GBL v Commissioner of State Revenue
[2021] QCAT 83
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
GBL v Commissioner of State Revenue [2021] QCAT 83
PARTIES: GBL (applicant)
v
COMMISSIONER OF STATE REVENUE (respondent)
APPLICATION NO:
GAR364-19
MATTER TYPE:
General administrative review matters
DELIVERED ON:
16 February 2021
HEARING DATE:
27 January 2021
HEARD AT:
Brisbane
DECISION OF:
Member Kanowski
ORDERS:
1. The decision of Commissioner of State Revenue, made on 29 July 2019, to disallow GBL’s objection to the land tax assessments for the financial years 2014/2015 to 2018/2019, is confirmed.
2. Publication of information that could identify the applicant or his wife is prohibited.
CATCHWORDS:
TAXES AND DUTIES – LAND TAX – LIABILITY FOR LAND TAX – OWNERS – GENERALLY – where taxpayer is registered proprietor of land – where taxpayer’s spouse made trustee under court order – where spouse’s trusteeship not recorded on land register – whether taxpayer is owner of land
TAXES AND DUTIES – LAND TAX – EXEMPTIONS – PRINCIPAL PLACE OF RESIDENCE – where taxpayer serving a long term of imprisonment – where taxpayer retains connection with pre-incarceration home – whether home exemption applies – whether home exemption for receiving care in place other than home applies
Land Tax Act 2010 (Qld), s 7, s 8, s 10, s 36, s 37, s 41
Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd (1999) 48 NSWLR 299
Koitaki Para Rubber Estates Limited v The Federal Commissioner of Taxation (1941) 64 CLR 241
Mattinson v Multiplo Incubators Pty Ltd [1977] 1 NSWLR 368
Minister for Immigration and Citizenship v Haneef (2007) 163 FCR 414R and Anor v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
S A Amos instructed by Office of State Revenue
REASONS FOR DECISION
Introduction
In this proceeding, ‘GBL’ seeks review of a decision of the Commissioner of State Revenue (‘the Commissioner’) on objection relating to land tax assessments. The assessments took into account real properties including:
(a)a property owned by GBL and his wife ‘MRL’ – ‘property A’; and
(b)a property owned by GBL solely – ‘property B’.[1]
[1]Properties A and B are, respectively, the second and first properties listed in the first table at Exhibit 2, 2.
In short, GBL argues that the Commissioner’s decision was wrong in that:
(a)he should not have been assessed as an owner of properties A or B because of the effect of interim court orders, appointing MRL as trustee, made in 2012 and 2016 in a family law proceeding; and
(b)alternatively, if he was properly regarded as an owner, he should for property A, or alternatively for property B, have had the benefit of the home exemption in section 41 of the Land Tax Act 2010 (Qld) (‘Land Tax Act’).
The review relates to assessments for the financial years 2014/2015 through to 2018/2019. A financial year begins on 1 July.[2]
[2]Acts Interpretation Act (Qld) 1954, Schedule 1 (definition of ‘financial year’) (‘Acts Interpretation Act’).
It is undisputed that property A was purchased as the matrimonial home of GBL and MRL in 2004. Further, GBL lived there with his family, apart from a short break from late 2011 to early 2012, until March 2014 when he was convicted of a serious offence.[3] He has been in gaol since then, serving a sentence. He will not be eligible to seek parole until 2035. Despite his absence from property A during the financial years in question, GBL contends that the home exemption under the Land Tax Act can extend for up to six years of absence. GBL submits that, alternatively, the home exemption could apply to property B.
[3]In submissions filed on 22 May 2020, GBL said he had occupied property A from 2006, but I assume this was a mistaken reference to 2004.
The written material before the tribunal, other than submissions, consists of:
(a)GBL’s amended application to review a decision filed on 27 February 2020 (exhibit 1);
(b)the bundle of documents (page-numbered 1 to 71) filed by the Commissioner under section 21(2) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) (exhibit 2); and
(c)the affidavit of Peter James Cross of the Office of State Revenue affirmed on 25 March 2020 (exhibit 3) – allowed as new evidence under section 71(3)(a) of the Taxation Administration Act 2001 (Qld) (‘Taxation Administration Act’).
The objection decision was made on 29 July 2019. The ground of objection was the one dealing with the home exemption. In the course of the proceeding before the tribunal, GBL was given permission, under section 71(2) of the Taxation Administration Act, to also rely on the additional ground relating to the court orders.[4]
[4]Tribunal Direction 2 made on 23 January 2020.
The tribunal’s role is to conduct a fresh hearing on the merits, and to produce the correct and preferable decision.[5] GBL as the applicant has the onus of proving his case.[6]
[5]QCAT Act, s 20.
[6]Taxation Administration Act, s 73.
Evidence and findings
The following facts are not in dispute, and I find:
(a)GBL and MRL were the registered proprietors of property A, as joint tenants, from 9 June 2004 to 11 June 2018;
(b)GBL was registered as the proprietor of property B at all material times;
(c)on 7 August 2012 the Federal Magistrates Court made interim orders by consent in relation to assets belonging to GBL and/or MRL including properties A and B;
(d)these orders included appointing MRL the trustee of various ‘items of property’[7] including properties A and B;
[7]Exhibit 3, 41.
(e)on 26 September 2016, the Family Court made further interim orders by consent, including that the terms of the 2012 order appointing MRL as trustee be varied by inserting the words:
PROVIDED THAT the property shall vest in the Wife as Trustee and she shall have the specific authority as trustee to execute transfer documents;[8]
(f)on 12 June 2018 the appointment of the Public Trustee of Queensland as manager of GBL’s estate, as a prisoner, was recorded on the title of property A, and the ownership was converted to a tenancy in common in equal shares held by GBL and MRL;
(g)on the same date, the appointment of the Public Trustee of Queensland as manager of GBL’s estate was recorded on the title of property B;
(h)on 7 August 2018 the Family Court made final orders by consent in the property proceeding;
(i)these included orders for GBL to transfer to MRL his interest in property A, and for GBL, provided certain conditions were met, to retain property B;
(j)on 6 September 2018 the transfer to MRL was registered on the title of property A;
(k)on 3 July 2019 the Family Court appointed MRL trustee for sale of property B;
(l)on 19 July 2019 an entry was made on the title of property B noting that appointment; and
(m)on 19 August 2019 a transfer of property B to a third party was registered on the title.
[8]Ibid, 48.
Some further details about the 2012 interim orders are relevant. In summary:
(a)GBL was restrained from encumbering, further encumbering, selling, transferring or otherwise dealing with the interests of himself and/or MRL in various assets including properties A and B, unless with the written consent of MRL;
(b)MRL was appointed, subject to the terms and conditions contained in the orders, as trustee of various items of property including properties A and B;
(c)unless otherwise agreed or ordered, MRL was to exercise the role of trustee in accordance with certain terms, including that she was to collect and call in the rental of property B and the rental of the granny flat, if occupied, of property A, and apply that income towards certain mortgages and outgoings;
(d)until further order, MRL was to have the sole right to use and occupy property A and its furniture and contents; and
(e)MRL was authorised to provide a copy of the interim orders to various persons including the Registrar of Titles and the Office of State Revenue.
The impetus for the 2016 interim court orders is not disclosed in the evidence.
The Commissioner points out, and I accept, that at no point during the relevant period (which runs up to 30 June 2018) did MRL have her trusteeship recorded on the title to the properties. The Commissioner observes, correctly, that even though there was no transfer to MRL as trustee, she could have lodged for registration a request to vest her interest as trustee: section 109 of the Land Title Act 1994 (Qld) (‘Land Title Act’). This is what she later did, in relation to her appointment as trustee for sale of property B.
GBL also says, in summary:
(a)property A was purchased with the intention of it being the home of himself and his wife and children;
(b)MRL continued to live at property A with children of their marriage during the tax years in question (and beyond);
(c)his personal belongings remained there;
(d)services such as telephone, electricity and gas remained connected in his name;
(e)his electoral enrolment remained there;
(f)in 2014, when he was transferred into the prison where he is currently held, he was required to state his principal place of residence, and he gave the property A address in response; and
(g)property A was put up for sale for a period in 2016 but MRL did not make much effort to sell it and it did not sell.
Some of these points were first made by GBL in submissions in the course of the proceeding before the tribunal, but I allow them as new evidence under section 71(3)(a) of the Taxation Administration Act. I consider this to be necessary in the interests of justice, bearing in mind that GBL would not have been aware earlier of all matters that might be relevant, and it appears that he did not have any legal assistance in preparing his objection.
The evidence of GBL summarised in paragraph 12 is uncontradicted. It appears credible, and I accept it.
Ground of objection relating to court orders
In his amended application to review a decision, GBL contends:
At the time the Land Tax was assessed on the Applicant’s properties [A and B] orders under the Family Law Act 1975 were in place that showed the applicant’s wife as sole trustee over the properties. The Applicant was only a beneficiary of a trustee, and had no rights at all as an owner.
GBL also points to the prohibition in the 2012 interim court orders on him selling or otherwise dealing with the properties. GBL says that had he been able to sell the properties, he would have done so, and no land tax liability could have arisen. He should not be assessed as an owner in these circumstances, he submits. GBL also notes that the 2012 orders allowed disclosure of the orders to the Registrar of Titles and the Office of State Revenue. He submits that this shows that the parties anticipated that the appointment of MRL as trustee would affect both land registration and land tax. GBL also emphasises that orders were made in August 2018 for property A to be transferred into MRL’s sole name, and that this was during the last of the financial years in question, 2018/2019.
In relation to GBL’s last point, however, I note that liability for land tax arises at midnight on 30 June immediately preceding the relevant financial year.[9] It is therefore the position as at 30 June 2018 which is relevant for the financial year 2018/2019.
[9]Land Tax Act, s 7.
The owner of taxable land when a liability for land tax arises is liable to pay the tax.[10] ‘Taxable land’ is defined as land in Queensland that has been alienated from the State for an estate in fee simple, and that is not exempt land.[11] Subject to whether property A or B is exempt land – to be considered under the second ground of objection – there is no question, and I find, that properties A and B are taxable land.
[10]Ibid, s 8.
[11]Ibid, s 9.
Section 10 of the Land Tax Act deals with ownership:
10 Meaning of owner
(1) The owner of land includes the following—
(a) a person jointly or severally entitled to a freehold estate in the land who is in possession;
(b) a person jointly or severally entitled to receive rents and profits from the land;
(c) a person taken to be the owner of the land under this Act.
(2) The fact that a person is the owner of land under a provision of this Act does not prevent another person also being the owner of the land.
(3) This section is subject to sections 12 to 14, 22 and 23.
It is desirable to first discuss the sections mentioned in section 10(3).
Section 12 deals with community title schemes, and its effect is that the body corporate is not treated as an owner. Instead, lot owners are treated as owners. This is relevant to property B, which is an apartment.
Section 13 provides that a mortgagee is not treated as the owner of land. This is uncontentious in the present case.
Section 14 deals with life estates. That situation does not arise in the present case.
Section 22 is to the effect that where land is co-owned, a co-owner is taken for land tax purposes to own their proportional share of the land. Joint tenants are treated as each holding equal interests. The operation of this section is also uncontentious in this case. GBL’s liability for land tax in respect of property A was levied in respect of a half interest.
Section 23 deals with deceased estates, and so it has no operation in the present case.
In relation to whether GBL was an owner as defined in section 10, the Commissioner’s submissions focus on property A, but similar considerations would apply in respect of property B. The Commissioner submits that GBL was the owner of property A under section 10(1)(a). The Commissioner submits that GBL was a person jointly or severally entitled to a freehold estate in the land who was in possession. The Commissioner submits, and I accept, that possession in this context does not connote physical occupation. Rather, it refers to a ‘present right of enjoyment, as distinct from a reversion, remainder or expectancy’.[12]
[12]Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd (1999) 48 NSWLR 299, 309.
The Commissioner also points to the land registration scheme under the Land Title Act. Section 37 of that Act says that ‘an indefeasible title for a lot is created on the recording of the particulars of the lot in the freehold land register’. The Commissioner submits that GBL had indefeasible title as a registered proprietor. The Commissioner also points out that MRL’s trusteeship was not recorded on the title during the period in question, as it could have been under section 109 of the Land Title Act.
Before considering those submissions, it is relevant to observe that on general principles, when a trust is created, the trustee has legal ownership of the property and the beneficiary has beneficial (also known as equitable) ownership. The interim court orders in the present case had the effect of making GBL the beneficiary of a trust. Accordingly, he would share in any increase or decrease in the value of the properties. However, his usual rights to deal with the properties were removed, and the trustee was required to deal with rental income for certain purposes.
Putting aside for the moment the registration system for land in Queensland, such splitting of legal and beneficial ownership would lead to questions about whether the land tax scheme is intended to tax the trustee of land, the beneficial owner, or both. It is noteworthy that there is specific provision for the assessment of trustees.[13] Further, the New South Wales scheme discussed in Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd[14] operated to make an equitable owner liable for land tax in only a secondary capacity. This might provoke questions about whether a similar arrangement should be implied in the Queensland legislation.
[13]For example in Land Tax Act, s 20.
[14](1999) 48 NSWLR 299, 305.
However, the land registration scheme in Queensland is a matter of compelling significance. The scheme confers indefeasible title on a registered proprietor. The fact that GBL was the registered proprietor of a half share in property A, and of the whole of property B, is sufficient to make him an owner of those properties under section 10(1)(a) of the Land Tax Act. The constraints placed on his dealings by the interim court orders does not alter that status, or provide an exemption.
Further, the fact that MRL might be classed as owner of the properties under section 10(1)(a) or (b) of the Land Tax Act does not mean that GBL cannot be classed as an owner. Section 10(2) envisages that a number of people can be classed as owners.
Accordingly, this ground of objection is not successful. Subject to any home exemption, GBL is properly treated as the owner of property B and a half-owner of property A for the financial years in question.
Ground of objection relating to the home exemption
GBL contends that he is entitled to the home exemption for property A or, failing that, for property B on the basis that he would have resided there if he had remained out of gaol and been unable to salvage the marriage.
The exemption in section 41 of the Land Tax Act applies to land ‘used as the person’s home’.[15]
[15]Land Tax Act, s 41(1)(b)(i).
Sections 36 and 37 of the Land Tax Act are relevant:
36 Land used as the home of a person
(1) Land is used as the home, of a person for a financial year, only if—
(a) that land, and no other land, has been continuously used by the person for residential purposes, whether alone or with another person, for the 6 month period (the 6 month residency period) ending when a liability for land tax arises for the financial year; or
(b) the land is taken to be used as the person’s home under section 37 or 38; or
(c) otherwise—the commissioner is satisfied the land is used as the person’s principal place of residence, whether alone or with another person, when a liability for land tax arises for the financial year.
(2) For deciding whether land is used as the person’s principal place of residence under subsection (1)(c), the commissioner may have regard to the following—
(a) the length of time the person has occupied a residence on the land;
(b) the place of residence of the person’s family;
(c) whether the person has moved his or her personal belongings into a residence on the land;
(d) the person’s address on the electoral roll;
(e) whether services such as telephone, electricity and gas are connected to the land;
(f) whether the person acquired the land with an intention to occupy a residence on the land as his or her principal place of residence;
(g) any other relevant matter.
37 Land taken to be used as a home—person who receives care
(1) This section applies to land, for a financial year, if—
(a) the person who owns the land received care for all or part of the 6 month residency period; and
(b) the person used the land for a qualifying residential use before the person started to receive care; and
(c) the person has used the land for a qualifying residential use continuously for a period of at least 6 consecutive months; and
(d) subsection (6) does not prevent the person from being taken to use the land as the person’s home under this section.
(2) For this section, the person receives care if the person—
(a) resides at a hospital as an inpatient; or
(b) receives residential care at a residential care service; or
(c) resides on other land that is not owned by the person and is under the care of someone else.
(3) The land is taken to be used as the person’s home for the financial year.
(4) However, subsection (3) does not apply if income was derived from use of the land during the 1 year period ending when the liability for land tax arises.
(5) Despite subsection (4), income may be derived from a lease, licence or other arrangement under which a person has a right to occupy the land, if—
(a) the right of occupation is for not more than 6 months in the 1 year period; or
(b) the income is not more than is reasonably required to cover the following—
(i) rates and other charges levied on the land by the local government for the land; and
(ii) maintenance expenses for the land.
(6)The maximum period for which the person may be taken to use the land as the person’s home under this section is 6 years from the end of the last period of at least 6 consecutive months during which the land was used by the person for a qualifying residential use.
(7) In this section—
qualifying residential use, of land by the owner of the land, means use of the land, and no other land, by the owner for residential purposes, whether alone or with another person.
residential care service see the Aged Care Act 1997 (Cwlth), schedule 1.
GBL contends that he was entitled to the home exemption for property A firstly on the basis that it remained his home. He contends that during the period in question property A was used by him for residential purposes, and should be treated as his principal place of residence, bearing in mind that:
(a)it had been purchased as the family home;
(b)he had occupied it as his home for several years;
(c)his family continued to live there;
(d)his possessions were there;
(e)services were connected in his name there;
(f)it was his address on the electoral roll; and
(g)he would have been staying there but for his incarceration.
GBL acknowledges that the 2012 interim court orders gave MRL the sole right to occupy property A. However, he points out that this did not preclude him from living there with MRL’s consent, and he did live there after the 2012 orders were made.
I accept that GBL retained significant ties with property A even after his incarceration, but I do not accept that it was used by him for residential purposes or that it should be treated as his principal place of residence. He was not merely temporarily absent. He was absent on a very long-term basis. The fact that his possessions and electoral enrolment remained there, and that services remained connected there in his name, must have been matters of convenience or inertia. They could not have reflected an expectation of a pending return. In my view, GBL’s residency was severed once he was convicted and remained in custody awaiting a lengthy sentence. As observed in Koitaki Para Rubber Estates Limited v The Federal Commissioner of Taxation: ‘the place of residence of an individual is determined … by reference to where he eats and sleeps and has his settled or usual abode’.[16] During the period in question, GBL’s place of residence was a gaol.
[16](1941) 64 CLR 241, 249.
Accordingly, property A was not used as GBL’s home under section 36(1)(a) or (c) of the Land Tax Act. The same applies for property B, with which GBL had even less residential connection.
The alternative basis for a home exemption pressed by GBL is that he was receiving care for the purposes of section 37 of the Land Tax Act. GBL contends that he was covered by section 37(2)(c): he resided on land (the gaol) that was not owned by him and he was under the care of someone else namely Queensland Corrective Services or, at times, Queensland Health. He says he remained entitled to the exemption for six years from early 2014, under section 37(6).
In response to submissions by the Commissioner that ‘care’ in section 37(2)(c) must refer to disability, medical, aged or similar care, GBL relies on dictionary definitions of ‘care’ which include supervise, look after, attend, provide for, and watch over. He also points out that he was in custody, and dictionary definitions of ‘custody’ include safekeeping, care, protection, supervision and incarceration. GBL submits that the relevant government agencies owe prisoners a duty of care, and so he is properly classified as being under the care of those agencies. GBL also submits that if Parliament intends to use a word in a particular way, different to ordinary usage, one would expect to see the word defined in the Act. GBL notes that there is no definition of ‘care’ in the Land Tax Act.
GBL submits that nothing in section 37(2)(c) confines ‘care’ to disability or similar care. GBL relies on the reservations expressed in Mattinson v Multiplo Incubators Pty Ltd[17]about the process of reading down general words by reference to accompanying particular words. I note that while that is not exactly the process advocated by the Commissioner, the process is similar in that the Commissioner contends that the meaning of ‘care’ in section 37(2)(c) should be confined by the apparent meaning of the same word used elsewhere in section 37(2).
[17][1977] 1 NSWLR 368, 373.
GBL also relies on the following observation:
The principle of legality means that common law rights will not be taken by a court to have been displaced by legislation save where the intention to do so is “expressed with irresistible clearness”.[18]
[18]R and Anor v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459, 471. Footnote omitted.
Similar remarks about encroachment on common law rights and freedoms, GBL notes, were made in Minister for Immigration and Citizenship v Haneef.[19]
[19](2007) 163 FCR 414, 442-444.
GBL submits that where alternative meanings are open, the one providing tax relief should be preferred.
However, GBL has not identified any authority for his implied proposition that there is a common law right to be taxed as minimally as possible, or some common law freedom from taxation. So I do not consider the comments about encroachment of common law rights and freedoms to be of real assistance.
As was observed in Mattinson v Multiplo Incubators Pty Ltd, ‘the meaning of particular words may, of course, be ascertained by reference to the meaning of words with which they are associated’.[20]
[20][1977] 1 NSWLR 368, 373.
The Commissioner submits that GBL is in the custody of the chief executive of Queensland Corrective Services, and that any legal duty of care owed to GBL by the State is merely a by-product of his imprisonment. The Commissioner submits that the meaning of ‘under the care’ in section 37(2)(c) of the Land Tax Act can be determined from the context of the preceding subsections. These make it apparent, the Commissioner submits, that care for disability or similar reasons is envisaged. Any ambiguity can be resolved, the Commissioner submits, by refence to the explanatory note to the bill for the Land Tax Act (as permitted by section 14B of the Acts Interpretation Act). The note says that section 37:
… provides the rules which apply to allow land to be taken to be used as the home of a person who is not in occupation because of illness or having to reside elsewhere to receive care.[21]
[21]Land Tax Bill 2010 Explanatory Note, 19.
I accept the Commissioner’s submissions on the meaning of ‘under the care’ in section 37(2)(c) of the Land Tax Act: that it refers to care required because of disability or similar need. The context strongly suggests that. It is not obvious why Parliament would have intended to extend the exemption to a person absent from their previous home because of imprisonment.
I find that GBL was not receiving care during the financial years in question for the purposes of section 37 of the Land Tax Act.
Accordingly, the home exemption did not apply to GBL.
Non-publication order
The tribunal may prohibit the publication of identifying information if necessary to avoid interfering with the proper administration of justice.[22] GBL and MRL were parties to family law proceedings. It has been necessary to discuss those proceedings in these reasons. Section 121 of the Family Law Act 1975 (Cth) creates a far-reaching prohibition on the identification of parties to such proceedings. In order to respect that prohibition, it is necessary to make a non-publication order in this case.
[22]QCAT Act, s 66.
Conclusion
As I have found that GBL was correctly assessed as the owner of a half share in property A, and as the owner of property B, and that the home exemption does not apply, the correct and preferable decision is to confirm the decision made on objection by the Commissioner.
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