Loughnan v The Commissioner of State Revenue

Case •

[2021] QCAT 72

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL


CITATION:

Loughnan v The Commissioner of State Revenue [2021] QCAT 72

PARTIES:

GERARD MICHAEL LOUGHNAN

(applicant)

v

THE COMMISSIONER OF STATE REVENUE

(respondent)

APPLICATION NO/S:

GAR098-20

MATTER TYPE:

General administrative review matters

DELIVERED ON:

2 March 2021

HEARING DATE:

29 September 2020

HEARD AT:

Brisbane

DECISION OF:

Member Richard Oliver

ORDERS:

The Commissioner of State Revenue is invited to re-consider the decision of 13 January 2020 the subject of this application to review pursuant to s 23(2) of the Queensland Civil and Administrative Tribunal Act 2009 in accordance with these reasons.

CATCHWORDS:

TAXES AND DUTIES –LAND TAX – EXEMPTIONS –PRINCIPAL PLACE OF RESIDENCE – QUEENSLAND – where applicant was the owner of land and house that had been rented under a residential tenancy agreement – where Commissioner levied land tax as at 30 June 2018 and 30 June 2019 in respect of the land – where applicant contended the residential tenancy terminated on 28 June 2018 – whether tenancy terminated on 28 June 2018 – whether decision to levy land tax should be set aside – whether land the applicant’s principal place of residence as at 30 June 2018 and 30 June 2019.

Queensland Civil and Administrative Tribunal Act 2009 ss 20, 23 and 28

Land Tax Act s 36

Taxation Administration Act 

APPEARANCES & REPRESENTATION:

Applicant:

Mr Loughnan in person

Respondent:

Mr Derrington of counsel instructed by McInnes Wilson Lawyers

REASONS FOR DECISION

  1. This is a tale of two houses. Mr Loughnan was the owner of two adjacent properties with canal frontage on the Isle of Capri, No. 11 and No. 13.[1] He has been the owner of No. 13 for many years. In 2007 he purchased No. 11 because, at that time, houses in the area were being sold and demolished with large multi storey structures being constructed in their place. Mr Loughnan wanted to preserve his view and amenity by purchasing the neighbouring house which was very rundown. It remained vacant for a number of years and then, in about 2012, he decided to move out of No. 13 into No. 11 to commence renovations.

    [1]The street address is not included for the purposes of privacy. 

  2. Between 2008 and November 2015 Mr Loughnan was employed as a teacher with an Institution in Brisbane. There was disputation with his employer about workplace harassment and he was dismissed in November 2015. He took legal action against the employer and that action was subsequently resolved to his satisfaction with a confidential settlement agreement. However, after he was dismissed he had difficulty in finding work in Queensland and meeting his financial commitments. Ultimately he found employment as a relief teacher in January 2017 in a school at Orange in New South Wales. When he took up this position he then rented out No. 11.

  3. The Commissioner of State Revenue issued notices of land tax payable in respect of both properties for the 2018/2019 and 2019/2020 years on the basis that neither one was Mr Loughnan’s principle place of residence. Land tax is assessed as at midnight of the 30th June each year. Mr Loughnan’s position is that as at midnight on 30 June 2018 and 30 June 2019, No. 13 was his principal place of residence and therefore land tax was not payable.

  4. Mr Loughnan paid the land tax as assessed on both properties, but has filed an application  in the Tribunal to review the Commissioner’s decision to impose the land tax under the Taxation Administration Act 2001.

  5. In reviewing the Commissioner’s decision, it is the Tribunal’s function to produce the correct and preferable decision by way of a fresh hearing on the merits.[2] The Commissioner has filed a comprehensive statement of reasons annexing all of the evidence and submissions relied upon in coming to the decision under review. Mr Loughnan also relies on the statement of reasons which include his submissions to the Commissioner, by his lawyers and a further response filed on 20 July 2020. Objection was taken to some of the material annexed but in the end that material is irrelevant to my decision.  Further submissions were made at the hearing of this application with Mr Loughnan giving some further evidence by way of submission.

    [2]Queensland Civil and Administrative Tribunal Act, s.20.

  6. At the commencement of the hearing Mr Loughnan conceded that land tax was payable in respect of No. 11. The only issue for determination by the Tribunal is whether, as at midnight on 30 June 2018 and 30 June 2019, No. 13 was Mr Loughnan’s principal place of residence and therefore, exempt from land tax. In other words he satisfied s 36(2) of the Land Tax Act, which is a non-exhaustive criteria to assist in deciding whether a place is a principal place of residence.

  7. In respect of No. 13 it is not disputed it had been tenanted in the financial year of 2017/2018, but Mr Loughnan contends that the tenants vacated the premises and gave up the lease, or alternatively the lease came to an end, on 28 June 2018. It is the Commissioner’s position that the lease came to an end or the tenants vacated in July 2018, at the earliest 7 July 2018, and therefore was subject to land tax. In respect of the 2019 year Mr Loughnan asserts that it was his principal place of residence, had been used by him during the 2018/2019 year even though he was still in New South Wales, was not tenanted and therefore exempt. The Commissioner’s position is to the contrary.

Further Background

  1. After taking up the temporary teaching position in Orange, New South Wales January 2017 for about 3 months he continued doing contract teaching work at various schools in and around Sydney, each one for a set period of time. During the period he was teaching in Sydney, he lived in shared accommodation, sometimes with only a room and did not have any permanent place of residence.[3] He would move to be close to the school at which he was teaching. The teaching positions after Orange were at Oatlands, Killarney Heights, St Andrew’s Cathedral College and Blacktown Boys High School all in Sydney. He returned permanently from New South Wales in March 2020.

    [3]Appendix 1 to Response filed 20 July 2020.

  2. When in New South Wales in early 2017, he was involved in a motor vehicle accident and was questioned by police about this his residential address when he had a Queensland driver licence. He said after this he had to change his drivers license address to New South Wales, which is understandable.  He also believed he had to change his electoral address to keep it up to date with the Australian Electoral Commission.

  3. Although the tenants at No. 13 started off on 12 month residential tenancy agreement, it was not renewed but they continued on a periodic tenancy. The tenancy came to an end when ultimately, Mr Loughnan says, that one of the tenants telephoned him and said they were moving out, this was on 28 June 2018. He says they left the keys in the house and had moved to other premises on the Gold Coast.

  4. As he was still committed to teaching for the balance of the remainder of the term, he was not able to immediately return to the Gold Coast. However he says he did return so on 7 July 2018. He therefore submits that as at 30 June 2018 No. 13 was not tenanted, and it resumed being his principal place of residence . It was his intention to, and he did, continue to reside there from 28 June 2018 to date. If I find this to be the case, then No. 13 is tax exempt.

Position as at 30 June 2018

  1. The Commissioner’s position, after considering all of the evidence and having regard to s.36(2) of the Land Tax Act, that Mr Loughnan does not satisfy the criteria to determine that No. 13 was used as his principal place of residence. There is certainly evidence to support the Commissioner’s position including  a rental statement[4] which shows that rent was paid up to 6 July 2018. However, Mr Loughnan says this last payment was for one week’s rent in arrears, which means that rent was only paid up to 28 June 2018 which supports his argument.

    [4]Statement of Reasons, page 61.

  2. The Commissioner obtained a Refund of Rental Bond Form 4 from the Residential Tenancies Authority. This is persuasive evidence as to the date of the termination of the tenancy because it is signed by both the tenants and Mr Loughnan and dated 20 July 2018. The Form notes that ‘Date vacated’ is ‘20/07/18’.The bond was lodged on 4 July 2015.

  3. Clarification was sought from one of the tenants, Ms Walters, by Ms Millard of the Commissioner’s office on 17 December 2019. The email is as follows:

    … a copy of the form for the refund of your bond, provided to me by Mr Gerard Loughnan (the lessor), provides that you vacated the property on 20 July 2018 (it appears that you each dated the form as 20 July 2018 as well). I also note that Mr Bailey still had the electricity connected at the property in his name until 19 July 2018. However, Mr Loughnan states that the date in the bond refund form is incorrect and you actually vacated the property on 29 June 2018. Can you please confirm what date you actually vacated the property by return email as soon as possible.

  4. There is a jpg image attachment to the email, which presumably is the Form 4. Ms Walters responded the same day saying that she had been through her ‘paperwork and tenant agreements’ and they ‘handed the keys back and moved out of No 13….on 19 July 2018’.[5] It is correct that the electricity was not disconnected until 19 July 2018.[6]

    [5]Statement of Reasons p 77.

    [6]Statement of Reasons p 230.

  5. To be fair to Mr Loughnan, there are some things that can be said about the probative value of this email exchange. The obvious, is that Ms Walters was asked to recall the date she vacated No 13 nearly 18 months after the event. She did not do so from her independent recollection but by reference to ‘paperwork and tenant agreements’.  Also, in respect of her recollection, the questions put to her were leading and reiterated information that was in the Form 4 she signed, asserting the correctness of the content. It would be surprising, having put the information contained in the Form to her, particularly the date, that she would resile from it. Another issue is that there is no dispute the full bond was repaid to the tenants, it was not used to run out the rent. The last rent paid was up to the 6 July 2018. If rent was paid in arrears, then the tenants lived in or occupied the house rent free from 6 July 2018 through to 19 July 2018. If not, they still enjoyed a rent free period. I find this to be unlikely.

  6. The original tenancy agreement entered into between Mr Loughnan and the tenants was for a 12 month period from 4 July 2015 to 3 July 2016. The tenancy agreement was not renewed but after July 2016 converted to a periodic tenancy. In other words no further written tenancy agreements were signed by the tenants. By reference to the Bond Lodgement form[7] the 12 month tenancy would have expired on 7 July 2016. This then gives a reference date, for recollection purposes of early July. If Ms Walters referred to this document as she appears to have done by reference to her email, then the 28 June 2018 date would not have sat comfortably with date on the written agreement. This conclusion is somewhat speculative but in the absence of any documents produced by Ms Walters, it is open on the evidence to come to this conclusion.

    [7]Statement of Reasons p 65.

  7. Mr Loughnan points to other evidence. In particular, there is no dispute that the tenants moved to a known address in Chevron Island. A screen shot of the Domain web page shows that this address was ‘rented’ in June 2018 for $480/wk. It also shows that it was listed in June 2018 and rented within 7 days. There was no direct evidence as to the precise meaning of the entries on the webpage but it does seem tolerably clear that the property was rented in June 2018. It does not necessarily prove though that the tenants moved out of No 13, or surrendered the tenancy, on 28 June 2018. It does support the submission from Mr Loughnan that they had at least secured alternate accommodation at an address on Chevron Island in June 2018.

  8. Therefore, in respect of Ms Walters email evidence, if taken at face value it certainly supports the Commissioner’s position. However, when critically considered in the way the evidence came to light and some objective facts about the rent, return of the bond and the tenant’s new premises it is not as probative as the Commissioner submits. Despite this observation, in light of other evidence I am satisfied that at least it establishes that the tenants did not move out on 28 July 2018.

  9. Then there is the evidence of Mr Loughnan. The first observation I would make is that I considered him to be genuine and forthright in the way he presented his case both in his submissions and evidence from the bar table. Obviously he has an interest in the outcome of the proceeding and this must also be considered in the context of his overall credit. From the time he first moved interstate to pursue employment opportunities he has been in temporary accommodation near the schools when he obtained contract teaching jobs. I accept he has been in shared accommodation and living out of suitcases. He said, and I also accept, that for a man of his age he found the living conditions very difficult but had no choice if he wanted to meet his financial commitments, mainly the mortgage commitments on two houses.

  10. Although he asserts No.13 was his principal place of residence from 28 June 2018, in an email letter to the OSR of 25 August 2019 he asked for a re-assessment because the house at No 13 ‘has been my principal place of residence since 6 July 2018’.[8]  He reiterates this assertion later in the email. The email supports the contention that the tenants had moved out of the house but obviously does not support his contention that he took possession on 28 June. His explanation is that he took physical possession after coming back from Sydney on 6 July 2018. If the tenancy did end on 28 June 2018 then obviously exclusive possession reverted back to him on that date.

    [8]Statement of reasons p 234.

  11. That then brings up for consideration, did Mr Loughnan, in fact take up possession on 7 July 2018 after he says the house was vacated on 28 June 2018. To try and resolve this question, one needs to consider other evidence.

  12. Mr Loughnan produced a printout of his credit card statement. The following table records the chronological timeline of the date of transaction was processed and the date of the transaction followed by the details. The table is out of order as compared to the credit card statement so as to provide a chronology of the actual transactions. This gives a better understanding of Mr Loughnan’s movements.

Date processed Date of Transaction Details
02/07/18 01/07/18 Tarocash, Marrickville (Sydney)
07/07/18 03/07/18 WW Petrol, Chatswood (Sydney)
06/07/18 05/07/18 Chemist Warehouse, Newtown (Sydney)
09/07/18 08/07/18 Oxford Shop Pty Ltd, Alexandria (Sydney)
13/07/18 12/07/18 Caltex Star Mart, Taree South (NSW)
16/07/18 12/07/18 Koala Tree, Motel, Pt Macquarie (NSW)
16/07/18 13/07/18 Caltex Chinderah (North NSW)
13/07/18 12/07/18 Virgin Aust, Spring Hill
13/07/18 12/07/18 Peppers/ Mantra (Qld) ($1,268.66)
18/07/18 18/07/18 Regent Taxies, Helensvale (Qld)
23/07/18 19/07/18 Bunnings Mermaid Waters (Qld)
23/07/18 19/07/18 Bunnings Mermaid Waters (Qld)
23/07/18 19/07/18 Bunnings Mermaid Waters (Qld
23/07/18 20/07/18 Dominos Pizza Surfers Paradise (Qld)
23/07/18 20/07/18 Cenati Ashmore (Qld)
23/07/18 20/07/18 Bunnings Mermaid Waters
23/07/18 21/07/18 RAS South Kempsey (NSW – fuel)
23/07/18 22/07/18 Kmart Marrickville (NSW)
26/07/18 25/07/18 BP Express St Peters (NSW)

  1. The above timeline of transaction dates demonstrates the following scenario. On 5 July he was in Sydney and his last day in Sydney was 8 July  when the made a purchase at the Oxford Shop in Alexandria. On 12 July it appears he drove north and stopped for fuel at the Caltex, Taree South, about 3.5 hrs north of Sydney. He stopped overnight at Pt Macquarie on 12 July. The next day, 13 July, he continued north and stopped for fuel at Chinderah, near Kingscliffe, just south of the border. This suggests he arrived on the Gold Coast on 13 July.  He then stayed at the Peppers/Mantra, Surfers Paradise for several nights having regard to the size of the account transaction for 12 July  ($1,268). It is reasonable to assume accommodation costs would be not more than $300/nigh from general experience.[9]

    [9]QCAT Act s28(3)(c).

  2. With respect to the Regents Taxi payment on 18 July, this he says was when he flew to Brisbane, presumably on Virgin, got the train from the airport to Helensvale and then the taxi. However, this does not sit comfortably with the timeline above. He was asked about this and his actual evidence/submission about the sequence of events is rather unsatisfactory. It is difficult to summarise as it is disjointed therefore the relevant part is set out as follows:

    MR LOUGHNAN: Yes and then I can go to page 349 which was the credit card statement that Mr Derrington refers to. Now bear in mind, we had – the reliance – heavy reliance has been put on the date of 6 July. The 6 July was – I was still in Sydney on 6 July and came to Queensland. I bought petrol at Chatswood. Well these – date processed – date of transaction, there is a few, you know, it may not necessarily be correct. However on 13 July is the hotel bill that was processed on 12th July. Peppers Mantra Breakfree which was Surfers Paradise which I went and stayed in because on arrival I had found in the interim the power was still on in the tenants’ names and there was work to be done to clean up.

    And then you will see I actually purchased a ticket with Virgin Australia on 12th July, that would have been to return back to the Gold Coast because I actually drove back on 13th September to Sydney when I stayed halfway, or I flew back and stayed halfway, and I stayed at Port Macquarie. There were [indistinct] and then I had to come back.

    MEMBER: Alright, alright stop. On 11 July, well that looks like it’s just a payment. On 12th July you bought a Virgin ticket but that does not tell us when ---

    MR LOUGHNAN: No, that was just – through – I don’t know what the 376 was for. 12th July, if you look at that, Peppers Mantra. I agree I drove ---

    MEMBER:  And then you back [sic] and stayed at Port Macquarie.

    MR LOUGHNAN: Yeah.

    MEMBER: Okay, and then on 18th your back getting a taxi at Helensvale. So, you came up ---

    MR LOUGHNAN: Because I flew to Brisbane.

    MEMBER: --- and you went back and then you

    MR LOUGHNAN: Yep and then I flew to Brisbane and caught the train.

    MEMBER: Okay. Or what date are you – you say you got back on the Gold Coast

    MR LOUGHNAN: I got back here on 7th in the first instance. But didn’t stay.

    MEMBER: Okay.

    MR LOUGHNAN: I thought – well, the 3rd.

    MEMBER: No, hang on stop. You got back on 7th and you stayed at the Mantra on the 12th.

    MR LOUGHNAN: Yep

    MEMBER: At Peppers. What did you do between 7th and 12th?

    MR LOUGHNAN: I must have been at the house and I had been trying to get Click Energy to put the power on or AGL but they would not – could not push it in my name until the tenants had taken the power out of their name …

  3. It is obvious there is confusion about the timeline of events as contended by Mr Loughnan. In respect of the last answer, what is abundantly clear, from the credit card transactions, is that he was not on the Gold Coast between 7 July 2018 and 12 or 13 July 2018 and did not stay at the house. Also, electricity was connected to the house and could be used, even if not in his name. An adjustment for this could have been made with the tenants.  I find it unlikely he would have stayed at Peppers and incur that expense, given his complaints about financial pressure, when the house was available. The other curiosity is the Virgin Australia airline ticket. Presumably the purchase was on-line and no documentation has been provided to confirm whether he flew from Brisbane to Sydney or from Sydney to Brisbane or if it was a return trip. Even so it must have been used after 12 July. From the above table, and his evidence it is reasonable to conclude that Mr Loughnan flew to Sydney while, or after, staying at Peppers so that he was back on the Gold Coast on 18 July. 

  1. I simply do not accept his evidence that after driving to the Gold Coast, he then drove back to Sydney on 13 July as he asserts, particularly having just arrived on the Gold Coast and having paid for multiple nights accommodation at Peppers. It would seem that he did go back to Sydney on Virgin to return to Brisbane and then took the  taxi, on the 18th, from the Helensvale Train Station. On his version he would not have had a car on the Gold Coast but clearly he drove to Sydney on 21 July because he stopped for fuel at South Kempsey. Put in a very non-legalistic way, unfortunately Mr Loughnan’s story “just does not hang together”.

  2. The objective evidence being the RTA Form 4, his letter to the Commissioner of 25 August 2019 in which he said he took possession of No. 13 on 6 July 2018, the fact that he did not get back to the Gold Coast until the 12th or 13th July at the earliest, despite my misgivings about the email from Ms Walters she does support the fact that the tenancy did not terminate on 28 June 2018, does not satisfy me that there was a change in possession of No. 13 on 28 June 2018 as Mr Loughnan asserts. I therefore conclude that as at midnight 30 June 2018 No. 13 was not his principal place of residence and is therefore subject to the land tax levied by the Commissioner.

Financial Year 2019

  1. Although No 13 was listed for rent or sale on 20 July 2018, coincidently same day the RTA Form 4 was signed, it remained vacant for the whole of the financial year. Mr Loughnan was also trying to sell No 11 at the same time. It didn’t really matter to him which one sold but he was committed to selling one of them. He tried to rent No 13 again in April/May 2019. He continued to work in New South Wales right up to the end of 2019 and commuted back to No 13 on a regular basis between July 2018 and December 2019. He remained on the electoral role in New South Wales, a fact relied upon by the Commissioner, as well. However I do not find that persuasive. The Commissioner also submits that the fact that his intention was to rent No 13 (or No 11) exhibits an intention on Mr Loughnan’s part that No 13 was never intended to be his permanent place of residence at the relevant date of 30 June 2019.

  2. There is some force in this argument but it has to be considered in the overall context of what was going on in Mr Loughnan’s life at the time. He was still looking for work in Queensland  and in the meantime continued to work in New South Wales by necessity. Also, it was his intention, which I accept, to return to eventually live at the Gold Coast in either No 11 or 13. As it happened No 11 did sell and he returned to live in 13. He was there in January and February 2020 but returned to live there full time in March 2020 before the Queensland Government closed the borders to New South Wales because of the pandemic

  3. It is difficult, again, to get a clear picture of what was going on after 20 July 2018 and it seems to be that arguments both ways are being reconstructed on the known facts in reliance on documentary evidence and advertising No 13 for rental. However, I accept that Mr Loughnan was intent on selling one property and keeping the other for his permanent home. Therefore, on this logic only one would have attracted land tax in any event. I am therefore satisfied that the correct and preferable decision is that No 13 was his principal place of residence as at midnight on 30 June 2019.

Exercise of Discretion to Reduce Land Tax

  1. Mr Loughnan contends that because of his particular circumstances, if land tax is to be levied, the Commissioner ought to have reduced the tax because of hardship. Mr Derrington referred the Tribunal to s 37 of the Taxation Administration Act  which is the only legislative provision authorising the Commissioner to refund or reduce tax. It does not allow the Commissioner to exercise a discretion to take into account a taxpayers personal circumstances. By reason of this decision, after re-assessment any tax refundable is paid pursuant to this section. Therefore, the Commissioner decision not to exercise a discretion to reduce the tax payable is the correct decision.

Summary

  1. I have come to the conclusion that Mr Loughnan does have a land tax liability for the 2018 year. The evidence does not support a finding that possession of No. 13 reverted to him on 28 June 2018. When it did is still a little uncertain but more probable than not it was after he returned from Sydney on or after 18 July 2018.

  2. As for the 2019 year, I have found that even though there were attempts to sell or rent No. 13, it was Mr Loughnan’s principal place of residence as at 30 June of that year. Therefore, this part of the Commissioner’s decision is set aside.

  3. Finally, I accept Mr Derrington’s submission that there is no discretion on the part of the Commissioner to reduce or not impose land tax under the relevant legislation.

  4. I propose to invite the Commissioner to reconsider the decision under section 23(2) of the QCAT Act in light of these reasons.


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