Chu v Commissioner of Land Tax
[2004] QLC 35
•23 April 2004
LAND COURT OF QUEENSLAND
CITATION: Chu v Commissioner of Land Tax [2004] QLC 0035 PARTIES: Billy Y K Chu
(applicant)v. Commissioner of Land Tax
(respondent)FILE NO:
A2003/0056
DIVISION: Land Court of Queensland PROCEEDING: An appeal against land tax assessment No. 89237 DELIVERED ON: 23 April 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mrs CAC MacDonald ORDERS: (i) The appeal is allowed.
(ii) Land tax assessment No. 89237 is remitted to the respondent to be amended to exclude the value of Lot 3 on RP 136278 in the County of Stanley, Parish of Nundah.
CATCHWORDS: Land Tax – Meaning of “principal place of residence” – Not defined in Land Tax Act – Appellant resided at more than one residence – Part-time medical practice attached to one – Factors to be considered – Intention of appellant not conclusive – Need to consider all background facts and circumstances.
Land Tax – Burden of proof – Lies on party who asserts affirmative of issue in dispute – Appellant must prove that Commissioner should be satisfied of fact.
Land Tax – Powers of Court on appeal – Court has same powers as decision make – Commissioner to be satisfied as to “principal place of residence” – Land Tax Act 1915, ss 3E, 27; Land Act 1994, s.429.
APPEARANCES: Dr BYK Chu on his own behalf
Mr F Redmond of Counsel for the respondentSOLICITORS: Crown Law for the respondent
This appeal has been lodged by Dr Billy Y K Chu (the appellant) against land tax assessment No. 89237 made by the Commissioner of Land Tax on land owned at midnight on 30 June 2002 by the appellant. The appeal relates to Lot 3 on RP 136278 in the County of Stanley, Parish of Nundah which is situated at 514 Flinders Parade, Brighton (the property).
The grounds of appeal as set out in the Notice of Appeal filed in this Court on 31 March 2003 were –
“Appeal against non allowance of owner occupied Principal Place of residence Land tax exemption. Please see attached 3 pages”.
The three pages referred to set out the background facts and reasons for the appeal.
The appellant appeared and gave evidence in support of the grounds of appeal. The respondent was represented by Mr F Redmond of Counsel.
Dr Chu is the owner of the property at 514 Flinders Parade, Brighton, a bayside suburb of Brisbane. A house is constructed on the land which, at the relevant time, was occupied by the appellant’s elderly mother and two of his adult sons. Dr Chu also resides in the house for part of each week. The house was purchased by the appellant in 1975 and was let to tenants until August 1999. It was then repaired and renovated and the appellant’s mother and sons moved in during February 2001.
About the same time, the appellant moved a substantial portion of his furniture and belongings into the house and reduced his working hours at his medical practice in Maryborough. Dr Chu’s evidence was that his normal routine is that he does not work Fridays and Mondays each week and that he spends all public holidays, long weekends and the periods when he is attending conferences in Brisbane at the property at Brighton. He considers that property to be his principal place of residence and he therefore claims to be entitled to a deduction in respect of the property in the assessment for 30 June 2002.
The respondent submitted that the appellant has no principal place of residence and is therefore not entitled to any deduction for the property as a principal place of residence.
It appears from the evidence that the appellant owns a number of properties in Queensland including one at 258 Lennox Street, Maryborough. Dr Chu said that he had purchased that property in 1975 or 1976 as a set of three old flats. He subsequently constructed a medical centre in front of the flats and transferred his practice to the new building in 1985. That building has 2 levels and comprises a surgery on the lower level and what Dr Chu described as an “on call facility” on the upper level. The upper level consists of a sitting room, office, bedroom, storeroom, bathroom and toilet and simple cooking facilities. When Dr Chu is in Maryborough and on call he sleeps at 258 Lennox Street. If he is not on call, he uses one of his other properties usually one at Hervey Bay which he keeps furnished for this purpose. Dr Chu emphasized that the on call facility had been constructed to provide living quarters to be used by any doctor who was on call in relation to the medical practice and he said that it was used by him for that purpose. It appears that no other doctor has ever worked in the practice.
Dr Chu said that his intention had been to retire and live permanently at the property in Brighton but because of the shortage of rural doctors in Queensland he had decided to maintain a part-time practice in Maryborough. Prior to the change to part-time work, he had lived and worked in Maryborough. For administrative convenience, accounts for services such as telephone, car registrations, property registrations, insurance and land tax were addressed to his premises at 258 Lennox Street, Maryborough because administrative staff were available there to handle the paperwork and pay the bills.
Dr Chu relied on various other factors to support his submission that the Brighton property was his principal place of residence at the relevant date. He said that he had been interviewed there by an officer from the Australian Bureau of Statistics in 2003, a Brisbane City Council rates notice for the period 1 July 2001 to 30 September 2001 allowed an owner/occupier remission, and he tendered a copy of a letter written by him on 1 November 2002 to the Brisbane City Council concerning a local traffic problem. Dr Chu has taken out contents insurance to cover his furniture and personal effects at the property. Mail from Hong Kong is redirected to him at that address also. He has been enrolled on the electoral roll for Brighton since April 2002 and registration certificates for two of his vehicles are sent to him at that address.
The respondent’s principal submission was that Dr Chu had no principal place of residence because at the relevant time he was living both at the property and at 258 Lennox Street, Maryborough. In support of that submission, Counsel for the respondent pointed to the evidence that the appellant spends more days per week in Maryborough than in Brisbane. He also relied on the fact that at the relevant date Dr Chu’s address was listed as Maryborough for a number of purposes - telephone, motor vehicle registration, driver’s licence, and medical board registration.
Other evidence established that the 2001 annual return of a family company indicated that Dr Chu’s normal residential address was 258 Lennox Street, Maryborough. Dr Chu said that he had notified a change of address to the Brighton property to the Australian Securities and Investments Commission effective from 1 July 2003. He had not done this earlier because he was busy looking after his sick mother and making appropriate arrangements for her care. A telephone account for the telephone at 258 Lennox Street showed that STD calls were made regularly from the phone, particularly to Brisbane, during the period 9 May 1999 to 23 July 1999. This evidence is equivocal in that there is no information as to who made the phone calls. It appears also that Dr Chu’s former de facto partner lives in a house in Maryborough owned by the family company but Dr Chu was adamant that the personal relationship ceased in 1979 and he has not lived at that house since 1982. His residential address is recorded at the Australian Taxation Office as a property in Hervey Bay.
Section 12 of the Land Tax Act 1915 (the Act) provides that land tax shall be charged on land owned at midnight on 30 June immediately preceding the financial year in and for which the tax is levied. Section 11(1) says that land tax shall be payable by every owner of land upon the taxable value of all the land owned by the owner, and not exempt from taxation under the Act.
Section 11(6A) of the Act provides, so far as is relevant, that
“… if land comprising 1 parcel is owned by an individual otherwise than in the capacity of a trustee and is used as the individual’s principal place of residence …, in calculating the taxable value of all land owned by the individual there shall be deducted an amount equivalent to the relevant unimproved value of that parcel …”.
Section 3E of the Act provides that
“When land is a principal place of residence
3E. In respect of any year in respect of which land tax is leviable or payable, land is not used as the principal place of residence of a person unless –
(a)that land and no other land has, for the period of 6 months immediately preceding the time when the ownership of land for the purposes of this Act is determined, been continuously used for residential purposes by the person
(b) in any other case – the commissioner is satisfied the land is used as the principal place of residence of the person (whether alone or with other persons) and for no other purpose.”
In order to be eligible for a deduction under s.11(6A) therefore, the appellant must establish that the property is a “principal place of residence”. The Act does not contain a definition of “principal place of residence” but the effect of s.3E is that to qualify as a principal place of residence either subparagraph (a) or (b) of the section must be fulfilled.
In Rosara Pty Ltd v The Commissioner of Land Tax (1992) 14 QLCR 56, the learned President considered the meaning of the phrase “principal place of residence” as used in s.3E of the Act. The President referred to the judgment of Williams J in Koitaki Para Rubber Estates Ltd v. Federal Commissioner of Taxation (1941) 64 CLR 241 at 269 where his Honour said:
“The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where he habitually lives even if this is in hotels or on a yacht or some other place of abode.”
It is evident from this extract that it is possible for a person to have more than one residence. However, the effect of s.3E(a) of the Act is that land does not qualify as a principal place of residence unless the land and no other land has been continuously used by the taxpayer for the period of six months immediately preceding the relevant date. It follows from the evidence I have summarised above that the Brighton property cannot qualify as a principal place of residence under s.3E(a) because Dr Chu did not live there continuously during the relevant six months, that is the six months immediately preceding 30 June 2002.
There remains the question of whether the property qualifies under s.3E(b) of the Act. In Rosara it was held (at 63) that this provision was applicable in cases where the taxpayer has more than one residence and that it was for the Commissioner to be satisfied that the subject land is used as the principal place of residence. The learned President went on to say that the ordinary meaning of the word “principal” as contained in the Oxford English Dictionary (Third Edition) is “first”, “chief”, “original”, “first in rank of importance”. I respectfully adopt this reasoning.
The appellant considers that it is for him to decide which is his principal place of residence, and he has selected the Brighton property. While I consider that the intention of the appellant may be relevant in determining his principal place of residence (see Benson v The Commissioner of Land Tax A86 -1988/9, unreported Land Court, 20 February 1987), it is not conclusive and it is only one of the factors that are to be taken into account. It is not possible for a person simply to nominate which property is his principal place of residence. It is a question of fact as to which property if any, is a principal place of residence (Rosara at 64) and all the relevant background facts and circumstances are to be taken into account in determining that fact.
The Commissioner has decided that he is not satisfied that the property is used as a principal place of residence and the appellant has appealed against that decision under s.27(1) of the Act. Section 18(1) of the Act says that on the hearing of the appeal the court may make such order as it thinks fit, and may either reduce or increase the assessment. That latter section should be read in conjunction with s.429 of the Land Act 1994, because s.27(3) of the Land Tax Act says that chapter 7, part 3 of the Land Act applies to the hearing and determination of an appeal under s.27(1) of the Land Tax Act. Section 429 of the Land Act forms part of chapter 7, part 3 of that Act and provides that:
“429 Powers of court on appeal
(1) In deciding an appeal, the court has the same powers as the decision maker.
(2) An appeal is by way of rehearing.
(3) The court may -
(a) confirm the review decision; or
(b)set aside the review decision and substitute another decision; or
(c)set aside the review decision and return the issue to the Minister with directions the court considers appropriate.”
Applying these provisions I consider that the issue to be decided on this appeal is whether, on a consideration of all the evidence adduced at the hearing, the Commissioner could be properly satisfied that the Brighton property was the appellant’s principal place of residence (see also Rosara at 63).
Although neither the Land Tax Act nor the Land Act indicate which party carries the burden of proof in an appeal such as this, it has been held previously in this Court that the appellant does have that onus (Benson v The Commissioner of Land Tax A86-88/9, unreported, Land Court, 20 February 1987; Dillon v Valuer-General and The Commissioner of Land Tax, A88-35 and A89-38, unreported, Land Court, 8 December 1989). The basis of these decisions was that the general rule is that the burden of proof lies on the party who asserts the affirmative of the issue or question in dispute. In this case, that principle has the consequence that Dr Chu bears the burden of proving that the Commissioner should have been satisfied that the Brighton property was the appellant’s principal place of residence at the relevant date.
On a consideration of all the evidence, I have concluded that the appellant has established sufficient facts for the Commissioner to have been satisfied that the Brighton property was the appellant’s principal place of residence as at 30 June 2002. The appellant’s intention is that the property be his principal place of residence and he normally resides there for part of each week. Dr Chu takes primary responsibility for the care of his elderly mother and she and his sons also reside at the property so that he has strong family connections with it. The appellant enrolled on the electoral roll for that address in April 2002, and some furniture and possessions are located there. There are other factors which indicate that he has links with Maryborough. He spends more time at 258 Lennox Street each week than at the property in Brighton, most of his cars are registered there, his driver’s licence and other documents indicate Maryborough as his address. However, I have accepted Dr Chu’s evidence that the principal reason he has maintained his connection with Maryborough is to continue his part-time medical practice, and that it is administratively convenient for him to have his business correspondence sent to that address. On balance, therefore, I consider that the evidence indicates that the Commissioner should have been satisfied that the Brighton property was the appellant’s principal place of residence.
ORDERS:
(i) The appeal is allowed.
(ii)Land tax assessment No. 89237 is remitted to the respondent to be amended to exclude the value of Lot 3 on RP 136278 in the County of Stanley, Parish of Nundah.
CAC MacDONALD
MEMBER OF THE LAND COURT
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