PAIZES and COMMISSIONER OF STATE REVENUE
[2016] WASAT 66
•10 JUNE 2016
PAIZES and COMMISSIONER OF STATE REVENUE [2016] WASAT 66
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2016] WASAT 66 | |
| LAND TAX ASSESSMENT ACT 2002 (WA),TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | DR:261/2015 | DETERMINED ON THE DOCUMENTS | |
| Coram: | JUDGE T SHARP (DEPUTY PRESIDENT) | 10/06/16 | |
| 25 | Judgment Part: | 1 of 1 | |
| Result: | Commissioner's decision affirmed Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | ALEXANDER PETER PAIZES COMMISSIONER OF STATE REVENUE |
Catchwords: | Land tax Reassessment Exemption Private residential property Primary residence Property held in trust Commissioner's power to exempt land |
Legislation: | Interpretation Act 1984 (WA), s 9, s 19 Land Tax Assessment Act 1910 (Cth) Land Tax Assessment Act 1976 (WA) Land Tax Assessment Act 2002 (WA), s 5, s 7, s 17, s 19, s 20, s 20(1), s 20(2), s 21, s 21(1), s 21(1)(a), s 21(1)(b), Pt 3 Land Tax Assessment Bill 2001 (WA), cl 21 Revenue Laws Amendment (Assessment) Act (No. 2) 2001 (WA) Revenue Laws Amendment (Assessment) Bill (No. 2) 2001 (WA) State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 87(1), s 87(2), s 87(4) Taxation Administration Act 2003 (WA), s 13, s 16, s 16(2), s 16(2)(a), s 16(5), s 34(2)(d), s 40 |
Case References: | Archer v Federal Commissioner of Land Tax (1912) 13 CLR 557 Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257 Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241 Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 |
Orders | The applicant's application is dismissed. |
Summary | The Commissioner since 2006 had allowed the applicant an exemption from land tax in respect of certain property in Mosman Park. This was on the basis that the property in question was being used by the applicant as his primary residence. However, it came to the Commissioner's attention that the applicant had in fact moved out of the property in December 2009 when he and his exwife separated and he had been living elsewhere.,Accordingly, the Commissioner reassessed the property for land tax for the 2014/2015 assessment year on the basis that the primary residence exemption no longer applied.,The applicant objected to the reassessment and the Commissioner disallowed the objection. The applicant then applied to the Tribunal for a review of that decision.,The substance of the applicant's argument was that the property was exempt from land tax under the Land Tax Assessment Act 2002 (WA) because it was and should continue to be regarded as his primary residence. ,The Commissioner on the other hand argued that the property was 'property held in trust' under a Family Court order, which in terms of the Act meant that the exemption did not apply. The Commissioner also pointed out that in any event the applicant did not live in the property and so it could not be his sole or principal place of residence.,The applicant in response said that the 'trust' in question was not in fact a trust to which the Act applied. Further, while the applicant conceded that he no longer resided at the property, he considered that he ought to still have the benefit of the exemption because of the circumstances of his removal from the property, namely his marital difficulties and subsequent divorce. The applicant considered that the Commissioner had the power under the Act to grant that exemption.,The Tribunal found that the trust created by order of the Family Court was not a trust to which the Act applied. However, the Tribunal did not consider that the exemption otherwise applied, because the applicant was not at the relevant time using the property as his primary residence. The Tribunal did not accept the applicant's argument that he was still entitled to the exemption because of the circumstances of his removal from the property. Instead, the Tribunal agreed with the Commissioner that the Commissioner did not have the power to grant the exemption in those circumstances. In any event, any appeal in respect of the Commissioner's exercise of her power of exemption under s 20 of the Act was, under s 20(3) of the Act, to the Minister, not the Tribunal.,The applicant's application for costs was also dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : LAND TAX ASSESSMENT ACT 2002 (WA)
- TAXATION ADMINISTRATION ACT 2003 (WA)
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Land tax Reassessment Exemption Private residential property Primary residence Property held in trust Commissioner's power to exempt land
Legislation:
Interpretation Act 1984 (WA), s 9, s 19
Land Tax Assessment Act 1910 (Cth)
Land Tax Assessment Act 1976 (WA)
Land Tax Assessment Act 2002 (WA), s 5, s 7, s 17, s 19, s 20, s 20(1), s 20(2), s 21, s 21(1), s 21(1)(a), s 21(1)(b), Pt 3
Land Tax Assessment Bill 2001 (WA), cl 21
Revenue Laws Amendment (Assessment) Act (No. 2) 2001 (WA)
Revenue Laws Amendment (Assessment) Bill (No. 2) 2001 (WA)
State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 87(1), s 87(2), s 87(4)
Taxation Administration Act 2003 (WA), s 13, s 16, s 16(2), s 16(2)(a), s 16(5), s 34(2)(d), s 40
Result:
Commissioner's decision affirmed
Application dismissed
Summary of Tribunal's decision:
The Commissioner since 2006 had allowed the applicant an exemption from land tax in respect of certain property in Mosman Park. This was on the basis that the property in question was being used by the applicant as his primary residence. However, it came to the Commissioner's attention that the applicant had in fact moved out of the property in December 2009 when he and his exwife separated and he had been living elsewhere.
Accordingly, the Commissioner reassessed the property for land tax for the 2014/2015 assessment year on the basis that the primary residence exemption no longer applied.
The applicant objected to the reassessment and the Commissioner disallowed the objection. The applicant then applied to the Tribunal for a review of that decision.
The substance of the applicant's argument was that the property was exempt from land tax under the Land Tax Assessment Act 2002 (WA) because it was and should continue to be regarded as his primary residence.
The Commissioner on the other hand argued that the property was 'property held in trust' under a Family Court order, which in terms of the Act meant that the exemption did not apply. The Commissioner also pointed out that in any event the applicant did not live in the property and so it could not be his sole or principal place of residence.
The applicant in response said that the 'trust' in question was not in fact a trust to which the Act applied. Further, while the applicant conceded that he no longer resided at the property, he considered that he ought to still have the benefit of the exemption because of the circumstances of his removal from the property, namely his marital difficulties and subsequent divorce. The applicant considered that the Commissioner had the power under the Act to grant that exemption.
The Tribunal found that the trust created by order of the Family Court was not a trust to which the Act applied. However, the Tribunal did not consider that the exemption otherwise applied, because the applicant was not at the relevant time using the property as his primary residence. The Tribunal did not accept the applicant's argument that he was still entitled to the exemption because of the circumstances of his removal from the property. Instead, the Tribunal agreed with the Commissioner that the Commissioner did not have the power to grant the exemption in those circumstances. In any event, any appeal in respect of the Commissioner's exercise of her power of exemption under s 20 of the Act was, under s 20(3) of the Act, to the Minister, not the Tribunal.
The applicant's application for costs was also dismissed.
Category: B
Representation:
Counsel:
Applicant : In Person
Respondent : Ms BM Allen
Solicitors:
Applicant : N/A
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Archer v Federal Commissioner of Land Tax (1912) 13 CLR 557
Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211
Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800
Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257
Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
Introduction
1 This matter comes before the Tribunal by way of an application under s 40 of the Taxation Administration Act 2003 (WA) (TA Act), made by the applicant on 5 August 2015.
2 The applicant seeks a review of a decision by the respondent (Commissioner) that land tax is payable for a property situated at 9 Saddington Crescent, Mosman Park (Property).
3 The applicant since January 2006 was the registered proprietor of the Property and until the 2014/2015 assessment year, the Property was exempt from land tax on the basis that the applicant and his wife used the Property as their primary residence. However, the applicant had in fact moved out of the Property in 2009 and he and his wife were divorced in 2011. From 2009 until June 2015, only the applicant's exwife and his children lived in the Property.
4 In February 2015, the Office of State Revenue (OSR) became aware of this situation and subsequently reassessed the land tax payable for the 2014/2015 assessment year. The land tax assessed was $6,187.29.
5 In February 2015, the applicant wrote to the Commissioner objecting to the reassessment. The objection was disallowed and the applicant then applied to the Tribunal for a review of that decision.
Proceedings in the Tribunal
6 At a directions hearing on 14 October 2015, the matter was referred to mediation by the Tribunal which took place on 29 October 2015 and 18 January 2016. The matter did not resolve and at a further directions hearing on 3 February 2016 the parties agreed that this matter involved a discreet question of law, which could be determined entirely on the documents.
7 The Commissioner filed a statement of issues, facts and contentions and a bundle of documents on 24 February 2016. The applicant filed his responsive statement on 23 March 2016. On 5 April 2016, the Commissioner sought and was granted leave to file and serve responsive submissions and those were filed on 19 April 2016. The Tribunal's decision was reserved on that date.
Facts
8 The facts of this matter are largely agreed and are set out in the Commissioner's statement of issues, facts and contentions as follows.
9 On 6 January 2006, the applicant became the sole registered proprietor of the Property, comprising Lot 37 on Plan 22789 and being the whole of the land in Certificate of Title Volume 2137 Folio 793.
10 On 23 September 2006, a 100% private residential property exemption was applied to the Property under s 21(1)(a) of the Land Tax Assessment Act 2002 (WA) (LTA Act). This exemption became effective on 30 June 2006.
11 Between 30 June 2006 and 2 February 2015, because the Commissioner had not received any notification of changed details regarding the Property, and as a result of the operation of the Commissioner's land tax database, this 100% exemption from land tax was automatically applied to the Property during each assessment year, including the 2014/2015 assessment year.
12 However, although the applicant lived at the Property with his wife and children until 9 December 2009, he and his wife then separated. From 9 December 2009 until August 2013, the applicant resided at 2A Fourth Avenue, Applecross and since August 2013, the applicant has resided at Unit 1, 10 Arthur Street, Shenton Park.
13 The applicant's ex-wife and his children remained residents of the Property until 9 June 2015.
14 The applicant and his wife were divorced on 21 June 2011.
15 This situation came to the attention of the Commissioner during the course of the sale of the Property in 2015. On 3 February 2015, the Commissioner removed the residential exemption which had previously applied to the Property and on 11 February 2015, a Land Tax Notice of Assessment for the 2014/2015 assessment year was issued to the applicant, reassessing the land tax payable by the applicant for the 2014/2015 assessment year.
16 The Land Tax Notice of Assessment relates to two taxable properties, one of which was the Property. The relevant land tax payable for the Property was $6,187.29.
17 On 17 February 2015, the applicant wrote to the OSR, objecting to the reassessment of land tax applicable to the Property.
18 On 28 April 2015, an OSR officer conducted an electoral roll search in relation to the applicant. The results of that search showed that the applicant had registered his address on the electoral roll as Unit 1, 10 Arthur Street, Shenton Park on 5 August 2013.
19 On 19 May 2015, following a request for further information to support his objection, the applicant provided the requested information, including a copy of Consent Orders made by the Family Court of Western Australia on 7 February 2013.
20 Order 1 of the Consent Orders ordered that the applicant and his exwife be appointed joint trustees for the sale of the Property.
21 Order 8 of the Consent Orders ordered that, pending settlement of the sale of the Property, the wife has exclusive occupation of the Property.
22 On 10 June 2015, the Commissioner disallowed the applicant's objection.
23 On 5 August 2015, the applicant applied to the Tribunal for review of the Commissioner's decision made on 10 June 2015, as well as recovery of his costs for making his application.
24 On 7 December 2015, the Commissioner provided the applicant with a further statement of reasons for the Commissioner's decision on review.
Issues
25 The parties submit that the issue for determination is whether the Commissioner was correct in making a reassessment under s 16 of the TA Act of land tax for the 2014/2015 assessment year in relation to the Property.
26 The Commissioner says that the following sub-issues then arise:
1) did the Commissioner have the power to make a reassessment of the land tax applicable to the Property for the 2014/2015 assessment year? This sub-issue depends upon:
a) whether the original assessment for land tax for the 2014/2015 assessment year was incorrect within the meaning of s 16(2)(a) of the TA Act (that is, was the Property exempt from land tax for the 2014/2015 assessment year under s 21 of the LTA Act?); and
b) if the original assessment was incorrect, was the Commissioner precluded under s 16(5) of the TA Act from making the reassessment?
and
2) if the answer to (a) above is yes (that is, the Commissioner had the power to make a reassessment of the land tax applicable to the Property for the 2014/2105 assessment year), was the Commissioner's decision to make the reassessment the correct and preferable decision in the circumstances?
27 The applicant, while agreeing with the Commissioner's formulation of the primary issue for determination as set out above, says that there is one further issue for consideration. The applicant contends that the Commissioner did not apply her mind as to whether the discretion provided for in s 20(2) of the LTA Act should have been exercised in his favour.
Legislation
28 The relevant provisions of the LTA Act are as follows:
5. Taxable land
Land tax is payable, in accordance with the land tax Acts, for each financial year for all land in the State except land that is exempt under section 17.
7. Liability to pay land tax
(1) Land tax payable on land for an assessment year is payable by the person who is or was the owner of the land at midnight on 30 June in the previous financial year.
…
17. Exempt land
(1) Land is exempt from land tax for an assessment year if
(a) the Commissioner grants an exemption for the assessment year under section 20; or
(b) it is exempt for the assessment year under another provision of this Part.
(2) Unless this Part provides otherwise, an exemption under a provision of this Part referred to in subsection (1)(b) applies, in accordance with section 18, to the whole or part of a lot or parcel of land.
19. Applying for exemption or concession
The Commissioner may require an owner of land
(a) to lodge an application in the approved form for an exemption or concession under this Part; and
(b) to give the Commissioner any information within the owner's knowledge or control that is relevant to deciding whether or not the land is eligible for an exemption or concession.
20. Commissioner's power to exempt land
(1) A taxpayer may apply to the Commissioner for an exemption, concession or further concession for any of the following land
(a) any proportion of private residential property that is used by an individual for a purpose that is not an exempt purpose, where the private residential property is exempt to some extent under section 21, 22 or 23 because of its use by the individual as his or her primary residence as provided in the respective section;
…
(2) The Commissioner may grant the exemption, concession or further concession for the whole or part of a lot or parcel of land the subject of an application under subsection (1) if the Commissioner is satisfied that there are reasonable grounds for doing so.
(3) If the Commissioner refuses to grant the exemption or concession, the applicant may appeal to the Minister against the Commissioner's decision.
…
21. Residences owned by individuals, exemptions for
(1) Private residential property (except property held in trust) is exempt for an assessment year if, at midnight on 30 June in the financial year before the assessment year, it is owned
(a) by an individual who uses it as his or her primary residence; or
(b) by a husband and wife, at least one of whom uses it as his or her primary residence; or
(c) by persons who have lived in a de facto relationship with each other for at least 2 years, whether or not they still live on that basis, at least one of whom uses it as his or her primary residence.
(2) However, if the property is also owned by another person or persons, it is exempt if each owner who does not use it for that purpose is an owner only because of a requirement by a financial institution for a guarantee of money advanced on the security of the property.
…
29 In accordance with the Glossary to the LTA Act:
owner
(a) in relation to land (except an interest in a home unit), means a person who is entitled to the land for any estate of freehold in possession; or
(b) in relation to an interest in a strata title home unit, means the proprietor of the lot as defined in the Strata Titles Act 1985; or
(c) in relation to a nonstrata home unit, means a person who is entitled to an exclusive right to occupy the home unit because the person
(i) is a shareholder in the body corporate which owns the land on which the building containing the home unit is erected; or
(ii) is the registered proprietor of an undivided share in the land on which the building containing the home unit is erected;
or
(d) in relation to any liability to pay land tax for land (including an interest in a home unit), if a person or body is taken to be the owner of the land under section 8, means the person or body[.]
primary residence, in relation to an individual, means the individual’s sole or principal place of residence;
private residence means a building or part of a building that was occupied, or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals, except a building or part of a building that is
(a) used as a hotel, motel, hostel, lodging house or boarding house; or
(b) ordinarily used for holiday accommodation; or
(c) used as an educational institution, college, hospital or nursing home; or
(d) used as a club; or
(e) used as a home for aged or disabled persons by an eligible organisation within the meaning of the Aged or Disabled Persons Care Act 1954 of the Commonwealth; or
(f) prescribed or of a prescribed class;
private residential propertymeans
(a) a lot of land on which there is a private residence; or
(b) a parcel of land on which there is a private residence constructed so that part of the residence stands on each of the lots of land that constitute the parcel; or
(c) an interest in a home unit; or
(d) for the purposes of sections 24, 24A, 27, 27A and 28 a lot of land on which a private residence is being or has been constructed[.]
trustee, in relation to land, means
(a) a person in whom the legal estate of the land is vested (whether solely or jointly with other trustees), and whether appointed or constituted trustee by act of parties, or by order or declaration of a court or by operation of law; and
(b) an executor or administrator, guardian, committee of management, receiver or liquidator having the administration or control of the land; and
(c) a person having or taking upon himself or herself the administration or control of land effected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control, or management of the land of a person who is under a legal disability[.]
30 The relevant provisions of the TA Act are as follows:
13. Assessments
(1) An assessment is a determination
(a) of the amount of tax payable under a taxation Act or of a portion of such an amount; or
(b) that no tax is payable; or
(c) that a person is liable to pay tax or is exempt from liability to pay tax; or
(d) that an instrument, event or transaction is liable to tax or is exempt from tax.
(2) An assessment may be made in relation to any one or more, or all, of the components of the tax payable by a taxpayer.
(3) The receipt by the Commissioner of an amount as payment of tax does not constitute an assessment of tax liability.
16. Reassessments
(1) The Commissioner must make a reassessment
(a) if specifically required to do so under a taxation Act; or
(b) if specifically required to do so under a direction given in the course of review proceedings; or
(c) if a taxation Act provides for a rebate or refund of tax in particular circumstances, and the circumstances were not taken into account when the previous assessment was made.
(2) Subject to subsection (5), the Commissioner may also make a reassessment
(a) on his or her own initiative, if it appears that a previous assessment is or may be incorrect for any reason; or
(b) on the application of the taxpayer.
(3A) Despite subsections (1) and (2), the Commissioner cannot make a reassessment in relation to an interim assessment unless specifically required to do so by section 39(1) or a direction given in the course of review proceedings.
(3B) A reference in this Act to an assessment following an interim assessment does not include a reference to a reassessment of an interim assessment.
(3) A reassessment may be made whether or not any amount of tax has been paid on the previous assessment.
(4) A reassessment may consolidate 2 or more separate assessments into a single assessment.
(5) If an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
40. Right of review by State Administrative Tribunal
(1) A person dissatisfied with the Commissioner's decision on an objection or on an application for an extension of time for lodging an objection may apply to the State Administrative Tribunal for a review of the decision.
(2) A person ceases to be entitled to apply to the State Administrative Tribunal for a review of a decision on an objection against an interim assessment if the assessment following the interim assessment is made before the person makes an application under subsection (1) for a review of the decision.
(3) Subsection (1) does not apply to, or in respect of, a decision if this Act expressly provides that the decision is not subject to review under this Act.
27. Nature of review proceedings
(1) The review of a reviewable decision is to be by way of a hearing de novo, and it is not confined to matters that were before the decisionmaker but may involve the consideration of new material whether or not it existed at the time the decision was made.
(2) The purpose of the review is to produce the correct and preferable decision at the time of the decision upon the review.
(3) The reasons for decision provided by the decisionmaker, or any grounds for review set out in the application, do not limit the Tribunal in conducting a proceeding for the review of a decision.
29. Tribunal's powers in review jurisdiction
(1) The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decisionmaker in making the reviewable decision.
(2) Subsection (1) does not limit the powers given by this Act or the enabling Act to the Tribunal.
(3) The Tribunal may
(a) affirm the decision that is being reviewed; or
(b) vary the decision that is being reviewed; or
(c) set aside the decision that is being reviewed and
(i) substitute its own decision; or
(ii) send the matter back to the decisionmaker for reconsideration in accordance with any directions or recommendations that the Tribunal considers appropriate,
and, in any case, may make any order the Tribunal considers appropriate.
…
32 The parties' respective positions are as follows.
Commissioner
33 The Commissioner points out that the exemption under s 21(1) of the LTA Act does not apply to 'property held in trust'. The Commissioner argues that the Property at the relevant time was 'property held in trust' and does not therefore attract the exemption under s 21 of the LTA Act.
34 However, the Commissioner says that even if the Property was not 'held in trust', the Property was not owned 'by an individual who uses it as his or her primary residence' as required for the exemption under s 21 to apply.
35 Further, the Commissioner does not consider that it is open to her under s 20(1) of the LTA Act to nonetheless apply the exemption, irrespective of the applicant's particular circumstances.
The applicant
36 The applicant submits that the Property was not 'held in trust'. The applicant accepts that he and his exwife were appointed trustees by the Family Court to sell the Property. However, the applicant says that the Family Court did not vest the legal estate of the Property in the 'trustee', but merely appointed the applicant and his ex-wife as joint trustees for the sale of the Property; applicant's statement of issues, facts and contentions, page 5. As such, the applicant says, the 'trust', insofar as it might have existed at all, existed purely for the specific purpose of facilitating the sale of the Property.
37 The applicant says that the particular form of 'trust' created, being one created by an order of the Family Court solely for the purpose of cooperation to bring about the sale of the Property, should not defeat the applicant's claim for an exemption.
38 The applicant says that if the Tribunal agrees with him that the Property was not 'held in trust', then the Tribunal should find that the Commissioner should have exempted the Property for the relevant assessment year by exercising her discretion under s 20(1) of the LTA Act. The applicant says that the Commissioner did not 'apply its mind properly, in the exercise of its discretionary power, to whether the exemption was applicable'; applicant's statement of issues, facts and contentions, page 6.
39 The applicant says that to understand this argument, it is necessary also to understand the circumstances that caused the applicant to leave the Property and his living conditions after he left the Property.
40 The applicant says that because of the state of his marriage, he had no alternative but to move out of the Property. When he first left the Property, he lived with his brother in shared accommodation in Applecross. He says that during that period he returned to the Property regularly and so, he says, if the Commissioner's practice is to allow the exemption while a taxpayer is hospitalised or on holiday, he sees no reason why the Commissioner should not also allow him an exemption in his particular circumstances.
41 If, however, the Tribunal finds that the Property was in fact 'held in trust', then the applicant says that he and his ex-wife were the beneficial owners of the Property.
42 As such, the exemption in s 21(1)(b) applies, because he and his ex-wife are therefore joint owners of the property and one of them, the applicant's ex-wife, used the Property as her primary residence.
Disposition
Interpretation of LTA Act general principles to be applied
43 As Buss JA said in Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 (Abbotts) at [160]:
The modern approach to statutory construction is purposive. The statutory text is the surest guide to Parliament's intention. A decision as to the meaning of the text must begin by considering the context, in its widest sense. This will include the general purpose and policy of the provision. (citations omitted)
44 The same approach to statutory interpretation in Western Australia was taken by Edelman J in Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55 where his Honour said at [14]:
The key integers in the exercise of determining the effect of Parliament's intention in s 64(2) are statutory text, context, and purpose. The starting point, and the end point, is the text. But, although the statutory text is the 'surest guide' to Parliament's intention, the text must be read in the widest sense of context, including the general purpose and policy of the provision.
45 I may also have regard to extrinsic material without necessarily invoking the provisions of s 19 of the Interpretation Act 1984 (WA). As Buss JA has also said in Abbotts at [91]:
At common law (that is, independently of s 19 of the Interpretation Act), this court is permitted, in construing a statutory provision, to have regard to the words used by Parliament in their legal and historical context and, if appropriate, to give them a meaning that will give effect to any purpose of the legislation that can be deduced from that context. The context includes reference to the legislative history of the provision and any relevant reports of law reform bodies which describe the matters requiring legislative reform. (citations omitted)
46 Accordingly, the starting point of the statutory construction of s 21 of the LTA Act is a consideration of the text itself, in its proper statutory context.
47 The proper statutory context of a provision includes:
a) the relevant Act as a whole;
b) the general purpose, policy and legislative history of the provision; and
c) the mischief which a statute was intended to remedy; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408, Abbotts at [91].
48 However, legislative history and extrinsic materials cannot be relied upon to displace the clear meaning of the text; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257 at [39]. Furthermore, taxation statutes, including the LTA Act are to be interpreted in a technical manner; Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775 at 781; Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 at 816.
The LTA Act
49 Section 5 of the LTA Act provides that land tax is payable for all land except land exempt under s 17.
50 Land is exempt under s 17 if either:
a) the Commissioner grants an exemption under s 20; or
b) it is exempt under another provision of Pt 3 of the LTA Act.
51 Section 21 is in Pt 3 and it relevantly provides that private residential property (except property held in trust) (my emphasis) is exempt for an assessment year if on the immediately preceding 30 June it is owned by an individual who uses it as his or her primary residence.
52 'Private residential property' and 'primary residence' are defined terms in the LTA Act and I have already set out in full the definitions of those terms.
53 The term 'trust' is not defined. However, under s 9 of the Interpretation Act 1984 (WA), where a word is defined in a written law then other parts of speech and grammatical forms of that word have corresponding meanings. The word 'trustee' is defined in the LTA Act and it is not in dispute between the parties that the word 'trust' should be given a corresponding meaning; respondent's statement of issues, facts and contentions, paragraph 54, applicant's statement of issues, facts and contentions, page 2.
54 It is clear and is not in dispute between the parties that the Property is private residential property, being a lot of land upon which there is a private residence. The first issue is then, was the Property at the relevant time 'held in trust'?
History and purpose
55 Section 21(1)(a) of the LTA Act remains as it was originally enacted. The relevant Explanatory Memorandum does not assist me. It merely provides that under cl 21, the private residence exemption would not apply where property is held in trust; Explanatory Memorandum accompanying the Land Tax Assessment Bill 2001 (WA); respondent's bundle at page 107.
56 The predecessor to the LTA Act was the Land Tax Assessment Act 1976 (WA) (1976 Act).
57 According to the second reading speech in respect of the Land Tax Assessment Bill 2001 (WA), the LTA Act is a re-enactment of the 1976 Act, but in a form 'far easier to comprehend than the existing Act'. It was not intended to alter the policy settings of the 1976 Act in any significant manner; Western Australia, Parliamentary Debates, Legislative Assembly, 5 December 2001 (Mr Ripper, Treasurer); respondent's bundle at page 108.
58 The 1976 Act as it was first enacted allowed the private residence exemption, irrespective of whether or not the property was held in trust. The amendment to the 1976 Act which removed the residential land exemption for properties held in trust was contained in the Revenue Laws Amendment (Assessment) Act (No. 2) 2001 (WA) (Amendment Act).
59 The Explanatory Memorandum for the Amendment Act explains the rationale for that amendment. According to the Explanatory Memorandum, the intention was to remove the sole or principal place of residence land tax exemption for land owned by companies and trusts. It states that property held by companies or trusts will generally no longer qualify for a principal place of residence exemption. The Explanatory Memorandum contains this passage:
This measure will result in a broader land tax base, and recognises that such structures are often in existence for tax minimisation purposes, or to ensure that the property is protected from claims by creditors against individual family members.
While it is considered that a person should be free to place their family home in such a structure and gain the associated benefits, the Government believes that they should not also expect to enjoy the same land tax treatment provided to natural persons who directly own and occupy their home, and as a result, forego those other benefits.
Put simply, the Government does not believe that State taxation laws should be structured to allow shareholders of private companies and trustees of trusts to enjoy the best of both worlds.
(Explanatory Memorandum, Revenue Laws Amendment (Assessment) Bill (No. 2) 2001 (WA); respondent's bundle at pages 105106).
Was the Property at the relevant time 'held in trust'?
60 When a court orders that land is to be vested in a person as trustee, this would not ordinarily be for the purpose of tax minimisation or protection from creditors. However, the clear meaning of the LTA Act is that land vested in a person by order of a court falls within the meaning of 'property held in trust'. It follows that the LTA Act deprives all property held in trust of the benefit of the exemption, not just trusts created to 'enjoy the best of both worlds'.
61 It is beyond doubt that the Family Court can, by order, alter the interests of the parties to a marriage in the property of those parties. However, in this case the relevant orders of the Family Court made on 7 February 2013 read as follows:
1. The husband and the wife be appointed trustees for sale of the [Property]. …
2. The wife to do all things necessary to facilitate the marketing and sale of the [Property].
…
4. Upon settlement of the sale of the [Property] the proceeds of sale shall be applied as follows:
(a) in payment of agent's fees, commissions, and other costs associated with sale;
(b) in payment of the usual conveyancing adjustments for rates and taxes;
(c) the balance then remaining to be divided 60% to the wife and 40% to the husband, subject to the wife paying the husband $16,000 from her share.
62 Quite clearly, the Family Court appointed the applicant and his exwife as 'trustees for sale of' the Property. However, while the Family Court used the word 'trustees', there was no order vesting the legal estate in the Property in the applicant and his ex-wife. I therefore do not consider that the Family Court did or intended to alter the interests of the applicant in the Property itself.
63 In my view, the effect of the Family Court orders was not that the Property itself was to be 'held in trust' by the applicant and his exwife, but that upon the sale of the Property, the proceeds of sale were to be paid to and held in trust by the applicant and his exwife and applied in accordance with Order 4.
64 It follows that the applicant and his exwife were not 'trustees' within the meaning of the LTA Act and I find that at the relevant time the Property was not 'property held in trust'.
65 The owner of the Property as defined in the LTA Act following the making of the Family Court orders, being the person who at the relevant time was entitled to the land for any estate of freehold in possession, in my view continued to be the applicant.
66 I have considered the Commissioner's contention that the effect of those orders is that the applicant and his exwife are trustees in what has been referred to as a trust for sale. Further, I accept, as pointed out by the Commissioner, that in Archer v Federal Commissioner of Land Tax (1912) 13 CLR 557 (Archer) it was held that a trust for the sale of land is a trust for the purposes of the Land Tax Assessment Act 1910 (Cth). However, Archer was decided in a different statutory context and, more importantly, the property in question in Archer was 'conveyed to trustees' (Archer at 558) upon certain trusts including in certain circumstances trusts for sale. That is not the case here.
Did the applicant at the relevant time use the property as his primary residence?
67 The term 'primary residence' is defined in the LTA Act as an individual's sole or principal place of residence. The phrase 'sole or principal place of residence' is not defined in the LTA Act. However, as Williams J said in Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241 at 249, '[t]he place of residence of an individual is determined … by reference to where he eats and sleeps and has his settled or usual abode'.
68 The applicant on his own version of events removed from the Property on 9 December 2009 and only returned to perform garden and pool maintenance tasks and to visit his children; applicant's statement of issues, facts and contentions at page 7, respondent's statement of issues, facts and contentions at paragraph 87. The applicant 'asserts that he had not ruled out that he would return to the [Property] and in fact hoped he would in order to keep the family together'; applicant's statement of issues, facts and contentions at page 9.
69 By 30 June 2014, that possibility must have been at best remote, because:
a) in February 2013 the Family Court had ordered the sale of the Property;
b) the Family Court also ordered (Order 8) that, pending settlement of the sale, the applicant's ex-wife had exclusive occupation of the Property; and
c) the applicant had on 5 August 2013 registered his address with the Electoral Commission as being his address in Shenton Park; respondent's bundle at page 14.
70 In my opinion, any return by the applicant to the Property after the making of the Family Court orders would have been as a visitor.
71 In those circumstances, I cannot be satisfied that at midnight on 30 June 2014 the owner of the Property, the applicant, was using the Property as his sole or principal place of residence. I find that the exemption in s 21(1) of the LTA Act did not apply to the Property for the 2014/2015 assessment year.
Does s 20(2) of the LTA Act apply to the applicant's circumstances?
72 The applicant submits that the Commissioner has a discretion to apply the exemption in s 21 of the LTA Act as she sees fit or appropriate and cites Commissioner's Practice LT 15.0 as setting out circumstances where the Commissioner may and has exercised such a discretion. However, the Commissioner responds, in my respectful view correctly, to the effect that Commissioner's Practice LT 15.0 is a document which merely provides some guidance as to the Commissioner's approach in relation to the application of s 21(1) of the LTA Act in the context of the owner being temporarily absent from his or her primary residence. It is not a description of an exercise of discretion, but a description of how the Commissioner will apply the provisions of the LTA Act.
73 Section 20 of the LTA Act does give the Commissioner some element of discretion to apply an exemption, concession or further concession under the LTA Act if the Commissioner is satisfied that there are reasonable grounds for doing so. However, s 20(1) provides that a taxpayer may only apply to the Commissioner for such an exemption if, relevantly, private residential property is exempt to some extent because of its use by the individual as his or her primary residence. In the light of my previous findings, this is clearly not the case.
74 In any event, if the Commissioner refuses to grant the exemption or concession applied for, the applicant's right of appeal against the Commissioner's decision is to the Minister, not this Tribunal; s 20(3) of the LTA Act, s 34(2)(d) of the TA Act.
Was the respondent precluded under s 16(5) of the TA Act from making the reassessment?
75 This issue appears to be of concern only to the Commissioner. It did not form part of the applicant's application and it is raised for the first time in this proceeding in the Commissioner's statement of issues, facts and contentions at paragraphs 91 - 105.
76 The point being raised is this. Under s 16(2)(a) of the TA Act, the Commissioner may make a reassessment on her own initiative if it appears that a previous assessment is or may be incorrect for any reason.
77 Section 16(5) of the TA Act contains two limits on the Commissioner's power to make a reassessment.
78 The first is, if an assessment is based on a particular interpretation of the applicable law that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation is or was erroneous.
79 Secondly, if the assessment is based on a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the practice is or was erroneous.
80 The Commissioner asserts that she was not precluded by either the 'applicable law limb' or the 'practice limb' of s 16(5) from making the reassessment in question and gives specific reasons for that conclusion.
81 However, the applicant in reply says that he finds the relevant paragraphs of the respondent's statement of issues, facts and contentions 'confusing'. The applicant, while maintaining that the Commissioner was wrong in concluding that the original assessment was incorrect, does not argue that the Commissioner is precluded by s 16(5) of the TA Act from making the reassessment.
82 I agree that there is no apparent reason why the Commissioner would be precluded by s 16(5) of the TA Act from making the reassessment. Beyond that, I do not propose to consider this issue any further.
Costs
83 The applicant in his application seeks:
… an order that the Office of State Revenue refund me the amount of $6187.30 which I was unjustifiably required to pay in the form of land tax plus the costs of taking this decision on review which I understand to be at least $822.
84 The applicant in his statement of issues, facts and contentions has confined his application for costs to the total sum of $411.
85 The effect of s 87(1) and s 87(2) of the SAT Act is, relevantly, that each party in proceedings before the Tribunal is to bear its own costs, unless the Tribunal otherwise orders.
86 In exercising the discretion in its review jurisdiction, the Tribunal is bound, by virtue of s 87(4), to take into account the considerations therein specified. However, other things may be considered in addition.
87 In exercising its review jurisdiction, the Tribunal is to deal with the matter in accordance with the SAT Act and any relevant provisions of the enabling Act, in this case, the TA Act. The TA Act makes no mention of costs.
88 The onus of showing in the particular circumstances of the case that it is fair and reasonable that a party should be reimbursed for the costs it incurred is on the party seeking an order in its favour; Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 at 51.
89 In this case, the applicant's application was entirely unsuccessful. In addition, there is nothing to suggest that:
a) the Commissioner did not genuinely attempt to make a decision on its merits;
b) the Commissioner's decision to reassess for land tax payable in respect of the property for the 2014/2015 assessment year was arbitrarily formed; and
c) the Commissioner's conduct caused unnecessary costs to the applicant.
90 The applicant has not put anything before the Tribunal that could support an assertion that the Commissioner ought to meet the applicant's costs in this matter.
91 For these reasons, the applicant's application for costs is therefore refused.
Orders
92 The applicant's application is dismissed.
I certify that this and the preceding [92] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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