Kolln v Chief Commissioner of State Revenue (Rd)
[2011] NSWADTAP 58
•08 December 2011
Administrative Decisions Tribunal
New South Wales
Case Title: Kolln v Chief Commissioner of State Revenue (RD) Medium Neutral Citation: [2011] NSWADTAP 58 Hearing Date(s): 30 September 2011 Decision Date: 08 December 2011 Jurisdiction: Appeal Panel - Internal Before: Judge K P O'Connor, President
S Frost, Judicial Member
J Schwager, Non-judicial MemberDecision: Appeal dismissed
Catchwords: STATE REVENUE - Land Tax - Exemption for Principal Place of Residence - Concession for Unoccupied Land - Scope of Schedule 1A, Clause 6 - Tribunal held not applicable to this case - No error - Appeal dismissed
Legislation Cited: Administrative Decisions Tribunal Act 1997
Land Tax Management Act 1956Cases Cited: Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8
Chief Commissioner of State Revenue v White and anor [2008] NSWADTAP 27
Kolln v Chief Commissioner of State Revenue [2011] NSWADT 127Texts Cited: Category: Principal judgment Parties: Ian Kolln (Appellant)
Chief Commissioner of State Revenue (Respondent)Representation - Counsel: COUNSEL
G Johnson SC (Appellant)
J Mitchell (Respondent)- Solicitors: Crown Solicitor's Office (Respondent)
File number(s): 119028 Decision Under Appeal - Court / Tribunal: Administrative Decisions Tribunal - Before: Revenue Division - Date of Decision: 31 May 2011 - Citation: Kolln v Chief Commissioner of State Revenue [2011] NSWADT 127 - Court File Number(s) 106041 Publication Restriction:
REASONS FOR DECISION
APPEAL PANEL (K O'CONNOR, DCJ (PRESIDENT), S FROST (JUDICIAL MEMBER), J SCHWAGER (NON-JUDICIAL MEMBER): All land in NSW is, in principle, subject to land tax: Land Tax Management Act 1956 (LTM Act), s 7. The rule is subject to exemptions and other qualifications.
The LTM Act, s 10(1)(r) provides an exemption for 'land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A'.
'Principal place of residence' is a defined term. Section 3 provides:
principal place of residence of a person means 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.
This is an appeal against a decision of the Revenue Division of the Tribunal. The appellant owned two pieces of land. He occupied one as his place of residence during the relevant years. He owned the other, and intended to build on it a new place of residence. This was the higher value property, and therefore it was beneficial to him financially to have it carry the exemption.
He submitted to the respondent that the higher value property should be treated as exempt from land tax under cl 6 of Schedule 1A. Clause 6 provides a concession that in certain circumstances allows unoccupied land to be treated as a person's principal place of residence. The respondent rejected the submission, and decided that the appellant's circumstances did not fall within the scope of the exemption. The Tribunal affirmed the respondent's decision. See Kolln v Chief Commissioner of State Revenue [2011] NSWADT 127 (31 May 2011).
The appellant is entitled to appeal on a question of law, and has applied for leave to extend the appeal to the merits (see Administrative Decisions Tribunal Act 1997 , ss 112, 113).
In our view the Tribunal correctly recorded the interpretations of the law given in earlier authority in the Tribunal. It applied those interpretations correctly to the facts. The question therefore is whether the earlier authority was correct.
The appellant's domestic residence in the years 1992-2009 was at Shipwright Place, Oyster Bay. He lived there with his wife and children. The other property is located at Greenpoint Road, Oyster Bay. It was owned by the appellant's mother prior to her death in 1993. Her will left the property to the appellant, and the transfer took place in July 1994.
The appellant took out an owner builder permit in 1995 with a view to building a home at the Greenpoint Road property. The Tribunal's decision gives a precis of the difficulties that are said to have beset the appellant in completing the project.
In the relevant years cl 2 of Schedule 1A provided:
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, 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 .
(5) The principal place of residence exemption is subject to the restrictions set out in Part 4.
The land 'used and occupied' by the appellant in the relevant years was the Shipwright Place property. On its face therefore cl 2 accords the exemption to that property. The appellant asserts that the concession given by cl 6 is also applicable, and he should be allowed to take the benefit of that provision.
Clause 6 provided in the relevant years:
6 Concession for unoccupied land intended to be owner's principal place of residence
(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.
Note. It is an offence under section 55 of the Taxation Administration Act 1996 to make a statement to a tax officer, or give information to a tax officer, orally or in writing, knowing that it is false or misleading in a material particular.
(2) This clause does not apply unless:
(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 building 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 the owner of the unoccupied land demonstrates 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 of the land, 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 and 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 owns land outside New South Wales that is the principal place of residence of the person or a member of the person's family (within the meaning of clause 12), or
(c) the land, or the 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 purposes of this clause:
unoccupied land means land that is not being used or occupied for any purpose.
On their face, and in light of the evidence that the appellant led before the Tribunal in relation to intent and such matters, sub-cll (1) and (2) enable the appellant to have the Greenpoint Road property treated as the land to carry the exemption, subject to being granted an extension of time under sub-cl (4).
We do not agree with the respondent's submission that the present circumstances do not engage, at least, sub-cll (1) and (2). To similar effect see Chief Commissioner of State Revenue v White and anor [2008] NSWADTAP 27 at [37].
Be that as it may, we do agree with the respondent that sub-cl (7) becomes critical. It excludes from the scope of the concession any land owned by a person that falls into any one of the three categories. The question is does sub-cl (7) have the effect of excluding the appellant from the benefit of the concession.
In our view, paragraph (a) is applicable. It provides relevantly that: 'This clause does not apply in respect of land owned by a person if ... 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 this Schedule'.
The term 'entitled' is, perhaps, an unusual word to describe a disabling circumstance. In Schedule 1A the word appears first in cl 2(3) (set out above), cl 6(1) (set out above), as well as cl 4(2)(b), (d) and cl 11(5)(b). It is used in the sense of describing an attribute, characteristic or circumstance. In this case the appellant is a person who possesses the attribute or characteristic of having land with which he has a relationship of actual use and occupation. Once that characteristic exists, he is excluded by virtue of sub-cl (7) from claiming the prima facie entitlement given to him by the earlier sub-clauses.
The land to which sub-cl (7)(a) refers is Shipwright Place. Accordingly he is excluded from claiming a concession for the unoccupied land.
The provisions, we acknowledge, are somewhat convoluted, but their ordinary effect, as we see it, is to confine the benefit of the cl 6 concession to new entrants to home ownership. If the purchaser of a piece of land already owns land which is occupied as their principal place of residence, they receive an exemption for that land but not for the new land. On the other hand if they were not owner/occupiers of land when they purchased the land intended to be the site for their domestic residence they may claim the cl 6 concession pending completion of the building works within the period fixed (or as extended).
We agree, therefore, with the Tribunal's reliance on its previous decision in Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8, where it said:
49 Subclause 6(7) simply denies the concession available under clause 6 if the person seeking the concession owns another residence within or outside New South Wales, which is on the relevant taxing date being used and occupied as the principal place of residence of the person. The subclause also prevents an owner of land, if the land or in combination of any adjoining land is capable of being developed, to have either two residences or residential units.
50 In the present matter, the Chief Commissioner has denied the concession on grounds that subclause 6(7), in particular paragraph (a), applies to the applicants. The predecessor of subclause 6(7)(a) was subsection 10T(3)(a) which provided as follows:
"the person or any joint owner of the land is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 10(1)(r)".
51 The effect of the proviso in s 10T(3)(a) was considered by the Tribunal in Wilks v Chief Commissioner of State Revenue [2002] NSWADT 248 where Judicial Member Block held at paragraph 19 as follows:
"... The concession under section 10T was available only where the Applicant was not entitled to an exemption for another property under section 10(1)(r) and the plain fact is that he was so entitled in respect of the McMahons Property in relation to the relevant year. This is so having regard also to section 3(3)(a) of the Act and the fact that property had been "continuously used and occupied ... for residential purposes" since the preceding 1 July. The McMahons Property may at that time and from the Applicant's subjective point of view have been owned by him on a temporary basis in the sense that he intended to sell it at a convenient time thereafter but that is not the point. The plain fact is that once the McMahons Property qualified for the section 10(1)(r) exemption in relation to the relevant year (and it clearly did) then and in respect of the Castlecrag Property the section 10T concession was not available."
The appellant also sought to rely on cl 12. Clause 12 provides:
12 Only one principal place of residence for all members of same family
(1) 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.
(2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year.
(3) Such an election is to be made, by or on behalf of the members of the family, in writing and must be lodged with the Chief Commissioner within the period for the lodging of objections under section 89 of the Taxation Administration Act 1996 .
(4) An election may be made, in respect of a tax year, by the end of the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability) for that tax year.
(5) If an election is not made, the Chief Commissioner is to treat the residence that has the highest land value for land tax purposes as the principal place of residence of all members of the family.
(6) For the purposes of this clause, a family consists of the following:
(a) a person and his or her spouse (if any),
(b) any dependent child or dependent step-child of the person and his or her spouse (or of either of them) who ordinarily resides with the person or his or her spouse.
(7) A person is the spouse of another person if:
(a) they are legally married, or
(b) they are living together as a couple in a de facto relationship within the meaning of the Property (Relationships) Act 1984 .
(8) However, if the Chief Commissioner is satisfied that a person:
(a) is legally married to another person but not cohabiting with that other person, and
(b) has no intention of resuming cohabitation with that other person,
the person is not to be regarded as the spouse of that other person and if a dependent child or dependent step-child of the person has a joint interest in the principal place of residence of the spouse, that interest is to be disregarded.
(9) A person who is the child or step-child of another person is a dependent child or a dependent step-child if the person is under 18 years of age and is not legally married.
(10) Nothing in this clause prevents more than one residence from being treated as the principal place of residence of members of a family under clause 7 (Concession for sale of former principal place of residence).
He stated that he had not made an election, and that therefore the higher value property rule set out in sub-cl (5) is applicable.
We agree with the respondent's submission that this clause is addressed to circumstances where there are two properties that are actually used as residences. This is not a case of that type.
Again, we agree with the analysis of the way in which cl 6 and cl 12 interacts set out in the decisions relied upon by the Tribunal below, i.e. Aronstan , cited above, at [43]-[44] and [56]-[57]; and Chief Commissioner of State Revenue v White, cited above, at [33]-[37].
Order
Appeal dismissed.
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