Hussein v Chief Commissioner of State Revenue

[2025] NSWCATAD 202

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Hussein v Chief Commissioner of State Revenue [2025] NSWCATAD 202

Hearing dates:

25 February 2024

Date of orders:

12 August 2025

Decision date:

12 August 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

J Sullivan, Senior Member

Decision:

(1)   The assessments to land tax are confirmed.

(2) The premium component of interest in respect of the assessments is remitted to nil under s 25 of the Taxation Administration Act 1996 (NSW).

Catchwords:

TAXES AND DUTIES – Land tax – Principal place of residence (PPR) exemption – owner’s PPR one of two freestanding houses on the land – larger house leased to tenants - whether the concession in cl 4 of Sch 1A of the Land Tax Management Act 1956 (NSW) (LTMA) applied to exempt the whole of the land from land tax – whether the concession in cl 10B of Sch 1A of the LTMA applied where no application made under s 9C of the LTMA

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Land Tax Management Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Valuation of Land Act 1916 (NSW)

Cases Cited:

Agrinova v Chief Commissioner of State Revenue [2024] NSWCATAD 17

Agrinova v Chief Commissioner of State Revenue [2025] NSWCATAP 86

Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19

Clarke v Chief Commissioner of State Revenue [2009] NSWADT 184

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249

Haddad v Chief Commissioner of State Revenue [2011] NSWADT 17

Haddad v Chief Commissioner of State Revenue [2014] NSWCA 23

Haddad v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 35

Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54

Texts Cited:

Wolters Kluwer, Australian Land tax NSW Commentary, (online at 28 April 2025) at 5-212

Category:

Principal judgment

Parties:

Asif Mohammed Hussein (Applicant)

Chief Commissioner of State Revenue (Respondent)

Representation:

Self-Represented (Applicant)

Solicitors:
Crown Solicitor’s Office (Respondent)

Counsel:
S Hanscomb (Respondent)

File Number(s):

2024/00259929

Publication restriction:

None

REASONS FOR DECISION

1. The Applicant (Mr Hussein) applied for a review of the Respondent’s decision to assess him to land tax under the Land Tax Management Act 1956 (NSW) (“LTMA”) for land he owned in Bonnyrigg Heights in New South Wales (“Property”).

2. The assessments are for the 2019, 2020, 2021 and 2022 land tax years (“Relevant Years”).

3. This case concerns the application of the principal place of residence exemption in s 10(1)(r) and Sch 1A of the LTMA in circumstances where two standalone dwellings were located on the Property:

1. a “Smaller House” (sometimes referred to as a “granny flat”) which was used and occupied by the owner as his principal place of residence; and

2. a “Larger House” which was leased to tenants and not occupied by the owner.

4. The central question is whether the concession in cl 4 of Sch 1A of the LTMA (titled “Concession for land on which there is one other residential occupancy”) applies to exempt the whole of the land from land tax.

5. The Applicant, who was self-represented, also asked the Tribunal to consider, if a liability to land tax exists:

1. whether there is another basis for only the rented portion of the land to be assessed to land tax;

2. whether the Tribunal will remit or waive the land tax; and

3. whether the Tribunal will remit interest (which accrues on the assessments as no payment has been made).

Summary of this decision

6. The assessments to land tax in respect of each land tax year are correct.

7. First, the concession in cl 4 of Sch 1A does not apply to exempt the whole of the Property from land tax, because the Tribunal is bound by, and follows, the decision of the Court of Appeal in Haddad v Chief Commissioner of State Revenue [2014] NSWCA 23 (“Haddad”).

1. The reasoning of the Court of Appeal in that case confirms that, for the purpose of cl 4, Sch 1A:

1. the Larger House was a “flat” as defined in s 3(1) of the LTMA;

2. it was therefore an “excluded residential occupancy” as defined in cl 4(2)(c) of Sch 1A;

3. but cl 4 of Sch 1A also requires that the excluded residential occupancy is contained in a building or buildings which is also occupied by the owner.

2. As a result, cl 4 of Sch 1A cannot apply because the Larger House was a separate (detached) building exclusively occupied by a person other than the owner.

8. Secondly, cl 10B of Sch 1A contains a separate concession for multiple occupancies where cl 4 does not apply. In the usual course, cl 10B would apply to exempt a portion of the land attributable to the Applicant’s principal place of residence (“PPR”). However, cl 10B links to a valuation mechanism in s 9C of the LTMA, which requires that the Valuer-General has determined an apportionment factor, or an application for apportionment has been made. As neither has occurred, there is no allowable proportion, so the Tribunal cannot substitute an assessment that reflects a partial exemption.

9. Having regard to the circumstances of this case, the correct and preferable decision is to remit the premium component of interest to nil.

Materials before the Tribunal

10. The Applicant filed his Application to the Tribunal (A1), a bundle of documents (A2) and a further bundle which included written submissions, three statutory declarations and further documents (A3). A fourth statutory declaration – which had been not reproduced in the bundle – was handed up at the hearing (A3-a).

11. At the hearing the Respondent had filed documents required under s 58 of the Administrative Decisions Review Act 1997 (NSW) (“ADR Act”) (R1), a further Tender Bundle (R2) and written submissions (R3). Further written submissions were filed by the Respondent after the hearing, for reasons explained below (R4).

12. The Applicant attended the hearing by audio-visual link, and was sworn in at the start of the hearing.

Relevant facts

Attributes of, and use of the Property

13. The Applicant purchased the Property, and became the registered owner, in 2018.

14. It was valued by the Valuer-General as a single parcel. It does not comprise any strata plans.

15. The Applicant provided a useful overview of the Property, and its characteristics, by referring to photographs before the Tribunal (R2).

16. Three separate buildings were located on the Property:

1. the Larger House – a 6 bedroom multi-story freestanding residence (including a garage beneath);

2. the Smaller House – a single level freestanding residence; and

3. a further freestanding building which could be used as a garage and/or for storage.

17. For all Relevant Years, the Larger House was leased to tenants who used it for residential purposes and paid rent to the Applicant; it was leased to “Tenant 1” for the 2019 land tax year, and to “Tenant 2” for the 2020 to 2022 land tax years.

18. For all Relevant Years (as confirmed by the Respondent’s counsel at the hearing), it is not in dispute that the Smaller House was “used and occupied by the Applicant as his principal place of residence” for the purpose of cl 2 of Sch 1A of the LTMA.

19. There is no evidence that the Applicant also occupied any part of the Larger House during the period of the tenancies, and I find that he did not.

Assessments to land tax

20. 2019 Assessment: On 14 October 2019, the Respondent issued an assessment for the 2019 land tax year. It advised a liability to land tax of $10,494 (R1, pp 4-7). The due date for payment was 28 January 2020.

21. 2020 Assessment: On 22 January 2020, the Respondent issued an assessment for the 2020 land tax year. It advised a liability to land tax of $7,688 (R1, pp 12-15). The due date for payment was 1 May 2020.

22. 2021 Assessment: On 18 February 2021, the Respondent issued an assessment for the 2021 land tax year. It advised a liability to land tax of $3,886.65 (R1, pp 29-32). The due date for payment was 31 May 2021.

23. 2022 Assessment: On 27 January 2022, the Respondent issued an assessment for the 2022 land tax year. It advised a liability to land tax of $11,470.65 (R1, pp 35-36, 39-40). The due date for payment was 8 March 2022.

Penalties and Interest

24. No penalties were imposed under the Assessments.

25. As the Applicant did not pay the disputed assessments by the due dates, “late payment” interest accrued under the provisions of the Taxation Administration Act 1996 (NSW) (“TA Act”). The accumulated interest was detailed on the assessment issued for each subsequent land tax year, and/or included in the “Assessment Amount” on the relevant notice (see, for example, R1 at pp 14, 31, 39, 50-52).

26. The Applicant said that he was in communications with Revenue NSW from 2020, trying to obtain historical documents requested, and was told by “Priscilla” on 19 January 2021 that he needed a client ID to remit the interest or update the exemption information (reference to this call at R1, p 308). The Applicant says he didn’t pay the assessments because his discussions with officers of the Respondent had led him to believe that the Property would be exempt as long as he could prove he lived there, which he believed he could.

27. The Tribunal was advised at the hearing that as the period of non-payment continued through the COVID-19 pandemic, the interest was paused for a period until 2022, when it resumed at rates which progressively increased to the usual rates (market and premium components) under the TA Act.

28. The Appellant told the Tribunal he was unaware of his tax obligations, and was not trying to avoid anything.

29. He said it was very unclear what the position of Revenue NSW was, and it continued for a long time. He said he still doesn’t understand it.

30. The Applicant said the accrual of interest has led to an increase in the amount payable, with the current total being approximately $68,000.

31. Although there was evidence of Revenue NSW posting all of the above assessments to the wrong address (despite being advised – per Client Notes – of the correct address), the Applicant did not specifically say that the 2019-2022 Assessments were not received.

The Objection and Objection Decision

32. The Client Notes Report and other correspondence before the Tribunal show engagement between the Applicant and the Respondent through a review and objection. They confirm that the focus of those communications was around the Applicant providing additional information to demonstrate that the Property was his PPR.

33. In around March 2023, the Respondent advised that rental data obtained from the Australian Taxation Office indicated the Property had been leased (R1, p 74). The Applicant confirmed that part of the Property was rented out.

34. Ultimately, he was advised that the Respondent was not satisfied the Property was used and occupied as his principal place of residence. He was told he should object to the assessments.

35. On 9 February 2024, the Applicant sent an email to the Respondent which was subsequently confirmed to have been treated as an objection (“Objection”, R1 p 109). The email did not refer to interest, nor to any particular land tax year. It said, relevantly:

“I trust this correspondence finds you well. I am writing to address my concerns and seek clarification regarding the land tax exemption application I submitted for the aforementioned property”.

“I have made an initial application for exemption, which, according to my records, may not have been received by your department. This letter serves as my second attempt to raise an objection and request a waiver for the land tax associated with [the Property]”.

“In response to a request for supporting evidence of my residency at the premises upon the acquisition of the property, I provided the required documentation, including an email correspondence serving as a ‘welcome letter’ from my service provider and a receipt from the removalist. The Land Tax Department subsequently requested additional evidence in the form of year-by-year bills, which was not initially communicated or requested during the application process”.

“It has come to my attention that there may be conflicting information within the department regarding the sufficiency of the evidence I provided. Some officers have confirmed that the documentation was satisfactory, while others insist on the submission of further details. I am concerned that this inconsistency may be perceived as discriminatory treatment”.

“I kindly request a thorough review of my land tax exemption application for [Property] with the aim of immediate approval. Additionally, I have submitted an exemption form, the receipt of which the department claims not to have received”.

“To ensure clarity and avoid any further miscommunication, I request that all future correspondence on this matter be conducted in writing. I appreciate your prompt attention to this matter and look forward to a swift resolution”.

36. The Respondent sent more requests for information in February to April 2024, requesting further documentation in support of the Applicant’s claim to have used and occupied the Property as his principal place of residence. This correspondence, and responses, were located in the s 58 documents. Included in this correspondence was an email from the Applicant to the objection team dated 14 March 2024 (R1, 117) which referred, inter alia, to interest:

“I have provided everything already and uploaded it numerous times. Now I cannot find where I have put my documentation…. Could you not see it on your ends of the system if not”.

“What else can I do to get this mattered sorted I’m just so stressed about it. What options do I have? How much do I need to pay is there a concession because this is highly unfair is there an arrangement I can make with the tax office? How much of this is interest?...”

37. On 8 May 2024, the objection was disallowed (Objection Decision, R1 p 301); concluding in respect of the Relevant Years that:

“As you have not demonstrated that you used and occupied the relevant property as your principal place of residence as at the relevant taxing dates, the principal place of residence exemption for the relevant property where the conditions prescribed by Schedule 1A Clause 2 of the Act is denied for the relevant tax years.”

38. The Client Notes Report recorded, on 8 May 2024 (R1, p 305), my emphasis:

“Objections for the 2019, 2020, 2021 and 2022 land tax years disallowed… The taxpayer has failed to discharge their onus of proof. Based on the evidence and information available, the Chief Commissioner is not satisfied that the taxpayer used and occupied [the Property] as his principal place of residence… Evidence indicates that the property has been continuously tenanted…”

Application to the Tribunal

39. The Applicant filed his application to the Tribunal on 10 July 2024 (A1). Under “grounds for application” he said, relevantly:

“I have provided the department with more than sufficient amount of evidence, yet enough weight was not put on the evidence given…”

40. The Tribunal made orders on 13 August 2024 extending the time for filing the application to 10 July 2024.

Jurisdiction and task of the Tribunal

41. Given an order was made to extend the time of filing, the Tribunal has jurisdiction to determine this matter under s 96 of the TA Act, s 9 of the ADR Act and s 30 of the Civil and Administrative Tribunal Act 2013 (NSW) (“NCAT Act”).

42. The Tribunal “stands in the shoes” of the Respondent in conducting a merits review. The Tribunal’s task is to decide what the correct and preferable decision is having regard to the material before it, including any relevant factual material and any applicable written or unwritten law: ADR Act, s 63.

43. The Applicant has the onus of proving his case: TA Act, s 100(3). That means he must prove all matters necessary for the Tribunal to answer the statutory questions in its favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities.

44. Under s 100(2) of the TA Act, neither the Applicant nor the Respondent is limited in the present application to the grounds of the objection.

45. In conducting its review, the Tribunal may (among other things) confirm or revoke the assessments, make a decision in place of the reviewable decision, remit the matter to the Respondent, or make orders as to costs or otherwise as it thinks fit: s 101(1) of the TA Act.

The legislation (in force for the Relevant Years)

46. Section 7 of the LTMA provides that land tax is levied on the land value of all land in New South Wales that is owned by taxpayers other than land that is exempt from taxation under the Act. Under s 8, land tax is charged on land owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied.

47. Section 9 provides:

9 Taxable value

(1) Land tax is payable by the owner of land on the taxable value of all the land owned by that owner which is not exempt from taxation under this Act.

(2) The taxable value of that land is the total sum of the average value of each parcel of that land.

(3) The average value of a parcel of land is to be calculated, as provided for by section 9AA, on the basis of the land value of the land.

(4) The land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year.

(5) The fact that there is no land value entered in the Register on 31 December in a year as the land value of the land as at 1 July in that year does not prevent land tax being levied and charged and becoming payable for any following tax year once that land value is entered in the Register and the average value is ascertained.

The principal place of residence (PPR) exemption

48. Section 10 of the LTMA deals with land that is exempted from tax.

49. Section 10(1)(r) provides for an exemption from land tax for “land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A”.

50. Clause 2 of Sch 1A provides:

2 Principal place of residence exemption

(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 ... if the land is -

(a) a parcel of residential land...

(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 Schedule, 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 Schedule is referred to as the “principal place of residence exemption”.

(5) The principal place of residence exception is subject to the restrictions set out in Part 4,

51. “Residential land” is relevantly defined in cl 3 of Sch 1A (my emphasis):

3 Residential land - meaning

(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 adapted 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 buildings are, designed, constructed or adapted.

Note:

Clause 4 allows one residential occupancy to be disregarded in applying the principal place of residence exemption. Clause 5 allows the use of land for purposes ancillary to a business conducted at a different place to be disregarded in certain circumstances.

Concessions

The clause 4 Concession

52. Clause 4 of Sch 1A provided (my emphasis):

4 Concession for land on which there is one other residential occupancy

(1) For the purposes of the principal place of residence exemption, if a building or buildings used or occupied for residential purposes contains or contain a residential occupancy other than that of the owner, the use of the building or buildings for the purpose of that residential occupancy may be disregarded if:

(a) the residential occupancy is an excluded residential occupancy, and

(b) the building contains or buildings contain (out of a total of all rooms in the building or buildings) not more than one of those excluded residential occupancies (not including the occupancy of the owner).

(2) For the purposes of this clause, each of the following residential occupancies is an “excluded residential occupancy”:

(a) one room,

(b) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy,

(c) one flat,

(d) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, and one room,

(e) one flat and one room,

(f) 2 rooms, each of which is separately occupied.

(3) Accordingly, land does not cease to be residential land because there is on the land one, but not more than one, such excluded residential occupancy, even if income is derived from the residential occupancy.

(4) If land is comprised of 2 or more lots or strata lots, the excluded residential occupancy must be located on a lot or strata lot that is also used and occupied by the owner of the land for residential purposes.

53. Under s 3(1) of the LTMA, “flat” is defined as follows:

“flat” means a room or a suite of rooms (whether or not forming part of a building or a detached building)—

(a)  used or occupied as a separate dwelling, or

(b)  so constructed, designed or adapted as to be capable of being used or occupied as a separate dwelling.

54. There is no definition in s 3(1) of the phrase “suite of rooms”.

The clause 10B concession

55. For each of the Relevant Years, there was a further concession in clause 10B of Sch 1A, which provided (my emphasis):

10B   Concession for multiple-occupancy land

(1)  This clause applies if land owned by one person, or by 2 or more joint owners, is the site of a flat that is used and occupied by the owner, or by one of them, as a principal place of residence, and there is also situated on the land one or more other flats that are used, or adapted for use, as a separate occupation to that of the owner (not being an excluded residential occupancy that may be disregarded under clause 4).

(2)  Section 9C applies in respect of the land as if the land were mixed use land.

(3) For the purposes of applying Division 5A of Part 1B of the Valuation of Land Act 1916 to the land, a reference in that Division to that part of the land that is occupied or used for non-residential purposes is to be read as a reference to that part of the land that is adapted for use as a separate occupation to that of the owner (and which is not an excluded residential occupancy that may be disregarded under clause 4).

(4)  This clause does not apply to land comprised of one or more strata lots.

56. Clause 10B refers to s 9C of the LTMA, which provided as follows:

9C   Reduction in land value for flats on mixed development land or mixed use land

(1)  For the purpose of assessing land tax, the land value of mixed development land or mixed use land on which is situated a flat is to be reduced by the allowable proportion in relation to the flat.

(2)  The allowable proportion for a flat is as determined in accordance with whichever of the following paragraphs is applicable in the particular case—

(a)  if there is an apportionment factor entered in the Register in respect of that land value—the proportion determined in accordance with the following calculation—

(b)  if paragraph (a) is not applicable—the proportion specified in an application for a reduction under this section as the fair and reasonable proportion of the land value of the land to be attributed to the flat, subject to subsections (2A) and (2AA).

(c)  (Repealed)

(2A)  If there is no apportionment factor entered in the Register in respect of the land value of the land, the Chief Commissioner may request the Valuer-General to determine the apportionment factor in respect of the land concerned.

(2AA)  If a request is made under subsection (2A)—

(a)  the Valuer-General must determine the apportionment factor concerned and enter it in the Register, and

(b)  the allowable proportion for the flat must be determined in accordance with subsection (2)(a).

(2AB) Apportionment factors for the purposes of this section are to be ascertained in accordance with Division 5 or Division 5A of Part 1B of the Valuation of Land Act 1916, as appropriate to the land concerned. If such an apportionment factor is expressed as a percentage, the apportionment factor is, for the purposes of this section, to be converted to a fraction.

Note—

Divisions 5 and 5A of Part 1B of the Valuation of Land Act 1916 allow objections to be made against the amount of an apportionment factor.

(2AC)  (Repealed).

(3)  The reduction under this section applies only if the following requirements are satisfied.

(a) the flat must be used and occupied by the owner of the land (or one of the owners) as his or her principal place of residence and for no other purpose, in which connection the use of the land for the purpose of one, but not more than one, residential occupancy other than that of the owner under lease or licence from the owner may be disregarded if it is an excluded residential occupancy (within the meaning of clause 4 of Schedule 1A).

(b)  (Repealed).

(c)  an owner of the land who occupies the flat must not be an owner merely because of being a trustee.

(d)  (Repealed).

(e)  the owner of the land must not be a company or company jointly with another person or other persons, except in either case a trustee company acting in its representative capacity.

(4) For the purposes of determining whether a flat has been used and occupied by an owner of land as his or her principal place of residence under subsection (3) (a), clauses 8, 9 and 10 of Schedule 1A apply in respect of the flat, and that part of the land on which the flat is situated, in the same way as they apply in respect of land under the principal place of residence exemption.

Note—

The effect of this provision is to deem a flat to be used and occupied by the owner of the land as a principal place of residence in certain circumstances, similar to the principal place of residence exemption. As a consequence, the land value of the mixed development land or mixed use land on which the flat is situated can be reduced by the allowable proportion under this section.

(5)  Unless the land concerned is land to which subsection (2)(a) applies, there is to be no reduction under this section unless.

(a)  Application has been made for the reduction by all the owners of the land, specifying the proportion that in their opinion is a fair and reasonable proportion of the land value of the land to be attributed to the flat, and

(b)  The application is made in a form approved by the Chief Commissioner.

(6)  There is to be no reduction under this section if the building on the land, or the buildings on the land together, comprise 2 flats and the land is exempted from taxation under this Act.

(6A)  For avoidance of doubt, if a reduction in the land value of land is required under this section and the land is jointly owned, then, for the purposes of section 27(3)(a), the individual interest of each of the owners of the land (including the owner who occupies the flat) is to be assessed on the basis of the land value of the land as reduced under this section.

(7) This section does not apply to land to which section 9D or 21B applies.

(8)  In this section.

mixed development land has the same meaning as in Division 5 of Part 1B of the Valuation of Land Act 1916.

mixed use land has the same meaning as in Division 5A of Part 1B of the Valuation of Land Act 1916.

57. In the LTMA, a reference to “the Register” is defined in s 3 as meaning “the Register of Land Values kept under section 14CC of the Valuation of Land Act 1916 (NSW)” (“VOL Act”), which says:

14CC Register of Land Values

(1) The Valuer-General is to keep a Register of Land Values in such form as the Valuer-General thinks fit.

(2) The Register is to contain such of the following kinds of information in relation to land as is within the knowledge of the Valuer-General -

(a) information as to the ownership of the land,

(b) information as to the occupation of the land,

(c) information as to the value of the land,

(d) information as to the title of the land,

(e) information as to the location or description of the land,

(f) information as to the area of the land,

(g) such other kinds of information as is permitted or required by this Act or the regulations to be entered in the Register.

(3) An entry in the Register as to a land value, allowance or apportionment factor ascertained under this Part is conclusive evidence of the ascertaining of the value, allowance or factor on the date shown in the entry.

58. Section 14A of the VOL Act provided:

14A Valuer-General to ascertain land values

(1) The land value of each parcel of land in New South Wales, other than -

(a) lands of the Crown, or

(b) land that is within the Western Division and is not within the area of a rating or taxing authority,

is to be ascertained each year.

(2) The Valuer-General may at any time value any parcel of land, either on his or her own initiative or -

(a) in the case of lands of the Crown, on the application of the public authority by or on whose behalf the land is held, or

(b) in the case of land within the Western Division (including land referred to in paragraph (a)), on the application of the Secretary of the Department of Industry, or

(c) in the case of land within the area of a rating or taxing authority (including land referred to in paragraph (a) or (b)), on the application of that authority.

(3) (Repealed)

(4) The Valuer-General may separately value different parts of the same parcel of land, in which case this Act applies to each such part as if it were a separate parcel of land.

(5) Any land value ascertained under this Act is to be entered in the Register of Land Values.

(6) The power to ascertain a land value includes the power to reascertain that land value, and references in this Part to the ascertainment of land value are taken to include references to the reascertainment of land value.

59. Section 14BBA in Division 5A of the VOL Act, which applies to “mixed use land”, provides as follows:

14BBA   Owner may apply for apportionment factor for mixed use land

(1)  The Valuer-General may ascertain an apportionment factor for the land value of mixed use land, either on his or her own initiative or on the application of the owner of the land or of a rating or taxing authority.

(2)  An apportionment factor ascertained by the Valuer-General under this Division is to be entered by the Valuer-General in the Register of Land Values in respect of the land value to which it relates.

The submissions at the hearing, and subsequently

The Applicant’s submissions

60. At the hearing, the Applicant agreed with the Respondent’s submission that the central question before me was whether clause 4 of Sch 1A applied. He is not a lawyer, and (unsurprisingly) did not present any detailed legal analysis as to its operation.

61. The Applicant, as noted above, provided oral testimony taking the Tribunal through the layout of the properties in question and there was nothing of any relevant dispute regarding the facts.

The Respondent’s submissions

Submissions at the hearing

62. The Respondent confirmed that it was accepted that the Applicant resided in the Smaller House as his principal place of residence for all Relevant Years. Accordingly, the focus of the submissions was whether cl 4 of Sch 1A of the LTMA applied. The Respondent submitted, in summary:

1. The Larger House was not an excluded residential occupancy because it was not a “suite of rooms”, and therefore not a “flat” as defined.

2. There was no definition of a “suite of rooms”, but the principle of statutory interpretation noscitur a sociis could be applied to the list in cl 4(2), which is trying to list similar things – referring in oral submissions to a boarding house, caretaker apartment, serviced apartments, hotels, a house and a separate granny flat, and a studio.

3. The Cambridge Dictionary defined the word “suite” on its own as “a set of connected rooms, especially in a hotel”.

4. The “suite of rooms” can only be applied one way, to the smaller dwelling (an apparent concession that residing in the smaller of two detached dwellings could possibly meet the requirements of the concession).

63. The written submissions said, inter alia:

35. A further concession, or rather extension of the PPR Exemption, is available to owners of land which contain multiple dwellings under clause 4 of Schedule 1A to the LTMA. Under that provision, land does not cease to be residential land because there is on the land one, but not more than one, excluded residential occupancy, even if income is derived from the residential occupancy.

36. An “excluded residential occupancy” is limited, under clause 4(2) of Schedule 1A to the LTMA to various kinds of small dwellings which fit generally under the rubric of “granny flats” or “studios” as advertised in modern real estate.

37.   Critical to these proceedings, the concession is “one way” – that is, it only applies to residential occupancies other than that of the owner (see the chapeau to LTMA Sch 1A, cl 4(1)). Put another way, the concession does not apply where the owner of land themselves lives in the excluded residential occupancy, and the other residential occupancy (the main dwelling) is tenanted.

72. The available evidence supports only one rational inference, which is that if the Applicant was actually in occupation of any part of the Property during the Tax Years, it was the Flat [Smaller House] and not the primary dwelling [Larger House]. In circumstances where the concession afforded by clause 4 of Schedule 1A to the LTMA only operates to allow the lease of a granny flat or studio by the occupier of a primary dwelling, and not the other way around, the Tribunal must find that the Respondent was correct to refuse to apply the PPR Exemption.

64. The hearing proceeded on the basis that there was no relevant precedent before me, a position I queried. At the end of oral submissions, Respondent’s counsel pointed me to the 2014 decision of the Court of Appeal of the New South Wales Supreme Court in Haddad v Chief Commissioner of State Revenue [2014] NSWCA 23 (“Haddad”), providing the citation but without further elaboration as to its application.

65. Following the hearing, I made orders for the filing of further submissions (if any) on the application of Haddad as well as the availability of the concession in clause 10B of Sch 1A, which had not been agitated at the hearing nor raised in the written submissions as filed.

Submissions filed after the hearing

66. The Applicant did not file any further submissions.

67. The Respondent filed further submissions (RFS) which:

1. accepted that Haddad was binding precedent which mandated the conclusion that the cl 4 exemption did not apply;

2. withdrew reliance on some earlier submissions which were inconsistent with Haddad; and

3. accepted that the concession in cl 10B of Sch 1A applied to the facts of this case, but submitted that the Tribunal was unable to reduce the assessments absent any application being made to the Respondent under s 9C.

Part A - Does clause 4 of Sch 1A apply to exempt the land from land tax?

68. The Court of Appeal decision in Haddad is a convenient place to start, because that case, and the relevant legislative history, are central to my consideration of the cl 4 concession.

Haddad – history and the findings of the Court of Appeal

69. The land in issue in Haddad also had two standalone (detached) dwellings. The main residence (main house) was rented to tenants and a smaller corrugated iron two bedroom unit (shed) was claimed by the owner (Ms Haddad) to be her principal place of residence.

The decision at first instance

70. The case was heard at first instance by the Administrative Decisions Tribunal (“ADT”), who decided in favour of the Chief Commissioner in Haddad v Chief Commissioner of State Revenue [2011] NSWADT 17. JM Verick held that the land was not a parcel of “residential land” as defined in cl 3, and therefore the requirements of the exemption in clause 2 were not satisfied.

Decision of the Appeal Panel of the ADT

71. In Haddad v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 3, the Appeal Panel of the ADT affirmed the decision of JM Verick, on the basis that the concession in clause 4 did not apply. Importantly, the definition of “flat” for the 2005-2007 land tax years specifically excluded a “single dwelling”, which the main house was held to be. The Appeal Panel said:

10 The first ground of appeal concerns the possibility of the appellant being entitled to the principal place of residence exemption provided for by Schedule 1A. The simple answer to the appellant’s claim is that the Wadalba property is not a parcel of residential land within cl 2(1)(a) of Schedule 1A. That conclusion flows from the fact that, up to July 2007, there were two separate buildings on the property, one comprising a 3 bedroom house leased for residential purposes and the other 2 bedroom unit occupied by the appellant. By operation of cl 3(1)(c), the circumstances that income was derived from the 3 bedroom house takes the property outside the definition of “residential land” unless one of the concessions in Part 3 applies, there being no suggestion that cl 3(2) is applicable.

11 Of the concessions in Part 3, the appellant relied on that contained in cl 4 for the period up to 7 July 2007, when the unit was destroyed by fire. The appellant contended that it was the 2 bedroom unit which constituted her PPR. To attract the operation of cl 4, the appellant must show that the 3 bedroom house was a residential occupancy contained within the building - i.e. the 2 bedroom unit occupied by the appellant as her PPR - and that it was an excluded residential occupancy within the meaning of cl 4(2). On the uncontested evidence, the house was not contained within the 2 bedroom unit. The two were separate. Even if it were otherwise, the 3 bedroom house seems to fall squarely within the definition of “single dwelling” in s 6 (3) of the Act and is therefore excluded from the definition of “flat”. Nor as a matter of construction could it be said that a 3 bedroom dwelling constitutes a “suite of rooms (not being a flat)” within either cl 4(2)(b) or 4(2)(d). The expression “suite of rooms” has a well-established meaning in common parlance as rooms which are not designed to be occupied as separate dwelling e.g. rooms lacking a bathroom, toilet facilities, a kitchen or laundry facilities.

12   Accordingly the appellant, whatever the factual merits of her claim to occupy the 2 bedroom flat, cannot on the facts found by the Tribunal below establish her claim to the PPR exemption at anytime up to 7 July 2007.

Decision of the Court of Appeal

72. The taxpayer appealed to the Court of Appeal, which observed that the cl 4 concession was a “threshold issue”, and the Appeal Panel had not considered the legislation in force for the 2004 land tax year.

73. In summary, the Court of Appeal held that the cl 4 concession only applied where the tenancy was contained in a building which the owner also occupied as their residence.

74. Ward JA, in the leading judgment, said (my emphasis):

50.   There is no dispute that the three bedroom building was tenanted during the relevant tax years …

The Threshold issue

53. The Appeal Panel … proceeded on the basis that, to attract the operation of the concession in Part 3, Ms Haddad must show that the three bedroom building was a residential occupancy “contained within” the two bedroom building and that it (i.e., the three bedroom building) was an “excluded residential occupancy” within the meaning of clause 4(2).

54.   The Appeal Panel said that the uncontested evidence was that the “house” (by which it was clearly referring to the three bedroom building that had been tenanted) was not “contained” within the two bedroom building and that they were separate. It went on to say that, even if it were otherwise, the three-bedroom house did not fall within any of the criteria set out in clause 4(2), stating that the three bedroom dwelling “seems to fall squarely” within the definition of a single dwelling and that it was therefore excluded from the definition of “flat”. The Appeal Panel also found that the three bedroom building was not a “suite of rooms”, an expression it said had a well-established meaning in common parlance.

55. Mr Sneddon [amicus curiae] submitted that the Appeal Panel was incorrect in construing the opening words of clause 4(1) as requiring that the three bedroom building be physically “contained” within the two bedroom building. Emphasis was placed on the use of the plural in the opening words of clause 4(1) for the proposition that the provision contemplated that there might be more than one building and did not require that those buildings be attached. It was submitted that if the relevant residential occupancy were required to be contained within the building occupied by the owner then the plural reference to “buildings” in clause 4(1) would have no work to do.

57. It is only necessary to determine the construction of “contain[s]” in the opening words of clause 4(1) when considering the application of the PPR exemption for the 2004 land tax year. That is because, for the 2005-2008 land tax years, it is clear that the three bedroom building on Wadalba did not fall within the definition in clause 4(2) of “excluded residential occupancy” because it was a “single dwelling”.

58. The only descriptions in clause 4(2) within which the three bedroom building could possibly fall are a “flat” (in sub-clause (c)) or a “suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy” (in sub-clause (b)). As extracted earlier, “flat” was defined, for the land tax years from 2005 to 2008, as including a suite of rooms but excluding a single dwelling.

59. The concept of “suite of rooms” in clause 4(2) is not defined but must be something that is capable of being a flat (by reference to the definition of “flat” in the legislation) but which is not a “flat” for the purposes of clause 4(2). This suggests that it must be distinguishable from a structure that falls within the definition of a “single dwelling”. It was submitted by the respondent that, given that the types of residential occupancy identified in clause 4(2) increase in size from sub-clauses (a) to (f), a suite of rooms must be read as meaning something more than a room but not enough to be a flat.

60.   The three bedroom house, on the evidence before the Tribunal, was clearly a “single dwelling”, as Dr Haddad in his submissions seems to concede (Orange 33 G-K). Indeed, Dr Haddad contended that both buildings on the Wadalba land were capable of being, and had been constructed to be used as, separate dwellings. He submitted that there was no basis for treating one as a house and the other as a flat.

61.   Therefore, for the 2005-2008 land tax years, there was no error in the Appeal Panel’s conclusion that, whatever the factual merits of Ms Haddad’s claim to have occupied the two bedroom building, the PPR exemption did not apply.

62. As to the 2004 land tax year, however, the definition of “flat” did not exclude a single dwelling. Therefore, Mr Haddad contends that at least for this year, even if his argument on the threshold issue otherwise fails, the three bedroom building is an “excluded residential occupancy” for the purposes of the clause 4(1) exemption.

63.   The question then is whether the Appeal Panel erred in finding, in effect, that the opening words of clause 4(1) require, on the facts of this case, that the excluded residential occupancy be physically contained within the two bedroom building.

64.   The opening words of clause 4(1) must be read as referring to one or more buildings “used or occupied [by the owner] for residential purposes”, by contrast with the reference to a residential occupancy “other than” that of the owner. I see no reason not to give the word “contain” its ordinary meaning. If so, then the excluded residential occupancy must be an area forming part of a larger area in order to be contained within it.

65.   The meaning of “contain[s]” in this context must be that there needs to be a building or buildings used or occupied by the owner for residential purposes within which, or within one of which if the owner uses and occupies more than one building, is contained a residential occupancy of someone else. Such an interpretation is consistent with the comment by Gzell J in Chief Commissioner of State Revenue v McGrath [2008] NSWSC 387 (at [48]) (albeit that this is a case on distinguishable facts since there the respective buildings were on two parcels of land with no unity of title) to the effect that the exemption in clause 4 of Schedule 1A permits a ‘granny flat’ “in the residence” (my emphasis).

66.   In other words, if Ms Haddad had established that her use and occupation for residential purposes of the Wadalba land was not confined to use and occupation of the two bedroom building but encompassed at least part of both buildings, in the sense of those two buildings, though detached, forming part of an overall residence used or occupied by her for residential purposes, then the occupancy of part of the three bedroom building by another person could be an excluded residential occupancy contained within the three bedroom building within the exemption.

67.   Here, however, the Tribunal found that the three bedroom building had been tenanted from some time in 2002. On the facts found by the Tribunal, the two separate buildings cannot readily be described as a set of buildings occupied by Ms Haddad in part of which there was an excluded residential occupancy, even if, as Dr Haddad asserts, there was a connection in terms of the access to the property, electricity supply and the like. Dr Haddad’s own submissions emphasise the independence of the two buildings on the Wadalba land.

68. On that basis, in my opinion the Appeal Panel did not err in concluding that the clause 4(1) exemption did not apply to the 2004 land tax year, even though the Appeal Panel seems incorrectly to have assumed that there was no excluded residential occupancy for that year on the same basis as it correctly reached that conclusion for the 2005-2008 years.

69.   Mr Sneddon, who ultimately accepted that the three bedroom dwelling would not fall within the definition of “flat”, sought to maintain an argument that if land tax would not be applicable had the respective occupants of the three and two bedroom buildings been reversed (i.e., had the two bedroom building been that which was tenanted and the three bedroom building that which Ms Haddad claimed to occupy) then the proprietor should be able to claim the land tax exemption for the converse situation. The difficulty with this argument for the 2005-2008 land tax years is that it finds no support in the terms of the legislation, which clearly excludes single dwellings from the definition of “excluded residential occupancy”. For the 2004 land tax year, the difficulty is in characterising the three bedroom building as contained within a building or buildings used or occupied by Ms Haddad for residential purposes.

70.   There has been no error shown in relation to the Appeal Panel’s findings in relation to the threshold issue. Whether or not this was an issue that should have been raised at an earlier stage in the respective proceedings, as Dr Haddad contends, it was a matter correctly determined by the Appeal Panel.

78. I note, for completeness, that since preparing these reasons I have had the opportunity to read in draft the reasons of Leeming JA. I agree with his Honour’s more detailed exposition of the construction of clause 4 in the form that it took in 2004, which leads to the same conclusion I have reached as to that issue.

75. Her Honour also agreed at [80] with the following analysis of Leeming JA (as did MacFarlane JA) (my emphasis):

81    My reasons for construing cl 4 in the form it took for the 2004 year expand on those given by Ward JA, in that I rely not merely upon the meaning of “contain” but also on the structure of cl 4 and the definition of “flat”. However, I do not regard any aspect of these reasons as inconsistent with her Honour’s reasons.

82 The following matters may be observed from the structure of cl 4. First, central to cl 4 is the idea of “excluded residential occupancy”. Secondly, once it is observed that every “flat” is necessarily either a room or a suite of rooms, then every excluded residential occupancy is one or two rooms or a suite of rooms or a suite of rooms and another room. Thirdly, the clause does not use the legal language of lease or licence or other form of tenure, but instead the language of bricks and mortar: “building”, “room” and “suite of rooms”. Fourthly, the clause does not use the legal language of fixtures or structures on the land, but instead uses the physical language of buildings which contain, or building which contains. Fifthly, the verb that is used four times in the clause to link “building” with “room” or “suite of rooms” is “contain”. The question posed by the statute is not whether there is no more than one excluded residential occupancy on the land, but whether there is not more than one excluded residential occupancy contained in one or more building(s).

83    The 2004 definition of “flat” also links “building” with “room” and “suite of rooms”, but it employs a different approach. Its concluding words “whether the room or suite is a detached building or forms part of a building” should, in accordance with settled principles of construction, be given work to do: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [71]. Those words confirm that there are two ways in which a room or suite of rooms that is a flat may relate to a building. Either the room or the suite of rooms may itself be a building, or they may form part of a building.

84 This is a case where the defined term “flat” is to be read into cl 4 in the manner indicated by McHugh J in Kelly v The Queen [2004] HCA 12; 218 CLR 216 at [103]. When that is done, the list of “excluded residential occupancies” in cl 4(2) includes both classes of flats: those which are themselves buildings, and those which form part of a building. However, only if the building or buildings contain an excluded residential occupancy is cl 4(1) satisfied.

85    In circumstances where the definition of “flat” expressly includes flats which form part of a building, the harmonious approach to construction required by Project Blue Sky at [69] gives to the verb “contain” its natural meaning. An excluded residential occupancy which is a flat is capable of falling within cl 4(1) if it is within the class of flats being a room or suite of rooms which forms part of a building. However, if the flat is within the other class of flats, namely, a room or suite of rooms that is a detached building, then it is not contained in a building or buildings within the meaning of cl 4(1).

86 That construction respects the semantic relationship between “forms part of” and “contains”. Moreover, it gives to “contains” what I regard to be its natural meaning in this bricks and mortar context. For, given the focus on rooms and suites of rooms in contradistinction to buildings in cl 4, there is no reason for the verb “contain” to lose its ordinary meaning: a building “contains” a room or suite of rooms when the room or suite of rooms is part, but not the whole, of the physical fabric of the building.

87    That reasoning leads to the same construction favoured by Ward JA, and to the consequence that there was no error of law in the result reached by the Appeal Panel in relation to the three bedroom structure in the 2004 year, although its reasoning was erroneous.

High Court refused special leave to appeal

76. The taxpayer filed an application for special leave to appeal the decision in Haddad to the High Court. In refusing the application, the High Court referred to the principal judgment of Ward JA and recorded ([2014] HCASL 144 at [5]):

“5.   There is no reason to doubt the correctness of the decision of the Court of Appeal.   The application is dismissed.”

Changes to the relevant provisions

77. Amendments were made to the LTMA by the State Revenue Amendment Act 2008 (NSW) (“2008 Amendment Act”), including the following:

1. the words “but does not include a single dwelling” were once again omitted from the definition of “flat” in s 3(1) (and the definition of “single dwelling” was correspondingly omitted);

2. New cl 4(4) was added, which provided:

(4)   If land is comprised of 2 or more lots or strata lots, the excluded residential occupancy must be located on a lot or strata lot that is also used and occupied by the owner of the land for residential purposes.

3. New cl 10B was introduced into the LMTA to allow for a concession for multiple-occupancy land.

78. The Explanatory Note to the Bill which introduced the 2008 Amendment Act (“2008 EN”) stated that the objects of the Bill (in respect of the amendments to the LTMA) were:

(d) to amend the Land Tax Management Act 1956:

(i) to clarify an exemption for non-profit associations, and

(ii) to clarify the application of the principal place of residence exemption to land comprised of 2 or more lots or strata lots, and

(iii) to extend a concession to land owned by one person that is comprised of multiple residential occupancies, and

(iv) for statute law revision purposes.

79. The 2008 EN provided the following explanation of the changes made by Schedule 4 of the Bill (my emphasis):

1. In respect of strata lots:

Schedule 4 Amendment of Land Tax Management Act 1956

Principal place of residence exemption

Schedule 4 [15] clarifies the application of the principal place of residence exemption to land comprised of 2 or more lots or 2 or more strata lots. In order to qualify for the exemption:

(a) the lots must be adjoining or, in the case of strata lots, must have adjoining walls or floors, and

(b) the lots must be owned by the same person or, if any of the lots are jointly owned, the lots must all be jointly owned by the same persons, and

(c) the lots must be the site of, or comprise, a single residence.

The rules will not prevent a part of the land from being used for the purpose of an occupancy in addition to that of the owner if it is permitted under the existing rules relating to the principal place of residence exemption (see clause 4 of Schedule 1A to the Act). However, the additional residential occupancy must be located on a lot that is also used and occupied by the owner of the land for residential purposes. (See Schedule 4 [13]).

The rules will not prevent a strata lot that is ancillary to a residence (such as one used as a garage) from being claimed as being subject to the principal place of residence exemption. Schedule 4 [10]–[12] are ancillary amendments.

2. In respect of the insertion of the new concession in cl 10B:

Concession for multiple-occupancy land

Schedule 4 [14] will allow a land tax concession to be applied in respect of land owned by one person that does comprise more than one residential occupancy. (This may include land that is excluded from the principal place of residence exemption by the amendments referred to above). The concession, which is similar to the concession that applies to mixed use land, will allow land tax to be assessed on the basis of that proportion of the land that is used for a separate residential occupation to that of the owner.

3. And in respect of the removal of “single dwelling” from the definition of “flat” in s 3(1) (my emphasis):

Other amendments

Schedule 4 [1] and [3]–[7] remove the general distinction in the Land Tax Management Act 1956 between flats and single dwellings. The distinction is only relevant to the mixed use land concession in sections 9C and 9D (where it is preserved). The amendments ensure that the concession for additional residential occupancies under the principal place of residence exemption is capable of applying to any flat that is a separate dwelling from a person’s principal place of residence. Schedule 4 [2] simplifies an existing provision (including by rectifying a formatting error). Schedule 4 [8] removes a redundant cross-reference. Schedule 4 [16] enables savings and transitional regulations to be made as a consequence of the amendments. Schedule 4 [17] provides for the application of the amendments in respect of the next land tax year to commence on or after the commencement of the amendments.

In relation to land tax, a parcel of land with multiple dwellings can contain multiple places of residence. Therefore, proportional land tax may be payable if at least one of the dwellings is rented to a tenant and at least one other dwelling is occupied by the owner as a principal place of residence, by a life tenant, or by an occupant under a nil or nominal rent arrangement.

No substantive difference from the 2004 provisions considered in Haddad

80. Despite the amendments made to cl 4 of Sch 1A by the 2008 Amendment Act, cl 4(4) is not relevant to the facts before me, and the text of the provisions I am required to consider in this case are not relevantly different from the 2004 version of the provisions considered in 2014 by the Court of Appeal in Haddad:

1. The text of cll 4(1), 4(2) and 4(3) of Sch 1A remains unchanged; and

2. The definition of “flat” in s 3(1) was substantively the same because it also did not exclude a “single dwelling”. It provided as follows:

“flat” means a room or suite of rooms constructed, designed or adapted for occupation or use as a separate dwelling, whether the room or suite is a detached building or forms part of a building.

81. Since the applicable provisions of cl 4 are not materially or substantively different from the earlier version applicable to the 2004 land tax year considered by the Court of Appeal (in 2014), I must conclude that the decision in Haddad applies with equal force, is binding upon this Tribunal, and should be followed: see Agrinova v Chief Commissioner of State Revenue [2024] NSWCATAD 17 at [60], as upheld by the Appeal Panel in Agrinova v Chief Commissioner of State Revenue [2025] NSWCATAP 86 at [207]. This was also the position adopted by the Respondent in the further (and revised) submissions filed after the hearing.

82. The following analysis is mandated by the findings of the Court of Appeal in Haddad.

83. Although “building” is not defined, I am satisfied that the Smaller House is a building. At all relevant times, the Applicant occupied the Smaller House for residential purposes.

84. In respect of the Larger House, I find that at all relevant times:

1. it was a “building”;

2. it was occupied for residential purposes by a tenant under the terms of a lease;

3. it was a ‘flat’ as defined in s 3(1):

1. it was a suite of rooms used or occupied as a separate dwelling;

2. it was a detached building (i.e. “whether or not forming part of a building”); and

3. the definition of flat did not exclude a “single dwelling”;

4. it was therefore an “excluded residential occupancy” within cl 4(2)(c),

5. it did not satisfy the opening words of cl 4(1), because it was not contained within a building or buildings used or occupied [by the owner] for residential purposes. Rather, it was a standalone building which was used or occupied only by the tenants. There was no evidence to the contrary.

85. As a result, the Larger House did not meet the requirements of cl 4 of Sch 1A of the LTMA.

86. As cl 4 did not apply, the income derived from the tenancy in respect of the Larger House is not ignored for the purpose of the definition of “residential land” in cl 3 of Sch 1A.

Part B - Clause 10B of Schedule 1A

87. Where the cl 4 concession doesn’t apply, the only remedy is for a partial exemption to be sought as provided for by the separate concession in cl 10B of Sch 1A. Clause 10B of Sch 1A was introduced into the LTMA by the 2008 Amendment Act, and was not considered in Haddad.

88. Clause 10B(1) prescribes three requirements before cl 10B can apply. Each are satisfied, as follows:

1. First, the land was the site of a “flat” (the Smaller House) that was used and occupied by the owner (the Applicant) as a principal place of residence;

2. Secondly, there was also situated on the land one or more other flats (the Larger House) that was used as a separate occupation to that of the owner; and

3. Thirdly, that other flat (the Larger House) was not “an excluded residential occupancy that may be disregarded under clause 4”.

89. The land was also not comprised of one or more strata lots, so cl 10B(4) does not preclude the operation of cl 10B.

90. Clause 10B(2) therefore invokes the mechanism for “mixed use land” in s 9C of the LTMA. It provides that s 9C of the LTMA applies in respect of the land “as if the land were mixed use land”.

91. However, there are many operative provisions to navigate.

92. First, s 9C(1) provides that for the purpose of assessing land tax, the land value of the “mixed use land” on which is situated a flat is to be reduced by the “allowable proportion” in relation to that flat. And s 9C(3) provides that the reduction under the section only applies in respect of the flat which is used or occupied by the owner as their principal place of residence. So in this case, “flat” for which the allowable proportion is calculated is the Smaller House, because it is the Applicant’s principal place of residence..

93. Subsections 9C(2), (2A), (2AA) and (2B) then address the various methods by which the “allowable proportion” may be calculated.

Section 9C(2)

94. Section 9(2) provides:

(2)  The allowable proportion for a flat is as determined in accordance with whichever of the following paragraphs is applicable in the particular case—

(a)  if there is an apportionment factor entered in the Register in respect of that land value—the proportion determined in accordance with the following calculation—

(b)  if paragraph (a) is not applicable—the proportion specified in an application for a reduction under this section as the fair and reasonable proportion of the land value of the land to be attributed to the flat, subject to subsections (2A) and (2AA).

95. Section 9C(2)(a) does not apply, because there is no evidence before the Tribunal of any apportionment factor being entered in the Register in respect of the Property. Section 14BBA of the VOL Act (extracted above at par 59), which applies to mixed use land, provides that an apportionment factor may be ascertained by the Valuer-General (and entered in the Register) either on his or her own initiative or on the application of the owner of the land or of a rating or taxing authority. There is no evidence of any application being made by either the Respondent or the Applicant.

96. Section 9C(2)(b) is to be read together with the following provisions:

1. Sections 9C(2A) and 9C(2AA) – If there is no apportionment factor entered in the Register, the Respondent may request the Valuer-General to determine the apportionment factor in respect of the Property. If such a request is made, the apportionment factor is to be determined in accordance with s 9C(2)(a) and will be entered on the Register;

2. Section 9C(5) - Unless the land concerned is land to which s 9C(2)(a) applies (which it does not), there is to be no reduction under s 9C unless:

(a)  application has been made for the reduction by all the owners of the land, specifying the proportion that in their opinion is a fair and reasonable proportion of the land value of the land to be attributed to the flat, and

(b)  the application is made in a form approved by the Chief Commissioner.

97. The combined effect of all of these provisions is as follows:

1. There is no evidence of any apportionment factor having been entered on the Register by the Valuer-General in respect of the Property;

2. Accordingly, s 9C(2)(a) does not apply;

3. The Applicant, as the owner of the land, was therefore required by ss 9C(2)(b) and 9C(5) to apply to the Respondent for a reduction (in a form approved by the Respondent) specifying the fair and reasonable proportion of the land value to be attributed to the Smaller House (being his principal place of residence);

4. The Respondent could either:

1. accept the fair and reasonable proportion specified by the Applicant; or

2. make a request to the Valuer-General (under s 9C(2A)) that the Valuer-General determine an apportionment factor which would, in turn, be entered on the Register.

98. In this case, no application has been made by the Applicant for a reduction under s 9C. It may have been possible for this to have been provided up to the date of the hearing (see Clarke v Chief Commissioner of State Revenue [2009] NSWADT 184, which involved a consideration of similar provisions in s 9D of the LTMA) , but it was not a matter ever raised by the Respondent.

99. As a result, the Respondent – and the Tribunal standing in the Respondent’s shoes – cannot unilaterally undertake the task to determine the apportionment factor or a reduction in the land value attributable to the Smaller House. It follows that the Tribunal cannot substitute an assessment under s 9C that reflects or allows an exemption for the non-tenanted area that comprises the principal place of residence of the Applicant.

100. The Respondent stated, in the submissions filed after the hearing at [30]:

“In the result, and for the purposes of this application, the Respondent’s respectful submission is that the possible (and even likely) availability of the concession in clause 10B of Schedule 1A to the LTMA would not move the Tribunal to do anything other than dismiss the application. The Tribunal is not in a position, having regard to the evidence, to make any rational order otherwise.”:

101. This is an unfortunate position for the Applicant to be in, but it follows that the correct and preferable decision is that the assessments to land tax are correct.

Commissioner’s Guidance

102. I would urge the Respondent to review and update his published guidance in respect of cll 4 and 10B of Sch 1A and also s 9C of the LTMA which in my view do not provide appropriate guidance for taxpayers in light of my findings above. In this regard, LT85v6 (Principal Place of Residence Exemption) says (my emphasis):

Concession for land on which there is one other residential occupancy – clause 4

Land is entitled to the PPR exemption if part of it is occupied by tenants, provided the rented part satisfies the definition of “excluded residential occupancy”, which consists of one of the following combinations of no more than 2 separate tenancies or lettings:

•   one flat plus another room or suite of rooms which is not a self-contained flat; or

•   no more than two rooms, separately occupied by boarders or lodgers.

Note that the definition of ‘flat’ in section 3 includes a room or suite of rooms which can be part of a building or a detached building, used or occupied as a separate dwelling.

Land being used to provide a ‘bed & breakfast’ service can retain the PPR exemption provided the guest accommodation is limited to these permitted occupancies. If the ‘bed & breakfast’ occupies more of the property than the permitted occupancies, a concession to reduce the taxable value of the land is available (see explanation of sections 9C and 9D in this Ruling).

Concession for multiple occupancy land – clause 10B

Where land is the site of two or more flats, one of which is the principal place of residence of the owner (or one of the owners if there are joint owners), section 9C provides a proportionate concession for the flat used as a principal place of residence. However the land may be wholly exempt if there are only two flats and the PPR concession for excluded occupancies [clause 4 of Sch 1A] applies to the second flat.

103. Commentaries also complain that the current position is far from clear; for example, in Wolters Kluwer, Australian Land tax NSW Commentary, (online at 20 April 2025) at  ¶5-212, the authors refer to the “tension” between Haddad and the subsequent amendments.

Part C - Interest

104. The Applicant was very concerned that he had been in discussions with the Respondent over a long period of time, and had formed the impression from those discussions that the matter would be fully resolved in his favour once he had proved that he lived at the Property as his PPR in each of the Relevant Years.

105. He was now faced with a large bill with interest continuing to accrue.

106. In his written submissions (A3), he said:

It is my understanding that NCAT does not have jurisdiction to apply penalties such as interest. However, I wish to highlight the following points regarding the interest component of this matter:

1.   The interest applied functions as a penalty, rather than a fair adjustment, especially given the circumstances.

2.    The interest amount is compounding at an unreasonable rate while the matter remains in dispute resolution, further exacerbating the financial burden.

3.   The initial documentation was sent multiple times to the wrong address, which directly impacted my ability to respond in a timely manner. Despite numerous attempts to have the interest removed on these grounds, my requests were disregarded.

4.    The Chief Commissioner has stated that, because I did not explicitly mention the interest in my application, I am not entitled to request a refund. However, given the ongoing dispute and the circumstances surrounding the interest charges, I believe this position is unfair and warrants reconsideration.

5.   Was actively engaging with the department to solve this matter – Tab 11.

6.   Matter regarding covid – Tab 11.

7.   Tab 23 concerned about my tax matter indicates consistent need to resolve the matter.

I respectfully request clarification on whether the Tribunal has jurisdiction to address the issue of interest. Furthermore, I request that this matter be formally included as a point of contention in my claim, as it significantly impacts the fairness of the proceedings.

107. As no penalties were imposed under the Assessments, it is only necessary to consider whether interest should be remitted under s 25 of the TA Act.

108. The email dated 8 February 2024 was written by the Applicant in informal and general terms. It sought a complete exemption from land tax, and did not refer specifically to the relevant assessments. This email, however, was taken by the Respondent to be the relevant “objection” regarding the assessments which issued for the years under consideration here.

109. Although there was no specific mention made of interest in the “objection”, nor in the objection decision issued by the Respondent on 8 May 2024, the Applicant had specifically raised the topic of interest in his email dated 14 March 2024 referred to at par 36 above, during the course of communications with the Respondent prior to the issue of the objection decision. In the circumstances where the Applicant was not a lawyer, and the interest was also noted by the Respondent as continuing to accrue, I find that the objection was made against the assessments and the amounts said to be payable, as well as (or including) including a decision not to remit interest for late payment of the outstanding amounts which were in dispute. Accordingly, I find that the Tribunal has jurisdiction to consider remission of interest, noting also that the Tribunal is not reviewing the objection decision.

110. Although the Respondent recently issued guidelines for the purpose of s 25(3), they were issued after the hearing.

111. I have had regard to the Respondent’s guidance in practice note CPN 024 and to the various authorities regarding the basis upon which the premium component premium interest may be remitted, including Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19, Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249, Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54 and Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd  [2020] NSWCA 126. The discretion in s 25 is broad and unfettered, subject to ensuring that it is exercised consistently with the objects of the legislative scheme. I do not find that there are circumstances relevant to the remission of the market rate of interest, but it is not in dispute that the premium component is a form of penalty.

112. In this case there are three reasons why I consider there to be circumstances that warrant a full remission of the premium component of interest to nil. First, the Respondent changed its technical position in respect of clause 4 of Sch 1A, in recognition of the decision in Haddad. Secondly, the Respondent accepts that clause 10B could have been applied to reduce the taxable value of the land, but no such application was made. Thirdly, that has the result that there is no ability for the Tribunal to waive or reduce the land tax as assessed for the Relevant Years.

Orders

113. I make the following orders:

1. The assessments to land tax are confirmed.

2. The premium component of interest in respect of the assessments is remitted to nil under s 25 of the Taxation Administration Act 1996 (NSW).

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 12 August 2025