Muroi and Anor and Commissioner Of State Revenue
[2007] WASAT 312
•10 DECEMBER 2007
MUROI & ANOR and COMMISSIONER OF STATE REVENUE [2007] WASAT 312
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 312 | |
| LAND TAX ASSESSMENT ACT 2002 (WA) | |||
| Case No: | DR:373/2007 | DETERMINED ON DOCUMENTS | |
| Coram: | JUDGE J CHANEY (DEPUTY PRESIDENT) | 9/12/07 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | The decision of the Commissioner of State Revenue affirmed. Review application dismissed. | ||
| B | |||
| PDF Version |
| Parties: | MICHIHITO MUROI RIYOKO MUROI COMMISSIONER OF STATE REVENUE |
Catchwords: | Land tax Construction of dwelling house Delayed by fault of builder Whether exemption for "private residential property" in s 21 or s 24 of the Land Tax Assessment Act 2002 (WA) applies Whether any discretion to exempt owners from land tax where building contract extends into third year |
Legislation: | Land Tax Assessment Act 2002 (WA), s 7, s 21(1), s 24 |
Case References: | Semmens and Anor and Commissioner of State Revenue [2006] WASAT 219 Watt and Anor and Commissioner of State Revenue [2006] WASAT 220 |
Orders | 1. The decision of the Commissioner for State Revenue to impose land tax for the assessment year of 2005/2006 in respect of the property at 50 Meriwa Street, Nedlands is affirmed.,2. The application for review is dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : LAND TAX ASSESSMENT ACT 2002 (WA) CITATION : MUROI & ANOR and COMMISSIONER OF STATE REVENUE [2007] WASAT 312 MEMBER : JUDGE J CHANEY (DEPUTY PRESIDENT) HEARD : DETERMINED ON DOCUMENTS DELIVERED : 10 DECEMBER 2007 FILE NO/S : DR 373 of 2007 BETWEEN : MICHIHITO MUROI
- RIYOKO MUROI
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Land tax Construction of dwelling house Delayed by fault of builder Whether exemption for "private residential property" in s 21 or s 24 of the Land Tax Assessment Act 2002 (WA) applies Whether any discretion to exempt owners from land tax where building contract extends into third year
Legislation:
Land Tax Assessment Act 2002 (WA), s 7, s 21(1), s 24
(Page 2)
Result:
The decision of the Commissioner of State Revenue affirmed.
Review application dismissed.
Category: B
Representation:
Counsel:
Applicant : Self-represented
Respondent : Ms Coetzee
Solicitors:
Applicant : Self-represented
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Semmens and Anor and Commissioner of State Revenue [2006] WASAT 219
Watt and Anor and Commissioner of State Revenue [2006] WASAT 220
(Page 3)
Summary of Tribunal's decision
1 Mr and Mrs Muroi sought a review of a decision of the Commissioner of State Revenue to impose land tax on their property at 50 Meriwa Street, Nedlands for the financial year ending 30 June 2006. On 5 July 2005, Mr and Mrs Muroi contracted with a builder to demolish the existing house on the land, and construct a new residence in which they intended to live. The construction of the building was substantially delayed, and was not completed by 30 June 2007. The delay was, according to Mr and Mrs Muroi, entirely the fault of the builder.
2 A consequence of the delay of the building contract is that the exemption from land tax for two consecutive assessment years, available under s 24A of the Land Tax Assessment Act 2002 (WA), ceased to be available for the financial year 2005/2006. As a consequence, the Commissioner assessed the land for land tax for that year. Mr and Mrs Muroi sought to have the Commissioner's decision overturned. The consequences of granting their application would be that they would receive exemption from land tax for three consecutive years. While sympathising with Mr and Mrs Muroi's plight, the Tribunal concluded that it had no power to extend the period of exemptions provided for by s 24A, and concluded that there was no alternative but to dismiss the application and confirm the decision of the Commissioner.
The issue
3 The issue for determination in these proceedings is whether the determination of the Commissioner of State Revenue to assess land tax on the applicant's property at 50 Meriwa Street, Nedlands for the financial year 2005/2006, should be overturned. The applicants contend that, because of the extraordinary delay in construction of their home, and the significant financial detriment already suffered by them as a result of the delay, they should not be called upon to pay land tax during the period of the construction.
Operation of the Land Tax Assessment Act 2002 (WA)
4 Land tax is payable on land each financial year. It is levied upon the person who is, or was, the owner of the land at midnight on 30 June in the previous financial year – Land Tax Assessment Act 2002 (WA) (LTA Act) s 7(1). The Commissioner has power to grant exemptions under s 20(2) of the LTA Act in relation to land that comes within the
(Page 4)
- descriptions in s 20(1).
5 Private residential property owned by individuals is exempt from land tax if the property is used by the owner or owners as their primary residence at midnight on 30 June in the financial year before the assessment year – s 21(1).
6 In order to accommodate persons who are in the process of constructing a new residence, which they intend to use as their primary residence, but, because of the construction, are not using it as their primary residence on the relevant date, s 24A provides a further basis of exemption.
7 Section 24A(1) provides:
"Construction of private residence ¾ exemption for 2 assessment years
(1) Private residential property (except property held in trust) that is owned by an individual is exempt for 2 consecutive assessment years if - "
(a) the commencement date for the construction of the private residence that forms part of the property is ¾
- (i) in the first assessment year; or
(ii) in any previous financial year and part of the construction is carried out in the first assessment year;
and
(b) the completion date for the construction is in the second assessment year; and
(c) at midnight on 30 June immediately before the first assessment year, the individual owned the land on which the private residence is constructed; and
(d) the individual is the first occupant of the private residence; and
- (e) the individual uses the private residence as his or her primary residence during the second assessment year.
8 Section 24(3) requires the owner to apply for exemption after the commencement date for the construction, and s 24(4) requires the owner to notify the Commissioner, in an approved form, of the completion date of the construction, and when the applicant occupies the private residence.
The applicants' situation
9 Mr and Mrs Muroi own the property at 50 Meriwa Street, Nedlands. They have owned it for some years. On 5 July 2005, they made a contract with a builder. At that time, the existing house had been demolished and a building licence had been issued. Their expectation was that the construction of the residence, which they apparently proposed to use as their primary residence, was expected to be completed well prior to 30 June 2007. There have, however, been some very substantial construction delays, which the applicants say, and I accept, are entirely the responsibility of the builder.
10 Mr and Mrs Muroi had received the benefit of exemption from land tax in respect of 50 Merrriwa Street for the financial years 2005/2006 and 2006/2007. However, because they were unable to move into the property prior to 30 June 2007, an exemption for the year 2007/2008, if granted, would have exceeded the two consecutive assessment years contemplated by s 24A. On that basis, the Commissioner assessed land tax for the financial year 2005/2006 on the basis that, assuming the applicants moved into the home as their primary residence during the financial year 2007/2008, s 24A would entitle them to exemptions for 2006/2007 and 2007/2008.
11 Mr and Mrs Muroi seek to have that assessment set aside. In doing so, they point to the very significant financial consequences of the delay in the building contract, all of which have been entirely outside their control. They say, and I accept, they have suffered by having to live in a rental unit, pay the rent and other expenses related to that property, and they have been forced to renew their lease of those premises for a period of six months, which may well exceed the time that the premises are actually required before their home is completed. They point out that the possibility of recovering proper compensation from the builder from delays is complicated by the substantial costs of having to commence litigation.
(Page 6)
Is exemption available under the LTA Act?
12 In dealing with the initial objection to the assessment, the Commissioner pointed out to Mr and Mrs Muroi that the President of this Tribunal had previously considered the scope for additional exemptions beyond those provided for in s 24 of the LTA Act – see Semmens and Anor and Commissioner of State Revenue [2006] WASAT 219 and Watt and Anor and Commissioner of State Revenue [2006] WASAT 220. Section 24 provides for an exemption for one assessment year in circumstances where the property concerned is unoccupied on 30 June of the previous year because of construction of a proposed primary residence. Section 24A was introduced to the LTA Act in 2006, and took effect on 4 July 2006. The two year exemption provided for by s 24A was not available at the times relevant to the decision in Semmens.
13 In both those decisions the President determined that there was no discretion to allow any exemption beyond the one year period provided for in s 24.
14 The fact that the applicants applied for an exemption under s 24 and s 24A in relation to the year 2005/2006 indicates that, as at 30 June 2005, the property was not the applicants' primary residence. If it were, they would have been entitled to exemption for the 2005/2006 year pursuant to s 21 of the LTA Act. It is apparent, however, that the land was, at that time, vacant and, it would appear, the existing house on the property had been demolished. It is apparent that the land was not exempt under s 21, and there is no suggestion that it could have been the subject of exemption under s 20. It follows that the reasoning applied by the President in Semmens and Watt is equally applicable to this case.
15 The applicants sought to distinguish the decisions in Semmens and Watt on the basis that, in those cases, delays had been brought about by the "building boom" and the extent of the delays had not been as great as the delays experienced by Mr and Mrs Muroi. Although one can be very sympathetic to the plight in which the applicants find themselves, there is no scope under s 24A or anywhere else in the LTA Act for granting an exemption based upon the reasons for delay which cause a building contract to run over a third assessment date for land tax purposes. It can be assumed that the Parliament chose to introduce s 24A because of delays being experienced in the building industry, and the hardship which no doubt resulted to people in the position of Mr and Mrs Semmens and Mr and Mrs Watt as a consequence. As the President commented in their cases, it was a matter for Parliament as to whether or not further
(Page 7)
- exemptions could be granted. The same observation can be made as to whether there should be relief where a building project runs over 30 June for a third time.
16 In the circumstances, the Tribunal has no alternative but to dismiss the application for review and affirm the Commissioner's assessment.
Orders
17 In the circumstances, the Tribunal orders:
1. The decision of the Commissioner for State Revenue to impose land tax for the assessment year of 2005/2006 in respect of the property at 50 Meriwa Street, Nedlands is affirmed.
2. The application for review is dismissed.
I certify that this and the preceding [17] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUDGE J CHANEY, DEPUTY PRESIDENT
0
2
1