Greendale Developments Pty Ltd v Commissioner of State Revenue
[2013] QSC 326
•29 November 2013
SUPREME COURT OF QUEENSLAND
CITATION:
Greendale Developments Pty Ltd v Commissioner of State Revenue [2013] QSC 326
PARTIES:
GREENDALE DEVELOPMENTS PTY LTD
ACN 128 279 425 AS TRUSTEE
(appellant)
v
COMMISSIONER OF STATE REVENUE(respondent)
FILE NO/S:
BS 6176 of 2011
DIVISION:
Trial Division
PROCEEDING:
General Civil Appeal
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
29 November 2013
DELIVERED AT:
Brisbane
HEARING DATE:
29 August 2013
JUDGE:
Philip McMurdo J
ORDER:
The appeal is dismissed.
CATCHWORDS:
TAXES AND DUTIES – LAND TAX – VALUATION – GENERAL PRINCIPLES – where the appellant owned three lots of land – where lots 1 and 3 were valued together and lot 2 was valued separately for the 2009 and 2010 financial years – where there was a single valuation of the three lots together for the 2011 financial year – where the appellant argued the taxable value of the land for the 2011 financial year should be averaged under s 18(1)(a) of the Land Tax Act 2010 – where the appellant argued the valuations used for the purposes of averaging should be the aggregate of the two valuations of the lots in 2009 and 2010 financial years and the valuation for the 2011 financial year – where the appellant alternatively argued that the taxable value of the land should have been capped under s 90 of the Land Tax Act 2010 – where the appellant argues that the unimproved value of the land for the financial year starting on 1 July 2009 is the aggregate of the two valuations of the three lots for that year – whether there was a valuation for the three lots together for the 2009 and 2010 financial years – whether s 18(1)(a) of the Land Tax Act 2010 applies – whether s 90 of the Land Tax Act 2010 applies
Land Tax Act 2010 (Qld), s 16, s 17, s 18, s 90
COUNSEL:
L D Bowden for the appellant
T W Quinn for the respondent
SOLICITORS:
Hillhouse Burrough McKeown Lawyers for the appellant
Legal Services Commercial Counsel, Queensland Treasury and Trade for the respondent
The appellant is the owner of three lots of land at Carindale in Brisbane. The appellant owns this land as a trustee under four trusts. Land tax has been assessed for the appellant’s ownership of the land. There are four assessments: one for each trust.
This is an appeal against each assessment, brought pursuant to s 70 of the Taxation Administration Act 2001 (Qld). The issues, which are the same for each assessment, are questions of the proper interpretation of the Land Tax Act 2010 (Qld) (“the LTA”).
By s 6 of the LTA, land tax is imposed on the “taxable value” of all “taxable land” for each financial year. This land is taxable land.[1] By s 7, a liability for land tax for a financial year arises at midnight on 30 June immediately preceding the financial year. The taxable value of land is defined by s 16, s 17 and s 18 of the LTA, which at the relevant time were in these terms:
[1]As defined in s 9.
“16 Taxable value
The taxable value, of land for a financial year, is the lesser of -
(a)the VOLA value of the land for the financial year; or
(b)the averaged value of the land for the financial year.
17 VOLA value
The VOLA value, of land for a financial year, is the value applicable for the land under VOLA when a liability for land tax arises for the financial year.
18 Averaged value
(1)The averaged value, of land for a financial year, is -
(a)if there are VOLA values of the land for the financial year and the previous 2 financial years - the amount that is the average of those 3 values; or
(b)otherwise - the amount equal to the VOLA value of the land for the financial year multiplied by the averaging factor for the year.
(2)For subsection (1), the averaging factor for a financial year is the number calculated to 2 decimal places using the following formula -
T
3V
where -
T means the total of the VOLA values, for the financial year and the previous 2 financial years, of all land for which there is or was a VOLA value for that year.
V means the total of the VOLA values of all land for which there is a VOLA value for the financial year.”
The “VOLA” is the Valuation of Land Act 1944 (Qld).
Section 19 of the LTA provides that all taxable land of a taxpayer is to be aggregated for the purposes of an assessment. Section 19(1) is as follows:
“19 General principle - taxable land is aggregated
(1)A taxpayer’s liability for land tax must be assessed on the total taxable value of all taxable land owned by the taxpayer when the liability arises.
Example-
An individual owns 2 properties that are both taxable land. The properties each have a taxable value of $500000. The taxpayer’s liability for land tax is worked out using the total taxable value of $1000000.”
The relevant facts about the valuations of one or more of the three lots are undisputed. Under the VOLA, as at 30 June 2008, lot 2 was valued at $4.4 million and lots 1 and 3 were valued together at $7.2 million. Those two values were unchanged as at 30 June 2009. However, as at 30 June 2010, the three lots were valued together under the VOLA and the valuation was $20 million. The subject assessments are for the year commencing 1 July 2010.
The appellant says that the facts required an averaging of values under s 18(1)(a) of the LTA. The aggregate of the values for the three lots, in each of the “previous two financial years”, was $11.6 million. Therefore the taxable value was to be the average of $11.6 million, $11.6 million (again) and $20 million.
The Commissioner assessed tax upon an amount calculated by applying s 18(1)(b). The “averaging factor”, it is undisputed, is .95. Therefore he assessed upon a taxable value of $19 million.
The Commissioner’s case is that the s 18(1)(a) was not engaged, because there were no “VOLA values of the land for … the previous 2 financial years”, there being no single valuation of the three lots together for those financial years.
If the appellant’s case about the operation of s 18 is not accepted, its alternative case relies upon the so-called “capping” provision of s 90 of the LTA, which at the relevant time was as follows:
“90Capping of taxable value of land for 2010-11 financial year
(1)This section applies to land for the financial year starting 1 July 2010 (the 2010-11 financial year) if -
(a)section 30 does not apply to the land for the 2010-11 financial year; and
(b)the land had an unimproved value, within the meaning of the repealed Act, that applied for the financial year starting on 1 July 2009 (the previous financial year); and
(c)the uncapped value of the land for the 2010-11 financial year is more than 150% of the relevant unimproved value of the land for the previous financial year.
(2)Despite section 16, the taxable value of the land for the 2010-11 financial year is the capped value of the land for the financial year.
(3)For section 81, the prohibited grounds include the ground that the relevant unimproved value of the land for the previous financial year is excessive if the underlying value, or each underlying value, is the value of the area or interest made or caused to be made by the chief executive under VOLA.
(4)In this section -
capped value, of land for the 2010-11 financial year, means 150% of the relevant unimproved value of the land for the previous financial year.
relevant unimproved value has the meaning given under the repealed Act, section 2.
uncapped value, of land for the 2010-11 financial year, means the lesser of -
(a)the VOLA value of the land for the financial year; or
(b)the averaged value of the land for the financial year.”
The “repealed Act” means the Land Tax Act 1915 (Qld), which was repealed by the LTA.[2]
[2]s 86 of the LTA.
That 1915 Act contained definitions as follows:[3]
[3]s 2.
“relevant unimproved value of land, for a financial year, means -
(a)if section 3G applies - the capped value of the land for the financial year; or
(b)otherwise - the lesser of the following -
(i)the unimproved value of the land that applies for the financial year;
(ii)the averaged unimproved value of the land for the financial year.
…
unimproved value see sections 3C and 3CA.”
Section 3C of the 1915 Act provided, in part, as follows:
“(1)In relation to unimproved land, unimproved value means the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require. …”
Section 72 of the VOLA provided that:
“72.(1) The valuation … of any land made under this Act shall be -
(a)the unimproved value of that land for the purposes of the repealed Land Tax Act 1915 …”
The appellant’s case is that s 90 was engaged, because “the land had an unimproved value, within the meaning of the repealed Act, that applied for the financial year starting 1 July 2009”. It says that “the land” was that which is the subject of the assessments and comprises the three lots. The unimproved value of that land, for the financial year starting 1 July 2009, was the total of the value under the valuation made under the VOLA for lot 2 ($4.4 million) and the value under the valuation made under the VOLA for lots 1 and 3 ($7.2 million). Therefore, the uncapped value of the land for the subject year was more than 150% of $11.2 million (if the averaging provision does not apply). Consequently, the assessments should have been upon the capped value, being 150 per cent of $11.2 million.
The Commissioner says that “the land”, being that which was the subject of the assessments, did not have an unimproved value within the meaning of the repealed Act for the previous financial year, again because there was no single valuation of the three lots together for that year.
Neither of these questions of construction has been considered in another case. And the relevant extrinsic material does not assist in the determination of these questions.[4]
[4]Explanatory notes, Land Tax Bill 2010; Queensland, Parliamentary Debates, Legislative Assembly, 23 March 2010, 955-6 (Andrew Fraser, Treasurer).
Reference should be made to some provisions of the VOLA. By s 13, the chief executive was required to “decide the unimproved value of the land to be valued for the Acts under which local authorities are established”. By s 37 of the VOLA, the chief executive was required to “make annually a valuation of all land in an area …”.
Section 34 of the VOLA provided, in part, as follows:
“34 Lands to be included in 1 valuation
(1)Unless the chief executive otherwise directs, there shall be included in 1 valuation -
(a)several parcels of land which adjoin, and are owned by the same person, and where either no part is leased or all the parcels are let to 1 person; or
(b)several parcels of land in the same area which do not adjoin but are worked as 1 holding and used exclusively for the purposes of farming, and are owned by the same person and which, if let, are all let to 1 person.
(2)However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships. …”
Section 35 provided, in part, as follows:
“35 Separate valuation
(1)Unless the chief executive otherwise directs -
(a)several parcels of land which are owned by the same person, but which are separately let to different persons, shall be separately valued; and
(b)lands which do not adjoin or which are separated by a public road, or are separately owned, shall be separately valued; and …”
For the 2008 and 2009 years, the parcels constituted by lots 1 and 3 were included in one valuation, consistently with s 34(1)(a). For the subject year, they were valued together with lot 2, apparently because the chief executive had so directed. The appellant does not suggest that this valuation of the three parcels together was ineffective under the VOLA or for the purposes of the LTA.
The averaging case
The taxable value in question is the value of “the land” for the relevant financial year. “The land” in this context is constituted by the three parcels. Indisputably, there was a VOLA value for that land: $20 million. In deciding the operation of s 18, again it is “the land”, constituted by the three parcels, which must be considered.
Section 18(1)(a) requires an averaging of “3 values”. Therefore, it is engaged only where it can be said that there is a “VOLA value” of “the land” for each of the previous two financial years.
Was there a VOLA value for the land in each of these years? According to s 17 of the LTA, that turns upon whether there was a “value applicable for the land under VOLA”.
The appellant’s case must be that the three parcels, considered together as “the land”, did have a value, which was the aggregate of the values fixed by the two valuations of respectively $4.4 million and $7.2 million.
Consistently with this argument, the entirety of a taxpayer’s property portfolio in Queensland would have a certain “VOLA value”, if each of the parcels within the portfolio had itself been valued under the VOLA.
That would seem to be inconsistent with relevant provisions of the LTA. If “the VOLA value” could be an aggregate of the values according to separate valuations, then the entirety of a taxpayer’s holdings might have a single taxable value. That would be inconsistent with s 19, which requires an aggregation of a number of taxable values to reach what it describes as the “total taxable value of all taxable land owned by the taxpayer”. That appears particularly from the example to s 19(1).[5]
[5]The example forming part of the provision: Acts Interpretation Act 1954 (Qld), s 35C(2).
A second and related point is that relevant provisions of the LTA appear to assume that at any point in time, certain land will have but one value under the VOLA. For example, s 18(1)(a) applies where there are, across three financial years, “three values” which can be averaged. It is not easy to accept that a certain piece of land could have a VOLA value and, at the same time, together with other properties have another VOLA value.
Where a taxpayer owns several properties, which are unrelated to each other in the sense that the value of any of them would not affect the value of any other, it would appear to strain the language to say that the parcels together have a “value”.
Further, the notion of having a “VOLA value” for a portfolio of unrelated properties could have consequences for the beneficial operation of the averaging provision, which could not have been intended. Take a case where “the land” in the subject year includes a parcel which did not exist in the previous years, so that there was no value for it (or for the parcel which included it) in those previous years. Section 18(1)(a) could have no operation in that case, notwithstanding substantial movements in the values of other properties in that portfolio over the three years.
It is submitted for the appellant that the averaging provisions should be given an interpretation which accords with what is said to be its evident purpose, namely to confer “a benefit or advantage in the form of a lower taxable value of the relevant land”. However, the provision must be given effect according to its terms. Clearly, the averaging provisions of s 18 would be more likely to benefit taxpayers rather than the Commissioner. But the intended benefits of these provisions are those which are provided by the terms of the statute.
In my conclusion, the Commissioner’s argument must be upheld. In terms of s 17, and therefore s 18, there was no VOLA value of the land, constituted by the three parcels, in either of the previous two financial years. Consequently, the Commissioner correctly declined to apply s 18(1)(a).
The capping case
Returning to s 90 of the LTA, as set out above, it should be noted that it was not said that s 30 applied. Therefore, the requirement in s 90(1)(a) is satisfied.
The question here is whether, in terms of s 90(1)(b), “the land had an unimproved value, within the meaning of the repealed Act, that applied for [the previous financial year]”.
Again, “the land” in this context is constituted by the three parcels. Did that aggregation have an unimproved value within the meaning of the repealed Act?
Section 72 of the VOLA provided that the valuation of any land under that Act should be the unimproved value of that land for the purposes of the repealed Land Title Act 1915. Therefore, lot 2 had a value, according to a valuation under the VOLA of $4.4 million. And lots 1 and 3 had a value, according to a valuation under the VOLA, of $7.2 million. However, the land constituted by the three parcels in aggregate had not been valued under the VOLA for the previous financial year. Therefore, there was no valuation of that aggregation which, by s 72 of the VOLA, was the unimproved value of that aggregation for the purposes of the repealed Land Title Act 1915.
Consequently, the appellant’s alternative case must also be rejected. The respondent was correct in not applying the capping provisions of s 90.
Conclusion
The appeal is dismissed. I will hear the parties as to costs.
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