Kyren Nominees Pty Ltd v Commissioner of State Taxation
[2013] SASC 58
•24 April 2013
SUPREME COURT OF SOUTH AUSTRALIA
(Appeals to a Single Judge: Civil)
KYREN NOMINEES PTY LTD v COMMISSIONER OF STATE TAXATION
[2013] SASC 58
Judgment of The Honourable Chief Justice Kourakis
24 April 2013
TAXES AND DUTIES - LAND TAX - OBJECTIONS AND APPEALS - IN GENERAL
TAXES AND DUTIES - LAND TAX - AVOIDANCE OF LAND TAX
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - OTHER MATTERS
The appellant appeals against the determination of the Minister of Finance upholding a land tax assessment made by the respondent. The respondent formed the opinion that the purpose, or one of the purposes, of the creation of the minor interests was to reduce the amount of land tax payable in respect of land. Accordingly, the respondent disregarded the minor interests in two parcels of land in which the appellant held the preponderant interest pursuant to s 13A(3) of the Land Tax Act 1936 (SA).
The appellant challenges the opinion of the respondent with respect to the purpose of the creation of the interests. The appellant contends that the interests were created for asset protection reasons. Furthermore, the appellant asserts that s 13A(3) of the Land Tax Act 1936 (SA) does not apply to interests of land which are constituted by incremental augmentations of the size of that interest.
Held: appeal dismissed – the minor interests in land were created for the predominant purpose of reducing land tax – the appellant’s construction of s 13A(3) of the Land Tax Act 1936 (SA) is rejected because it lacks textual support and would obstruct the manifest purpose of the provision.
Land Tax Act 1936 (SA) s 13A, s 13A(3), s 4, s 12, s 2, s 16, s 13A(8); Local Government Act 1999 (SA); Taxation Administration Act 1996 (SA) s 92, s 96, s 96(1), s 97, s 98, s 98(b), referred to.
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355; Algoni Pty Ltd & Ors v Secretary, Department of Industrial Relations (1985) 3 NSWLR 515; Martin v Osborne (1936) 55 CLR 367, considered.
KYREN NOMINEES PTY LTD v COMMISSIONER OF STATE TAXATION
[2013] SASC 58Civil
KOURAKIS CJ: Kyren Nominees Pty Ltd (Kyren) appeals against the determination of the Minister of Finance upholding a land tax assessment made by the Commissioner of State Taxation. The Minister, by letter dated 20 April 2012, confirmed the Commissioner’s decision to disregard certain minor interests in two parcels of land in Coglin Street, Adelaide, in which Kyren held the preponderant interest. The minor interests were disregarded by the Commissioner pursuant to s 13A of the Land Tax Act 1936 (SA) (the Act) because he formed the opinion, pursuant to s 13A(3) of the Act, that the purpose, or one of the purposes, of the creation of the minor interests was to reduce the amount of land tax payable in respect of the land.
Kyren challenges on this appeal the Minister’s opinion as to the purpose of the creation of the interests. On the appeal Kyren called its sole director and shareholder Mr Theodore Samaras (Mr Samaras) and accountant Mr Angelo Polymeneas (Mr Polymeneas) both of whom gave evidence that the interests were created for asset protection reasons. Kyren also contends that, irrespective of Kyren’s purpose, s 13A(3) of the Act does not apply to interests in land which are constituted by incremental augmentations of the size of that interest. As to Kyren’s factual contention I find that the interests in land were created for the predominant purpose of reducing land tax. I also reject Kyren’s objection based on its construction of s 13A(3) of the Act. Kyren’s construction of s 13A(3) of the Act has scant textual support and would obstruct the manifest purpose of the provision. My reasons for both the factual finding and my construction of s 13A(3) of the Act follow.
The Act
In these reasons I refer to the provisions of the Act as they stood from 1 July 2008 to 30 June 2009.
By s 4 of the Act taxes are imposed on all land in the State save for the land expressly exempted by that provision. The taxes are imposed and payable in respect of each financial year[1] and the tax so imposed for a particular financial year is calculated on the site value of the land as at midnight on 30 June immediately preceding that financial year.[2]
[1] Section 4(2) of the Act.
[2] Section 4(3) of the Act.
Where two or more persons are the owners of land the same amount of land tax is payable in respect of that land as if only one person were the owner.[3] An owner of land is defined to mean any person who holds or is entitled to a legal or equitable estate of fee simple in the land.[4] The owners of land are jointly and severally liable to pay the tax in respect of that land.[5]
[3] Section 12(1) of the Act.
[4] Section 2 of the Act.
[5] Sections 14 and 16 of the Act.
The land tax scale prescribed by s 8 of the Act is progressive ranging from 30 cents for every $100 in value to $3.70 for every $100 in value. Section 8(2) of the Act provides that, except as otherwise provided by the Act, the rate of land tax is calculated by reference to the aggregate taxable value of all land owned by the taxpayer.
Section 13A of the Act provides for aggregation when an owner holds a greater than 50 per cent interest in multiple parcels of land but with different co‑owners:
13A—Commissioner may determine that minor interest is to be disregarded
(1) In this section—
prescribed interest—see subsections (2) and (3);
prescribed land means land where 2 or more persons are the owners of the land;
transaction includes any form of conveyance, transfer, contract, agreement or arrangement (whether or not in writing).
(2) If a person's interest in prescribed land is 5% or less, subsection (5) will apply in relation to the interest (a prescribed interest) unless the Commissioner, on the application of a person who, as an owner of the prescribed land, has an interest exceeding 5% in the land, is satisfied that there is no doubt that the interest was created solely for a purpose, or entirely for purposes, unrelated to reducing the amount of land tax payable in respect of the land, or any other piece of land.
(3) If a person's interest in prescribed land exceeds 5% but is less than 50%, subsection (5) will apply in relation to the interest (a prescribed interest) if the Commissioner forms the opinion that the purpose, or 1 of the purposes, for the creation of the interest was to reduce the amount of land tax payable in respect of the land, or any other piece of land.
(4) For the purposes of subsections (2) and (3), the Commissioner may have regard to—
(a)the nature of any relationships between the owners of the land, or between the owners of 2 or more pieces of land; and
(b)the lack of consideration, or the amount, value or source of the consideration, provided in association with the creation of the interest; and
(c)the form and substance of any transaction associated with the creation or operation of the interest, including the legal and economic obligations of the parties and the economic and commercial substance of any such transaction; and
(d)the way in which any transaction associated with the creation or operation of the interest was entered into or carried out; and
(e)any other matter the Commissioner considers relevant.
(5) If this subsection applies in relation to a prescribed interest under this section—
(a)the person holding the prescribed interest is to be taken not to be an owner of the land for the purposes of this Act; and
(b)the land tax payable in respect of the land is to be assessed, and is payable, as if the land were wholly owned by the owner or owners of the land who do not hold the prescribed interest (or, if relevant, any such prescribed interest).
(6) However, a preceding subsection will not apply for the purposes of the other provisions of this Act if the effect is to decrease the amount of land tax payable in respect of any land.
(7) If the Commissioner decides to reject an application of an owner of land under subsection (2), the Commissioner must give notice of the decision to the owner—
(a)stating the decision; and
(b)stating the grounds on which the decision is based.
(8) If the Commissioner forms an opinion under subsection (3) so as to give rise to the application of subsection (5), the Commissioner must give notice of the operation of subsection (5) to each owner of the land—
(a)stating the fact that the opinion has been formed, and setting out its effect under this section; and
(b)stating the grounds on which the opinion is based.
(9) For the purposes of this section—
(a)a reference to an interest in land is a reference to the estate, interest, right, benefit or fact of occupation that makes a person an owner of land under this Act; and
(b)an interest may be or become subject to the operation of this section no matter when it was created, including in a case where the interest was created before the commencement of this section.
Kyren contends that for the purposes of subsection (3) the prescribed interest is the interest which exceeds 5 per cent immediately before the commencement of the taxation year and it is the creation of that same interest (the interest) about which the Commissioner must form the opinion that the purpose, or one of the purposes, for its creation was to reduce the amount of land tax. That proposition reflects the plain words of s 4 of the Act and should be accepted.
Kyren then contends that because its interests in the relevant land immediately before the taxation years in dispute was the accumulation of two separate interests it is not a single interest and does not come within the terms of s 13A of the Act. Kyren also contends that the Commissioner can only form an opinion about the purpose of the creation of an interest if it is created by a single conveyance. Kyren argues that the Commissioner is faced with an impossible task when an interest has been created in two or more steps, for example, as in this case, first with the creation of a 0.5 per cent interest which is followed by a later augmentation of that interest to create a 5.5 per cent interest in the land. Faced with such a situation, the Commissioner can only form two separate opinions, the first with respect to the purpose of the creation of the 0.5 per cent interest and the second with respect to the purpose of the creation of the 5.5 per cent interest. Kyren’s submission continues that s 13A(3) fails to direct which of the two interests the Commissioner is to consider for the purposes of s 13A(3) of the Act. The necessary consequence of that elision, the argument concludes, is that s 13A of the Act can have no application to the minority interests in Kyren’s land or any other interests created by two or more conveyances.
In my view the construction for which Kyren contends proceeds from a false premise. On a plain reading of the text of s 13A of the Act, I see no difficulty in treating the final result, of two or more conveyances, as a single interest. It is simply not to the point that a lesser interest has been created along the way. It is the creation of the single interest which was held at midnight on 30 June preceding the taxation year to which s 13A of the Act directs the Commissioner’s attention.
It has been repeatedly said that the text of a statutory provision is the alpha and omega of the judicial task of statutory construction. However, those letters rarely convey any meaning unless they are read in the context of the intervening letters of the alphabet. It is the context of s 13A of the Act to which I now turn.
The Act imposes a progressive tax on the aggregation of land held in common ownership. Aggregation can be circumvented by the creation of minor interests which, because of their small size, offer no threat to the management of the land by the predominant owner and are relatively inexpensive to create. The manifest purpose of s 13A of the Act is to prevent the evasion of the aggregation provision by creating interests in land that are less than a majority interest and which are created for the purpose of reduction of land tax.
The Minister’s second reading speech expressly adverts to the existing practice of landholders to create minor interests in their multiple holdings to avoid the aggregation provisions. The evidence in this case from Mr Samaras and Mr Polymeneas confirms that the practice was widespread.
Kyren’s construction would obstruct the attempt to address that mischief in two obvious and substantial ways. First, the many taxpayers who had already created a minor interest in land could unilaterally avoid the application of s 13A of the Act by effecting a further conveyance to augment, even slightly, that interest so long as, in aggregate, the interest exceeded five per cent. Secondly, taxpayers could avoid the application of s 13A of the Act to future acquired land by creating the minority interest in a series of steps rather than by a single conveyance. Kyren’s construction undermines the manifest purpose of the provisions and leads to plainly absurd results.
I acknowledge that there are some problematic features of s 13A of the Act. In particular, it might be difficult to identify, as a question of fact, the purposes of the creation of the single interest when it is created by a series of conveyances.
A number of matters should here be noted. First, the parties both submit, in my view correctly, that it is the subjective purpose of the taxpayer which the Commissioner must discern, albeit by drawing inferences, where appropriate, from objective facts.
Secondly, it is sufficient if one of the purposes of the creation of the interest is the reduction of land tax. Kyren submits that s 13A of the Act would operate harshly if the tax reduction purpose of the creation of the minority interests before the enactment of s 13A of the Act remained forever as one of the purposes of the creation of any augmented interest. If that were so, the augmentation of the minority interest for a genuine commercial purpose would still have to be ignored for the purposes of aggregation. It can be accepted that aggregation in those circumstances would result in a much heavier tax burden, but the legislature might also have provided for the aggregation of all land held by a taxpayer irrespective of the reason for the creation of any minority interests. Whether to impose land tax on that basis, or to allow disaggregation if the minority interests were created for genuine commercial reasons, is a matter of tax policy for the legislature. Taxation legislation will of course be constructed with an eye to the protection of private property. However, characterisation of the effect of s 13A of the Act as harsh or otherwise is not, in itself, of much assistance in its construction.
I return to the question whether the purpose of the creation of one of a number of lesser interests necessarily remains a purpose of the creation of the single augmented interest existing at midnight on 30 June. In my view, the purpose of the creation of each of the lesser interests will not necessarily also be a purpose of the creation of the single augmented interest. Much will depend on the facts and circumstances. Where, for example, a taxpayer with a historically created minor interest of less than five per cent effects a conveyance to create an interest between five per cent and 50 per cent to perfect an equitable interest genuinely held by another, or to secure a development partner, the purpose in the creation of the historical interest might not be a continuing purpose of the creation of the interest existing immediately before the relevant tax year. In this context it may also be necessary to distinguish between purpose and motive. A taxpayer may decide to sell a significant, but less than 50 per cent, interest in land in order to raise capital. One of the reasons for so deciding may be the holding costs, including his or her land tax liability, associated with retaining the land. However, the sole purpose of the transaction might nonetheless be found to be the realisation of a portion of the equity in the land.
On the other hand, if the conveyance which augments the minority holding to an interest of more than 5 per cent is for a genuine purpose, other than tax reduction, but is in itself a conveyance of less than a five per cent interest it might still be found that the tax reduction purposes of the creation of the historical minority interest continues to be one of the purposes of the creation of the relevant single interest which exists at midnight on 30 June preceding the relevant financial year.
As will shortly be seen, because of the factual findings I have made, a final resolution of those questions can be left for another day.
Kyren also advanced a construction of the Act that the Commissioner was bound to form his opinion about the purpose of the creation of the interest before, or at least in the last moment before, midnight on 30 June preceding the relevant financial year. There is no textual basis for giving the Act such an absurd and unworkable construction. Kyren seems to conflate, for the purpose of this contention, the words of the Act which direct attention to the date on which the interest must exist with the time at, or by, which the Commissioner must form his opinion pursuant to s 13A of the Act. The interests might, as in this case, be created on 30 June. Even if the Commissioner managed to discover them all, he could not possibly investigate the surrounding circumstances which would allow him to form an opinion on them pursuant to s 13A of the Act. Again, if he did, there would be a difficult problem as to how to recognise parts of a day for the purposes of s 13A of the Act. Of course the practical difficulty to which I have referred extends even to interests created well before 30 June. For all of these reasons, Kyren’s construction should be rejected.
The evidence
The following facts have been agreed by the parties. Mr Samaras is the sole director of Kyren and holds 60 per cent of its shares in his personal capacity. He holds the remaining 40 per cent of its shares as trustee for his daughters; Natasha, Marissa, Nicole and Michelle. Mr Samaras is the director and sole shareholder of Theo Samaras Pty Ltd (Samaras Pty Ltd) and Eastern Parade Pty Ltd (Eastern). On 19 June 2000, Kyren, Samaras Pty Ltd and Eastern took a conveyance of land at 24 Coglin Street in the proportions of 99 per cent, 0.5 per cent and 0.5 per cent respectively. On 9 March 2001 Kyren, Samaras Pty Ltd and Mr Samaras took a conveyance of land at 16 Coglin Street in the proportions of 99 per cent, 0.5 per cent and 0.5 per cent respectively.
On 30 June 2008, Kyren transferred to Eastern a 5.5 per cent interest in 24 Coglin Street; reducing its interest to 93.5 per cent and increasing the interest of Eastern to 6 per cent. There was no change in the interest of Samaras Pty Ltd; it remains at 0.5 per cent. On the same day Kyren transferred a 5.5 per cent interest in 16 Coglin Street to Mr Samaras with the result that Kyren’s interest fell to 93.5 per cent and Mr Samaras’ interest rose to 6 per cent. There was no change in the shareholding of Samaras Pty Ltd; it remained at 0.5 per cent.
On 7 June 2007 the State Government introduced the Statutes Amendment (Budget 2007) Bill 2007. On the same day RevenueSA issued a circular, referring to a proposed amendment to the Act which would become s 13A, explaining that land tax minority interest provisions would come into effect on 30 June 2008. On 14 June 2007 RevenueSA issued another circular explaining in further detail the intended operation of the clause in the Bill which became, on 9 August 2007, s 13A of the Act.
In February 2008 RevenueSA wrote to Kyren Pty Ltd explaining the operation of s 13A of the Act and enclosing a copy of the circular of 14 June 2007.
In January 2009 RevenueSA wrote to Kyren requesting reasons for the changes in the interests held by the owners of 16 Coglin Street and 24 Coglin Street on 30 June 2008. Kyren did not respond.
The Commissioner wrote to Kyren Pty Ltd on 17 February 2010 informing it that he had formed the opinion that, for the purposes of s 13A(3) of the Act, the purpose, or one of the purposes, of the changes in the ownership of the Coglin Street properties was to reduce the amount of land tax payable and that accordingly he had disregarded those interests in the 2008/2009 financial year. Although not expressed as grounds, the Commissioner prefaced the statement of his opinion with certain factual observations. In short, the Commissioner referred to the increase in the interests of Eastern (24 Coglin Street) and Mr Samaras (16 Coglin Street) from 0.5 per cent to 6 per cent immediately before s 13A of the Act came into effect. The Commissioner also observed that those conveyances were made contemporaneously with changes in the ownership structure of other land held by entities associated with Mr Samaras.
On 29 September 2010 solicitors for Kyren responded to the Commissioner. The solicitors advised the Commissioner that Kyren had borrowed funds from other related entities in order to retire a bank overdraft and pay other creditors. The letter continued that:[6]
After the preparation (in mid June 2008) of Kyren’s draft financial accounts for FY08 the quantum of the Loans was discovered. At that time it was not foreseeable that Kyren would be able to repay the Loans. Instead of defaulting on the Loans Kyren made the First Transfer and the Second Transfer to discharge its obligations to Eastern Parade and Mr Samaras respectively.
The Transfers are therefore wholly for the purpose of repaying the Loans. Kyren has only made transfers of interests in property to entities and persons that Kyren is indebted to with no prospect of otherwise satisfying that debt.
The letter did not refer to a concern harboured by Eastern or Mr Samaras to secure repayment of their loans ahead of any claims which might be made by construction subcontractors engaged by Kyren on building developments it had undertaken.
[6] Exhibit A1, p 134 at [3.1]; Book of Documents Volume 1 of 2, p 134 at [3.1].
It is convenient to deal here with Kyren’s submission that the Commissioner’s letter of 17 February 2010 does not conform with the requirement in s 13A(8) of the Act that he state the grounds on which his opinion is based. That submission should be rejected. On a natural reading of the letter the factual matters referred to are the grounds on which the opinion is based. Compliance with s 13A(8) of the Act is not to be measured by whether or not the grounds are a sufficient basis to reasonably hold the opinion that the conveyances were for the purpose of reducing land tax. The purpose of s 13A(8) of the Act is to enable the taxpayer to decide whether to accept the Commissioner’s ruling or to challenge it. If the taxpayer believes the grounds are insufficient to support the opinion he or she may attempt to so persuade the Commissioner or appeal against his decision to this Court.
In this case Kyren first chose the former course but it did not complain that the Commissioner’s letter insufficiently disclosed his reasons. It could hardly do so after having failed to respond to the Commissioner’s earlier requests for information. Indeed, having regard to that failure, the grounds given by the Commissioner on 17 February 2010, in my view, reasonably support the opinion he reached. In any event, on a proper construction of s 13A(8) of the Act, the failure to give grounds does not invalidate the Commissioner’s determination having regard to the taxpayer’s right to appeal the determination by way of a rehearing de novo.[7] In Algoni Pty Ltd & Ors v Secretary, Department of Industrial Relations,[8] the remedy given for a failure to comply with a requirement to give reasons was a declaration to that effect and not an order quashing the decision for invalidity.
[7] Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355.
[8] (1985) 3 NSWLR 515.
I return to the chronology revealed by the agreed facts.
By letter dated 1 December 2010 the Commissioner requested supporting documentation for Kyren’s claim. On 23 March 2011 Kyren’s solicitors provided minutes of a meeting of Kyren held on 23 June 2008 in which it was resolved to execute the transfers to Eastern and Mr Samaras. Kyren also provided the financial statements of Kyren for the year ending 30 June 2008 which showed the reduction in the loan accounts of Eastern and Mr Samaras.
An officer of the Commissioner noticed the discrepancy between the minutes recording an agreement to convey a further 5 per cent interest and the actual conveyances of 5.5 per cent interest. The officer requested an explanation. Kyren’s solicitors responded that the minor discrepancy was of no moment, but did not provide any explanation for it, other than to say that “little attention [was] paid to the total interest held by minor owners”. That response gave no explanation at all.
Kyren was also involved in the transfer of 15 other minority interests in land on 30 June 2008. On that date Kyren transferred a 6 per cent interest in different blocks of five home units in a residential development known as the Paxton’s Walk Apartments to three of Mr Samaras’ daughters.[9]
[9] Natasha, Marissa and Nicole.
The agreed facts were supplemented by the evidence I summarise hereinafter.
The Commissioner adduced evidence that two other conveyances of minority interests in land held by corporations controlled by Mr Samaras were effected on 30 June 2008. By those conveyances Mr Samaras’ one per cent interest in different land held by each of those corporations was increased to six per cent. That evidence was not disputed by Kyren.
Kyren called Mr Samaras and its accountant, Mr Polymeneas.
I received an affidavit sworn on 7 February 2013 by Mr Polymeneas as his evidence in chief. Mr Polymeneas exhibited to his affidavit Kyren’s business records evidencing movements in the loan accounts of Mr Samaras and Eastern. As at 30 June 2007 Eastern’s loan account was in credit in the sum of $22,508.50. There was no opening balance in Mr Samaras’ loan account. The business records show that Eastern’s and Mr Samaras’ loan accounts were credited for payments made by each of them in discharge of Kyren’s liability under a loan made to it by Adelaide Bank. They were also credited with further advances of $70,000 and $6,000 respectively on 30 June 2007. Mr Polymeneas was not able to identify the nature of those advances. The closing balance on Eastern’s loan account on 30 June 2007 was $322,508.50 and the balance of Mr Samaras’ loan account was $40,000. On 30 June 2008, the balances were $11,434 and $1,500 respectively.
Mr Polymeneas deposed that, in a meeting with Mr Samaras on 14 May 2008, Mr Samaras expressed concern about Kyren’s financial future because of costs blow outs in any building developments it had undertaken. Mr Samaras also expressed concern about a possible claim on Kyren by the spouse of his daughter Marissa. Mr Polymeneas testified that he suggested that, as a means of addressing his concerns, Kyren settle its loan accounts with Eastern and Mr Samaras as a means of addressing his concerns. Mr Samaras complained that Kyren did not have the cash flow to do so. Mr Polymeneas then suggested that Kyren discharge the debts to Eastern and Samaras by transferring to them shares in land held by Kyren. I observe here that the meeting to which Mr Polymeneas deposed occurred one month earlier than the mid June 2008 discovery of the existence of the loan accounts referred to in the letter of Kyren’s solicitors dated 29 September 2010.
Mr Polymeneas deposed that he later prepared minutes of a meeting of directors for both Kyren and Eastern that record resolutions providing that the debts should be discharged in that way. The minutes were exhibited to Mr Polymeneas’ affidavit. Those minutes purport to be of a meeting held by Kyren on 23 June 2008 in which Mr Samaras, as the only attendee and chairperson, resolved that the repayment of the loan to Eastern be effected by a conveyance of 5 per cent of the Mills Street car park property at 24 Coglin Street at a value of $335,000. The minutes also record a resolution that 5 per cent of the property at 16 Coglin Street be transferred to Mr Samaras at a value of $38,500. Exhibited to Mr Polymeneas’ affidavit were also the minutes of a meeting purportedly held by Eastern on the same day, at which Mr Samaras was again the only attendee, and at which it was resolved to accept the offer of the transfer of a 5 per cent interest in the property at 24 Coglin Street valued at $335,000 to be offset against Eastern’s loan to Kyren.
Mr Polymeneas was cross-examined on his affidavit. He accepted in cross‑examination that he had advised Mr Samaras to create the minority interests in 16 Coglin Street and 24 Coglin Street when they were purchased in 2000 and 2001, in order to reduce Kyren’s land tax liability. Mr Polymeneas explained that at the time it was a well known land tax minimisation strategy to create a one or two per cent minority interest in land to avoid the aggregation provisions of the Act. Mr Polymeneas testified that the practice was accepted by the State Taxation Office.
In cross-examination Mr Polymeneas acknowledged that he became aware shortly after the 2007 State Budget was announced that minority interests of less than 5 per cent would be ignored for aggregation purposes and that minority interests between 5 per cent and 50 per cent would also be ignored unless there was a commercial reason for their creation. Mr Polymeneas testified that many clients sought his advice after the Budget announcement and that he told almost all of them (“nearly 99 per cent of them”) that there was nothing they could do to reduce land tax short of transferring 50 per cent or more of their interest in the land. Mr Polymeneas gave this answer in elaboration:[10]
Most of them, it was pretty obvious that if you transferred a percentage, it would have been done to avoid, to minimise land taxation, and the Commissioner would have disregarded that, and I told a lot of clients ‘There is no point you trying to transfer any percentages out to another entity because you get caught under legislation’. There was no commercial reason. You would have needed some kind of commercial reason to transfer.
[10] T 9-10.
Mr Polymeneas explained that he told clients that they needed a “commercial reason” to avoid land tax aggregation by the conveyance of a minority interest between 5 percent and 50 per cent. Mr Polymeneas also testified that he would explore with his clients whether there might be a “legitimate commercial reason” to convey a greater interest to a third party.
Mr Polymeneas testified that he spoke to Mr Samaras on many occasions, about 15 times, during the 2007-2008 financial year. He described Mr Samaras as a “significant client”. Mr Polymeneas agreed that he discussed the land tax changes with Mr Samaras.
Despite the frequency of his conversations with Mr Samaras, Mr Polymeneas testified that he did not recollect discussing the conveyances of the interests in the Paxton’s Walk Apartments. Nor could he recollect discussing any transfers involving the other corporate entities, with respect to whom conveyances were effected on 30 June 2008, even though he was the accountant for those entities. Mr Polymeneas testified that he did not provide any advice in respect of the conveyances of land held by the other corporate entities or with respect to the Paxton’s Walk Apartments.
Early in the course of the cross-examination of Mr Polymeneas concerning the meeting with Mr Samaras on 14 May 2008 the following exchange took place:[11]
Q.I take it from your answer before that, you suggest that the effect or the possibility that this transfer might be picked up under the Land Tax Act was not discussed.
A.That’s correct.
Q.Were you not concerned that it might well be a concern for the Commissioner.
A.No, the purpose of the meeting was Kyren’s financial stress at the time. That was the purpose of the meeting.
[11] T 16.
Mr Polymeneas went on to testify that at the time it did not concern him that the conveyance might be questioned by the Commissioner. Mr Polymeneas claimed that his concern was to protect Mr Samaras’ assets.
Mr Polymeneas also linked that concern to the proposed marriage of one of Mr Samaras’ daughters. Mr Polymeneas agreed that he had suggested a pre‑nuptial agreement at the meeting but that the Mr Samaras did no more than indicate that he would first have to talk to his daughter about it. Mr Polymeneas ultimately described the concern about claims which might be made by the partners of Mr Samaras’ daughters as a side issue. He said that the main issue was Kyren’s financial stress caused by the large loans it had taken out for its building developments and its disputes with contractors. Mr Polymeneas repeatedly emphasised that the main reason for the conveyance was Kyren’s financial stress and not a concern about claims which Mr Samaras’ daughters’ partners might make.
Mr Polymeneas acknowledged that Kyren had returned a profit in both the 2007 and 2008 financial years. Mr Polymeneas also acknowledged that Kyren had not defaulted on any payments to its subcontractors and that he had not advised Kyren that it “was a risk that it might be trading whilst insolvent”. Mr Polymeneas testified that he had not prepared any cash flow statements for Kyren in May 2008 and had not done so for several years. He also acknowledged that no bank had requested Kyren to provide cash flow projections.
Mr Polymeneas gave evidence about the Kyren balance sheet and the notes to financial statements which were exhibited to Mr Samaras’ affidavit. Mr Polymeneas explained that the financial statements showed that Kyren had advanced $2 million to a related company, Auto Park Pty Ltd, in the 2008 financial year. He explained that that was probably the disbursement of funds which Kyren had borrowed from a bank and which was advanced to Auto Park Pty Ltd for its business purposes. Mr Polymeneas accepted that the financial statements showed that Kyren had reduced its non-current liability to all shareholders, which must mean one or more of Mr Samaras and his daughters, from $1,127,000 to $441,000 in the same financial year. Mr Polymeneas did not explain in cross-examination, and was not asked to explain in re-examination, how or why the shareholders loan account was reduced. In particular, no evidence was given by Mr Polymeneas, nor anyone else, that the shareholder loans were reduced by a transfer of an interest in land, for example, the Paxton’s Walk Apartment transfers to his daughters.
Mr Polymeneas testified that he prepared the minutes of the meetings of Kyren and Eastern after Mr Samaras had provided him with the letters of demand made on Kyren. Mr Polymeneas testified that he had not advised Mr Samaras to write the letters of demand.
Mr Polymeneas was questioned about to how he had fixed on the 5 per cent interests on 16 Coglin Street and 24 Coglin Street recorded in the minutes when the letters of demand had not stipulated any particular asset. Mr Polymeneas testified that the percentage figures included by him in the resolutions were discussed with Mr Samaras at the meeting of 14 May 2008. Mr Polymeneas acknowledged that the percentages were not recorded in his notes of that meeting. Nonetheless, Mr Polymeneas gave evidence that he and Mr Samaras had considered several different properties in which an interest might be conveyed for the purposes of discharging the indebtedness. He testified that council rates notices were found for various parcels of land so that the capital value of those parcels of land could be considered against the amounts outstanding on the loan accounts. Council rates are levied against the capital value of land.[12] Mr Polymeneas said that the properties were considered from the point of view of which would make the better investment. He insisted that securing an interest above 5 per cent for land tax purposes was not the object of the exercise.
[12] Local Government Act1999 (SA).
In the course of his cross-examination on the object of the exercise Mr Polymeneas gave this answer:[13]
… the purpose of the meeting was not to discuss land tax as you alluded to earlier. Contrary to what you might think land tax is only a small part here. The major part of this meeting and the major concern was the stress that Theo was under at the time in terms of from a financial point of view. The purpose of the meeting was not in any way whatsoever to discuss land tax.
[13] T 36.
On further questioning Mr Polymeneas confirmed that land tax was “part of the thing that got discussed about it”. He explained that he mentioned the land tax advantage of transferring those interests to repay the loans. When the inconsistency with his earlier evidence was pointed out to him Mr Polymeneas said he could not remember if that is what he had earlier said. He continued:[14]
We discussed a lot of different things at that meeting – his financial position, the situation of the marriage of the daughters – lots of different things were discussed, and ultimately the land tax was an issue; it would be naïve to think it didn’t get discussed like in the normal discussions of business.
[14] T 36.
Mr Polymeneas accepted that he would have calculated that Mr Eastern’s loan account represented 5 per cent of the value of the Mill Street car park, which is situated at 24 Coglin Street, which he considered to be $335,000. He said he would have obtained that valuation from the council rates.
Mr Polymeneas testified that he was not aware that the valuation of 16 Coglin Street had increased from $700,000 on 1 January 2007 to $3.5 million on 1 January 2008. He testified that he was not aware that the Valuer-General’s valuation of the capital value of 24 Coglin Street had increased over the same year from $6.1 million to $7 million.
Mr Polymeneas could not explain why the conveyances ultimately effected were for 5.5 per cent when the minutes prepared by him recorded a resolution to convey a five per cent interest. He was not asked why the consideration for each of the transfers was 5.5 per cent of the value of the Coglin Street property concerned and not 5 per cent of the value to coincide with the interest which was to be transferred.
Mr Polymeneas testified that he informed Mr Samaras to have the conveyances effected by 30 June 2008 so that they would coincide with the financial year.
Mr Polymeneas gave evidence that he did not suggest that Mr Samaras and Eastern might obtain mortgages to secure their indebtedness over any claims made by Kyren’s subcontractors. Mr Polymeneas testified:[15]
I didn’t bring it up, in my head it wasn’t an option, in my view it is better to have your property in your own name.
[15] T 56.
Mr Polymeneas did not explain how or why that would be advantageous to Eastern and Mr Samaras given the likelihood that Kyren’s banker would have insisted on the mortgage remaining in place over their transferred interests as well as Kyren’s remaining interest. In any event, according to Mr Polymeneas the real concern was Eastern’s and Mr Samaras’ priority over unsecured creditors, and it is that priority which a mortgage would have secured.
I also received an affidavit, affirmed by Mr Samaras on 7 February 2013, as his evidence in chief. Mr Samaras affirmed that in mid-2008 he was concerned about Kyren’s financial position because Kyren was involved in various disputes arising out of the construction of apartment complexes in the city of Adelaide and because of the impact of the global financial crisis on the building industry.
According to Mr Samaras’ affidavit his major concern was the delay in, and escalating cost of, Kyren’s residential apartment development on the corner of North Terrace and Frome Road which it had undertaken in 2003. Kyren had incurred substantial legal fees in a dispute with the principal contractor for that development and in other legal proceedings with two subcontractors. The first stage of the development was financed by a loan from the Adelaide Bank. As a result of the legal disputes to which I have referred Adelaide Bank withdrew its support for Stage 2 of the development. Kyren eventually obtained alternative finance from Bank SA. However, in the course of the development Bank SA increased its lending margins and declined extensions of the facilities sought by Kyren. Kyren obtained alternative finance from the National Australia Bank. Stage 2 was completed in February 2008 but a subcontractor brought yet further legal proceedings against Kyren over a dispute about work performed on Stage 2. Kyren again incurred substantial legal expenses in the financial years ending 30 June 2007 and 30 June 2008.
Mr Samaras exhibited to his affidavit Kyren’s balance sheet as at 30 June 2008 which also showed Kyren’s position as at 30 June 2007. In June 2007 Kyren’s current liabilities stood at about $2 million but increased to just over $5 million as at 30 June 2008. The increase was due to the amount owing to trade creditors. Nonetheless the balance sheet showed a total equity at the end of each of those financial years of $3,684,162 and $3,774,863 respectively.
Mr Samaras deposed that he thought that it was a good idea that the loans be repaid by transferring assets so as not to place stress on Kyren’s cash flow. Mr Samaras deposed that he wrote letters of demand from Mr Samaras and Eastern on Mr Polymeneas’ advice. They were exhibited to his affidavit. They are both dated 14 May 2008. The letters demand repayment within 28 days but both Eastern and Mr Samaras offered to take a transfer of a suitable unspecified asset in lieu of cash. In cross-examination Mr Samaras testified that his secretary typed the letters of demand on Mr Polymeneas’ advice.
Mr Samaras also deposed that he was concerned about the proposed marriage of his daughter Marissa and a long term relationship in which his other daughter, Natasha, was involved. Mr Samaras’ concern was that his daughters’ partners might make a claim on Kyren’s assets.
Mr Samaras deposed that he decided to increase his and Eastern’s interests in 16 Coglin Street and 24 Coglin Street respectively because he thought that both properties had the potential to increase in value because of their proximity to the Adelaide Central Market. Mr Samaras deposed that by increasing Eastern’s ownership in 24 Coglin Street he secured the value of the land for his benefit because Eastern is 100 per cent owned by him whereas he is only a 60 per cent shareholder in Kyren, the remaining 40 per cent shareholding being held by him in trust for each of his four daughters.
Early in his cross-examination Mr Samaras claimed that he did not know that minority interests created in 24 Coglin Street when it was first purchased were created to reduce land tax. Later in his evidence Mr Samaras accepted that he was aware of that purpose but explained that it was a common practice in the industry at the time.
Mr Samaras gave evidence that he had not mentioned his concern about claims that the partners of his daughters might make against Kyren to his solicitors for the purpose of explaining the impugned transactions to the Commissioner because it was “nothing to be proud of”.
Mr Samaras confirmed that the partners of his daughters had not actually made any claim against Kyren. Mr Samaras acknowledged that the interests transferred to his daughters in the Paxton’s Walk Apartments were valued at $90,000 each. Mr Samaras attempted to explain the inconsistency in transferring interests in the Coglin Street properties to himself to safeguard against potential claims from his daughters’ partners and the transfer to his daughters of interests in the Paxton’s Walk Apartments. He testified that his daughters had been working for him at the time and that the transfers were in recognition of their assistance. Later, Mr Samaras disclosed that the transfers to his daughters were part of a settlement of a dispute reached with his daughters who wanted to stop working for him.
In cross-examination Mr Samaras accepted that he had no reason to withhold from the Commissioner that the purpose of the transfer was to protect Eastern’s loan assets from Kyren’s unsecured creditors. Mr Samaras confirmed that Kyren had not defaulted on payments to subcontractors. He agreed that in the financial year ending 30 June 2008 he had decreased his exposure to Bank SA in commercial bills from $16.9 million to $7.5 million. He agreed that Kyren was profitable in the years ending 2006, 2007 and 2008. He agreed that the total loans to Kyren’s shareholders had been reduced by almost $700,000 in the 2008 financial year.
In the course of cross-examination letters of demand to Kyren from Eastern and Mr Samaras in almost identical terms to the letters dated 14 May 2008 exhibited to Mr Samaras’ affidavit, but dated 15 May 2008, were put to Mr Samaras. The only difference between the text of the letters was the use of capitals for the word “DIRECTOR” in the letter from Eastern dated 15 May. Mr Samaras could not account for the duplication in the letters.
Mr Samaras agreed that the 5 per cent figures were arrived at in discussions with Mr Polymeneas. He could not explain why the conveyances ultimately transferred interests of 5.5 per cent in 24 Coglin Street and 16 Coglin Street to Eastern and Mr Samaras respectively.
Findings
I was not impressed by Mr Polymeneas’ demeanour. In my view he was overly defensive, both in the content of his answers and in his demeanour (he sat with his arms crossed through much of the questioning) when responding to questions in cross-examination.
The following inconsistencies and improbabilities in Mr Polymeneas’ evidence, along with Mr Polymeneas’ demeanour in dealing with them, left me with substantial concerns about his reliability and credibility:
(a)The inconsistent evidence about whether land tax was mentioned in the meeting on 14 May 2008.
(b)The failure to record in the notes of the meeting the balance of the loan account, the value of the land or the size of the interest which was to be conveyed.
(c)The inconsistency with Mr Samaras’ evidence as to who advised that Eastern and Mr Samaras write the letters of demand. It is unlikely that Mr Samaras would have prepared the letters on his own initiative. I find that he prepared the letters on the advice of Mr Polymeneas so that they might be referred to in the minutes of the meeting of Kyren by which the agreement to transfer land in lieu of repayment of the debts was made.
(d)The improbability that there was any serious concern about Kyren’s financial position given its profitable operation at the time and the fact that neither Mr Samaras nor his financiers saw any need to monitor Kyren’s liquidity by preparing cash flow statements.
(e)The absence of a satisfactory explanation for the conveyance of a greater interest in each of the Coglin Street properties than the 5 per cent recorded in the minutes.
(f)The improbability that Mr Polymeneas would not have been involved in discussions concerning the conveyances of interests in other properties held by Mr Samaras’ group of companies.
(g)The substantial payment on the shareholders’ loan account by means other than a transfer of land during the 2008 financial year and the failure to explain how the shareholders’ loan account was reduced.
I also reject Mr Polymeneas’ explanation for not raising the option of securing the loans to Eastern and Mr Samaras by mortgage. It was an obvious way in which to secure Kyren’s indebtedness. His evidence as to why a mortgage would not have been effective was not persuasive. In short, Mr Polymeneas must have appreciated that a transfer of an interest in the fee simple and a mortgage would both be subject to the bank’s mortgage but would be equally efficacious in affording priority over the unsecured claims of creditors.
I was equally unimpressed by Mr Samaras’ testimony. His initial claim that he was not aware of the purpose of the creation of the minority interests on the purchase of the Coglin Street properties was disingenuous. His failure to make the full explanation for the conveyances made in this hearing to the Commissioner though his solicitor leaves me with the strong impression that much of his testimony is a recent invention.
In particular, it appears from the early correspondence with the Commissioner that it was thought to be a sufficient commercial reason to justify the conveyances that they discharged an indebtedness, but that by the time the appeal was brought it was thought necessary to provide an explanation for why the indebtedness was discharged when it was by way of conveyance. Moreover the letter to the Commissioner dated 29 September 2010 claimed that it was not ‘foreseeable’ that Kyren would repay the loan. That explanation is different from the explanation proffered in evidence, which was that the transfer was a prophylactic measure in case Kyren’s financial position deteriorated. Plainly enough, if the developments went well monetary repayment was likely to be well within Kyren’s capacity. Indeed, the claim that repayment was not foreseeable is inconsistent with the retirement of about $680,000 of the non‑current liability owed to all shareholders in the same financial year.
The letter sent by Kyren’s solicitors to the Commissioner on 29 September 2010 claimed that the existence of substantial loan accounts in favour of Eastern and Mr Samaras were discovered in the course of the preparation of the financial statements during 2008. Mr Polymeneas did not testify that a late discovery was made. His evidence is premised on his knowledge, in May, of the approximate size of the loan accounts. The loan repayments would have been known and the journal entries made at, or close to, the time of the payments. As I earlier observed, the basis for the balance of the loan accounts remains a mystery.
The coincidence that Mr Samaras’ loan account happened to approximate the Valuer-General’s capital value of a 5.5 per cent interest in 16 Coglin Street and that the Eastern loan account happened to approximate a 5.5 per cent interest in the capital value in 24 Coglin Street was not satisfactorily explained.
The tables below show the changes in ownership in the Coglin Street land and the valuations of that land.
24 Coglin Street
Change in ownership Valuations Ownership 19/6/00 Ownership 30/6/08
[change in loan account]
Site Value
(Capital value) 07/08Site Value
(Capital Value) 08/09Kyren 99% Kyren 93.5% $1,850,000
(6,100,000)$2,300,000
(7,000,000)Samaras Pty Ltd .5% Samaras Pty Ltd .5% Eastern Pty Ltd .5% Eastern Pty Ltd 6%
[$322,509 - $11,434]5% capital value (305,000)
5.5% capital value (335,000)
5% capital value (350,000)
5.5% capital value
(385,000)16 Coglin Street Change in ownership Valuations Ownership 9/3/01 Ownership 30/6/08
[change in loan account]Site Value 07/08
(Capital Value)Site Value 08/09
(Capital Value)Kyren 99% Kyren 93.5% $700,000
(700,000)$890,000
(3,500,000)Samaras Pty Ltd .5% Samaras Pty Ltd .5% Mr T Samaras .5% Mr T Samaras 6%
[$40,000 - $1,500]5% = $35,000
(35,000)5.5% = $38,500
(38,500)5% = $44,500
(175,000)5.5% = $48,950
(192,500)
The table suggests that there is some significance in the unexplained amounts credited to the loan accounts of Eastern and Mr Samaras and the 0.5 per cent difference between the resolutions and the interests actually conveyed. The minutes prepared by Mr Polymeneas record as the consideration for the conveyance of a 5 per cent interest in each of the properties a sum of money which amounts to 5.5 per cent of the Valuer-General’s capital valuation of each of the properties. Without the unexplained credits to the loan accounts the value of the debt of each of Mr Samaras and Eastern was not sufficient consideration for even a 5 per cent conveyance. The failure to satisfactorily explain why the conveyance did not reflect the resolution and to explain how Mr Polymeneas came to calculate a consideration based on a conveyance of 5.5 per cent, or alternatively how the percentage interest came to be mistakenly recorded in the resolutions, greatly undermines the evidence of both Mr Polymeneas and Mr Samaras. Furthermore, the use of the Valuer-General’s capital value for 16 Coglin Street when Mr Polymeneas and Mr Samaras probably knew that it was significantly below its real capital value given their own knowledge of the development on that site was not satisfactorily explained.
The tables expose an even more substantial obstacle in accepting the testimony of Mr Polymeneas and Mr Samaras that land tax reduction was not a purpose of the conveyances. There is no reason, as the tables demonstrate, why Mr Samaras could not have taken an approximately 0.65 per cent interest in 24 Coglin Street to discharge Kyren’s $40,000 debt to him other than that, if he had done so, Kyren would not have obtained the land tax advantage it did by conveying, instead, the 5.5% per cent interest in 16 Coglin Street. Alternatively, Eastern could have taken close to a 50 per cent interest in 16 Coglin Street to extinguish its debt thereby securing the disaggregation of that property, but not 24 Coglin Street. The strategy actually adopted maximises the land tax benefits to Kyren. It is the very kind of strategy that one would expect might be adopted if Mr Polymeneas undertook, with Mr Samaras, the sort of exercise, which he testified that he undertook with other clients, in which he would explore with them whether there were only commercial reasons to transfer minority interests.
The inference which arises from the circumstances discussed in the preceding paragraph is supported by the inference which arises from the near simultaneous transfer of similarly small interests in other land held by Kyren and other companies controlled by Mr Samaras. The explanation given as to the Paxton’s Walk Apartments transfer was unconvincing. No explanation at all was given for the other transfers. The evidence of the other transfers manifests a strategy adopted to reduce land tax which would be payable by land holding entities associated with Mr Samaras by the creation of minority interests.[16] The evidence of that strategy is probative because it tends to rebut Kyren’s claim of a legitimate commercial purpose for the conveyances of the interests in the Coglin Street properties.
[16] Martin v Osborne (1936) 55 CLR 367.
I am satisfied that the transfers were not made to secure repayment of the loans. The evidence of the extent of the claims and the risk to Kyren’s solvency was sparse. Mr Polymeneas acknowledged in his evidence that the concern was not so great as to result in the preparation of any cash flow projections. The amounts of the claims were not put into evidence. There was no evidence to suggest that the amounts of the claims were such as to pose a substantial threat to Kyren’s solvency. In any event a mortgage would have adequately secured the loans.
I can accept, at a general level, that, quite apart from asset protection purposes, the conversion of the loans into equity in the land was financially advantageous to Mr Samaras and to Eastern. However, that is hardly likely to have been a substantial motivating purpose for the transfer given the community of interests between Mr Samaras, Kyren and Eastern. To put it in another way, any advantage to Eastern and Mr Samaras on the one hand was equally balanced by a disadvantage to Kyren. I acknowledge that Mr Samaras’ interest in Kyren was limited to 60 per cent of the shares. However, Mr Samaras did not contend that the purpose of the conveyances was to improve his position against that of his daughters to whom he owed a fiduciary duty. In the absence of a clear and express admission to a breach of trust of that nature such a purpose should not be attributed to him.
I find, based on the inferences I draw from the timing of the conveyances the circumstances mentioned in the five preceding paragraphs, and in the absence of a persuasive and legitimate explanation of the reason for the conveyances, that they were made for the primary purpose of land tax reduction. By that I mean that the decision to discharge Kyren’s liability to Eastern and Mr Samaras by the transfer of minority interests in the Coglin Street land was made for the purpose of land tax reduction. I record here that even though I am not persuaded that the unexplained credits to the loan accounts of Mr Samaras and Eastern referred to in [38] above record real credits, I am not prepared to go so far as to make a positive finding that the credits were false or a sham. I have put that factual issue aside in determining the purpose of the conveyances.
Nature of the appeal
The provisions of the Taxation Administration Act 1996 (SA) which govern this appeal are as follows:
92—Right of appeal
A person who has made an objection may appeal to the Supreme Court if—
(a) the person is dissatisfied with the Minister's determination of the objection; or
(b) 90 days (not including any period of suspension under section 88) have passed since the objection was lodged with the Minister and the Minister has not determined the objection and served notice of the determination on the person.
96—Grounds of appeal
(1) The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection or the reasons for the determination of the objection or the facts on which the determination was made.
(2) However, if the objection was to a reassessment, any limitation of the matters to which the objection could relate under Division 1 applies also to the appeal.
97—Onus on appeal
On an appeal, the appellant has the onus of proving the appellant's case.
98—Determination of appeal
On an appeal, the Supreme Court may do one or more of the following:
(a) confirm or revoke the assessment or decision to which the appeal relates;
(b) make an assessment or decision in place of the assessment or decision to which the appeal relates;
(c) make an order for payment to the Commissioner of any amount of tax that is assessed as being payable but has not been paid;
(d) make any further order as to costs or otherwise as it thinks just.
It is a necessary consequence of s 96(1) and s 98(b) of the Taxation Administration Act 1996 (SA) that the appeal is by way of rehearing. The rehearing is a rehearing de novo because the cases on appeal are not limited to the “facts on which the determination was made”. This Court on appeal therefore stands in the shoes of the Commissioner. It follows that the question for the Court is whether it holds the opinion that the purpose, or one of the purposes, of the conveyances was to reduce land tax.
The onus placed on the appellant by s 97 of the Taxation Administration Act is to prove or disprove facts on which that opinion might be based and to persuade the Court as to the reasonableness or unreasonableness of holding the opinion that the conveyance was for the proscribed purpose.
In this case I have found that the sole, or at least predominant, purpose of Kyren’s directing mind, Mr Samaras, was to obtain a land tax reduction. It necessarily follows that I have formed the relevant opinion. Plainly enough, if I had accepted the evidence of Mr Samaras and Mr Polymeneas I could not have formed the opinion that the purpose of the conveyances was land tax reduction. However, I observe that even if I had been left undecided about whether to accept of reject the evidence of Mr Polymeneas and Mr Samaras, I would have formed the opinion that the predominant purpose was the reduction of land tax based on the following grounds:
·the timing of the conveyances;
·the size of the interests conveyed;
·the selection of the land in which the interests were conveyed to discharge each of the debts; and
·the conveyances of similarly small interests in other land in which Mr Samaras, or a company controlled by him, held interests at the same time.
Conclusion
I confirm the determination of the Minister. I will hear the parties as to costs.
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