Druitt and Commissioner Of State Revenue
[2008] WASAT 187
•21 AUGUST 2008
DRUITT and COMMISSIONER OF STATE REVENUE [2008] WASAT 187
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2008] WASAT 187 | |
| LAND TAX ASSESSMENT ACT 2002 (WA),TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | DR:197/2008 | 14 AUGUST 2008 | |
| Coram: | MR D R PARRY (SENIOR MEMBER) | 21/08/08 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application for review upheld in part Land tax notice of reassessment for assessment year 2007/2008 set aside in relation to 26 Donar Street, Innaloo and reassessment substituted that land tax is determined on the basis of a 34% residential exemption in relation to that property for that assessment year | ||
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| PDF Version |
| Parties: | CAMPBELL GORDON DRUITT COMMISSIONER OF STATE REVENUE |
Catchwords: | Taxation Land tax Exemption Private residential property Lot with private residence and rear part of adjoining lot established and used as an integrated area that constitutes place of residence Commissioner treated lot and rear part of adjoining lot as a single property for valuation and assessment and granted a "34% residential exemption" in relation to adjoining lot over 10 assessment years Taxpayer notified Commissioner that the part of the adjoining lot established and used with private residence as integrated area was increased from 34% to 44% of adjoining lot and applied for reassessment to increase residential exemption of adjoining lot to 44% On reassessment Commissioner reduced residential exemption of adjoining lot to nil on ground that previous interpretation of applicable law was erroneous Commissioner partially allowed objection to reassessment by reinstating "34% residential exemption" for first of two assessment years Whether Commissioner may treat lot with private residence and rear part of adjoining lot as a single property for valuation and assessment Whether rear part of adjoining lot is a "lot" Whether partial exemption available Whether rear part of adjoining lot is used or occupied for an "exempt purpose" |
Legislation: | Land Tax Assessment Act 2002 (WA), s 4, s 18, s 21(1) Planning and Development Act 2005 (WA), s 135 State Administrative Tribunal Act 2004 (WA), s 29(1) Taxation Administration Act 2003 (WA), s 16(2)(b), s 16(5), s 34(1), s 40 |
Case References: | JM Bestall and Commissioner of State Revenue [2005] WASAT 32; (2005) 38 SR (WA) 311 |
Orders | 1. The application for review is allowed in part.,2. The decision of the respondent made on 27 March 2008 that Lot 140 on Plan 6290 is not exempt from land tax for the 2007/2008 assessment year is set aside and a decision is substituted that Lot 140 on Plan 6290 is subject to "34% residential exemption" for the 2007/2008 assessment year., 3. The land tax notice of reassessment issued on 2 April 2008 is set aside in relation to Lot 140 on Plan 6290 for the 2007/2008 assessment year.,4. Within seven days of the date of this order, the respondent must issue a land tax notice of reassessment in relation to Lot 140 on Plan 6290 for the 2007/2008 assessment year on the basis that that lot is subject to a "34% residential exemption" in that assessment year. |
Summary | The Commissioner of State Revenue assessed land tax for a lot for 10 assessment years on the basis that it was subject to a "34% residential exemption", as 34% of its area was established and used by a taxpayer and his family with the whole of the adjoining lot that contained their private residence as one integrated area that constituted their place of residence. When the taxpayer moved the fence within the lot in question to increase the proportion of the lot established and used with the adjoining lot, and applied to the Commissioner to reassess two outstanding land tax assessments by increasing the "34% residential exemption" to "44% residential exemption", the Commissioner determined that the previous assessments were based on an erroneous interpretation of the legislation and that no part of the lot could be treated as a single property with the adjoining lot for valuation and assessment. The Commissioner reassessed liability on the basis that the lot was not exempt at all, but subsequently partially allowed an objection in relation to the earlier of the two years by restoring the "34% residential exemption". The taxpayer sought review on the basis that 44% of the lot is exempt from land tax.,The Tribunal determined that the Commissioner could not lawfully treat a part of the lot as a single property for valuation and assessment with the whole of the adjoining lot. The Tribunal also determined that the lot was not subject to a partial exemption from land tax. In order for part of the lot to be exempt from land tax, the taxpayer must obtain subdivision approval to create a legal, rather than merely de facto, severance of the lot.,However, the correct and preferable decision in the review was to reimpose the "34% residential exemption" for the assessment year in question because the legislation precluded a reassessment on the basis that a particular interpretation of the applicable law was erroneous and because the taxpayer moved the fence after the dates in relation to which land tax was required to be reassessed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : LAND TAX ASSESSMENT ACT 2002 (WA)
- TAXATION ADMINISTRATION ACT 2003 (WA)
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Taxation - Land tax - Exemption - Private residential property - Lot with private residence and rear part of adjoining lot established and used as an integrated area that constitutes place of residence - Commissioner treated lot and rear part of adjoining lot as a single property for valuation and assessment and granted a "34% residential exemption" in relation to adjoining lot over 10 assessment years - Taxpayer notified Commissioner that the part of the adjoining lot established and used with private residence as integrated area was increased from 34% to 44% of adjoining lot and applied for reassessment to increase residential exemption of adjoining lot to 44% - On reassessment Commissioner reduced residential exemption of adjoining lot to nil on ground that previous interpretation of applicable law was erroneous - Commissioner partially allowed
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objection to reassessment by reinstating "34% residential exemption" for first of two assessment years - Whether Commissioner may treat lot with private residence and rear part of adjoining lot as a single property for valuation and assessment - Whether rear part of adjoining lot is a "lot" - Whether partial exemption available - Whether rear part of adjoining lot is used or occupied for an "exempt purpose"
Legislation:
Land Tax Assessment Act 2002 (WA), s 4, s 18, s 21(1)
Planning and Development Act 2005 (WA), s 135
State Administrative Tribunal Act 2004 (WA), s 29(1)
Taxation Administration Act 2003 (WA), s 16(2)(b), s 16(5), s 34(1), s 40
Result:
Application for review upheld in part
Land tax notice of reassessment for assessment year 2007/2008 set aside in relation to 26 Donar Street, Innaloo and reassessment substituted that land tax is determined on the basis of a 34% residential exemption in relation to that property for that assessment year
Category: B
Representation:
Counsel:
Applicant : In person
Respondent : Ms LA Eddy
Solicitors:
Applicant : Self-represented
Respondent : State Solicitor's Office
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Case(s) referred to in decision(s):
JM Bestall and Commissioner of State Revenue [2005] WASAT 32; (2005) 38 SR (WA) 311
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Summary of Tribunal's decision
1 The Commissioner of State Revenue assessed land tax for a lot for 10 assessment years on the basis that it was subject to a "34% residential exemption", as 34% of its area was established and used by a taxpayer and his family with the whole of the adjoining lot that contained their private residence as one integrated area that constituted their place of residence. When the taxpayer moved the fence within the lot in question to increase the proportion of the lot established and used with the adjoining lot, and applied to the Commissioner to reassess two outstanding land tax assessments by increasing the "34% residential exemption" to "44% residential exemption", the Commissioner determined that the previous assessments were based on an erroneous interpretation of the legislation and that no part of the lot could be treated as a single property with the adjoining lot for valuation and assessment. The Commissioner reassessed liability on the basis that the lot was not exempt at all, but subsequently partially allowed an objection in relation to the earlier of the two years by restoring the "34% residential exemption". The taxpayer sought review on the basis that 44% of the lot is exempt from land tax.
2 The Tribunal determined that the Commissioner could not lawfully treat a part of the lot as a single property for valuation and assessment with the whole of the adjoining lot. The Tribunal also determined that the lot was not subject to a partial exemption from land tax. In order for part of the lot to be exempt from land tax, the taxpayer must obtain subdivision approval to create a legal, rather than merely de facto, severance of the lot.
3 However, the correct and preferable decision in the review was to reimpose the "34% residential exemption" for the assessment year in question because the legislation precluded a reassessment on the basis that a particular interpretation of the applicable law was erroneous and because the taxpayer moved the fence after the dates in relation to which land tax was required to be reassessed.
Introduction
4 These proceedings involve applications for review brought by a taxpayer, Mr Campbell Druitt, pursuant to s 40 of the Taxation Administration Act 2003 (WA) (TA Act), of the decisions of the Commissioner of State Revenue (Commissioner) to allow in part Mr Druitt's objection to a reassessment of liability for land tax for the 2006/2007
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- assessment year and to disallow Mr Druitt's objection in relation to a reassessment of liability for land tax for the 2007/2008 assessment year in relation to Lot 140 on Plan 6290 (Lot 140) which is known as No 26 Donar Street, Innaloo. The Commissioner decided that Lot 140 is subject to a "34% residential exemption" for the 2006/2007 assessment year but is not subject to any residential exemption for the 2007/2008 assessment year. Mr Druitt applied for reassessment in relation to both assessment years on the basis that 44% of Lot 140 is exempt from land tax because 44% of Lot 140 is established and used by Mr Druitt and his family as one integrated area that constitutes their place of residence with Mr Druitt's adjoining property, Lot 141 on Plan 6290 (Lot 141) which is known as No 24 Donar Street, Innaloo.
Background
5 Lot 140 and Lot 141 are adjoining, regularly shaped, rectangular allotments with areas of 878 square metres and 883 square metres, respectively. Each lot contains a house in the front half.
6 Mr Druitt purchased Lot 141 in October 1983 and since that time he and his family have lived in the house on that lot. Mr Druitt purchased Lot 140 in July 1993. In August 1993, Mr Druitt shifted the boundary fence between the two lots and amalgamated the majority of the backyard of Lot 140 with the backyard of Lot 141. In 1994, Mr Druitt built a large cubbyhouse for his children towards the rear of Lot 140. Since that time, Mr Druitt has constructed a raised brick planter that straddles the common boundary between Lot 140 and Lot 141 and has installed integrated landscaping and reticulation in the rear part of the lots. For the past 15 years, the whole backyard of Lot 141 and the majority of the backyard of Lot 140 has been established and used by Mr Druitt and his family as a large integrated backyard. Throughout this period, Mr Druitt has rented the house on the front half of Lot 140 and a part of the backyard of that lot to tenants.
7 In March 2003, Mr Druitt applied to the Commissioner for reimbursement of 40% of land tax paid in relation to Lot 140 for the preceding five years on the basis that he and his family used 40% of Lot 140 together with the whole of Lot 141. On 1 May 2003, an officer of the Department of Land Administration inspected Mr Druitt's properties and estimated that approximately 27% of Lot 141 was being utilised by the residents of Lot 140. The officer recommended that "erring on the conservative side 30% to 1/3 would be more appropriate to adopt rather than the 40% that the owner has suggested".
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8 On 19 May 2003, the Commissioner wrote to Mr Druitt granting his application for reimbursement and stating that:
A 34% Residential Exemption has now been applied to [Lot 140] for the years 1998/1999 - onwards.
9 The Commissioner then issued reassessment notices for the assessment years 1998/1999, 1999/2000, 2000/2001, 2001/2002 and 2002/2003 identifying a new exemption status for Lot 140 of "34% residential exemption". Consistently with the Commissioner's decision made on 19 May 2003, the Commissioner granted a "34% residential exemption" for Lot 140 for the following assessment years of 2003/2004, 2004/2005, 2005/2006, 2006/2007 and 2007/2008.
10 Between July and October 2007, Mr Druitt removed the fence between the part of Lot 140 used by his tenant and the part of Lot 140 used by himself and his family, and constructed a part two metre high brick fence and part open one metre high timber and wire fence closer to the house on Lot 140, thereby increasing the size of the integrated backyard used in conjunction with the house on Lot 141. Mr Druitt estimates that the effect of this work has been to increase the portion of Lot 140 that is integrated with Lot 141 to 44%.
11 On 2 November 2007, Mr Druitt wrote to the Commissioner referring to and enclosing a copy of the Commissioner's letter dated 19 May 2003, and requesting that an inspection should take place of his properties to confirm that 44% of Lot 140 now qualifies for exemption from land tax. It is common ground in this review that the request made by Mr Druitt in his letter of 2 November 2007 was in substance a request for reassessment of outstanding assessments of liability for land tax under s 16(2)(b) of the TA Act in relation to Lot 140 for the 2006/2007 and 2007/2008 assessment years.
12 In assessing Mr Druitt's application for reassessment of land tax in relation to the 2006/2007 and 2007/2008 assessment years, the Commissioner determined that the "34% residential exemption" granted in 2003 and subsequently was based on an erroneous interpretation of the relevant provisions of the Land Tax Assessment Act 2002 (WA) (LTA Act). Consequently, on 21 November 2007, the Commissioner wrote to Mr Druitt disallowing his application for reassessment and stating that Lot 140 is not exempt at all from liability for land tax. On 5 December 2007, the Commissioner issued reassessments of land tax for the 2006/2007 and 2007/2008 assessment years on the basis that Lot 140 is not exempt from land tax.
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13 On 28 December 2007, Mr Druitt lodged an objection with the Commissioner under s 34(1) of the TA Act in relation to the removal of the "34% residential exemption" for Lot 140 and reassessment of land tax for that lot. On 27 March 2008, the Commissioner advised Mr Druitt that his objection had been allowed in part. In particular, the Commissioner maintained that the "34% residential exemption" granted in 2003 and subsequently was based on a misinterpretation of the legislation. However, as the Commissioner only became aware of the situation as a result of Mr Druitt's application for reassessment following the demolition and rebuilding of the fence, the Commissioner reinstated the "34% residential exemption" in relation to the 2006/2007 assessment year, but did not do so in relation to the 2007/2008 assessment year. On 2 April 2008, the Commissioner issued a further land tax notice of assessment referring to "34% residential exemption" for the 2006/2007 assessment year and no exemption from land tax for the 2007/2008 assessment year in relation to Lot 140.
14 On 26 May 2008, Mr Druitt applied to the Tribunal for review of the Commissioner's decisions in relation to his objections to the reassessments. Mr Druitt requests the Tribunal make the following decisions in the review:
I request that [the Tribunal] renew my partial exemption for Land Tax as previously recognised by the Commissioner of State Revenue for the property on Lot 140, 26 Donar Street, Innaloo Western Australia 6018. Furthermore the amount of exemption applied should be 44% to reflect that I utilise 44% of Lot 140 which is one integrated area with Lot 141 of my private residence.
Issues for determination
15 The following four principal issues arise for determination in this review:
1) Whether the Commissioner may treat Lot 141 and the rear part of Lot 140 as a single property for valuation and assessment.
2) Whether a partial exemption from land tax is available in relation to Lot 140.
3) Whether the expansion of the area of Lot 140 established and used with Lot 141 as one integrated area is relevant to the reassessments in question.
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- 4) What is the correct and preferable decision in relation to the reassessments?
16 The Tribunal will address each of these issues in turn.
Can the Commissioner treat Lot 141 and the rear of Lot 140 as a single property for valuation and assessment?
17 Mr Druitt contends that the rear part of Lot 140 is exempt from land tax by virtue of the private residential property exemption in s 21(1) of the LTA Act which states, in part, as follows:
Private residential property (except property held in trust) is exempt for an assessment year if, at midnight on 30 June in the financial year before the assessment year, it is owned -
(a) by an individual who uses it as his or her primary residence; …
18 Section 4 of the LTA Act states that the Glossary at the end of the Act "define[s] or affect[s] the meaning of some of the words and expressions used in this Act, and also affect[s] the operation of other provisions". The expression "private residential property" is defined in cl 1 of the Glossary to relevantly include "a lot of land on which there is a private residence". The expression "private residence" is defined in cl 1 of the Glossary to mean:
A building or part of a building that was occupied, or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals [with exceptions that are not relevant]
19 In this case, Lot 141 is exempt from land tax under s 21(1) of the LTA Act, because it is a "private residential property" that is owned by an individual, namely, Mr Druitt, who uses it as his primary residence. In contrast, Lot 140 is not exempt from land tax under this section, because, although it contains a private residence, it is not used by Mr Druitt as his primary residence.
20 However, Mr Druitt contends that the Commissioner can and should treat the rear part of Lot 140 as exempt in consequence of the following provisions in cl 2 of the Glossary:
(3) If 2 or more lots of land in the same ownership have common boundaries, the Commissioner may treat the lots as a single property for valuation and assessment if it is appropriate to do so.
(4) However, for the purpose of determining the use of a lot or parcel of private residential property, 2 or more lots of land are not to be treated as a single private residential property unless the Commissioner is satisfied that the lot or lots on
- which the private residence is constructed and each other lot are established, and used by the individuals who reside there, as one integrated area that constitutes the place of residence. (Emphasis added)
21 The Commissioner does not contest that the whole of Lot 141 and the rear part of Lot 140 are established and used by Mr Druitt and his family who reside there as one integrated area that constitutes their place of residence. However, the Commissioner contends that it is not open to treat the rear part of Lot 140 as a single property for valuation and assessment with Lot 141, because the rear part of Lot 140 is not a "lot" within the meaning of the LTA Act.
22 The term "lot" has the meaning given to it in cl 2 of the Glossary. Clause 2(1) of the Glossary states that a reference to a "lot" of land is a reference to "a defined portion of land" that is depicted on a plan or diagram deposited with the Western Australian Land Information Authority and for which, relevantly, a certificate of title has been issued, and is approved by the Town Planning Board or the Western Australian Planning Commission. Clause 2(2) of the Glossary states that a reference to a "lot" of land includes "a reference to the whole of any land" that is the subject of, relevantly, a certificate of title.
23 The Commissioner's contention is clearly correct. The rear part of Lot 140 is not a "lot" within the meaning of the LTA Act, but rather is a part of a "lot". The rear part of Lot 140 is not a defined portion of land depicted on a plan or diagram deposited with the Western Australian Land Information Authority and for which a separate certificate of title has been issued, and is not approved by the Town Planning Board or the Western Australian Planning Commission. Moreover, the rear part of Lot 140 is not the whole of any land that is the subject of a certificate of title. Rather, it forms part of a certificate of title.
24 A purposive interpretation arrives at the same result. It is apparent from cl 2(1) and cl 2(2) of the Glossary that the legislation intends to restrict the term "lot" to a defined area of land that is the subject of a legal, rather than merely a de facto, subdivision and therefore to preclude the Commissioner from treating land as a single property under cl 2(3) and cl 2(4) of the Glossary on the basis of a de facto, rather than a legal subdivision.
25 It follows that the Commissioner may not treat the whole of Lot 141 and the rear part of Lot 140 as a single property for valuation and assessment. The rear part of Lot 140 is not exempt from land tax under s 21(1) and cl 2(3) and cl 2(4) of the Glossary of the LTA Act.
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Is a partial exemption available?
26 Alternatively, Mr Druitt contends that Lot 140 is partially exempt from land tax under s 18 of the LTA Act which states as follows:
If -
(a) an exemption or concession under another provision of this Act would apply to land if it were used or occupied solely for an exempt purpose or purposes, or owned, used or occupied solely by a person or persons in a particular class or classes, or both, as mentioned in the respective provision; and
(b) the land is used or occupied partly for the exempt purpose or purposes and partly for another purpose or purposes, or is owned, used or occupied partly by persons in the particular class or classes, and partly by another person or persons,
then the exemption or concession applies to the proportion of the land that is used or occupied for the exempt purpose or purposes, or is owned, used or occupied by the persons in the particular class or classes, or both, as the case requires. (Emphasis added)
27 However, s 18 of the LTA Act cannot assist Mr Druitt for the following four reasons.
28 First, the expression "exempt purpose" is defined in cl 1 of the Glossary, in relation to land, to mean "a purpose for which the land is used or reserved and by virtue of which the land is exempt". However, under cl 2(4) of the Glossary, the Commissioner must be satisfied that the lot or lots on which the private residence is constructed and each other lot are not only used, but also established, as one integrated area that constitutes a place of residence: see JM Bestall and Commissioner of State Revenue [2005] WASAT 32; (2005) 38 SR (WA) 311 at [29] - [31]. The exemption under cl 2(3) and cl 2(4) of the Glossary would not therefore apply to land if it were merely used for an exempt purpose.
29 Second, even if use alone were sufficient under cl 2(3) and cl 2(4) of the Glossary, that use is not an "exempt purpose", because it is not a purpose "by virtue of which the land is exempt". Rather, it is a pre-condition to the Commissioner determining that it is appropriate to treat lots as a single property for valuation and assessment. The establishment of the pre-conditions in cl 2(4) of the Glossary does not, in itself, establish the exemption. There is still
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- a residual discretion to be exercised under cl 2(3) of the Glossary.
30 Third, even if use were sufficient and for an exempt purpose, para (a) of s 18 of the LTA Act would not be satisfied, because the exemption under s 21(1) and cl 2(3) and cl 2(4) of the Glossary of the LTA Act could not apply to the whole of Lot 140. The use of the definite article "the" before "private residence" in cl 2(4) of the Glossary indicates that the clause contemplates only one private residence on the lots in question. Moreover, the opening words of the definition of "private residence" in cl 1 of the Glossary, namely, "a building or part of a building", contemplate that a "private residence" must be comprised within one principal building. As Lot 140 and Lot 141 both contain a "private residence", the Commissioner may not treat the two lots as a single property for valuation and assessment under s 21(1) and cl 2(3) and cl 2(4) of the Glossary, and consequently the requirement in para (a) of s 18 of the LTA Act would not be satisfied in this case.
31 Fourth, while s 18 of the LTA Act clearly has a beneficial purpose, to seek to interpret it in such a way that it includes the circumstances in cl 2(3) and cl 2(4) of the Glossary would undermine the legislative intention apparent from cl 2(1) and cl 2(2) of the Glossary to preclude the Commissioner from treating land as a single property for valuation and assessment on the basis of a de facto, rather than a legal, subdivision.
32 It follows that a partial exemption under s 18 of the LTA Act is not available.
Is the expansion of the area relevant?
33 The physical works carried out by Mr Druitt in the period from July to October 2007 to expand the area of Lot 140 established and used with Lot 141 are not relevant, in any case, in relation to the assessments in question. As the Tribunal determined in JM Bestall and Commissioner of State Revenue at [45]:
We do not, therefore, consider that, even in review proceedings before the Tribunal, physical characteristics which came into being after midnight on 30 June in the financial year before the assessment year in question can be taken into account in determining whether an objection as to the assessment should be allowed in relation to that year.
34 It follows that, even if it were open to the Commissioner to treat the rear part of Lot 140 and the whole of Lot 141 as a single property for valuation and assessment, the physical changes which occurred between July and
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- October 2007 cannot be taken into account in relation to the reassessments which relate to the circumstances at midnight on 30 June 2006 and at midnight on 30 June 2007.
What is the correct and preferable decision in relation to the reassessments?
35 The Tribunal has found that it is not open to the Commissioner to treat the rear part of Lot 140 and the whole of Lot 141 as a single property for valuation and assessment and that Lot 140 is not subject to a partial exemption from land tax. Consequently, were it not for s 16(5) of the TA Act, the correct and preferable decision in relation to the assessments would be to reinstate the Commissioner's decision of 21 November 2007 that Lot 140 is not exempt from land tax.
36 However, s 16(5) of the TA Act states as follows:
If an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to the assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
37 Section 29(1) of the State Administrative Tribunal Act 2004 (WA) states that:
The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decision-maker in making the reviewable decision.
38 Although the "34% residential exemption" originally granted by the Commissioner in relation to Lot 140 for the 2006/2007 and 2007/2008 assessment years was based on an erroneous interpretation of the applicable law, s 16(5) of the TA Act precludes the Commissioner - and the Tribunal on review - from making a reassessment on that basis. Consequently, the correct and preferable decision, in the circumstances of this case, is to set aside the Commissioner's decision in relation to the reassessment for the 2007/2008 assessment year and substitute a decision that Lot 140 is subject to a "34% residential exemption" for that assessment year, even though this decision is based on an erroneous interpretation of the LTA Act.
Conclusion
39 The Commissioner has assessed liability for land tax in relation to Lot 140 for 10 assessment years on the basis of an erroneous interpretation of the legislation. The error was only discovered when Mr Druitt applied for
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- applied for reassessment in relation to two assessment years to increase the "exemption" from 34% to 44%. It may well be the case that, had Mr Druitt not applied for reassessment, the "34% residential exemption" would have continued to be automatically reflected in annual land tax assessments.
40 However, the circumstances do not enable or warrant the Commissioner to maintain an unlawful exemption in the future. In order for the rear part of Lot 140 to be exempt from land tax, it must be legally severed from the remainder of Lot 140 by a subdivision approved by the Western Australian Planning Commission under s 135 of the Planning and Development Act 2005 (WA).
41 Although the Commissioner cannot lawfully treat the rear part of Lot 140 and the whole of Lot 141 as a single property for valuation and assessment, as the Commissioner did just that in the assessments of land tax in relation to Lot 140 for the 2006/2007 and 2007/2008 assessment years, the effect of s 16(5) of the TA Act is that the Commissioner - and the Tribunal on review - cannot make a reassessment on that basis. Also, the Commissioner - and the Tribunal on review - cannot take into account in determining a reassessment of liability for land tax as at midnight on 30 June 2006 and midnight on 30 June 2007 physical changes which took place on Lot 140 after the relevant date.
42 It follows that the correct and preferable decision, in the unusual circumstances of this case, is to reimpose the "34% residential exemption" in relation to Lot 140 for the 2007/2008 assessment year.
Orders
43 The Tribunal makes the following orders:
1. The application for review is allowed in part.
2. The decision of the respondent made on 27 March 2008 that Lot 140 on Plan 6290 is not exempt from land tax for the 2007/2008 assessment year is set aside and a decision is substituted that Lot 140 on Plan 6290 is subject to "34% residential exemption" for the 2007/2008 assessment year.
3. The land tax notice of reassessment issued on 2 April 2008 is set aside in relation to Lot 140 on Plan 6290 for the 2007/2008 assessment year.
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- 4. Within seven days of the date of this order, the respondent must issue a land tax notice of reassessment in relation to Lot 140 on Plan 6290 for the 2007/2008 assessment year on the basis that that lot is subject to a "34% residential exemption" in that assessment year.
I certify that this and the preceding [43] 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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