Greenish v Chief Commissioner of State Revenue

[2007] NSWADT 282

CITATION:	Greenish v Chief Commissioner of State Revenue [2007] NSWADT 282
DIVISION:	Revenue Division
PARTIES:	APPLICANT Brenda Margaret Greenish RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	076060
HEARING DATES:	28 September 2007
SUBMISSIONS CLOSED:	26 October 2007
DATE OF DECISION:	3 December 2007
BEFORE:	Verick A - Judicial Member
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 and anor (RD) [2003] NSWADTAP 50 Gupta v Chief Commissioner of State Revenue [2006] NSWADT 187 Oamington Pty Ltd (Receiver and Manager appointed) and anor v Chief Commissioner of Land Tax and anor (1997) ATC 5051 Stature Pty Limited v Chief Commissioner of State Revenue [2002] NSWADT 271
REPRESENTATION:	T Greenish, agent A Rider, barrister
ORDERS:	The objection decision under review is set aside and the matter remitted to the respondent to reconsider the objection taking into account the correct relevant taxing date and having regard to the provisions found in clause 6 of Schedule 1A to the LTM Act.

REASONS FOR DECISION

1 This is an application made pursuant to section 96 of the Taxation Administration Act 1996 (“the TA Act”) for a review of an objection decision made by the respondent in relation to an assessment issued under the Land Tax Management Act 1956 (“the LTM Act”) in respect of the 2005 land tax year against the applicant. The decision that the applicant seeks a review is the refusal by the respondent of a claim for a principal place of residence exemption in relation to a property owned by the applicant and situated at Ocean Shores, New South Wales (“the property”).

2 The factual background is not in dispute and has been usefully set out by the respondent in his written submissions as follows:

“3. The Applicant purchased the Property as unoccupied land on 4 November 2004 with the intention of building a dwelling on it which was to become her principal place of residence. As at 31 December 2004, the Applicant was the sole registered proprietor of the Property,

4. As at 31 December 2004, the Applicant was also the sole registered proprietor of land situated at … Cressy Road, Ryde, New South Wales (Cressy Road Property), which had been the Applicant’s (and her husband’s) principal place of residence since 1996.

5. In May 2005, the Applicant entered into a contract for the sale of the Cressy Road Property, which was completed on 22 July 2005.

6. Following the sale of the Cressy Road Property and pending completion of construction of the dwelling on the Property, the Applicant moved into rental accommodation.

7. Construction of the dwelling on the Property did not commence until late September 2005.

8. As at 31 December 2005, the Applicant resided in rental accommodation at … , Middle Pocket, New South Wales.

9. On 11 April 2006, the Applicant moved into the dwelling on the Property and from that time on, the Property became the Applicant’s principal place of residence.

The events leading to these proceedings

10. On 12 September 2005, the Respondent wrote to the Applicant enclosing a Land Tax Questionnaire (Questionnaire) and a “Land Tax 2005 Factsheet”.

11. The Applicant completed and returned the Questionnaire to the Respondent under the cover of a letter dated 26 September 2005. In that letter, the Applicant stated that she intended applying for an exemption from land tax for the property on the basis that she had bought the unoccupied land to build a house that was to be her principal place of residence, while she sold her existing principal place of residence.

12. On 10 May 2006, the Respondent issued a Land Tax Notice of Assessment to the Applicant in respect of the Property for the 2005 and 2006 Land Tax Years for the total amount of $1,384.00.

13. On 10 July 2006, the Applicant wrote to the Respondent objecting to the imposition of land tax on the Property (First Objection), essentially by repeating the reasons set out in her letter dated 26 September 2005 for her belief that the Property should be exempt from land tax.

14. The Applicant also stated in the First Objection that:

(a) she had relied upon information in a land tax fact sheet supplied by the Respondent and referred to the following extract:

“other exemptions include: - land intended as the owner’s principal place of residence: if you

a) have purchased unoccupied land where you intend to build your principal place of residence.”

(b) she relied on information which, according to one of the Respondent’s client services officers, was qualified,

(c) following a telephone discussion with the Office of State Revenue (OSR), she understood that the land tax liability arose because she held both properties at 30 June 2005 and that if she had bought the Property one month earlier and settled on the sale of the Cressy Road Property one month earlier, there would have been no land tax to pay; and

(d) in her opinion, it was clearly not the intention(Applicant’s emphasis) of the LTMA to catch persons such as herself who were clearly buying land to build on and use as their principal place of residence, as advised in the Respondent’s fact sheet.

15. On 19 September 2006, the Respondent wrote to the Applicant in response to the First Objection and allowed her objection on the basis that the Property was exempt from the imposition of land tax pursuant to clause 7 of Schedule 1A of the LTMA. At the same time, the Respondent issued an amended assessment and refund cheque for the land tax (plus interest) that the Applicant had paid in respect of the Property.

16. The Respondent subsequently reviewed its amended assessment for the Property and determined that it was erroneous. On 23 February 2007, the Respondent wrote to the Applicant to advise of her reassessed liability for the Property and issued an amended assessment for the Property for the Tax Year in the amount of $1,384.00 (Assessment). The Respondent informed the Applicant that her liability arose under subclause 7(3)(b) of Schedule 1A of the LTMA. The Respondent also informed the Applicant that she could apply to the Administrative Decisions Tribunal (ADT) if she was dissatisfied with the Respondent’s decision to reassess land tax on the Property for the Tax Year (Decision).

17. The Applicant filed an application in the ADT for a review of the Respondent’s Decision. The application stated that the reasons for seeking a review were:

“I received land tax assessment 10th May 2006. I objected to the assessment, but was advised I had not lodged an ‘official objection’, which I then did on 26th July 2006. This objection was accepted by OSR in their letter dated 19th September 2006. We have now received a new letter and notice for the same matter saying they have reviewed their decision of 19th September and changed their minds, without any new evidence.”
18. However, because the Decision was not a decision of the Respondent that had been the subject of an objection, a jurisdictional error arose under section 96 of the Taxation Administration Act 1996 (NSW) (TAA) in relation to competence of the ADT to hear the Applicant’s application for review. Following correspondence between the Applicant, the Respondent’s solicitor and the Respondent in relation to resolving this jurisdictional error, the Applicant lodged a formal objection to the Decision on 18 June 2007 (Second Objection), which the Respondent subsequently disallowed in a letter to the Applicant dated 28 June 2007 (Disallowance) on the grounds that the Property was not exempt from land tax under subclause 6(7)(a) and 7(3)(b) of Schedule 1A of the LTMA.

19. At the directions hearing in this matter on 8 August 2007, after the Respondent’s solicitor informed the ADT of the history of the matter and issue as to whether the ADT had jurisdiction to conduct a review under section 96 of the TAA, the ADT stated that it was satisfied that the problem had been rectified by the parties, thereby allowing the Applicant to proceed with the application for review, which was now deemed to be a review of Respondent’s Disallowance of the Second Objection (Application for Review).”

3 Against the factual background, the Tribunal at the hearing was concerned with the respondent’s powers to reassess the applicant after allowing her objection for the relevant land tax year for the same liability. The respondent was requested to submit written submissions to the following questions:

a. Does the respondent have the power under the LTM Act or the TA Act to reassess the land tax liability of a taxpayer in respect of a particular land tax year where the respondent has allowed an objection by the taxpayer against an earlier assessment for the same liability?

b. Does any issue of estoppel by conduct or representation arise in circumstances where the respondent has allowed an objection to a land tax assessment so as to preclude the respondent from issuing a further assessment for the same land tax liability?

c. Was the “new” land tax notice of assessment issued to the applicant on 23 February 2007 properly issued in the form it was, or does the applicable legislation require a land tax reassessment?

4 By the combined effect of sections 7, 8, and 9 of the LTM Act, land tax is levied each year on land value of all land in New South Wales owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied other than land which is exempt from taxation under the LTM Act.

5 In the relevant year, land used and occupied as the principal place of residence by the owner of the land was exempt under section 10(1)(r) of the LTM Act. Section 3(1) of the LTM Act defines a “principal place of residence” of a person as “the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person”.

6 Section 10 of the Act sets out various categories of land that enjoy exemption from land tax under the Act. So far as it is relevant in relation to the “principal place of residence exemption”, the exemption under section 10(1)(r) is in the following broad terms:

“10 Land exempted from tax

1.Except where otherwise expressly provided in the Act the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act:

…

(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A.”

7 The “principal place exemption” is fully expanded in clause 2 of Schedule 1A to the LTM Act, which relevantly for the land tax year under review, provided that:

“(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:
(a) a parcel of residential land, or

(b) a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986.

(2) Land is not used and occupied as the principal place of residence of a person unless:
(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or

(b) In any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence.

(3) If the owner of land is entitled to the exemption conferred by this clause, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner’s entitlement to the exemption.

(4) The exemption conferred by this clause is referred to as the principal place of residence exemption.”

8 “Residential land” is defined in clause 3 of Schedule 1A to the LTM Act as follows:

“(1) In this Schedule, residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adopted for residential purposes, other than a building or buildings:
(a) comprised of lots within a strata plan or residential units, or

(b) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner, or

(c) from any part of which income is derived.

(2) Land does not cease to be used and occupied as provided by subclause (1) by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the building are, designed, constructed or adapted.”

9 Clauses 6 and 7 of Schedule 1A relevant for purposes of this matter were, in the relevant land tax year, in the following terms:

“6 Concession for unoccupied land intended to be the owner’s principal place of residence

(1) If the Chief Commissioner is satisfied that the owner of unoccupied land intends to use and occupy the land solely as his or her principal place of residence, the owner is taken, for the purposes of the principal place of residence exemption, to use and occupy that land as his or her principal place of residence.

(2) This clause does not apply unless the Chief Commissioner is satisfied that:

(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, and

(b) if those buildings or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and

(c) the intended use and occupation of the land is not unlawful.

(3) This clause applies in respect of the assessment of a person’s ownership of land only in the period of:
(a) 2 tax years immediately following the year in which the person became owner of the land, or

(b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 2 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner’s intended use and occupation of the land are physically commenced on the land.

(4) The Chief Commissioner may extend the period in which this clause applies if satisfied that:
(a) there is a delay in the completion or, in a case referred to in subclause (3)(b), the commencement of the building or other works necessary to facilitate the owner’s intended use and occupation, and

(b) the delay is due primarily to reasons beyond the control of the owner.

(5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person’s ownership of the land to continue to so use and occupy the land for at least 6 months.

(6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.

(7) This clause does not apply in respect of land owned by a person if:

(a) the person or any member of the person’s family (within the meaning of clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or under this Schedule. or

(b) the person or any joint owner of the land owns land outside New South Wales that is the principal place of residence of the person or joint owner, or

(c) the land, or other land if combined with any adjoining land of which the person is an owner, is capable of having more than 2 residences or residential units lawfully built on it.

(8) For the purpose of this clause:

unoccupied land means land that is not being used or occupied for any purpose.

7 Concession for sale of former principal place of residence

(1) If the Chief Commissioner is satisfied that, on a taxing date (the relevant taxing date):

(a) a person is the owner of land ( the former residence ) that was the principal place of residence of the person on the relevant taxing date or was the principal place of residence of the person on the preceding taxing date, and

(b) the person is the owner of other land (the new residence) that is being or is intended to be used and occupied by the person as his or her principal place of residence,

both the former residence and the new residence are taken, for the purpose of the principal place of residence exemption, to be used and occupied by the person as the person’s principal place of residence on the relevant taxing date.

(2) This clause applies in respect of land owned by a person only if the Chief Commissioner is satisfied that:
(a) the former residence has not been used or occupied except as the person’s principal place of residence, and no income has been derived from the use or occupation of the residence, since the preceding 1 July, except:

(i) income derived from an excluded residential occupancy (within the meaning of clause 4), or

(ii) income derived under a lease or licence entered into by the purchaser under a contract for sale of the former residence for a period pending completion of the sale, and

(b) the person became the owner of the new residence within the period 6 months before the relevant taxing date, and

(c) since the person became owner of the new residence the new residence has not been used or occupied except:

(i) as the person’s principal place of residence, or

(ii) by a tenant under a lease entered into by the previous owner, and

(d) the person intends to dispose of the former residence within 6 months after the relevant taxing date.

(3) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person at the relevant taxing date, the exemption is revoked if:
(a) the person fails to dispose of the former residence within 6 months after the relevant taxing date, or such further period as may be approved by the Chief Commissioner, or

(b) the person is not actually using and occupying the new residence as his or her principal place of residence by the next taxing date immediately following the relevant taxing date.

(4) The effect of the revocation is that the principal place of residence exemption is taken not to have applied in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.

(5) For the purposes of this clause, a person disposes of a former residence if:

(a) the person ceases to be an owner of the former residence, or

(b) the person enters into an agreement for the sale of the former residence.”

10 Clause 12 of Schedule 1A provides that for “the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family”.

11 “Principal place of residence” of a person is defined in section 3(1) of the Act as “the one place of residence that is, among one or more places of residence of the person within or outside Australia, the principal place of residence of the person”. Clause 12 of Schedule 1A restricts the principal place of residence exemption to only one place of residence for all members of the same family.

12 In relation to the assessment powers of the respondent, the term “assessment” is defined in the LTM Act as follows:

“3 Definitions

…

assessment means an assessment or reassessment by the Chief Commissioner under Part 3 of the Taxation Administration Act 1996.”

13 The other provisions relating to the respondent’s assessment powers are set out in the TA Act which include the following relevant provisions:

“3 Definitions
(1) In this Act:

assessment means an assessment made by the Chief Commissioner under Part 3 of the tax liability of a person under a taxation law, and includes:

(a) a reassessment and a compromise assessment under Part 3, and

(b) an assessment by the Supreme Court or the Administrative Decisions Tribunal on an application for review.

…

9 Reassessment

(1) The Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer.

(2) A reassessment of a tax liability is to be made in accordance with the legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislation or non-legislative) made after that time.

(3) The Chief Commissioner cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability …

…
14 Notice of assessment, reassessment or withdrawal of assessment
(1) The Chief Commissioner may issue a notice of assessment (showing the amount of the assessment).

…

(3) If the Chief Commissioner makes a reassessment, the Chief Commissioner must issue a notice of assessment (showing the amount of the reassessment).

…

(5) The notice is to be in a form approved by the Chief Commissioner.”

Submissions

14 The applicant’s case is that she relied on a land tax fact sheet issued by the respondent which clearly stated that the principal place of residence exemption extended to “land intended as the owner’s principal place of residence: if you (a) have purchased unoccupied land where you intend to build your principal place of residence” and that the respondent is bound by this statement. The applicant also relied on the ground that it is not the intention of the LTM Act to “catch” people, such as the applicant, who are “clearly buying land to build on and use as their principal place of residence” and that the liability only arose because she held both properties as at 30 June 2005.

15 The respondent’s submission in relation to the “fact sheet” ground is that the statement relied upon by the respondent was, as stated in the fact sheet, subject to the qualification that the exemption for unoccupied land was only available “provided you do not own another property which is currently your exempt principal place of residence”. In any case the respondent, has submitted that liability to land tax is determined “strictly in accordance with the provisions of the LTMA (and related legislation, such as the TAA)” and in support of his submission cited the following observation made by the Appeal Panel of this Tribunal in Chief Commissioner of State Revenue v Aldridge and anor (RD) [2003] NSWADTAP 50 at paragraph 33 of the decision:

“… the [taxpayers] cannot be exonerated from liability to land tax by virtue of any reliance on [information] published by the Chief Commissioner that is misleading or incorrect. Reliance on a misleading or incorrect [publication] might be reasonable grounds for waiver of interest or penalties for late payment of land tax, but not the land tax itself.”

16 The respondent has also placed some reliance on the following statement by the Tribunal in Gupta v Chief Commissioner of State Revenue [2006] NSWADT 187 at paragraph 33:

“The impression that the applicants had that they were entitled to an exemption [based on a land tax information booklet] was ill founded and … as the onus is on the tax payer to ascertain the position, further enquiries ought to have been made as to their liability or whether they were entitled to an exemption”.

17 In relation to the second ground that the respondent was bound by his fact sheet statement, the respondent has submitted that “no estoppel can be effective against the operation of a statute” (see, for example, Oamington Pty Ltd (Receiver and Manager appointed) and anor v Commissioner of Land Tax and anor (1997) ATC 5051)”. Further reliance was placed by the respondent on the observations made by this Tribunal in Stature Pty Limited v Chief Commissioner of State Revenue [2002] NSWADT 271 at paragraphs 11 and 12.

18 In respect of the final argument that it is not the intention of the LTM Act to “catch” people, such as the applicant, who are “clearly buying land to build on and use as their principal place of residence” and that the applicant only became liable to land tax because she owned both properties as at 30 June 2005, the respondent has submitted that the property did not fulfil the requirements of the “principal place of residence exemption” from land tax under Schedule 1A of the LTM Act in the tax year and was therefore liable to land tax as assessed.

19 The above submission was further expanded by the respondent by examining in detail the relevant legislative provisions. In particular it was submitted that the applicant “contravened either of subclauses 7(3)(a) or (b) of Schedule 1A” and that the exemption was not available under subclause 6(7)(a) to the applicant “because the Applicant was entitled to have her actual use and occupation of the Cressy Road Property taken into account”.

20 In relation to the respondent’s assessment powers, the respondent in his written submissions has set out the legislative provisions, which permit the respondent to make a reassessment after allowing an objection to an assessment. It has been submitted that the combined effect of section 9 and 14 of the TA Act gives him the statutory power to make reassessments and in this matter he has correctly issued a reassessment in accordance with those powers. It has also been submitted that there are no grounds upon which a claim for estoppel might be based to prevent the respondent from making the reassessment.

Findings and reasons for decision

21 The three questions raised at the hearing were essentially to determine the reassessment powers of the respondent in circumstances where he has allowed an objection to an earlier assessment for the same liability. The Tribunal is satisfied that the combined effect of the relevant provisions of the LTM Act and the TA Act allow the respondent to make a reassessment notwithstanding that he has allowed an objection to an assessment for the same liability. There is no finality of an assessment upon the determination of an objection and the respondent has the power to make a reassessment within 5 years after the initial assessment of the liability arose under section 9 of the TA Act. The respondent has also correctly submitted that under section 14 of the TA Act the respondent in issuing a reassessment is only required to issue a new notice of assessment. In the present matter, whilst there is some justification on the part of the applicant to raise the issue of fairness in the respondent’s actions, the relevant provisions allowed the respondent to make the reassessment.

22 In relation to estoppel, the Tribunal agrees with the respondent that the doctrine of estoppel does not apply to prevent the respondent from making reassessments, including in the present circumstances. As observed by this Tribunal in Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271:

11 … the doctrine of estoppel does not apply to prevent the Chief Commissioner from attending to his statutory duties. It is well established that the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commonwealth Commissioner of taxation assessing tax pursuant to the statutory power so to do. (cf. Kitto J in Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 at 117 and approved by the High Court in several subsequent cases including Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466, Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 and Federal Commissioner of Taxation v Ryan (2000) 168 ALR 704). As stated by Hill J, very succinctly and unequivocally, in AGC(Investments) Ltd v FC of T 91 ATC 4180 at p.4195:
“ … there is no room for the doctrine of estoppel operating to preclude the Commissioner of Taxation from pursuing his statutory duty to assess tax in accordance with law. The Income Tax Assessment Act imposes obligations upon the Commissioner and creates public rights and duties, which the application of the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commissioner assessing pursuant to his duty so to do. The cases certainly support that view.”

23 The correct and accepted view is that no conduct or representation on the part of the respondent can operate as an estoppel against a statutory obligation placed on the respondent to make a land tax assessment. In the present matter the respondent has acted within his statutory powers found in the LTM and TA Acts to make the reassessment.

24 The above observations in relation to estoppel equally apply in relation to the applicant’s reliance on the fact sheet issued by the respondent for the land tax year 2005. In the fact sheet the respondent under the question “What is exempt from land tax?” had stated that:

“Other exemptions include:

land intended as the owner’s principal place of residence: if you

(a) have purchased unoccupied land where you intend to build your principal place of residence (your home), …”

25 When read in isolation of the relevant legislative provisions dealing with the “principal place of residence” exemption, the statement can be read in the manner the applicant has. But that gives very little comfort to the applicant as that statement neither binds the respondent nor is he estopped from making and issuing an assessment pursuant to his statutory powers. The respondent is entitled to apply the statutory provisions without regard to his fact sheets or other publications. In a sense, taxpayers expect that any information provided by the respondent in fact sheets should be accurate and be relied upon. The respondent should take special care that the statements in his publications are correct and not misleading. Fact sheets and other guides issued by a revenue agency generally assist in the compliance of taxation laws by the taxpaying community in any self-assessing regime.

26 Having dealt with the preliminary issues, it is finally necessary to consider the substantive issue in this matter. The substantive issue is whether the respondent was entitled to impose land tax on the property for the 2005 land tax year. Essentially, the issue concerns the scope of clause 7 of Schedule 1A, which has been inserted in the LTM Act to provide a concession to an owner who disposes of his or her former residence and purchases a new residence to be used as his or her principal place of residence. In certain circumstances, both the former residence and the new residence are taken, for the purpose of the principal place of residence exemption, to be used and occupied by the person as the person’s principal place of residence on the relevant taxing date. If the sale and purchase is made in the circumstances set out in clause 7 both the former residence and the new residence are treated as exempt.

27 Generally speaking, only one property for each family is entitled to the principal place of residence exemption under the LTM Act. There is, however, an exception to this general rule under clause 7 which was inserted by the amendments made to the LTM Act by the State Revenue Legislation Further Amendment Act, 2003 which repealed the existing provisions at that time relating to the principal place of residence exemption found in the LTM Act and replaced them with a complete new code dealing with the principal place of residence exemption in Schedule 1A to the LTM Act.

28 The new Schedule 1A also introduced some changes to the exemption. In the Minister’s Explanatory Note to the State Revenue Legislation Further Amendment Act, 2003 it was noted, inter alia, that:

“… changes are made which:

(a) allow an owner to claim the exemption for 2 residences where the owner bought a new residence and is in the process of selling the existing residence, but the sale has not been completed at the taxing date (31 December), and

(b) remove certain restrictions for the current exemption for land on which a new family residence is being built or an existing residence is being refurbished, and

…

(e) allows each family, including dependents under 18, a concession for only one property, except when buying a new principal residence and selling their existing residence.”

29 The concession for two residences under clause 7 is effective from 31 December 2003 and applies in relation to the 2005 land tax year.

30 The provisions found in clause 7(2) apply where a person intends to dispose within six months after the relevant taxing date his former residence which has been only used as the person’s principal place of residence and acquires a new residence within the period of 6 months before the relevant taxing date and which after its purchase is only used as the person’s principal place of residence.

31 The respondent under subclause 7(3) can revoke the double concession. Subclause 7(3) provides as follows:

“If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person at the relevant taxing date, the exemption is revoked if:

(a) the person fails to dispose of the former residence within 6 months after the relevant taxing date, or such further period as may be approved by the Chief Commissioner, or

(b) the person is not actually using and occupying the new residence as his or her principal place of residence by the next taxing date immediately following the relevant taxing date.”

32 In this matter, the applicant purchased the property as unoccupied vacant land on 4 November 2004 with the intention of building a dwelling as her principal place of residence. On 31 December 2004, the applicant was also the owner of the Cressy Road property. The applicant entered into a contract on 2 May 2005 to sell the Cressy Road property and settlement occurred on 22 July 2005. The applicant, after the sale of the Cressy Road property, resided in rental premises until 11 April 2006 when she moved into the newly constructed dwelling on the property.

33 On the relevant taxing date, 31 December 2004, the applicant was the owner of her former residence and had purchased unoccupied land that was intended to be used and occupied as her principal place of residence, which for purposes of clause 7 was her “new residence”. The question for determination is whether both properties were entitled to the exemption under the provisions of subclauses 7(1) and (2) for the 2005 land tax year.

34 The respondent issued the first assessment for the land tax year 2005 on 10 May 2006. In the assessment the Cressy Road property was treated as exempt but the property at Ocean Shores as being taxable. The applicant objected against the assessment on the grounds that the property at Ocean Shores should also be exempt as it was purchased as unoccupied land where the applicant intends to build her principal place of residence.

35 The respondent allowed the applicant’s “First Objection” to the land tax assessment for the 2005 land tax year issued on 10 May 2006 in respect of the property on the grounds that the applicant had disposed of her former residence within 6 months as required by subclause 7(3) of Schedule 1A. There is no dispute that the disposal was within the period allowed by subclause 7(2). For the purposes of clause 7, a person disposes of a former residence if: (a) the person ceases to be an owner of the former residence, or (b) the person enters into an agreement for the sale of the former residence. The applicant entered into an agreement for the sale of her former residence on 2 May 2005 and that satisfied the requirement set out in paragraph (d) of subclause 7(2).

36 Subsequently, the respondent took the view that the applicant was not entitled to the concession for two residences, in particular the property, because the applicant had failed to satisfy the second requirement set out in paragraph (b) in subclause 7(3), that she had not actually used or occupied the new residence by the next taxing date following the relevant taxing date and issued on 23 February 2007 a reassessment of the property for the 2005 land tax year, which is the subject of this review.

37 The short question that the Tribunal needs to determine is whether the respondent was correct in taking the view that paragraph (b) of subclause 7(3) entitled the respondent to revoke the concession.

38 The respondent has largely relied on the factual background, that as at the relevant taxing date the applicant had not used or occupied the property as her principal place of residence, the respondent was entitled to revoke the exemption. The dwelling on the property was under construction on that date. In his letter to the respondent withdrawing the concession given to the applicant for the property for the 2005 land tax year stated that:

“Following our review, we are satisfied that …, Ocean Shores is your principal place of residence for the 2007 tax year and hence exempted under section 10(1)(r) of the Land Tax Management Act 1956 .

The Office has also reviewed your 2005 land tax assessment and found the concession applied to …, Ocean Shores was not correct. Schedule 1A, Clause 7(3) of the Land Tax Management Act 1956 states that if the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person at the relevant taxing date, the exemption is revoked if:

(a) the person fails to dispose of the former residence within 6 months after the relevant taxing date, or such further period as may be approved by the Chief Commissioner, or

(b) the person is not actually using and occupying the new residence as his or her principal place of residence by the next taxing date immediately following the relevant taxing date.

On the information available … Cressy Rd, Ryde was used and occupied as your principal place of residence as at 31 December 2004. Therefore, the property is exempt from land tax for the 2005 tax year.

As a result, you were not using and occupying …, Ocean Shores as at 31 December 2004, the exemption is revoked.”

39 From the above correspondence, it is clear, the respondent’s officer considered the applicant’s case by looking at the factual position on the wrong taxing date. The relevant taxing date should have been 31 December 2005, being the next taxing date immediately following the relevant taxing date, which was 31 December 2004. Instead, the respondent’s officer incorrectly took into account the factual situation as at 31 December 2004. In any case, on 31 December 2005, the property was not used or occupied by the applicant as her principal place of residence. To that extent the respondent was factually correct notwithstanding the fact that the officer had considered the position in relation to the incorrect taxing date.

40 However, the substantive error in the respondent’s objection decision was the respondent’s failure to take into account the provisions of clause 6 which provide a concession for unoccupied land intended to be the owner’s principal place of residence and which applied to the 2005 land tax year.

41 Under subclause 6(1) the owner of unoccupied land who intends to use and occupy the land solely as his or her principal place of residence is taken, for the purposes of the principal place of residence exemption under the LTM Act in particular Schedule 1A to the LTM Act, to use and occupy that land as his or her principal place of residence. The owner is deemed to actually use and occupy the unoccupied land as his or her principal place of residence for the 2 tax years immediately following the year in which the person became owner of the land. The 2 year period is generally the period allowed to the owner to complete building the new residence. There is, however, provision for the owner to seek an extension of the period. In certain circumstances, which are not relevant to this matter, the respondent is under subclause 6(4) allowed to extend the two years period.

42 The concession under subclause 6(2) is only available if the land is unoccupied because the owner intends to carry out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and if those buildings or other works have physically commenced on the land, no income has been derived from the use or occupation of the land, and the intended use and occupation is not unlawful.

43 The respondent has power to revoke the concession under subclause 6(5) which provides as follows:

“(5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person’s ownership of the land and to continue to so use and occupy the land for at least 6 months.”

44 Under subclause 6(6) the effect of the revocation is that the principal place of residence exemption is taken not to have applied to the unoccupied land in respect of any tax year to which, but for the revocation, it would have applied and the respondent is entitled to assess or reassess land tax liability for years to which the revocation applies.

45 It must also be noted that the concession under clause 6 is not available to an owner if the owner is entitled to have his or her actual use and occupation of other land taken into account under Schedule 1A (subclause 6(7)).

46 In the present matter, the applicant was entitled to the concession for unoccupied land under clause 6. The applicant satisfied the requirements set out in subclauses 6(2) and (3) on the 31 December 2005. No question of any revocation of the concession arose under subclause 6(5) in this matter as the applicant did occupy her new residence within the period allowed. There were no other disqualifying factors. As on 31 December 2005 the applicant was not entitled to have her use and occupation of any other land taken into account under Schedule 1A on 31 December 2005. She was on that date living in rental accommodation.

47 Accordingly, on 31 December 2005, the applicant was taken, under subclause 6(1) to use and occupy her new residence for the purposes of the principal place of residence exemption.

48 Therefore, when determining under subclause 7(3)(b) whether the applicant was actually using and occupying the new residence as her principal place of residence on 31 December 2005, the respondent was required to have regard to the deeming provisions found in Subclause 6(1). The respondent in his various correspondence and his submissions did not refer to the application of subclause 6(1) in this matter. On the information and evidence before the Tribunal, it is, however, clear that the applicant was entitled to the concession available to owners of unoccupied land under clause 6 and deemed under subclause 6(1) to actually use and occupy the property as her principal place of residence on 31 December 2005.

49 As the applicant was taken, under subclause 6(1), to have actually used and occupied the property on the next taxing date immediately following the relevant taxing date, the applicant satisfied the requirement set out in subclause 7(3)(b). The applicant was, accordingly, entitled to the principal place of residence exemption for the property under Schedule 1A for the 2005 land tax year.

50 In the absence of any consideration by the respondent of the application of clause 6 in relation to the requirement set out in subclause 7(3)(b) when making the objection decision and in his submissions to the Tribunal, the appropriate course in this matter is to remit this matter to the respondent for a proper reconsideration of this matter. The respondent needs to reconsider this matter, taking into account the factual position as at the correct relevant taxing date and having regard to the application of the provisions of clause 6, in particular subclause 6(1) when determining the requirement set out in subclause 7(3).

Order

The objection decision under review is set aside and the matter remitted to the respondent to reconsider the objection taking into account the correct relevant taxing date and having regard to the provisions found in clause 6 of Schedule 1A to the LTM Act.