BRIGHTWATER CARE GROUP (INC) and COMMISSIONER OF STATE REVENUE
[2006] WASAT 276
•8 SEPTEMBER 2006
BRIGHTWATER CARE GROUP (INC) and COMMISSIONER OF STATE REVENUE [2006] WASAT 276
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 276 | |
| TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | DR:90/2006 | 4 SEPTEMBER 2006 | |
| Coram: | MR D R PARRY (SENIOR MEMBER) | 8/09/06 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application for review allowed Respondent's decision to wholly disallow applicant's objections to assessments of land tax for the 2004/2005 and 2005/2006 financial years set aside and decision substituted wholly allowing objections | ||
| B | |||
| PDF Version |
| Parties: | BRIGHTWATER CARE GROUP (INC) COMMISSIONER OF STATE REVENUE |
Catchwords: | Taxation – Land tax – Whether land exempt – Land owned by a public charitable or benevolent institution – Whether land used solely for the public charitable or benevolent purposes for which the institution was established – Objects of institution include to provide, establish, maintain and manage homes, buildings and other facilities for the purpose of caring for the aged – Institution planned, designed and obtained development approval for aged care facility before first assessment year – Institution decided before first assessment year to defer development because of lack of resources and prioritisation of other aged care developments – Development approval lapsed during first assessment year – Continuing intention to develop land for aged care facility |
Legislation: | Interpretation Act 1984 (WA), s 18 Land Act 1933 (WA) Land Tax Assessment Act 2002 (WA), s 5, s 17, s 20, s 37, s 37(b), Pt 3 State Administrative Tribunal Act 2004 (WA), s 31(1), s 31(2), s 31(3) Taxation Administration Act 2003 (WA), s 40(1), s 43(1)(b), s 43(3) |
Case References: | Educang Ltd v Brisbane City Council [2002] QSC 374 Gladstone Town Council v Gladstone Harbour Board (1964) 11 LGRA 231 Newcastle City Council v Royal Newcastle Hospital [1959] AC 248 Rapp and Commissioner of State Revenue [2006] WASAT 135 The Roman Catholic Bishop of Perth v The Perth Road Board (1933) 49 CLR 37 Villa Maria Homes Inc v Commissioner of State Taxation (1996) 15 SR (WA) 283 Carey and Commissioner of State Revenue [2006] WASAT 51 Commissioners of Taxation v Trustees of St Mark's Glebe [1902] AC 416 Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 Rosenblum v Brisbane City Council (1957) 98 CLR 35 Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 Smith v Papamihial (1998) 158 ALR 451 The Association of the Franciscan Order of Friars Minor v City of Kew [1944] VLR 199 |
Orders | 1. The application for review is allowed.,2. The decisions of the respondent to wholly disallow the applicant's objections to liability for land tax for the 2004/2005 and 2005/2006 financial years in relation to Lot 102 on deposited plan 37832 are set aside and in their place decisions are made that the objections are wholly allowed.,3. Pursuant to s 43(3) of the Taxation Administration Act 2003 (WA), the respondent must refund any land tax paid by the applicant in relation to Lot 102 on deposited plan 37832 for the 2004/2005 and 2005/2006 financial years and pay interest on this amount calculated at the prescribed rate from the date on which the tax was paid to the date on which it is refunded. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : BRIGHTWATER CARE GROUP (INC) and COMMISSIONER OF STATE REVENUE [2006] WASAT 276 MEMBER : MR D R PARRY (SENIOR MEMBER) HEARD : 4 SEPTEMBER 2006 DELIVERED : 8 SEPTEMBER 2006 FILE NO/S : DR 90 of 2006 BETWEEN : BRIGHTWATER CARE GROUP (INC)
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Taxation – Land tax – Whether land exempt – Land owned by a public charitable or benevolent institution – Whether land used solely for the public charitable or benevolent purposes for which the institution was established – Objects of institution include to provide, establish, maintain and manage homes, buildings and other facilities for the purpose of caring for the aged – Institution planned, designed and obtained development approval for aged care facility before first assessment year – Institution decided before first assessment year to defer development because of lack of resources and prioritisation of other aged care developments – Development approval lapsed during first assessment year – Continuing intention to develop land for aged care facility
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Legislation:
Interpretation Act 1984 (WA), s 18
Land Act 1933 (WA)
Land Tax Assessment Act 2002 (WA), s 5, s 17, s 20, s 37, s 37(b), Pt 3
State Administrative Tribunal Act 2004 (WA), s 3(1), s 31(2), s 31(3)
Taxation Administration Act 2003 (WA), s 40(1), s 43(1)(b), s 43(3)
Result:
Application for review allowed
Respondent's decision to wholly disallow applicant's objections to assessments of land tax for the 2004/2005 and 2005/2006 financial years set aside and decision substituted wholly allowing objections
Category: B
Representation:
Counsel:
Applicant : Mr JA Thompson
Respondent : Ms RC Panetta
Solicitors:
Applicant : Allens Arthur Robinson
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Educang Ltd v Brisbane City Council [2002] QSC 374
Gladstone Town Council v Gladstone Harbour Board (1964) 11 LGRA 231
Newcastle City Council v Royal Newcastle Hospital [1959] AC 248
Rapp and Commissioner of State Revenue [2006] WASAT 135
The Roman Catholic Bishop of Perth v The Perth Road Board (1933) 49 CLR 37
Villa Maria Homes Inc v Commissioner of State Taxation (1996) 15 SR (WA) 283
(Page 3)
Case(s) also cited:
Carey and Commissioner of State Revenue [2006] WASAT 51
Commissioners of Taxation v Trustees of St Mark's Glebe [1902] AC 416
Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493
Rosenblum v Brisbane City Council (1957) 98 CLR 35
Ryde Municipal Council v Macquarie University (1978) 139 CLR 633
Smith v Papamihial (1998) 158 ALR 451
The Association of the Franciscan Order of Friars Minor v City of Kew [1944] VLR 199
(Page 4)
Summary of Tribunal's decision
1 A taxpayer sought review of the disallowance of its objections to liability for land tax. The taxpayer argued that the land was exempt as it was used exclusively for the public charitable or benevolent purposes for which it was established. The taxpayer's purposes included to establish aged care facilities. Prior to the assessment dates, the taxpayer had planned, undertaken detailed design and obtained development approval for an aged care facility on the land.
2 The Tribunal determined that the land was exempt from land tax at the assessment dates. Establishment of an aged care facility involved planning, detailed design, regulatory approval as well as construction of the facility. The land was, therefore, relevantly used for the establishment of the proposed facility. As it was not used for any other purpose, it was exempt from land tax.
Introduction
3 These proceedings involve an application brought by Brightwater Care Group (Inc) (Brightwater) pursuant to s 40(1) of the Taxation Administration Act 2003 (WA) (TA Act) for review of the Commissioner of State Revenue's (Commissioner) decisions to wholly disallow its objections to assessments of land tax for the 2004/2005 and 2005/2006 financial years. The assessments relevantly relate to Lot 102 on deposited plan 37832 which is known as 2A Walter Road West, Inglewood (land).
4 Assessments in relation to the land and other properties owned by Brightwater were originally issued on 21 September 2005. On 10 November 2005, Brightwater's solicitors objected to the assessments in relation to the land and another property. The objections were made on the basis that, at midnight on each of 30 June 2004 and 30 June 2005, the land and the other property were each owned by Brightwater and used solely for the beneficial purposes for which Brightwater was established, with the result that the properties were exempt from land tax for the assessment years under s 37 of the Land Tax Assessment Act 2002 (WA) (LTA Act).
5 Section 5 of the LTA Act provides that land tax is payable for each financial year for all land in the State except land that is exempt under s 17. Section 17 of the LTA Act provides that land is exempt from
(Page 5)
- land tax for an assessment year if the Commissioner grants an exemption for the assessment year under s 20 or it is exempt for the assessment year under another provision of Pt 3. The Commissioner has not granted exemptions under s 20 in relation to the land for the assessment years in question.
6 Section 37 of the LTA Act, which is contained in Pt 3, provides as follows:
"Land is exempt for an assessment year if –
(a) at midnight on 30 June in the previous financial year, it is owned by, vested in or held in trust for a public charitable or benevolent institution; and
(b) it is used solely for the public charitable or benevolent purposes for which the institution was established."
7 Brightwater's objections were allowed in part and disallowed in part. The Commissioner determined that a 50% exemption applies for both assessment years in relation to the land, as the Commissioner understood that construction on the land is 50% complete.
8 The application for review of the partial disallowance of the objections in relation to the other property were determined by consent.
9 Pursuant to s 31(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), the Tribunal invited the Commissioner to reconsider the decisions in relation to the land. On 15 June 2006, pursuant to s 31(2) of the SAT Act, the Commissioner, in effect, set aside the decisions and substituted new decisions to wholly disallow Brightwater's objections, on the basis that the land was vacant at each relevant date. Pursuant to s 31(3) of the SAT Act, these proceedings are taken to be for the review of the substituted decisions.
10 It is common ground that, at midnight on 30 June 2004 and 30 June 2005, Brightwater was a public charitable or benevolent institution that owned the land.
11 The critical and contested question in this review is whether, at midnight on 30 June 2004 and 30 June 2005 (Villa Maria Homes Inc v Commissioner of State Taxation(1996) 15 SR (WA) 283 at 286), the land was used solely for the public charitable or benevolent purposes for which Brightwater was established.
(Page 6)
12 Pursuant to s 43(1)(b) of the TA Act, the Tribunal is constituted by a senior member, as defined in s 3(1) of the SAT Act, who is a legal practitioner, as defined in that subsection.
Factual background
13 Brightwater was incorporated as The Homes of Peace on 4 June 1903 and adopted its current name on 10 October 1997. On 10 August 1964, the Crown made a grant of the property comprising the land and Lot 101 in deposited plan 37832 (Lot 101) under the Land Act 1933 (WA) to the Homes of Peace to "be used and held solely for the purpose of a "Hospital Site (Home of Peace)". The Homes of Peace/Brightwater subsequently constructed and operated a special care hospital facility for the aged, chronically ill and disabled on the land the subject of the Crown Grant.
14 The objects and purposes for which Brightwater is established include the following:
"To provide, establish, maintain and manage homes, buildings and other facilities for the purpose of caring for the aged, the incurable or chronically sick, permanently or temporarily disabled persons or permanently or temporarily sick persons." (Constitution cl 3.1(a)).
15 It is common ground that these purposes, and in particular the purpose of providing, establishing, maintaining and managing homes, buildings and other facilities for the purpose of caring for the aged, is a public charitable or benevolent purpose for which Brightwater was established.
16 Clause 4.1 of Brightwater's Constitution states that its income and property shall be applied solely to or towards the promotion of its objects.
17 In approximately December 2000, Brightwater decided to redevelop the land the subject of the Crown Grant to cater for changing social conditions and advances in the methods and technologies of care. The special care hospital facility was demolished in stages.
18 In approximately September 2001, Brightwater constructed a special care hospital facility for patients suffering from dementia and related illnesses on the land which is now Lot 101.
19 At the same time, Brightwater commenced planning for the construction of an aged care facility comprising 39 independent living
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- units and a community centre on the land. Brightwater commissioned a firm of architects and planners to prepare architectural plans and to lodge a development application with the City of Stirling for approval to construct the facility. The plans were completed in October 2002. The detailed design of the facility cost Brightwater between $50 000 and $70 000.
20 In March 2003, development approval was granted by the City of Stirling to construct the aged care facility on the land, subject to 43 conditions.
21 On 22 August 2003, the land the subject of the Crown Grant was subdivided to form the land and Lot 101.
22 In approximately January 2004, Brightwater decided to defer the immediate development of the land, predominantly because of a lack of resources and the priority given to the development of two other aged care facilities.
23 No physical works were commenced on the land in accordance with the development approval. As at midnight on 30 June 2004 and 30 June 2005, the land was vacant. The development approval lapsed in March 2005. Brightwater did not seek further development approval for the facility on or prior to 30 June 2005.
24 In September 2005, following the substantial completion of the other two aged care facilities, Brightwater's leadership team for the development of the land began reconsidering the development and retained a business analyst to work on the project. In late 2005 or early 2006, Mr Bret Allan Campbell, Brightwater's Manager, Corporate Services, who assumed responsibility for the development of the land in July 2004, became concerned that the terms of the Crown Grant may not allow development of an aged care facility on the land. Brightwater subsequently sought legal advice in relation to this issue and decided that the development of the land will not commence until it has been resolved. Resolution of the issue may require an application to be made for modification of the Crown Grant to include other charitable purposes, such as aged persons' housing.
25 It is Mr Campbell's unchallenged evidence that, since July 2004, Brightwater "has actively progressed the full use and development of [the land] within the scope of resources available to [it] and in furtherance of its charitable purposes" and that "Brightwater presently intends to develop [the land] as soon as possible after the issue relating to the terms
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- of the Crown Grant in Trust is resolved". It is also Mr Campbell's unchallenged evidence that, at no relevant time, has Brightwater used the land for anything other than the charitable purposes set out in its Constitution and the conditions of the Crown Grant.
Was the land used solely for the purposes for which Brightwater was established?
26 The Tribunal considers that, at midnight on 30 June 2004 and 30 June 2005, the land was used solely for the public charitable or benevolent purpose of establishing the proposed aged care facility.
27 It is possible to use land for an owner's special purposes without physical use of the land: Newcastle City Council v Royal Newcastle Hospital [1959] AC 248 at 255; (1959) 100 CLR 1 at 7; (1959) 4 LGRA 154 at 156 – 157.
28 Establishing the facility on the land involves a process including:
(i) planning;
(ii) detailed design;
(iii) regulatory approval; and
(iv) physical construction.
29 It follows that, during the planning, detailed design, regulatory approval and physical construction of the proposed facility, the land on which the facility is proposed is used for the purpose of establishing the facility. Moreover, each step in the process necessarily and directly involves the land.
30 Similarly, the Supreme Court of Queensland has held that, during construction of a school, the land on which the school was being constructed was used entirely for a school and, therefore, for educational purposes which were exempt from rating: Educang Ltd v Brisbane City Council [2002] QSC 374. The Court held, at [29], that the proper characterisation of the construction was that it was ancillary to the use of the land for a school.
31 In this case, at midnight on 30 June 2004 and 30 June 2005, the land was used solely for the establishment of the proposed aged care facility, because:
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- (i) Brightwater had a conscious intention to use the land for that purpose: Rapp and Commissioner of State Revenue [2006] WASAT 135 at [28];
(ii) the facility was the subject of planning, detailed design and, as at 30 June 2004, development approval; and
(iii) the land was not used for any other purpose.
32 Moreover, as Mr JA Thompson, counsel for Brightwater, submits, it could not have been the legislative intention to require a public charitable or benevolent institution to pay land tax in the circumstances referred to in the preceding paragraph when the land would be exempt from land tax after the completion of the facility, although it might produce income: Interpretation Act 1984 (WA) s 18.
33 Contrary to the submission made by Ms RC Panetta, counsel for the Commissioner, this is not a case of "non-use" of land; cf Rapp and Commissioner of State Revenue at [29]. While the land was not physically used, it was used by Brightwater for the purpose of establishing the proposed facility by planning, detailed design and obtaining regulatory approval, each of which is part of the process of establishing the facility on the land. Moreover, each of these steps necessarily and directly involved the land.
34 Nor is this a case of simply holding land for the purpose of using it in the future; cf Gladstone Town Council v Gladstone Harbour Board (1964) 11 LGRA 231 at 246, 248. Unlike Gladstone Town Council v Gladstone Harbour Board, in which the Board simply held land which had been permanently reserved and set apart for harbour purposes generally, the land in this case was relevantly used for the purpose of establishing the proposed aged care facility.
35 Furthermore, contrary to the Commissioner's submission, there was not, on the evidence, a "clear break in the continuation of the relevant purpose" by a deliberate decision not to proceed with the proposed facility. It is apparent, on Mr Campbell's evidence, that, at midnight on 30 June 2004 and 30 June 2005, Brightwater intended to proceed with the establishment of the proposed facility, but had to defer immediate development of the land, because of a lack of resources and giving priority to two other aged care facilities, which were then substantially completed by September 2005.
(Page 10)
36 Finally, contrary to the Commissioner's submission, the decision of the High Court of Australia in The Roman Catholic Bishop of Perth v The Perth Road Board (1933) 49 CLR 37 is not authority for the proposition that the deferral of a development owing to a lack of resources results in a cessation of use for a purpose. Although the Court referred to an agreed statement by a parish priest which said that "owing to the arrest of development by the prevailing depression and owing the difficulty in obtaining finance occasioned by the depression, no buildings have been erected upon the lands", this evidence was not referred to in the reasoning in any of the judgments. Rather, as Rich J observed at 43, "[t]he real difficulty in the case lies in the necessity that the present holding shall be 'exclusively' for that purpose. Mere individual or collective intention of members of the faith holding authority in the Church is not, I think, sufficient to manifest the requisite exclusion of other possible purposes for which the land may be used"; similarly per Starke and Evatt JJ at 45, Dixon J at 47 and McTiernan J at 48. The case did not, therefore, turn on whether there had been a cessation of use for a particular purpose by virtue of the deferral of a development due to a lack of resources, but rather on whether the use or holding was exclusively as or for, relevantly, a place of public worship or a place of residence of a minister of religion.
Conclusion
37 The Tribunal has determined that, at midnight on 30 June 2004 and 30 June 2005, the land was used solely for the establishment of a proposed aged care facility. It is common ground that the establishment of an aged care facility is a public charitable or benevolent purpose for which Brightwater was established. It is also common ground that Brightwater is a public charitable or benevolent institution which owned the land at the relevant times.
38 It follows that, at midnight on 30 June 2004 and 30 June 2005, the land was exempt from land tax under s 37 of the LTA Act.
39 The application for review should be allowed and the decisions of the Commissioner to wholly disallow Brightwater's objections should be set aside and decisions substituted that the objections are allowed. An order should also be made under s 43(3) of the TA Act for the refund of the land tax paid by Brightwater in relation to the land for the 2004/2005 and 2005/2006 financial years and payment of interest.
(Page 11)
Orders
40 The Tribunal makes the following orders:
1. The application for review is allowed.
2. The decisions of the respondent to wholly disallow the applicant's objections to liability for land tax for the 2004/2005 and 2005/2006 financial years in relation to Lot 102 on deposited plan 37832 are set aside and in their place decisions are made that the objections are wholly allowed.
3. Pursuant to s 43(3) of the Taxation Administration Act 2003 (WA), the respondent must refund any land tax paid by the applicant in relation to Lot 102 on deposited plan 37832 for the 2004/2005 and 2005/2006 financial years and pay interest on this amount calculated at the prescribed rate from the date on which the tax was paid to the date on which it is refunded.
I certify that this and the preceding [40] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR D R PARRY, SENIOR MEMBER
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