Moeller v Chief Commissioner of State Revenue

[2009] NSWADT 190

CITATION:	Moeller v Chief Commissioner of State Revenue [2009] NSWADT 190
DIVISION:	Revenue Division
PARTIES:	APPLICANTS Christine Moeller and Wolfgang Moeller RESPONDENTS Chief Commissioner of State Revenue
FILE NUMBER:	086099
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	25 June 2009
DATE OF DECISION:	22 July 2009
BEFORE:	Perrignon R - Judicial Member
LEGISLATION CITED:	Land Tax Management Act 1956 Valuation of Land Act 1916 Heritage Act 1977 Taxation Administration Act 1996 Administrative Decisions Tribunal Act 1997
CASES CITED:	Gauci v Federal Commissioner of Taxation [1975] 135 CLR 81 Federal Commissioner of Taxation v Dalco [1990] 168 CLR 614
REPRESENTATION:	APPLICANT In person RESPONDENT A Gerard
ORDERS:	1.The Chief Commissioner’s decision made on 15 April 2008 to assess the land at Leura to land tax for the 2007 tax year is confirmed 2. The Chief Commissioner’s decision made on 15 April 2008 to assess the land at Leura to land tax for the 2008 tax year is confirmed.

REASONS FOR DECISION

1 The Applicants, Mr and Mrs Moeller, are co-owners of a property at Leura in the Blue Mountains near Sydney. For some years, it has been used partly as a principal place of residence, and partly as a restaurant, wedding and function centre run by Mr and Mrs Moeller. It has been heritage-listed since about 1992.

2 On 15 April 2008, the Chief Commissioner of State Revenue assessed the property to land tax for the 2007 and 2008 tax years. In doing so, he relied on valuations made by the Valuer-General and entered by him in the Register of Land Values, described below.

3 Mr and Mrs Moeller apply to the Tribunal for review of both assessments.

4 Objection has been made to each assessment under Part 10 Division 1 of the Taxation Administration Act 1996, and disallowed. Accordingly, the Tribunal is empowered to review the decisions by section 96 of that Act, and by section 38 of the Administrative

Decisions Tribunal Act 1997.

Issues for determination

5 As there are no factual issues in dispute, the parties have agreed that the Tribunal should determine the application without a hearing, on the papers before it.

6 The grounds on which Mrs. Moeller seeks review are set out in her application:

“Land tax assessment 2007 & 2008 did not take heritage listing of property into consideration.”

7 It is common ground that the Chief Commissioner did not reduce his assessments by reason of the heritage listing of the property.

8 The issues for determination by the Tribunal are whether he had power to do so, and if so, whether he ought to have done so.

Legislation

9 Land tax is levied and paid on the ‘taxable value’ of all land in New South Wales, unless the land is exempt: section 7, Land Tax Management Act 1956. It is ‘charged on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied”: section 8.

10 The ‘taxable value’ of land is ascertained under section 9 of the Act, which provided relevantly as follows as at each of the taxing dates – namely, 31 December 2007 and 31 December 2007.

“ 9 Taxable value
(1) Land tax is payable by the owner of land on the taxable value of all the land owned by that owner which is not exempt from taxation under this Act.
(2) The taxable value of that land is the total sum of the average value of each parcel of that land.
(3) The average value of a parcel of land is to be calculated, as provided for by section 9AA, on the basis of the land value of the land.
(4) The land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year.

(5) ….”

11 The “Register” is defined as the Register of Land Values kept by the Valuer-General under section 14CC of the Valuation of Land Act 1916. The land values entered in the Register by the Valuer-General are values ascertained by him under Part 1B of the latter Act. Thus, the ‘taxable value’ of land assessed to land tax by the Chief Commissioner ultimately depends on the value of that land ascertained by the Valuer-General, and entered in the Register.

12 The method by which land values are to be averaged is governed by Section 9AA of the Taxation Administration Act 1956, which at all relevant times has provided as follows.

“9AA Average value of land
(1) For the purposes of this Act, the average value of a parcel of land is the average of the land value of the land in relation to the year for which the average value is being ascertained (the current land tax year ) and the land value of the land in relation to the 2 preceding land tax years (the preceding land tax years ).
(2) If a land value adjustment is required in relation to a parcel in the current land tax year, the average value is to be determined before that land value adjustment is made (that is, on the basis of the land value without that land value adjustment) and, despite any other provision of this Act, the Valuation of Land Act 1916 or the Heritage Act 1977 , the land value adjustment is to be applied, for the purpose of assessing land tax, to the average value of the land for that land tax year (and not the land value).
(3) For the purposes of this section, a land value adjustment is:
(a) a land value reduction , being any reduction that is required to be made to the land value of land under this Act for the purpose of assessing land tax, or
(b) (Repealed)
(c) a special allowance , being any allowance made in respect of the land value of land under Division 3 or 4 of Part 1B of the Valuation of Land Act 1916 .
(4) In the case of a land value reduction, the land value adjustment is to be applied to the average value of land by applying any provision of this Act that specifies that the land value is to be reduced for the purpose of assessing land tax as if a reference to the land value of land were a reference to the average value of land.
Note. For example, the reductions provided for by sections 9A, 9BA, 9C, 9D, 10 (2), (2A) and (2C), 10Q (4) and 10R (3) will now apply to the average value of the land in a land tax year and not to the land value of the land.
(5) (Repealed)
(6) In the case of a special allowance, the land value adjustment is to be applied to the average value of the land by deducting the allowance from the average value.
(7) If a parcel of land did not exist on 31 December immediately before either or both of the preceding land tax years, the average value of the land is taken to be:
(a) if the parcel did exist on 31 December immediately before one of the preceding land tax years—the average of the land value of the land in relation to the current land tax year and the land value of the land in relation to the preceding land tax year immediately before which it did exist, or
(b) in any other case—the land value of the land in relation to the current land tax year.
(8) Subsection (2) applies in relation to an average value determined as provided for by subsection (7) in the same way as it applies to an average value determined as provided for by subsection (1).
Note. For example, if the newly created parcel qualifies for an allowance for subdivision under Division 4 of Part 1B of the Valuation of Land Act 1916 in the current land tax year, the allowance would be applied to the average value calculated as provided for by subsection (7).
(9) The average value of a parcel of land that is heritage-protected, and that was not heritage-protected on 31 December immediately before either or both of the preceding land tax years, is to be determined as provided for by subsection (7) (as if the parcel did not exist on the date or dates of 31 December on which it was not heritage-protected).
(10) If the land value of land in relation to a land tax year is altered (whether as a result of being reascertained or on objection or appeal or for the correction of a clerical error or misdescription), the average value of the land must be reascertained on the basis of the altered land value.
(11) If the average value of a parcel of land, after applying a land value adjustment, is less than zero, the average value of the parcel is taken to be zero.

(12) For the purposes of this section, land is heritage-protected if it is either heritage restricted (within the meaning of section 14G of the Valuation of Land Act 1916) or the subject of a heritage valuation under Division 6 of Part 6 of the Heritage Act 1977, or both.”

13 The notices of assessment for the 2007 and 2008 tax years disclose that, in calculating the average value of the land under section 9AA for tax purposes, the Chief Commissioner relied on the values ascertained by the Valuer-General and entered by him in the Register of Land Values for each of four tax years. Those values were as follows:

2005	$1.03 million
2006	$1.03 million
2007	$1.15 million
2008	$1.2 million

14 In respect of each of these tax years, the Chief Commissioner used the value entered in the Register as at 1 July of the previous year, as required by section 9(4) of the Taxation Administration Act 1956. There is no evidence before the Tribunal that any of those entries have been altered since 15 April 2008, when the Chief Commissioner assessed the property to land tax for the 2007 and 2008 tax years.

15 In making his assessment for the 2007 tax year, the Chief Commissioner calculated the average of the values for 2005, 2006 and 2007. This came to $1.07 million.

16 In making his assessment for the 2008 tax year, he calculated the average of the values for 2006, 2007 and 2008. This came to $1,126,667.

17 The Chief Commissioner then reduced each of these average values by 35%, in order to arrive at the taxable value of the land for the 2007 and 2008 tax years. He did so pursuant to section 9C of the Taxation Administration Act 1996, which provided that land value for tax purposes was to be reduced by an ‘allowable proportion’. Section 9C(2)(a) provided that where – as in this case - an apportionment factor had been entered in the Register of Land Values, the ‘allowable proportion’ was to be calculated in accordance with the following formula:

18 That formula does not take account of any heritage listing affecting the land.

19 Mr and Mrs Moeller do not submit that the land value for tax purposes ought not have been reduced by an ‘allowable proportion’ pursuant to section 9C. Nor do they submit that the formula for calculating the ‘allowable proportion’ set forth above was applied incorrectly. It is therefore unnecessary to inquire into the method of his calculation.

20 Instead, they submit that the Chief Commissioner ought to have reduced each of his assessments by an unspecified amount, because the property was heritage-listed.

21 In a letter to Mr and Mrs Moeller dated 15 January 2009, the Valuer-General advised as follows.

“A senior valuer from the Department of Lands has … advised that 1 July 2005, 1 July 2006, 1 July 2007 and 1 July 2008 land values take into account the heritage listing of the property. The Office of State Revenue (OSR) and Blue Mountains City Council have been notified of the new heritage values.
However, the valuer has advised that the basis for the 1 July 2006, 1 July 2007 and 1 July 2008 valuations … were [sic] incorrectly recorded as being issued under section 6A1 of the Valuation of Land Act 1916 rather than section 14G, as required.”

22 Section 14B(1) of the Valuation of Land Act 1916 requires that land be valued as at 1 July in the year for which a value is to be ascertained. Section 14G sets out the assumptions upon which the Valuer-General is to value land which he determines to be ‘heritage restricted’. That land excludes land listed in the State Heritage Register under the Heritage Act 1977.

23 From the contents of the Valuer-General’s letter, the Tribunal infers that the Valuer-General had determined that the land was ‘heritage-restricted’ under section 14G, and that the land was not listed in the State Heritage Register. It follows that the land was ‘heritage-protected’, as defined in section 9AA(12) of the Land Tax Management Act 1956 (extracted above).

24 In a letter to the Chief Commissioner dated 15 February 2006, Mrs Moeller asserted that the property had been ‘heritage listed since 1992’, and ‘listed in the Blue Mountains City Council EDP [sic] plan since 1992 (time of our purchase of the property) or possibly even before’. These assertions are not challenged.

25 From these two letters, and from the notice of assessment dated 15 April 2008, the Tribunal infers that the property had been ‘heritage-protected’ within the meaning of section 9AA(12) of the Land Tax Management Act 1956 since 1992 or earlier, and for that reason did not attract the operation of sections 9AA(7) or (9), set forth above.

26 It follows that the Chief Commissioner correctly calculated the average value for the 2007 and 2008 tax years by reference to its value in the relevant tax year and the two preceding tax years, as entered in the Register of Land Values.

27 It also follows that the heritage listing has indirectly affected the quantum of land tax assessed, because it formed the basis, in part, for the land values entered in the Register, upon which the Chief Commissioner relied when assessing the property to land tax.

28 Where a land owner considers that a valuation notified by the Valuer-General under section 29 of the Valuation of Land Act 1916 is too high or low, he or she may lodge an objection with the Valuer-General: section 29(3A). Where the land owner is dissatisfied with the outcome of the objection, he or she may appeal to the Land and Environment Court under section 37(1) of the Act. Section 37(3) provides:

“No person or body has jurisdiction or power to conduct a review or hear an appeal in respect of the determination of an objection except as provided by this Part.”

29 Neither the Chief Commissioner nor the Tribunal has jurisdiction or power to entertain an objection to valuations ascertained and notified by the Valuer-General, to review any such valuations, or to hear an appeal in respect of them. In any event, in submissions filed with the Tribunal on 5 May 2009, Mr and Moeller indicated as follows:

“Our submission was not about changing the land value, but allowing for a further reduction of land tax taking into consideration the heritage factor which had been ignored. We did not make a submission regarding the land value in itself!”

Conclusion

30 An applicant before the Tribunal bears the onus of proving his or her case: section 101(2) Taxation Administration Act 1996. Unless and until that onus is satisfied, the Chief Commissioner does not have to prove that the decision under review was correct. This resembles the position under Commonwealth income tax legislation: Gauci v Federal Commissioner of Taxation [1975] 135 CLR 81 [at 89]; Federal Commissioner of Taxation v Dalco [1990] 168 CLR [ ] [at 624].

31 No legislation or authority has been cited in support of the submission that the Chief Commissioner ought to have further reduced his assessments because the property was heritage-listed, or that he was empowered to do so.

32 The Chief Commissioner submits that he is not empowered to value land, and that he assessed land tax in the manner authorised by the legislation.

33 In broad terms, the legislation provided for the Valuer-General to ascertain land values and enter them in the Register of Land Values. For ‘mixed development land’ such as the property at Leura, he was required by section 14X of the Valuation of Land Act 1916 to enter in the Register any apportionment factor determined by him, calculated pursuant to section 14Y of the Act. An ‘apportionment factor’ is ‘the proportion (expressed as a percentage) that the rental value of the part of that land that is non-residential land bears to the rental value of the mixed development land as a whole’: section 14Y.

34 In this case, the Valuer-General ascertained the value of the land as at 1 July 2004, 2005, 2006 and 2007, and entered those values in the Register. Pursuant to section 9(4) of the Land Tax Management Act 1956, these became the land values for the 2005, 2006, 2007 and 2008 tax years respectively. The Valuer-General also ascertained an apportionment factor of 65%, and entered it in the Register.

35 Sections 9 and 9AA of the Land Tax Management Act 1956 required the Chief Commissioner, in assessing land tax, to have regard to the land values in the Register, and to calculate the average of those values for taxation purposes. On the evidence, he did so.

36 Section 9C of the Act required him to reduce the land value for tax purposes by an ‘allowable proportion’, calculated in accordance with the formula in section 9C(2)(a). On the basis of that formula, he calculated the allowable proportion, and reduced the value for tax purposes in accordance with his calculation.

37 The Act also required him, where applicable, to apply the various exemptions and concessions listed in Part 3 of the Act. They did not include any general concessions or exemptions for land which was heritage-listed, or ‘heritage-protected’ as defined in section 9AA. No submission is made to the effect that the property at Leura attracted any of the exemptions or concessions listed in Part 3.

38 In the circumstances, Mr and Mrs Moeller have not demonstrated that, by reason of the heritage listing of the property, the Chief Commissioner was obliged to reduce further his assessments for the 2007 and 2008 tax years, or to reduce further the land value for tax purposes, or that in either case he had power to do so.

39 There is no basis for finding that the assessments of 15 April 2008 were incorrect. For that reason, it is appropriate that they be confirmed under section 101 of the Taxation Administration Act 1996.

Orders
40 Pursuant to section 101 of the Taxation Administration Act 1996, the Tribunal makes the following orders.

1. The Chief Commissioner’s decision made on 15 April 2008 to assess the land at Leura to land tax for the 2007 tax year is confirmed.
2. The Chief Commissioner’s decision made on 15 April 2008 to assess the land at Leura to land tax for the 2008 tax year is confirmed.