Dutta v Chief Commissioner of State Revenue

[2007] NSWADT 22

CITATION:	Dutta v Chief Commissioner of State Revenue [2007] NSWADT 22
DIVISION:	Revenue Division
PARTIES:	APPLICANT Subhra Dutta RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	066107
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	9 January 2007
DATE OF DECISION:	23 January 2007
BEFORE:	Handley R - Acting Deputy President
CATCHWORDS:	Land tax exemption - principal place of residence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Land Tax Management Act 1956 State Revenue Legislation Further Amendment Act 2003 Taxation Administration Act 1996
CASES CITED:	Chief Commissioner of State Revenue v Aldridge & Anor (RD) [2003] NSWADTAP 50
REPRESENTATION:	APPLICANT In person RESPONDENT S Benjamin, agent
ORDERS:	The decision under review is affirmed

1 Mr Subhra Dutta and his wife Rumia Dutta currently live in Kuwait. They own two properties in Sydney: a residential property at Glenmore Park and vacant land at Kellyville. On 22 September 2006, Mr Dutta filed an application with the Tribunal for the review of a decision dated 2 February 2006 to remove an exemption allowed from land tax for the Glenmore Park property for the 2003 tax year because it is tenanted.

Background

2 Mr and Mrs Dutta have lived in Kuwait since 1994. In 2002, they purchased a residential property in Glenmore Park and vacant land in Kellyville. On 3 May 2005, an officer of the Office of State Revenue (‘OSR’), conducting an audit, discovered that Mr and Mrs Dutta had not lodged a land tax return as required by s 12 of the Land Tax Management Act 1956 (‘the LTM Act’), and made a land tax assessment of $5,413.45 for the 2003, 2004 and 2005 tax years. This assessment included a 1.5% discount of $82.55 if payment was made by 14 June 2005. Mr Dutta sent a bank draft for $5,413.45 by registered post and, on 28 May 2005, completed a Valuation Objection Form requesting a concession exempting the Glenmore Park property from land tax on the ground that this was intended to be his and his wife’s principal place of residence.

3 By letter dated 17 October 2005, an officer of the OSR notified Mr and Mrs Dutta that he had decided to apply the intended principal place of residence exemption for the Glenmore Park property for the 2003 tax year pursuant to s 10T of the LTM Act applicable in respect of the 2003 tax year. However, he said s 10T was repealed in 2003 and the new requirements for this exemption, set out in Sch 1A, cl 6 of the LTM Act, stipulated that the exemption did not apply unless, amongst other requirements:

“(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, ...”

4 Moreover, the claimant was required to occupy the property within two tax years immediately following the year in which the person(s) became the owner of the land. Thus, the exemption did not apply for the 2004 tax year. The officer reassessed Mr and Mrs Dutta’s liability for land tax for the 2003 year and they received a refund in due course. However, this reassessment did not take into account that Mr and Mrs Dutta had received a 1.5% discount on the original assessment. Therefore, by letter dated 15 November 2005, Mr Dutta lodged a further objection.

5 In the course of reviewing the reassessment of Mr and Mrs Dutta’s liability for land tax, and noting the error in not taking into account the 1.5% discount originally received, a different officer of the OSR noticed that the exemption for the Glenmore Park property had been wrongly granted. By letter dated 2 February 2006, the officer notified Mr and Mrs Dutta that the concession was only applicable if, pursuant to s 10T(1), the owner “intends to use or occupy the land solely as his or her principal place of residence”. Because the property had been tenanted since the time of purchase, Mr and Mrs Dutta were not eligible for the concession.

6 By letter dated 2 April 2006, Mr Dutta lodged an objection to this further reassessment. This objection was considered and disallowed. On 22 September 2006, Mr Dutta filed an application for a review of the decision of 2 February 2006. The OSR provided a Statement of Reasons for the Chief Commissioner’s decision dated 5 December 2006 and Mr Dutta provided submissions dated 17 December 2006. The parties agreed that the matter should be dealt with ‘on the papers’.

The Relevant Legislation

7 The applicable provision of the LTM Act for the 2003 land tax year commencing on 1 January 2003 was s 10T. This provided an exemption from the imposition of land tax in respect of land:

“(1) If the Chief Commissioner is satisfied that the owner of the land (or, if there are joint owners, any one or more of them) intends to use and occupy the land solely as his or her principal place of residence, that intended use and occupation of land is to be regarded as its actual use and occupation for the purposes of section 10(1)(r).

(2) This section does not apply unless:


(a) (Repealed)

(b) the Chief Commissioner is satisfied that the intended use and occupation of the land is not unlawful, and

(c) while the owner is the owner, the land is not used or occupied except as his or her principal place of residence.”

8 This provision was repealed with effect from 31 December 2003 by the State Revenue Legislation Further Amendment Act 2003 which inserted a new provision in the LTM Act – Sch 1A, cl 6, providing for a similar exemption for unoccupied land intended as the owner’s principal place of residence, but stating that the exemption does not apply unless building or other works to facilitate the owner’s occupation of the land as his or her principal place of residence are intended or being carried out and, in the latter case, no income has been derived from the use and occupation of the land since the commencement of the works. Relevantly Sch 1, cl 6(1) states:

“(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.”

9 The “principal place of residence” of a person is defined in s 3 of the LTM Act as meaning “the one place of residence that is, among the one of more places of residence of the person within and outside Australia, the principal place of residence of the person”.

10 Section 9 of the Taxation Administration Act 1996 permits the Chief Commissioner to reassess the tax liability of a taxpayer.

Discussion

11 In the Statement of Reasons for the decision, the Chief Commissioner states that Mr and Mrs Dutta are not entitled to the exemption because their principal place of residence is Kuwait where they have been working and living since 1994. Moreover, it is clear that where a property is rented out, the exemption cannot be claimed, as the Tribunal confirmed in Chief Commissioner of State Revenue v Aldridge & Anor (RD) [2003] NSWADTAP 50 (‘Aldridge’). The OSR provided a copy of a Rental Bond Board Search Result confirming a bond was lodged in respect of the property on 9 April 2002 and refunded on 20 June 2005.

12 Mr Dutta has not disputed that the Glenmore Park property has been tenanted since he and his wife purchased it in April 2002. In his submission dated 17 December 2006, he points to the contradictory assessments of two officers of the OSR. He also notes the difficulties he has experienced in corresponding with the OSR and suggests a lack of general awareness of the requirement to lodge Land Tax Returns.

13 In my view, the decision of 2 February 2006 to remove an exemption allowed from land tax for the Glenmore Park property for the 2003 land tax year was correct. The exemption is only available in respect of unoccupied property and the evidence produced by the OSR and not contested by Mr Dutta is that the property was tenanted through 2003. As the decision in Aldridge makes clear, the fact that the owners may regard a property as their principal place of residence is not sufficient to bring them within the exemption. By renting out the property, Mr and Mrs Dutta granted a right to exclusive possession of the property to the tenants during the term and subject to the conditions of the lease. The property was, therefore, not unoccupied as was required for the exemption to apply. Moreover, the evidence of Mr and Mrs Dutta living and working in Kuwait since 1994, which has not been disputed by Mr Dutta, indicates that their principal place of residence is in Kuwait.

14 I note that Mr Dutta has experienced some frustration in his dealings with the OSR in terms of his not always receiving a response to correspondence, and miscalculations and contradictory decisions by officers of the OSR. However, in my view, the decision of 2 February 2006 is in accordance with the law, Mr and Mrs Dutta are not eligible for the exemption, and the decision must be affirmed.

Decision

The decision under review is affirmed.