KOHZAD and COMMISSIONER OF STATE REVENUE

[2007] WASAT 48

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   DEVELOPMENT & RESOURCES

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION:   A and COMMISSIONER OF STATE REVENUE [2007] WASAT 48

MEMBER:   JUSTICE M L BARKER (PRESIDENT)

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   21 FEBRUARY 2007

FILE NO/S:   DR 35 of 2007

BETWEEN:   A

Applicant

AND

COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Land tax – Tenants allowed to remain in property on compassionate grounds - Whether exemption for "private residential property" in s 21 of the Land Tax Assessment Act 2002 (WA) applies - No exemption available

Legislation:

Land Tax Act 2004 (ACT), s 11
Land Tax Assessment Act 2002 (WA), s 21
Taxation Administration Act 2003 (WA), s 34(1), s 40(1)

Result:

Decision of Commissioner of State Revenue affirmed
Review application dismissed

Category:    B

Representation:

Counsel:

Applicant:     Self-represented

Respondent:     Ms C Campbell (Acting as Agent)

Solicitors:

Applicant:     Self-represented

Respondent:     Commissioner of State Revenue

Case(s) referred to in decision(s):

Dival Nominees Pty Ltd and Commissioner of State Revenue [2005] WASAT 342

Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270

Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The applicant (A) owns two properties in the Perth metropolitan area.  Although she intended to recommence residing in the first property before 30 June 2006, she did not fulfil this intention.  Instead, A compassionately allowed her tenants to extend their periodic lease.

2. Notwithstanding her charitable intent, the Tribunal found that the Commissioner of State Revenue was legally correct in finding that A could not satisfy the exemption from land tax in s 21 of the Land Tax Assessment Act 2002 (WA).

3. The Tribunal observed that if any exemption from land tax on compassionate grounds were to be created, it would need to be created by the Parliament of Western Australia.  The Tribunal noted that in the Australian Capital Territory a taxpayer can apply for exemption on compassionate grounds.

4. Accordingly, the Tribunal affirmed the decision of the Commissioner of State Revenue to impose land tax, and dismissed the review application.

Issue

1. The issue for determination by the Tribunal is whether the Commissioner of State Revenue (the Commissioner) was correct in disallowing the applicant's (A’s) objection to the assessment of land tax for the assessment year 1 July 2006 to 30 June 2007 on her first property.

2. The Tribunal treated the Commissioner as having disallowed the objection, so that the Tribunal had jurisdiction to determine the matter under s 40(1) of the Taxation Administration Act 2003 (WA) (the Act). The Tribunal determined the matter on the documents and in light of the submissions made by the parties on 13 February 2007.

Facts

1. At all material times, A was the registered proprietor of two parcels of land in the metropolitan area (the first and second properties).

2. In May 2005, A rented the first property to tenants for a term of six months.  On the expiry of this lease, the tenants continued to rent the property on a periodic lease.

3. The tenants were due to move out of the first property before 30 June 2006, to enable A to resume residing in the property.  However, the female tenant experienced complications in the late stages of her pregnancy, and required strict bed rest between April and July 2006.

4. A, in an uncommon act of kindness, allowed the tenants to remain in the first property until 14 July 2006.  Until this date, A remained at the second property.  After 14 July 2006, she moved into the first property.

5. In August 2006, the Commissioner issued A with an assessment for land tax in the amount of $1845.00 for the assessment year 1 July 2006 to 30 June 2007.  The second property was exempted from land tax as A was residing there at midnight on 30 June 2006.

6. On 29 August 2006, A had an interview with an officer of the Office of State Revenue. At this meeting, A effectively objected to the Commissioner's assessment, as she was entitled to under s 34(1) of the Act. The Tribunal treated the Commissioner as having disallowed the objection by letter dated 17 November 2006.

7. A’s local Member of the Legislative Assembly raised A’s situation with the Treasurer, the Hon Eric Ripper MLA, by letter in January 2007.  Mr Ripper replied on 22 January 2007 explaining that the exemption provision was not available in the circumstances.

8. On 17 January 2007, the Commissioner issued a further notice of assessment in the amount of $1845.00.

9. On 25 January 2007, A filed an application for review before the State Administrative Tribunal under s 40(1) of the Act.

Contentions

1. A acknowledges that she was not residing in the first property on 30 June 2006.

2. A contends that she should not be compelled to pay land tax on the first property for the following reasons:

   •She allowed the tenants to remain in the first property as she herself had been in a similar situation to the female tenant, who was experiencing severe difficulties with her pregnancy in a foreign country and without the support of family or friends, and wholly understood the pain and fear of losing her first-born child from which the female tenant was suffering; 

   •The rental income from the first property is her only source of income;

   •Her long-term unemployment and constant maintenance of her 70-year-old property have placed her in financial difficulties; and

   •Since her migration to Australia 13 years ago, she has been a law-abiding citizen.

3. The Commissioner contends that there is no compassionate exemption from land tax, and that the Land Tax Assessment Act 2002 (LTA Act) does not allow the Commissioner to do anything but tax A on the property she owns but was not residing in on 30 June 2006, namely the first property.

The legal position

1. Unfortunately, from A’s point of view, the law on the assessment of land tax is clear. The owner of land in Western Australia must pay tax for each financial year under s 5 of the LTA Act, unless an exemption applies to that land. Section 21(1)(a) of the LTA Act states that property is exempt from land tax if, at midnight on 30 June, it is owned by an individual who uses it as his or her primary residence.

2. Prior to 30 June 2006, A intended to use the first property as her primary residence.  However, she did not act upon this intention for compassionate reasons.  It is well-established that "use" means "a present use; it does not include a contemplated or intended use": Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 per Gibbs J at 21; affirmed in Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 per Stephen J at 285.

3. Similarly, the Tribunal has previously stated that maintaining an intention to use land in a manner which exempts the land from land tax is not enough to qualify for that exemption: Dival Nominees Pty Ltd and Commissioner of State Revenue [2005] WASAT 342 per Barker J at [104].

4. Only the Parliament of Western Australia can introduce new exemptions to land tax. However, if the Parliament were to amend the Act to include an exemption such as that contained in s 11 of the Land Tax Act 2004 (ACT), which allows the Commissioner under that Act in the Australian Capital Territory to exempt a property from land tax where the owner was temporarily absent due to "compelling compassionate reasons", it is likely that A would find herself well within the scope of the exemption.

5. It follows that, on the present state of the law, it was not open to the Commissioner to grant any exemption to A in respect of the land tax payable on the first property.

Conclusion and order

1. For the reasons set out above, A’s application for review of the Commissioner’s refusal to uphold her objection to the imposition of land tax on the first property for the financial year 1 July 2006 to 30 June 2007 must fail.

2. Accordingly, the Tribunal orders:

   1.The decision of the Commissioner of State Revenue to impose land tax for the financial year 1 July 2006 to 30 June 2007 on the first property is affirmed.

   2.The review application is dismissed.

   I certify that this and the preceding [25] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

   ___________________________________

   JUSTICE M L BARKER, PRESIDENT