Elliott v Commissioner for Act Revenue

Case •

[2020] ACAT 72

•

16 September 2020

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

ELLIOTT v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2020] ACAT 72

AT 9/2020

Catchwords:               ADMINISTRATIVE REVIEW – scope of exemption from land tax where ‘a parcel of land stops being rented so it can be occupied as the principal place of residence of a person’ – meaning of ‘person’ – Watson v Commissioner for ACT Revenue not followed – Commissioner’s decision to disallow objection to imposition of land tax set aside – substituted by a decision to allow the objection

Legislation cited:        ACT Civil and Administrative Tribunal Act 2008 ss 48, 68

Land Tax Act 2004 ss 8A, 9, 10, 11, 11A, 11B, 11C, 11G, 11H, 17
Land Tax Amendment Act 2018

Legislation Act 2001, ss 137, 138, 139, 140, 141, 142, 160

Revenue Legislation Amendment Act 2019

Cases cited:Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41

Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55
Esso Australia Pty Ltd v Australian Workers Union [2017] HCA 4
Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28
Sztal v Minister for Immigration and Border Protection [2017] HCA 34
The Queen v A2; The Queen v Magennis; The Queen v Vaziri [2019] HCA 35
Watson v Commissioner for ACT Revenue [2020] ACAT 46

Texts cited:Dennis Pearce, Statutory Interpretation in Australia (LexisNexis, 9th ed, 2019)

Tribunal:  Senior Member M Orlov

Date of Orders:  16 September 2020

Date of Reasons for Decision:         16 September 2020

AUSTRALIAN CAPITAL TERRITORY          

CIVIL & ADMINISTRATIVE TRIBUNAL           AT 9/2020

BETWEEN:

EDWARD ELLIOTT

Applicant

AND:

COMMISSIONER FOR ACT REVENUE

Respondent

TRIBUNAL:     Senior Member M Orlov

DATE:16 September 2020

ORDER

The Tribunal orders that:

  1. The decision under review is set aside and substituted by a decision to allow the applicant’s objection to the imposition of land tax for the quarter commencing 1 April 2019 on the parcel of land identified as Unit 55 Block 15 Section 9 Campbell.

  2. The respondent pay the amount of $359.50 to the applicant for the filing fee.

    ………………………………..

    Senior Member M Orlov

REASONS FOR DECISION

Synopsis

  1. This application is for review of a decision by the delegate of the Commissioner for ACT Revenue (Commissioner) to disallow Mr Elliott’s objection to an assessment of land tax on a home unit he purchased in Campbell to occupy as his principal place of residence. For reasons that follow, the decision under review is set aside and substituted by a decision upholding Mr Elliott’s objection.

Background

  1. The facts are not in dispute.[1]

    [1]    Statement of agreed facts filed on 10 July 2020 and statutory declaration of Edward Elliott dated and filed on 10 July 2020 and admitted into evidence without objection.

  2. Mr Elliott entered into a contract to purchase the property on 1 March 2019. The property was tenanted at the time. Before entering into the contract, Mr Elliott informed the vendor’s agent that he intended to live in the property and asked if the tenancy could be ended. In early March, the vendor’s agent informed Mr Elliott that the tenant had found alternative accommodation and would be moving out at the end of the month. The tenant vacated the property on 31 March 2019. Mr Elliott settled the purchase on 3 April 2020 and commenced to occupy the property as his principal place of residence on or around that date. He became registered as the proprietor on 2 May 2019 and has continued to occupy the property as his principal place of residence since then.

  3. A notice of arrears of land tax, including interest to 15 September 2019, was issued to Mr Elliott on 5 September 2019 in the amount of $681.18 in respect to the quarter commencing on 1 April 2019. It appears that earlier notices issued to A.L. Ling of Homefinders Real Estate, who I presume was the vendor’s managing agent, did not come to Mr Elliott’s attention.

  4. Mr Elliott lodged an objection to the assessment on 11 September 2019.

  5. On 28 February 2020, Mr Elliott received notice of the Commissioner’s decision disallowing the objection.

  6. Mr Elliott filed this application for review on 6 March 2020.

The issue

  1. Mr Elliott claims that that the property is exempt from land tax for the quarter commencing on 1 April 2019 pursuant to section 11C(1)(b) of the Land Tax Act 2004 (LTA) as in force at the time.[2]

    [2]    Republication 26 applies to the period from 28 March 2019 to 9 December 2019

  2. At the relevant time, section 11C provided:

    (1)     This section applies if­ –

    (a)a person becomes the owner of a parcel of land for occupation as the principal place of residence of the person; or

    (b)a parcel of land stops being rented so it can be occupied as a principal place of residence by a person.

    (2)     The parcel of land is exempt from land tax for the 1st quarter after the date –

    (a)for subsection 1(a) – the person became the owner of the parcel; or

    (b)for subsection 1(b) – the parcel stopped being rented.

    (3)     Subsection (2) does not apply if the parcel of land is –

    (a)not occupied as the principal place of residence of the person within 3 months after the date –

    (i)the person became the owner of the parcel; or

    (ii)the parcel stopped being rented; or

    (b)rented by a tenant, other than the vendor of the parcel of land under a rental arrangement with the person for not longer than 3 months.

  3. The issue I have to decide is whether the circumstances in which Mr Elliott purchased and entered into occupation of the property as his principal place of residence meet the requirements for the property to be exempt from land tax under section 11C. That involves first, determining the meaning of the section and second, applying the section to the facts of this case.

The parties’ approach to the issue

  1. Both parties framed the issue for decision differently, focussing on the meaning of the word ‘person’ in section 11C(1)(b). Mr Elliott submitted that the question for determination is whether he is a ‘person’ within the meaning of section 11C(1)(b) as it stood at the time.[3] The Commissioner submitted that the meaning of the word ‘person’ in section 11C(1)(b) determines whether or not the relevant tax liability arose.[4]

    [3]    Submissions of the applicant filed on 10 July 2020 at [1]

    [4]    Submissions for the respondent filed on 24 July 2020 at [4]

  2. This approach to the issue stems from a recent decision of the tribunal in Watson v Commissioner for ACT Revenue (Watson)[5] in which the tribunal decided that ‘person’ in section 11C(1)(b), as it stood at the relevant time, means ‘owner’ as defined in the Dictionary of the Act.

    [5] [2020] ACAT 46

  3. Both parties made detailed written submissions about the correctness of the decision in Watson. Mr Elliott submitted that the decision was clearly wrong and I should not follow it.[6] The Commissioner submitted that the reasoning and outcome in Watson accords with settled principles of statutory construction and that, although I am not bound by the decision, I should follow it as a matter of comity.[7]

    [6]    Submissions of the applicant filed on 10 July 2020 at [4]

    [7]    Submissions for the respondent filed on 24 July 2020 at [5] to [8]

  4. The decision in Watson is the only decision of the tribunal on the meaning of section 11C(1)(b) and is currently on appeal. The Commissioner accepted that considerations of comity have less force in those circumstances.[8] The Commissioner submitted that I should nevertheless adopt the reasoning of the tribunal in Watson.

    [8]    See also the discussion in Dennis Pearce, Statutory Interpretation in Australia (LexisNexis 9th ed, 2019)  at [1.12], [1.13]

  5. The tribunal in Watson considered that section 11C(1)(b) gives rise to a constructional choice between two possible meanings of ‘person’ – namely, ‘any person’ as the applicant submitted, or ‘owner’ as the Commissioner submitted.[9] The parties agreed, and the tribunal accepted, that the meaning of ‘person’ is ambiguous. The tribunal considered “that on a literal reading, both interpretations put forward by the parties are plausible and neither interpretation is superior”.[10] Ultimately, the tribunal concluded that the context and purpose of the LTA and reference to extrinsic materials favoured the Commissioner’s interpretation that ‘person’ in section 11C(1)(b) means ‘owner’.

    [9] [2020] ACAT 46 at [40]-[42]

    [10]   At [45]

  6. I discuss the reasoning in Watson later in these reasons. However, Watson is not the starting point for working out the meaning of section 11C.

The correct approach to working out the meaning of section 11C

  1. In the ACT the meaning of legislation must be worked out in accordance with Chapter 14 of the Legislation Act 2001. Although Chapter 14 is not a comprehensive statement of the law of interpretation applying to an Act and assumes that common law presumptions operate in conjunction with the chapter,[11] it nevertheless governs the approach that must be taken to working out the meaning of an Act.[12] Section 140 is the starting point. It requires that in working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole. Section 141 provides that in working out the meaning of an Act, material not forming part of the Act may be considered. Section 142 identifies material not forming part of the Act that may be considered.

    [11] Section 137

    [12] Section 138

  2. Section 139 is important also. It provides that, in working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation. The section operates on the premise that, in working out the meaning of the Act in any particular case, more than one meaning may be (and often is) available, giving rise to what has come to be referred to as a “constructional choice” between one or more possible meanings.[13]

    [13]   Sztal v Minister for Immigration and Border Protection & Anor [2017] HCA 34 at [37]-[39] (Gageler J) and Esso Australia Pty Ltd v Australian Workers Union [2017] HCA 54 at [71] (Gageler J). See also Dennis Pearce, Statutory Interpretation in Australia (LexisNexis 9th ed, 2019)at [2.1] and [2.13]

  3. Chapter 14 reflects the modern approach to statutory interpretation at common law. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT), Hayne, Heydon, Crennan and Kiefel JJ stated:[14]

    This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of the legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.

    [14] [2009] HCA 41 at [47]. See also Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 at [69]-[71]

  4. In Commissioner of Taxation v Consolidated Media Holdings Ltd the High Court stated, after referring to the passage from Alcan extracted above:[15]

    So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

    [15] [2012] HCA 55 at [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ). See also Sztal v Minister for Immigration and Border Protection & Anor [2017] HCA 34 at [14]; The Queen v A2; The Queen v Magennis; The Queen v Vaziri [2019] HCA 35 at [31]-[37] (Kiefel CJ and Keane J)

  5. In Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, the High Court stated:[16]

    The duty of courts is to give effect to the meaning of statutory words as intended by Parliament. In common with how all speech acts are understood, the meaning is that which a reasonable person would understand to have been intended by the words used in their context. One presumption, or inference, based on common experience of legislative acts, is that when Parliament uses words with a common or ordinary meaning then the words are intended to bear that ordinary meaning. That presumption also reflects the expressed goal of parliamentary drafting for clarity and familiarity in order to ensure the transparency and intelligibility of statute law. That presumption can be further reinforced by another presumption, that words repeated in a statute are used with the same meaning.

    [16] [2020] HCA 29 at [95] (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ)

  6. I approach the task of working out the meaning of section 11C on the basis of the preceding summary of the applicable principles.

The statutory context

  1. The imposition of land tax is governed by Part 2 of the LTA. In broad terms, pursuant to sections 8A and 9, land tax is imposed on all residential land on the first day of each quarter unless the land is exempt from land tax on that date under section 10 or 11. Pursuant to section 17, the owner of the land is liable to pay the land tax, whether the amount became payable before or after the person became the owner.

  2. Except for subsection 10(1), the other exemptions under section 10 and 11 are not presently material.

  3. Section 10(1) provides:

    (1)     The following parcels of land are exempt from land tax imposed under section 9:

    (a)a parcel of land if exempted under the following provisions:

    (i)section 11A (Principal place of residence exception)

    (ii)section 11B (Moving out of principal place of residence)

    (iii)section 11C (Moving into principal place of residence)

    (iv)section 11D (Exemption after death of owner)

    (v)section 11G (Exemption for life tenant)

    (vi)section 11H (Exemption if nil or nominal rent paid)

    (vii)section 11I (Exemption if land becomes unfit for occupation)

  4. Sections 11A, 11G and 11H are important. Collectively, they define the circumstances in which occupation of a parcel of land as the principal place of residence of a person will result in the land being exempt from land tax.

  5. Section 11A exempts a parcel of land from land tax if, on the first day of the quarter, it is occupied as the principal place of residence of one or more ‘owners’ of the parcel.

  6. ‘Owner’ of a parcel of land is defined in the Dictionary of the LTA to mean:

    (a)     the registered proprietor of an interest in the parcel (other than an interest in a lease granted by a person other than the Territory or the Commonwealth); or

    (b)     if the registered proprietor has sold the interest to another person (the new owner) and the new owner is in possession of the parcel but has not yet registered as the proprietor – the new owner; or

    (c)     a mortgagee in possession of the parcel; or

    (d)     a person holding the parcel under a sublease from the Territory, if the Territory holds the parcel under a lease from the Commonwealth; or

    (e)     for a parcel held under a land sublease – the sublessee.

  7. Notably, a new owner – i.e. a person to whom the registered proprietor has sold an interest in a parcel of land – who has not yet become registered as the proprietor, is not an ‘owner’ within the meaning of the LTA unless the new owner is in possession of the parcel.

  8. Section 11G exempts a parcel of land from land tax if, on the first day of the quarter, the parcel is owned by someone other than a corporation or trustee and is occupied as the principal place of residence of a person having a life or term interest in the parcel under a will, provided the parcel is not rented to the person.

  9. Section 11H exempts a parcel of land if, on the first day of the quarter, the parcel is owned by someone other than a corporation or trustee and is occupied by a person who is liable to pay an amount that is no more than the total amount required for rates, repairs, maintenance and insurance in relation to the parcel, or pays no rent for the parcel.

  10. Summarising the effect of these provisions, residential property is exempt from land tax payable for a quarter if, on the first day of the quarter, the property is occupied as the principal place of residence of a person:

    (a)who is an ‘owner’; or

    (b)who has a life or term interest in the property under a will and is not paying rent; or

    (c)who is liable to pay no more than is necessary to cover the cost of rates, repairs, maintenance and insurance on the property; or

    (d)who pays no rent.

  11. In the case of a person to whom (b), (c) or (d) applies, there is an additional requirement that the property is owned by someone other than a corporation or a trustee.

  12. The transitional arrangements when an ‘owner’ moves out of, or a ‘person’ moves into, a parcel of land as their principal place of residence are governed by sections 11B and 11C.

  13. Section 11B provides that the parcel of land is exempt from land tax for the first quarter after the date the owner stops occupying the parcel as the principal place of residence.

  14. Section 11C applies if either of the circumstances in subsection (1)(a) or 1(b) is present. I refer to these as the first and second limb of section 11C.

  15. The first limb applies where a person becomes the owner of a parcel of land for occupation as the principal place of residence. The parcel is exempt from land tax for the first quarter after the person becomes the owner, unless one of the exceptions in subsection (3) applies. Pursuant to subsections (3)(a)(i) and 3(b), the exemption under subsection (2)(a) does not apply if the new owner does not occupy the parcel as the principal place of residence within three months after the date the person becomes the owner, or the parcel is rented to a tenant, other than the vendor under a rental arrangement for not longer than three months.

  16. The second limb applies where a parcel of land stops being rented so it can be occupied by a person. The parcel is exempt from land tax for the first quarter after the parcel stopped being rented, unless one of the exceptions in subsection (3) applies. Pursuant to subsections (3)(a)(ii) and 3(b), the exemption under subsection (2)(b) does not apply if the person does not occupy the parcel as their principal place of residence within three months after the date the parcel stopped being rented, or the parcel is rented to a tenant, other than the vendor under a rental arrangement for not longer than three months.

Contextual analysis of the second limb of section 11C

  1. Whether a parcel of land is exempt from land tax for a particular quarter under the second limb of section 11C, depends on the answers to the following questions. The questions arise from a plain reading of the text.

    (a)Did the parcel of land stop being rented so it can be occupied by a person?

    (b)On what date did the parcel stop being rented?

    (c)Did the person occupy the parcel as the principal place of residence within three months after the date the parcel stopped being rented?

    (d)Is the parcel rented by a tenant?

    (e)If it is rented, is the tenant the vendor of the parcel under a rental arrangement with the person for no longer than three months.

  2. ‘Person’ does not have a defined meaning in the LTA. Section 160 of the Legislation Act 2001 provides that a reference to a ‘person’ in an Act generally includes a reference to a corporation as well as an individual. However, only an individual can occupy a parcel as a principal place of residence. It is clear that wherever ‘person’ appears in section 11C, the word refers to an individual only.

  1. That limitation aside, ‘person’ must take its meaning from the context in which it appears.

  2. Clearly, in subsections (1)(a), 2(a) and 3(a)(i), ‘person’ means a person who becomes the owner of the parcel of land for occupation as the principal place of residence of the person before the commencement date of the relevant quarter.

  3. However, in subsection (1)(b) ‘person’ is used in a different sense, as I will explain. ‘So’ or ‘so that’ is commonly used to introduce a purpose. In subsection 1(b) ‘so’ means ‘in order that’ or ‘with the intention that’. The second limb of section 11C applies where a parcel, which is rented to a tenant, stops being rented ‘in order that’ or ‘with the intention that’ a ‘person’ can occupy the parcel as the person’s principal place of residence. The ‘person’ is the individual who is the intended beneficiary of the act of stopping the parcel from being rented. The identity of the ‘person’ intending to occupy the parcel as the principal place of residence must be known on the date the parcel stops being rented and the purpose of stopping the parcel from being rented must be to enable the person to do so.

  4. If that condition is met, the parcel is exempt from land tax for the first quarter after the parcel stopped being rented under section 11C(2)(b), unless the exemption does not apply because of an exception in subsection (3).

  5. The exception in subsection 3(a)(ii) applies where the ‘person’ in subsection 1(b) does not occupy the parcel as their principal place of residence within three months after the date the parcel stopped being rented.

  6. The exception in subsection 3(b) applies where the parcel is rented by a tenant, other than the vendor of the parcel under a rental arrangement with the person in subsection (1)(b) for not longer than three months.

  7. I have summarised the effect of sections 11A, 11G and 11H earlier in paragraph [32]. It is apparent that the ‘principal place of residence’ exemption applies more broadly than simply where an owner occupies the property as their principal place of residence. A property which is occupied rent free by a person as their principal place of residence (whether the person is a relative or friend of the owner, or simply a person who the owner is content to allow to live in the property), or for which the person is liable to pay only the cost of rates, repairs, maintenance and insurance, is exempt from land tax. A property that is occupied rent free by a life tenant under a will is exempt from land tax also.

  8. When the meaning of section 11C is considered in that context, in my opinion the meaning is clear. The evident intention is to provide for the ‘principal place of residence’ exemption to apply to property that stops being rented so that a person can move into the property as their principal place of residence, where the result of the person moving in will be to make the property exempt from land tax under sections 11A, 11G or 11H.

  9. Subject to the exceptions in subsection 11C(3), the exemption from land tax under the second limb of section 11C is available where, on the date the parcel of land stops being rented, the ‘person’ for whose benefit the parcel stops being rented, is:

    (a)the, or an, ‘owner’ of the parcel of land who intends to occupy the parcel as the owner’s principal place of residence; or

    (b)a person who has settled the purchase of the parcel of land intending to occupy the parcel as the person’s principal place of residence, but who has not become registered as the proprietor and does not subsequently, before the first day of the next quarter, enter into possession of the property so as to become the ‘owner’ of the parcel;[17] or

    (c)a person who has entered into a contract to purchase the parcel of land intending to occupy the parcel as the person’s principal place of residence, but who has not settled the purchase; or

    (d)a person who has a life or term interest in the property under a will, who intends to occupy the parcel as the person’s principal place of residence; or

    (e)a person who intends to occupy the parcel as the person’s principal place of residence and who will be liable to pay only the cost of rates, repairs, maintenance and insurance on the property; or

    (f)a person who intends to occupy the parcel as the person’s principal place of residence rent free.

    [17] In contrast, where a person settles the purchase of a parcel before the date the parcel stops being rented so as to enable them to occupy the premises as their principal place of residence, and the person subsequently enters into possession of the parcel before becoming registered as the proprietor, the person becomes the ‘owner’ of the parcel on the date they enter into possession. In that case the exemption under section 11C(2)(a) applies.

  10. In reaching that view, I have given careful consideration to the extrinsic materials referred to in Watson and by the parties in their written submissions.

  11. Sections 11A to 11I were inserted by the Land Tax Amendment Act 2018. The tribunal in Watson referred to the following statement in the Explanatory Statement for the Land Tax Amendment Bill 2018.[18]

    This Bill changes the way land tax is imposed on residential land. It introduces a ‘principal place of residence’ test as the primary determinant of liability for land tax in place of a ‘rented’ test.

    Residential land which is an owner’s principal place of residence will be exempt from land tax. Any other residential land will be subject to land tax including properties left vacant by an owner. This acts as a financial incentive for owners to put their properties into the rental market rather than leaving them vacant for long periods of time.

    Exceptions will be introduced in certain circumstances: for owners moving in or out of a principal place of residence… [Emphasis added]

    [18] [2020] ACAT 46 at [38]

  12. The tribunal in Watson summarised the Commissioner’s submissions as follows:[19]

    The respondent contended that the purpose of the LTA is stated in the Explanatory Statement to the Land Tax Amendment Bill, which is to impose land tax on properties that are not being occupied by an owner as their principal place of residence. Only land which is the owner’s principal place of residence is exempt from land tax. The purpose of the Act encourages an interpretation of the word ‘person’ in section 11C(1)(b) as referring to an ‘owner’. The explanatory Statement makes it clear that the legislature intended for the exception in section 11C to apply only to owners moving in and out of a principal place of residence, not to any and all people.[Emphasis added]

    [19] [2020] ACAT 46 at [37]

  13. The Commissioner made a similar submission in this case:[20]

    The relevant purposes of the Act are to raise revenue and to impose land tax on properties that are not being occupied by an owner as their principal place of residence. Only land which is the owner’s principal place of residence is exempt from land tax. The purpose of the Act thus supports the interpretation of the word ‘person’ in s 11C(1)(b) as referring to an ‘owner’. [Emphasis added]

    [20]   Submissions of the respondent filed on 24 July 2020 at [11]

  14. The tribunal in Watson was persuaded that the contextual meaning of ‘person’ in section 11C(1)(b) was limited to an ‘owner’ having regard to the context and purpose of the Act and the extrinsic materials.[21]

    [21] [2020] ACAT 46 at [42], [55]

  15. I am respectfully unable to agree. First, I do not accept that the meaning of ‘person’ in section 11C(1)(b) is ambiguous for the reasons I have explained earlier. Second, the statement in the Explanatory Statement to the effect that, apart from an owner’s principal place of residence, “any other residential land will be subject to land tax” is inaccurate having regard to sections 11G and 11H. At most, the statements are a broad generalisation that do not illuminate the meaning of the statutory text. Consistent with the authorities on statutory interpretation to which I have referred earlier, the statements cannot be relied upon to displace the clear meaning of the statutory text.

  16. I have also had regard to the subsequent amendments to the LTA by the Revenue Legislation Amendment Act 2019, which substituted new sections 11B and 11C and inserted a new section 11CA into the Act.

  17. It is clear that the amendments restrict the operation of the former section 11C so as to limit the exemption to circumstances where a person moves into a property as their principal place of residence after becoming the owner of the property, or an owner moves into a property as their principal place of residence after the property stops being rented.

  18. The Explanatory Statement for the Revenue Legislation Amendment Bill 2019 (No 2) states that the purpose of the amendments is to “clarify the operation of section 11C of the Land Tax Act”. The tribunal in Watson considered that this carried considerable weight.[22] The Commissioner submitted in this case that the Explanatory Statement shows that the amendments did not alter, but merely clarified, the operation of the section.[23] I disagree. In my view, having regard to the clear meaning of section 11C, the contrary is the case.

Applying the facts of this case to the second limb of section 11C

[22] [2020] ACAT 46 at [57]

[23]    Submissions of the respondent filed on 24 July 2020 at [12]-[14]

  1. It is common ground that Mr Elliott did not become the ‘owner’ of the property until after 1 April 2019. The exemption under section 11C(2)(a) therefore does not apply for the quarter commencing on 1 April 2019.

  2. However, the uncontradicted evidence establishes that the property stopped being rented on 31 March 2019, so that Mr Elliott could occupy the property as his principal place of residence as soon as settlement happened a few days later. The circumstances satisfy subsection 11C(1)(b).

  3. As the date on which the property stopped being rented was before 1 April 2019, pursuant to subsection 11C(2)(b) the property is exempt from land tax for the quarter commencing on 1 April 2019.

  4. Mr Elliott commenced to occupy the property as his principal place of residence on 3 April 2019 and continues to do so. None of the exceptions in subsection 11C(3) apply to him.

  5. Accordingly, I find that the property is exempt from land tax for the quarter commencing 1 April 2019.

The result in Watson

  1. As the decision in Watson is under appeal and, in light of my conclusions about the meaning of section 11C, it is not necessary for me to say anything more about the reasoning in Watson. I note however, that in my view the result in that case is clearly correct, although not for the reasons stated by the tribunal.

  2. The applicant in Watson was the owner of a unit in Kingston that had been rented for a number of years, including in the quarter commencing on 1 July 2018. The tenant vacated the property on about 1 December 2018. The facts referred to in the decision are silent as to whether the tenant was asked to vacate, or simply decided to leave at the end of the term. The owner sold the property pursuant to a contract of sale dated 25 January 2019. The purchaser declared an intention to occupy the property as his principal place of residence. The sale settled on 20 February 2019 and the new owner moved into the property about a week later. The property remained vacant from when the tenant moved out until the new owner moved in.[24]

    [24] [2020] ACAT 46 at [5]

  3. Land tax was assessed on the property for the quarter commencing on 1 January 2019. The applicant’s objection against the assessment was disallowed and the applicant sought a review. The issue before the tribunal was whether the property was exempt from land tax for the quarter commencing on 1 January 2019 pursuant to the second limb of section 11C.

  4. As the earlier analysis shows, the second limb of section 11C would apply only if the property stopped being rented ‘so’ the property could be occupied as the principal place of residence of the new owner. The property stopped being rented on about 1 December 2018. The new owner entered into a contract to purchase the property more than seven weeks later. In the absence of evidence to the contrary, it is open to infer that the property remained vacant so that it could be sold with vacant possession. The fact that the purchaser, whose identity and existence was not known to the owner on the date when the tenant vacated the property, turned out to be a person who intended to occupy the property as his principal place of residence, was simply a coincidence. The purchaser could have been an investor who intended to continue renting the unit.

  5. The requirement in subsection 11(1)(b) that “the parcel stops being rented so it can be occupied as the principal place of residence by a person” is not satisfied by the facts in Watson because the evident purpose of the property being vacated, or left vacant after the tenant vacated, was to enable the owner to sell the property with vacant possession to an as yet unidentified purchaser, whose intentions with respect to occupying the property as their principal place of residence could not be known.

Conclusion

  1. For the abovementioned reasons, I consider that the decision under review should be set aside under section 68 of the ACT Civil and Administrative Tribunal Act 2008 and substituted by a decision to allow Mr Elliott’s objection to the imposition of land tax for the quarter commencing 1 April 2019 on the parcel of land identified as Unit 55 Block 15 Section 9 Campbell.

  2. As I have decided the application in Mr Elliott’s favour, it is appropriate that I should make an order under section 48(2)(a)(i) of the Act that the Commissioner pay Mr Elliott the filing fee for the application in the amount of $359.50.

    ………………………………..

    Senior Member M Orlov

    HEARING DETAILS

FILE NUMBER:

AT 9/2020

PARTIES, APPLICANT:

Edward Elliott

PARTIES, RESPONDENT:

Commissioner for ACT Revenue

COUNSEL APPEARING, APPLICANT

N/A

COUNSEL APPEARING, RESPONDENT

N/A

SOLICITORS FOR APPLICANT

N/A

SOLICITORS FOR RESPONDENT

ACT Government Solicitor

TRIBUNAL MEMBERS:

Senior Member M Orlov

DATE OF HEARING:

6 August 2020

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0