Nawaf Mualla ATF N Mualla Trust v Chief Commissioner of State Revenue

[2024] NSWCATAD 159

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Nawaf Mualla ATF N Mualla Trust v Chief Commissioner of State Revenue [2024] NSWCATAD 159

Hearing dates:

22 May 2024

Date of orders:

13 June 2024

Decision date:

13 June 2024

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S Dunn, Senior Member

Decision:

(1) The Assessment under review is confirmed

Catchwords:

TAXES AND DUTIES – land tax – relevant threshold - whether trust is a special trust – whether trust is a concessional trust – revocation of classification of a trust as a special trust

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW), ss 55, 63

Land Tax Act 1956 (NSW), s 3AL, Sch 13

Land Tax Management Act 1956 (NSW), ss 3, 3A, 3B, 7, 8, 25A

Taxation Administration Act 1996 (NSW), ss 96,100, 101

Cases Cited:

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Valastar v Chief Commissioner of State Revenue [2010] NSWADT 46 at [20]

Category:

Principal judgment

Parties:

Nawaf Mualla ATF N Mualla Trust (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Applicant (self-represented)

Crown Solicitor (Respondent)

File Number(s):

2024/00051212

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This is an application to the Tribunal under s 55 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act) for a review of a land tax assessment issued by the Respondent to the Applicant, Nawaf Mualla as trustee for the N Mualla Trust (Trust), on 9 September 2022 for the 2022 land tax year (Assessment) in respect of property owned by the Applicant in his capacity as trustee of the Trust at Yagoona, New South Wales (Property).

2. The Applicant submits that the Trust should not have been characterised as a special trust, so that the land tax threshold should have applied to the Property. The Applicant submits that the Trust should not have been characterised as a special trust because it should have been characterised as a concessional trust. Alternatively, the Applicant submits that the Tribunal should revoke the classification of the Trust as a special trust.

3. On 18 September 2023 the Applicant objected to the Assessment and the Respondent disallowed that objection by notice dated 22 November 2023. The Assessment is, accordingly, administratively reviewable by the Tribunal by virtue of s 96 of the Taxation Administration Act 1996 (NSW) (TA Act).

4. Section 100(3) of the TA Act makes it clear that the Applicant has the onus of proving his case. This requires him to prove all matters necessary for the Tribunal to answer the statutory question in his favour on the balance of probabilities. Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [28] - [31].

5. In conducting the review, the Tribunal is required to determine the correct and preferable decision having regard to the material before it and the applicable law: s 63 of the ADR Act.

6. Section 101 of the TA Act sets out the powers of the Tribunal in dealing with an application for review and provides that the Tribunal may, amongst other things, confirm or revoke the assessment, make an assessment or other decision in place of the assessment or remit the matter to the Respondent for determination in accordance with its finding or decision.

Material before the Tribunal

7. The Applicant relied upon a document containing a mixture of evidence and submissions filed on 4 April 2024 and further submissions dated 21 May 2024 which were handed up at the hearing.

8. The Respondent relied upon documents filed under s 58 of the ADR Act, a tender bundle filed on 7 May 2024 and submissions filed on 7 May 2024.

Relevant Legislative Provisions

Land Tax Act 1956 (NSW)(LTA) and Land Tax Management Act 1956 (NSW) (LTMA)

9. Pursuant to s7 of the LTMA land tax is levied on the taxable value of all land in New South Wales unless it is exempt under the LTMA.

10. Land tax is charged on land owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied: s8 LTMA.

11. Section 3 of the LTMA defines the “owner” of land relevantly as follows:

Owner includes—

(a) in relation to land, every person who jointly or severally, whether at law or in equity—

(i) is entitled to the land for any estate of freehold in possession

…

12. Section 3AL(2) of the LTA (and Schedule 13 of the LTA) provides for a land tax threshold to apply except in relation to land which is subject to a special trust (or land owned by a non-concessional company).

13. Section 3A of the LTMA defines “special trust” relevantly as follows:

3A Special trust—meaning

(1) For the purposes of this Act, a trust is a special trust if—

(a) the trust property includes land, and

(b) the trustee of the trust is the owner of the legal estate in the land, and

(c) the trust is not a fixed trust.

(2) For the purposes of this section, a trust is a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes (disregarding section 25 (3)).

(3) For the purpose of determining whether a trust is a fixed trust under this section, any equitable interest of the trustee as trustee of the trust is to be disregarded.

(3A) If a trust satisfies the relevant criteria, the persons who are beneficiaries of the trust under the trust deed are taken to be owners of an equitable estate in the land that is the subject of the trust and, accordingly, the trust is taken to be a fixed trust.

…

(3B) For the purposes of this section, the relevant criteria are as follows—

(a) the trust deed specifically provides that the beneficiaries of the trust—

(i) are presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust, and

(ii) are presently entitled to the capital of the trust, and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property,

(b) the entitlements referred to in paragraph (a) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed,

…

(4) A trust is not a special trust—

(a) if the trust is solely a charitable trust, or

(b) if clause 9 of Schedule 1A applies in respect of the land that is the subject of the trust, or

(c) if the trust is a concessional trust, or

(d) in relation to any land tax year in which it is a superannuation trust, or

(e) if the trust is established by will, but only during the period ending on the expiration of 2 years after the date of death of the testator, or

(f) in relation to any land tax year in which it is a family unit trust, as provided by Schedule 1AA.

14. At the relevant date, namely 31 December 2021, s 3B of the LTMA defined “concessional trust” as follows (the definition has subsequently been amended):

3B Concessional trust—meaning

(1) For the purposes of this Act, a trust is a concessional trust if—

(a) the trust property includes land, and

(b) each person who is a beneficiary of the trust is—

(i) a person under the age of 18 years, or

(ii) a person in respect of whom a guardianship order is in force under the Guardianship Act 1987, or

(iii) a person in the target group within the meaning of the Disability Inclusion Act 2014.

15. Section 25A of the LTMA provides that the Respondent may classify a trust as a special trust. It provides as follows:

25A Classification of trust as special trust

(1) If land is subject to a trust, the Chief Commissioner may classify the trust as a special trust for land tax purposes—

(a) on the application of the trustee of the trust, or

(b) on the Chief Commissioner’s own motion.

(2) Without limiting subsection (1) (b), the Chief Commissioner may classify a trust as a special trust in relation to a land tax year if any information required to be provided for that land tax year in relation to the trust, the land that is the subject of the trust or the beneficiaries of the trust is not provided as required under this Act.

(3) A classification of a trust as a special trust that is made on the application of the trustee of a trust has effect in respect of any assessment of land tax liability (being an initial assessment of land tax liability) that is made on or after the date on which the trust is classified as a special trust, and does not affect any assessment of land tax liability made before that classification.

(4) However, if an application for classification of a trust as a special trust is duly made by the trustee within the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being a notice that relates to an initial assessment of land tax liability)—

(a) the classification of the trust as a special trust is taken to extend to the land tax year in respect of which that notice of assessment was issued, and

(b) liability for that land tax is to be re-assessed accordingly.

(5) The Chief Commissioner may revoke the classification of a trust as a special trust—

(a) on the application of the trustee of the trust, or

(b) on the Chief Commissioner’s own motion.

(6) The Chief Commissioner must revoke the classification of a trust as a special trust if the trust was classified as a special trust on the application of the trustee and an application for revocation is duly made by the trustee of the trust.

(7) A revocation of a classification that is made on the application of the trustee of a trust has effect in respect of any assessment of land tax liability (being an initial assessment of land tax liability) that is made on or after the date on which the classification is revoked, and does not affect any assessment of land tax liability that was made before that revocation.

(8) However, if an application for revocation is duly made by the trustee within the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability), and the Chief Commissioner revokes the classification—

(a) the revocation is taken to extend to the land tax year in respect of which that notice of assessment was issued, and

(b) liability for land tax is to be re-assessed accordingly.

(9) An application under this section is to be made in a form approved by the Chief Commissioner, and is to include such supporting information as the Chief Commissioner requires.

(10) The Chief Commissioner may, despite anything to the contrary in this section—

(a) reject any application under this section if it is made in contravention of the trust or trust deed that declares the trust concerned, and

(b) reject any application for revocation of the classification of a trust as a special trust if any information required to be provided in relation to the trust, the land that is the subject of the trust or the beneficiaries of the trust has not been provided as required under this Act or the Taxation Administration Act 1996, and

(c) assess or re-assess any land tax liability for land the subject of a trust that is not a fixed trust on the basis of the trust being a special trust, including land tax liability in respect of land tax years that commenced or occurred before the trust was classified as a special trust.

(11) In this section—

fixed trust has the meaning given by section 3A.

Mr Mualla’s evidence

Mr Mualla gave some brief evidence at the hearing. He said that he wanted to set up a trust and put property in the trust for himself and his children because he and his wife had separated and he had been told that if the property was in a trust, if something happened to him, the property would go to his children.

He said that he created the trust deed for the Trust from a trust deed form he found on line and he “filled in the boxes”. He did not read the deed paragraph by paragraph.

Facts

The following facts are not in dispute.

By Deed executed on 4 December 2020 the Trust was established. The Applicant is the trustee of the Trust.

16. The Trust Deed defined “beneficiary” as a “person who may become entitled to income or capital” (clause 1.1 (c)) and “default beneficiary” as “a beneficiary referred to in clause 14.2 (d)”.

17. Clause 3.1 of the Trust Deed provided:

3.1 Beneficiaries

The beneficiaries of the Trust comprise:

Persons

(a) Nawaf Mualla and Sam Mualla and Alexander Mualla and Alina Mualla ("the specified beneficiaries");

(b) the lineal descendants of the parents of the specified beneficiaries and spouses for the time being; widow or widower of such lineal descendants born before the termination date;

(c) the spouse of any child or grandchild of either of the specified beneficiaries;

(d) any parent, brother or sister, nephew or niece of either of the specified beneficiaries];

Corporations

(e) a company which now or before the termination date is incorporated in Australia or under the laws of any other country of which a director, or natural person who beneficially owns a share carrying a right to vote at general meetings, is a beneficiary of this trust;

Secondary trust

(f) a trustee of any other trust, whether now existing or created after the date of this deed ('secondary trust) where;

(i) a beneficiary or discretionary object of the secondary trust is a beneficiary of this Trust;

(ii) the provisions of the secondary trust require a vesting in interest of its trust property prior to the termination date of this Trust; and

(iii) the provisions of the secondary trust require the beneficiaries of that secondary trust to be such so as not to cause this deed to breach any applicable rule or law against perpetuities;

Benevolent objects

(g) a trustee of any charitable trust; and

(h) any association, society, authority, institution, church, religious order, corporation, person or entity which at the time a distribution of income or capital is to be made is exempt from income tax under the provisions of the Act or if at the relevant time a gift of money to such body is deductible against assessable income of the donor by virtue of the Act.

18. The Trust Deed also relevantly provided:

(clause 3.4) any person whose inclusion as a beneficiary would result in the Trustee being a foreign person under the Land Tax Act 1956 (NSW) is irrevocably excluded as a beneficiary of the Trust;

(clause 4.1) the Trustee holds the income of a financial year which is available for distribution upon trust to pay, apply or set aside the income, or any part of the income, to or for the benefit of the beneficiaries in such shares or proportions as the Trustee may in its discretion determine;

(clause 5.1) until the Trust is wound up the Trustee holds the capital of the Trust for the beneficiaries, prior to the termination date in such shares or proportions as the Trustee in its discretion may determine, and on termination of the Trust the capital available for distribution which has not been the subject of a determination by the Trustee must be held for the default beneficiaries in the manner described in clause 14.2(d);

(clause 8.1) income or capital, other than permitted remuneration, may not be paid or transferred beneficially to or applied for the benefit of the Settlor or the Trustee and no discretion or power conferred by the Trust Deed may be exercised and no provision of the Trust Deed operates to confer any direct or indirect benefit in the trust fund to the Settlor or to a Trustee;

(clause 14.1 and the Schedule) the Trust must wind up and terminate on the first to occur of the date which the Trustee with the written consent of the Appointor determines or the 80^th anniversary of the day before the date of the Trust Deed;

(clause 14.2(d)) on termination the Trustee must hold the remainder of the trust fund on trust for the default beneficiaries described in the Schedule who are living on the termination date in equal shares (and if a default beneficiary dies before the termination date leaving issue, such issue will take equally among themselves the share to which their parent would otherwise be entitled).

19. The Schedule to the Trust Deed specifies the “named beneficiaries” as Nawaf Mualla, Sam Mualla, Alexander Mualla and Alina Mualla.

20. The Property was purchased by the Applicant, Nawaf Mualla as trustee for the N Mualla Trust, in 2021.

21. On 6 September 2022 the Respondent issued a land tax notice of assessment to the Applicant assessing the Applicant as liable to land tax, on the basis that the Trust was a special trust, as well as surcharge land tax in respect of the Property on the basis that the Trustee was deemed to be a foreign person under s 5A of the LTA.

22. On 9 September 2022 the Applicant lodged a land tax variation return noting that the Trust Deed excludes foreign beneficiaries.

23. On 9 September 2022 the Respondent issued a further notice of assessment to the Applicant for the 2022 land tax year reassessing the Applicant as liable for land tax, on the basis that the Trust was a special trust, but not liable to surcharge land tax, for the 2022 land tax year.

24. On 20 December 2022 a Deed of Variation of the Trust Deed was executed to change the nature of the Trust “from a discretionary trust to a fixed trust.” The Respondent accepts that the Deed of Variation had the effect of changing the Trust to a fixed trust from the date of its execution.

Applicant’s Submissions

25. The Applicant submits:

1. The Trust should not be classified as a special trust because there is a conflict of interest between the Trustee and the beneficiaries specified in the Trust Deed and because inconsistencies in provisions in the Trust Deed concerning the governing law of the Deed could create uncertainty regarding the application of tax laws;

2. The Trust should be classified as a concessional trust under s 3B of the LTMA because the Applicant, Mr Mualla, as Trustee, is precluded from being a beneficiary of the Trust by virtue of clause 8 of the Trust Deed and the remaining named beneficiaries in the Schedule to the Trust Deed are Mr Mualla’s children who are each under 18 years of age;

3. The Respondent should have informed the Applicant that he could apply under s 25A(8) of the LTMA for a revocation of the classification of the trust as a special trust.

Consideration

Was the Trust a special trust

26. As noted above, the onus is on the Applicant to prove that the Assessment is incorrect. Accordingly, the Respondent does not need to establish that the Trust was properly characterised as a special trust for the 2022 land tax year. The Applicant must prove that the Trust was not a special trust for the 2022 land tax year.

27. Whether or not there may be a conflict of interest between the Trustee and the beneficiaries of the Trust or whether or not there may be inconsistencies between certain of the provisions of the Trust Deed will not determine the proper classification of the Trust.

28. Pursuant to s 3 A of the LTMA, a trust is a special trust if:

1. The trust property includes land;

2. The trustee of the trust is the owner of the legal estate in the land;

3. The trust is not a fixed trust; and

4. None of subparagraphs (a) – (f) of s 3(4) apply.

29. It is not in dispute, and it is clear from the cover page of the contract to purchase the Property which is in evidence, that the property of the Trust included land, namely the Property. It is also clear on the evidence that Mr Mualla as trustee of the Trust, was the owner of the legal estate in the Property. Accordingly, s3A subss (1) and (2) of the LTMA are satisfied and the Trust was a special trust, unless it was a fixed trust or one of subparagraphs (a) – (f) of s 3(4) apply.

30. The Applicant does not submit that the Trust was a fixed trust and it is clear that, prior to the Deed of Variation, it was not.

31. Section 3A (2) of the LTMA defines a trust as a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are “owners” of the land for tax purposes.

29. Pursuant to s 3A(3B) of the LTMA, the beneficiaries of a trust will be taken to be owners of the equitable interest in the land if the trust deed provides that the beneficiaries of the trust are presently entitled to the income and capital of the trust and those entitlements cannot be removed, restricted or affected by the exercise of, or failure to exercise a discretion conferred on a person by the trust deed.

30. Under the Trust Deed, prior to the Deed of Variation, the Trust was clearly a discretionary trust where the beneficiaries were not presently entitled to the income or capital of the Trust (refer clauses 4.1 and 5.1 of the Trust Deed referred to at paragraph [22] above). Accordingly, the Trust was not a fixed trust as defined by s 3A(2) of the LTMA.

31. The Applicant submits that the trust should, however, have been classified as a concessional trust such that s 3(4)(c) of the LTMA applies.

32. A concessional trust is defined in s 3B of the LTMA as set out above at paragraph [14]. Each person (which means every person) who is a beneficiary of the Trust must be either under the age of 18 years, or a person in respect of whom a guardianship order is in force, or a person who is in the target group within the meaning of the Disability Inclusion Act 2014: Valastar v Chief Commissioner of State Revenue [2010] NSWADT 46 at [20].

33. The Applicant submits that, because clause 8 of the Trust Deed prevents any income or capital of the Trust being distributed to him as Trustee or him otherwise benefiting from the Trust fund, he should not be considered a beneficiary of the Trust. I accept that submission.

34. The Applicant has also established that each of his children who were the specified beneficiaries of the Trust and the named beneficiaries in the Schedule to the Trust Deed were under the age of 18 years as at 31 December 2021.

35. However, clause 3.1 of the Trust Deed defines the beneficiaries of the Trust in broad terms to include, amongst others, corporations in which another beneficiary holds a share and any parent (or other specified relatives) of the specified beneficiaries.

36. The Applicant submits that, while clause 3.1 provides a broad definition of potential beneficiaries, clause 5.1 and 14.2(d) of the Trust Deed provide that the remaining capital upon termination of the trust is to be held for the default beneficiaries in the Schedule which lists only himself and his children and their lineal descendants, “intentionally excluding parents and companies”. He submits that “following the principle that specific provisions override general provisions”, “the trust’s clear intention is to prioritise the named beneficiaries in the Schedule over the broader range of potential beneficiaries in clause 3.1.”

37. He further submits that:

Obviously when the trust deed was first created, it clearly intended to prioritise the only named beneficiaries as the sole recipients of the trust’s assets. This intention is evidenced by the specific provisions outlined in the Schedule and clause 14.2(d) which identify these named beneficiaries as the primary individuals to benefit from the trust upon its termination. The broad definition of potential beneficiaries in clause 3.1 serves to outline the trustee’s flexibility during the trust’s operation, but it is the explicit and narrow list in the Schedule that governs the final distribution of the trust’s assets. By specifying these default beneficiaries and reinforcing their priority in the termination clauses, the trust deed underscores that the named beneficiaries were meant to be the principal focus, ensuring that they are the exclusive recipients when the trust is wound up.

41. The Applicant submits that the “specific designation of default beneficiaries in clause 14.2(d) and the Schedule should override the general definition [of beneficiaries] in clause 3.1”.

42. I cannot accept the Applicant’s submission in this regard. The principle (of statutory construction) that specific provisions override general provisions has no operation. There is no inconsistency between the specific clauses of the Trust Deed the Applicant points to, which apply upon termination of the Trust and clause 3.1 which applies during the time of the Trust’s operation. At the relevant time, namely 31 December 2021, the Trust had not been terminated. As the Applicant’s own submission concedes clause 3.1 of the Trust Deed provides the list of beneficiaries the Trustee may in his discretion make distributions of income or capital to “during the trust’s operation”. The Applicant may have intended his children to be the “principal focus” and as Trustee the Applicant may, in his discretion, have prioritised trust distributions to his children. Nevertheless, the Applicant’s children were not the only beneficiaries of the Trust for the purposes of s 3B of the LTMA.

43. Section 3B(2) of the LTMA provides that a person is a beneficiary of a trust if the person is a person in whose favour capital or income of the trust may be applied by the exercise of a power or discretion in favour of that person. As at 31 December 2021 each of the persons or entities listed in clause 3.1 of the Trust Deed were persons or entities in whose favour the capital or income of the Trust could be applied at the Trustee’s discretion.

44. For s 3B of the LTMA to apply, the Applicant must, therefore, establish that any person (that is, every person) (or entity) falling within the classes of beneficiaries in clause 3.1 met the criteria in s 3B (1)(b) of the LTMA.

45. Those classes of beneficiaries included, amongst other persons or entities, the mother of the specified beneficiaries, Ms Shaban. There is no evidence before the Tribunal as to Ms Shaban’s date of birth, however, it is abundantly clear from the material before the Tribunal including the birth certificates of her children, that Ms Shaban was not under 18 years of age as at 31 December 2021. There is no evidence before the Tribunal to suggest that Ms Shaban may fall within the other classes of persons specified in s 3B(1)(b), namely that she was subject to a guardianship order or a person in the target group within the meaning of the Disability Inclusion Act 2014.

46. Nor is there evidence before the Tribunal as to whether any other members of the classes of beneficiaries set out in clause 3.1 of the Trust Deed satisfied the criteria in s 3B(1)(b).

47. Accordingly, I cannot be satisfied on the evidence before me that each person who was a beneficiary of the Trust was a person under the age of 18 years, a person in respect of whom a guardianship order was in force or a person in the target group within the meaning of the Disability Inclusion Act 2014. I therefore cannot be satisfied that the Trust was a concessional trust for the 2022 land tax year.

48. Given the above, it is not necessary for me to determine, but I note that in my view it appears that a concessional trust as defined by s 3B of the LTMA, could only have natural persons as its beneficiaries. Only natural persons can be under the age of 18 years, and only natural persons could be the subject of guardianship orders or be in the “target group” as then defined by the Disability Inclusion Act 2014. As the classes of beneficiaries of the Trust included corporations and other entities, in my view, it also, for that reason, could not have satisfied the definition of a concessional trust.

49. The Applicant did not submit or provide any evidence that any of the other subparagraphs of s 3(4) of the LTMA apply.

50. Accordingly, as the trust was not a fixed trust and the Applicant has not established that it was a concessional trust or that any other of the subparagraphs of s 3(4) of the LTMA apply, the Trust was correctly classified as a special trust for the 2022 land tax year.

Revocation of classification as a special trust

51. The Applicant also complains that he was not informed by the Respondent that he could have applied, within the time allowed for the lodging of an objection to the Assessment, for the revocation of the classification of the Trust as a special trust under s 25A (8) of the LTMA (and, I infer, that had he been made so aware he would have done so) and asks the Tribunal to “consider our application to revoke the classification of the Trust as a special trust.”

52. Section 25A of the LTMA is set out in full at paragraph [15] above. However, it is useful to summarise the relevant provisions again.

53. Section 25A(5) of the LTMA provides that the Respondent may revoke the classification of a trust as a special trust on the application of a trustee of the trust. It is clear from the use of the term “may” that the Respondent has a discretion in this regard.

54. Section 25A(6) of the LTMA provides that the Respondent must revoke the classification of a trust as a special trust if the trust was classified as a special trust on the application of the trustee and an application for revocation is duly made by the trustee. This section makes it clear that if the trust was initially classified as a special trust on the application of the trustee, the Respondent must revoke that classification on an application of the trustee. However, that section, in my view must be read together with s 25A(10) below. I note that the Applicant, in any event, does not rely upon s 25A(6) of the LTMA because the Trust was not initially classified as a special trust on the application of the Trustee.

55. Section 25A(7) of the LTMA provides that a revocation of a classification made on the application of a trustee of a trust has effect on or after the date on which the classification is revoked.

56. Section 25A(8) of the LTMA provides that if an application for revocation is made by a trustee within the time period allowed for the lodging of an objection to a notice of assessment of land tax liability and the Respondent revokes the classification, the revocation is taken to extend to the land tax year in respect of which the notice of assessment was issued. The use of the word “and” in this subsection again makes if clear that the Respondent has a discretion whether or not to agree to revoke the classification of the trust on an application by a trustee.

57. Section 25A (10) of the LTMA also provides that the Respondent may, despite anything to the contrary in the section, reject any application under the section if it is made in “contravention of the trust or trust deed that declares the trust concerned”.

58. The Respondent submits that, as ss 25A (7) and (8) follow on from s 25A (6), an application for revocation under s 25A (8) of the LTMA may only be made where the trust was initially classified as a special trust on the application of the trustee, which was not the case here.

59. I reject that submission. There is nothing in the wording of ss 25A (7) or 25A(8) which limits applications under those sections to cases where the trust was initially classified as a special trust on application of the trustee. I consider that it would have been open to the Applicant, within the time period allowed for lodging an objection against the Assessment, to make an application under s 25A(8) of the LTMA for a revocation of the classification of the trust even though the Trust was classified as a special trust on the Respondent’s own motion.

60. The Applicant did not make such an application and there is no power under s 25 of the LTMA or elsewhere to extend the time for making such an application.

61. However, even if the Applicant had made such an application within time, it would have been open to, and in my view appropriate for, the Respondent to reject such an application under s 25A (10) of the LTMA because, as I have found above, the Trust was correctly classified as a special trust. Any such application for revocation would be “in contravention of the trust deed declaring the trust”. The legislature could not have intended by s 25A (8) of the LTMA that the Respondent would be bound to revoke the classification of a trust as a special trust on an application by a trustee in circumstances where he considers that the trust is in fact correctly classified as a special trust.

62. Accordingly, while it is clear that the Applicant was frustrated that he was not informed of the option to make an application for revocation, I do not consider the Applicant has suffered any prejudice as a result because, in my view, any such application should properly have been rejected by the Respondent under s 25A(10) of the LTMA.

63. I also note that the Tribunal has jurisdiction to review decisions of the Respondent which have been the subject of an objection: s 96 of the TAA. There has been no relevant decision made or objection taken in this regard. The Tribunal has no power to make an order revoking the classification of the Trust as a special trust for the 2022 land tax year under s25A of the LTMA or otherwise. However, even if it did, for the reasons given above, it would not be appropriate to do so in circumstances where the Tribunal is satisfied on the evidence that the Trust was, at the relevant time, a special trust.

Conclusion

64. On the evidence before me the Applicant has not discharged his onus of establishing that the Assessment was incorrect in characterising the Trust as a special trust. Nor is it possible or appropriate for the Tribunal to make an order revoking the classification of the Trust as a special trust for the 2022 land tax year.

Orders

1. The Assessment under review is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 13 June 2024