasons:

   (1)In the applicant's letter to the Commissioner dated 4 May 2004, Mr Bremner states that he does not understand what the Commissioner means by a "formal written agreement allowing possession to take place".  Further the applicant expressly stated that:

   "I never thought at any stage that it was necessary to go into print when dealing with my own flesh and blood."

   (2)In Mr Bremner's letter to the Commissioner dated 18 June 2004 he asked what type of agreement the respondent is looking for.

   (3)In his letter to the Commissioner dated 7 July 2004, Mr Bremner provides an undated written agreement headed "This is a mutual agreement between father and son" and a Statement of Intent dated 20 September 1996.

   (4)Mr Bremner did not provide any written proof of the arrangement he had entered into with his son until the Statement of Intent dated 20 September 1996 was enclosed with a letter dated 7 July 2004.

2. The Commissioner also notes that the Statement of Intent was not signed by the applicant's son.

3. Given these discrepancies, the Commissioner submits that - if the Statement of Intent is to be given weight - the applicant should be required to explain on oath how, when and why the Statement of Intent came into existence and the Commissioner should be afforded the opportunity to cross-examine the applicant on these issues.  The Commissioner further submits, in any event, that at best the Statement of Intent may provide evidence that the applicant held the land on trust, in the form of a constructive trust (although the Commissioner does not admit this).

4. The Commissioner says that the Statement of Intent does not constitute an "agreement for the sale of land" for the purposes of s 17 and s 18 of the Old Act and s 8 of the New Act because it is not a contract for the sale of the land by offer and acceptance and at best it only represents the applicant's intention to transfer the land to his son for no consideration and therefore the Statement of Intent does not alter the applicant's liability to pay land tax for the assessment years.

Contentions of the applicant

1. On 12 July 2005 I required the Commissioner to file and serve on the applicant a Statement of Issues, Facts and Contentions by 26 July 2005 together with the documents the Commissioner relies on in relation to the application.  I also required the applicant to file and serve a Statement of Issues, Facts and Contentions by 9 August 2005 in reply to that filed by the respondent together with any documents said to be relevant to the application.  I further ordered that once those various statements and documents were filed, or if the applicant failed to  file and serve his Statement in the required time, the Tribunal would determine the application on the documents already filed.

1. In all these circumstances, the applicant Mr Bremner has not taken the opportunity of filing any additional Statement of Issues, Facts and Contentions in reply to those filed by the Commissioner.  I therefore proceeded to deal with the matter on the papers having regard to the statement of the applicant's position already set out therein.

2. The essence of the applicant's position is that he considers it unfair that the residential exemption should not apply at material times because he considers that as he had in substance agreed with his son that 101 Tweeddale Road was to be occupied by his son,  the Commissioner was obliged to, or at least had a discretion to, treat the position as one where the son was the registered proprietor at material times and used the land as his principal residence.

Findings

1. On the evidence and the submissions before me, I find that the contentions made on behalf of the Commissioner are factually and legally correct.

2. At all material times during the two assessment periods the applicant was the registered proprietor of the land. There is no compelling evidence to show that the applicant held the land in trust for his son. In any event, under the Old Act and the New Act the applicant as registered proprietor remained liable for the assessable land tax.

3. There is no basis to conclude that in law the land was occupied by the son at material times so that the principal place of residence exemption applied.

Conclusion and Order

1. For these reasons I find that the applicant's application for review cannot succeed.

2. The Tribunal orders as follows:

   (1)The decision of the Commissioner is affirmed.

   (2)The application of the applicant in the Tribunal is dismissed.

I certify that this and the preceding [75] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

JUSTICE M L BARKER, PRESIDENT