Perry Properties Pty Ltd v Chief Commissioner of State Revenue
[2011] NSWADT 145
•15 June 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2011] NSWADT 145 Hearing dates: 22 October 2010 Decision date: 15 June 2011 Jurisdiction: Revenue Division Before: M Hole - Judicial Member Decision: The 80% threshold requirement as set out in Revenue Ruling No LT78 was not reached at any time for the 2007 Tax Year
Catchwords: Revenue Ruling LT78 (2007) (80% rule); costs Legislation Cited: Land Tax Management Act 1956
Revenue Ruling No. LT 78
Administrative Decisions Tribunal Act 1997
Taxation Administration Act 1996Cases Cited: Corporate Affairs Commission v Yuill (1991) 172 CLR 319
K & S Lake City Freighters Pty ltd v Gordon & Gotch Ltd (1985) 157 CLR 309
Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404
Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96
Pearse v Chief Commissioner of State Revenue [2007] NSWADT 14Category: Principal judgment Parties: Applicant - Perry Properties Pty Ltd v Chief Respondent - Commissioner of State Revenue Representation: Mr Singleton, Barrister (Applicant)
Mr Rider, Barrister (Respondent)
Mr Perry as (Agent for Applicant)
Crown Solicitors Office (Respondent)
File Number(s): 106006
REasons for decision
This matter has been remitted to the Tribunal for determination of the issue of compliance with the "80% threshold" requirements of Revenue Ruling No LT78 ("RR78") "Exemption - land used and occupied primarily for a boarding house - 2007 tax year".
Evidence
The applicant has tendered an affidavit by Ms Nicola Flannery, an employee of the applicant, dated 15 October 2010. Two affidavits by Ms Nicola Flannery, dated 1 July 2010 and 8 September 2010 as filed were also relied on by the applicant. The representative of the applicant has submitted that those affidavits are relevant if the interpretation of clauses 3(i) and 3(i)(a) as submitted is accepted. On that basis the affidavits may be considered by the Tribunal.
An affidavit by Liam John Boyle dated 20 August 2010 was filed in the Tribunal on behalf of the respondent. A further affidavit by Liam John Boyle dated 9 September 2010 was filed on behalf of the respondent.
The information in the affidavits of Ms Flannery and comprehensive analysis as provided in the affidavits of Mr Boyle clearly set out the factual accommodation provided at the land used and occupied by the Applicant for a boarding house partly for long term residents.
Applicable Legislation
Land Tax Management Act 1956 ("LTMA")
Section 10Q:
"Low cost accommodation-exemption/reduction
10Q Low cost accommodation-exemption/reduction
(1) Land is exempted from taxation under this Act leviable or payable in respect of the year commencing on 1 January 1995 or any succeeding year if:
(a) the land is used and occupied primarily for low cost accommodation, and
(b) application for the exemption is made in accordance with this section, and
(c) the Chief Commissioner is satisfied that the land is so used and occupied in accordance with guidelines approved by the Treasurer for the purposes of this section.
(2) The guidelines may include provisions with respect to the following:
(a) the circumstances in which accommodation is taken to be low cost accommodation,
(b) the types and location of premises in which low cost accommodation may be provided,
(c) the number and types of persons for whom the accommodation must be provided,
(d) the circumstances in which, and the arrangements under which, the accommodation is provided,
(e) maximum tariffs for the accommodation,
(f) periods within which tariffs may not be increased,
(g) the circumstances in which the applicant is required to give an undertaking to pass on the benefit of the exemption from taxation (or, if subsection (4) applies, the reduction in taxation) to the persons for whom the accommodation is provided in the form of lower tariffs.
(3) A guideline may:
(a) apply generally or be limited in its application by reference to specified exceptions or factors, or
(b) apply differently according to different factors of a specified kind,
or both.
(4) If the Chief Commissioner is satisfied that part only of land or premises is used and occupied primarily for low cost accommodation in accordance with the Treasurer's guidelines, the land value of the land is to be reduced for the purposes of land tax in accordance with the principles in section 10R (3)-(3C).
(5) This section does not apply to an owner of land in respect of a tax year unless:
(a) the owner applies to the Chief Commissioner for the exemption or reduction, in the form approved by the Chief Commissioner, and
(b) the owner furnishes the Chief Commissioner with such evidence as the Chief Commissioner may request for the purpose of enabling the Chief Commissioner to determine whether there is an entitlement to the exemption or reduction.
(6) Without limiting the other ways in which this section may cease to apply to a person, it ceases to apply to a person if the person breaches an undertaking given as referred to in subsection (2) (g)."
Revenue Ruling No 78:
"Revenue Ruling No. LT 78 Exemption - Land Used and Occupied Primarily for a Boarding House - 2007 Tax Year (Section 10Q Land Tax Management Act, 1956)
Ruling history
Ruling no. LT 78
Issued date 23 November 2006 to 1 January 2007
Status - Relates to the 2007 land tax year only. See LT 76 for the 2006 tax year These rulings are issued annually.
Preamble
1. Where land is used and occupied primarily as a boarding house, an exemption from land tax or a reduction in the land value of the land is available if guidelines approved by the Treasurer are met.
2. The purpose of this ruling is to outline the approved guidelines applying to the 2007 tax year, to explain the conditions that entitle the owner to claim an exemption or a reduction in the land value and to provide a statutory declaration to be completed by owners who claim the concession.
Guidelines Approved by the Treasurer
3. The approved guidelines for the 2007 tax year are as follows:
(i) land that is used as the site of a boarding-house will be entitled to an exemption from land tax for the 2007 tax year where, during the year ended 31 December 2006, in respect of at least 80% of the accommodation available to boarding house residents:
(a) occupation was by long term residents (a long term resident is considered to be a person who resided at a boarding-house for 3 consecutive months or for any periods totalling 3 months); and
(b) where full board and lodging was provided, the maximum tariff charged was no more than*:
$269 per week for single accommodation or $450 per week for married or shared accommodation
or where less than full board and lodging was provided, was no more than*:
$180 per week for single accommodation or $300 per week for family or shared accommodation
(ii) where the requirements of paragraph 3(i)(a) above could not be met, land used and occupied primarily for a boarding house may still qualify for exemption provided:
(a) at least 80% of the accommodation that was actually occupied was occupied by long term residents; and
(b) at least 80% of the accommodation available to boarding-house residents was either occupied or was available for occupation at tariffs within the limits shown in paragraph 3(i)
(iii) where less than 80% of the accommodation available to boarding house residents was occupied by long term residents, owners seeking an exemption must provide an explanation of the reasons that this requirement was not met and such circumstances will be considered on a case-by-case basis;
(iv) The owner must provide a statutory declaration stating that, in respect of at least 80% of the accommodation available to boarding house residents, the tariff for full board and lodging during the whole of 2007, will not exceed*;
$277 per week for single accommodation or $463 per week for family or shared accommodation
or where less than full board and lodging is provided, the tariff will not exceed*:
$185 per week for single accommodation or $309 per week for family or shared accommodation.
[*The tariff rates indicated above do not include GST. Any GST collected on the rent should be accounted separately)
4. For the purposes of these guidelines, "boarding house" is considered to mean premises which:
(i) are used in the course of conducting a business of letting rooms to boarders or lodgers; and
(ii) are used and occupied by at least three (3) long term residents who:
(a) are not members of the family of the owner or manager; or
(b) are not directors or shareholders or members of the family of a director or a shareholder of a company if the company is the owner; and
(iii) are not premises which are licensed under the Liquor Act 1982; and
(iv) are not used and occupied by persons who are subject to a Residential Tenancy Agreement under the Residential Tenancies Act 1987.
5. For the purposes of paragraph 4(ii) above, a member of the family of the owner or manager or a member of the family of a shareholder means a person who could in any circumstances possibly be entitled in terms of the Wills Probate and Administration Act 1898 to an inheritance should the owner, manager or shareholder die intestate.
Ruling
6. If only part of the land or only part of the premises were used for a boarding-house, a pro rata reduction in the land value of the land will be calculated by the Chief Commissioner if the Chief Commissioner is not satisfied that a reduction claimed by an owner is fair and reasonable. Otherwise, the calculation will be made on a floor area basis.
7. Owners must apply for exemption by completing part A and either part B or C of the standard statutory declaration. The application should be lodged as soon as possible but within 30 days of the serving of an assessment which contains the land, by posting to the Chief Commissioner at the following address :-
Office of State Revenue Client Services Division
GPO Box 4042 Sydney NSW 2001
or alternatively, the application may be lodged at any branch of the Office of State Revenue from where additional copies of all forms are available.
8. Records of owners who claim concessions are regularly audited by the Office of State Revenue. Documentary evidence supporting the information in parts A, B or C of the statutory declaration must be retained and produced for inspection, if requested."
Administrative Decisions Tribunal Act 1997 ("ADT Act")
"Costs
88 Costs
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal, or
(vi) vexatiously conducting the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.
(4) In this section, "costs" includes:
(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application."
Taxation Administration Act 1996 ("TAA")
"Requirement for full and true disclosure of relevant facts and circumstances
10 Requirement for full and true disclosure of relevant facts and circumstances
(1) A person who is liable to pay tax under a taxation law must, before or at the time an assessment of the tax liability is made, fully and truly disclose to the Chief Commissioner all the facts and circumstances affecting the tax liability under the relevant taxation law.
Maximum penalty: 100 penalty units.
(2) A defendant is not guilty of an offence under this section if the defendant proves that the defendant reasonably relied on some other person to ensure that the requirements of this section were satisfied."
Applicant's submissions
The representative of the applicant submitted that the primary issue in the remitted proceedings is whether or not "at least 80% of the accommodation that was actually occupied was occupied by long term residents". This requires four steps being:
firstly to quantify the accommodation that was actually occupied in the subject property in 2006. This to be measured in 'bed nights' - i.e. count the number of beds that were occupied;
secondly identify the long term residents who occupied those bed nights;
thirdly quantify the number of 'bed nights' occupied by long term residents; and
fourthly then calculate whether or not at least 80% of the bed nights were occupied by long term residents.
The representative for the applicant submitted that in the event that the applicant had not satisfied the long term residents requirement then the exemption set out in subparagraph 3(iii) should be applied. This was on the basis that the Tribunal has a broad discretion.
Attention was drawn to the evidence of Ms Flannery that the subject property did not open until part way through 2006 and was not fully operational until about half way through the year. That this special circumstance reduced the number of long term residents as a proportion of the total occupancy.
The representative of the applicant made comprehensive submissions in respect of the construction of paragraph 3(i)(a) of the RR78. It was submitted that the proper construction of the meaning of paragraph 3(i)(a) required application of both a 'literal' and 'contextual' approach. The following examples were provided:
"In Corporate Affairs Commission v Yuill (1991) 172 CLR 319 at 346 McHugh J said:
The first step in the process of statutory construction is the ascertainment of the ordinary grammatical meaning of the legislative provision in question. However, ascertaining the ordinary grammatical meaning of a legislative provision is only the first step in the process of statutory construction, for the object of that process is to ascertain the meaning which Parliament intended.
In K & S Lake City Freighters Pty ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312 Gibbs CJ noted the importance, and the limits, of context:
The words of any statutory provision must be first read in the context provided by the statute as a whole ... but 'if, when so read, the meaning of the section is literally clear and unambiguous, nothing remains but to give effect to the unqualified words': Metropolitan Gas Co. v Federated Gas Employees' Industrial Union; Cooper Brookes (Wollongong) Pty. Ltd. V. Federal Commissioner of Taxation.
Further that beyond the words and their context, there are also other maxims, none more important than the pursuit of the purpose of the legislation in question for example in the: Interpretation Act 1987 at s33; and as referred to in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423.
The representative of the applicant submitted further that:
"There is no doubt that, consistently with the general scheme of land tax in this State, 'land tax for the 2007 tax year' is calculated by reference not to 2007 but to the year ended 31 December 2006. The criteria that have to be satisfied for the exemption are criteria that fix upon the events of 2006. The criterion of particular immediate relevance is that in 2006 at least 80% of the occupied accommodation had to have been occupied by long-term residents. That is a criterion that focuses on the facts of 2006."
The difficulty as to the meaning of "long term resident" then had to be considered. It was submitted that only after determining whether a person was "a long term resident" could it be determined whether the 80% threshold occurred in 2006. Thus it was submitted that the definition of the class of persons is not referable to events in 2006. Accordingly an assessment of whether a person can be classed as a "long term resident" relied on periods outside 2006. That the subparagraph did not require any additional words to be added to restrict the period to be considered as "during 2006". That the parenthesis in the subclause surround "a long term resident is considered to be a person who resided at a boarding house for 3 consecutive months or for any periods totalling 3 months) ..." were for the purpose of identifying the words from which is drawn the imputation of the definition of "long term resident". Thus a long term resident is defined as a person who resided in any boarding house for 3 consecutive months or for any periods totalling 3 months whenever that was satisfied.
The submission that time of residence of a person in other boarding houses could be added was not pressed.
The applicant submitted that for the purposes of construction of 3(ii)(a) the definition of "long term resident" must be construed taking into account the provisions of paragraph 3(i)(a). This being so a "long term resident" would be a resident who resided at a boarding house for 3 consecutive months or for any periods totalling 3 months. This would require the identification of each long term resident over any period whether within 2005, 2006, 2007, 2008, 2009, 2010 and now 2011 to determine their eligibility to be termed a long term resident so that each of them bore a status as such continuing ad infinitum. Further, that a person could gain the status by accumulation of residence of periods totalling 3 months in any boarding house.
The submission was also put that the respondent's interpretation would defeat the purpose of section 10Q LTMA which was to encourage low cost accommodation.
The representative of the applicant submitted that:
"The dispute about the long-term residents rule is entirely one about the proper construction of the rule. If the Commissioner's construction of the long-term residents rule is right - if the applicant cannot rely on a person's being a long-term resident on the basis that he or she resided in another boarding house or in this one in a different year - then the applicant fails. On the other hand, if the applicant's construction is right then the applicant succeeds. There is no apparent dispute about the facts".
The submission in paragraph 18 was put as a submission in reply to the submissions of the respondent that "no resident, no matter how long that person resided at a boarding house, would be classified as a long term resident for a given year" ... "if that person commenced that residence after 1 October of a relevant year or if a person ceased residing at the boarding house before 31 March and did not return that year".
Respondent's submissions
The representative of the respondent submitted that the preliminary issue was whether section 10Q LTMA should apply to the subject land as a matter of public policy. This submission was based on a submission that additional facts concerning the legal or permitted use of the subject land had been discovered. The additional facts in respect of permitted use related to the period from 2 July 2007 on and were applicable to any consideration of the "80% threshold", if the RR78 was construed to permit accumulation of periods after 30 December 2006.
The representative of the respondent submitted that section 8 TAA required the applicant to fully and truly disclose all the facts and circumstances affecting the tax liability of the applicant. That the applicant had failed to do so.
The representative of the respondent submitted that paragraph 1 of RR78 refers to "land is used and occupied as a boarding house" and referred to Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96 at 20:
"Is the structure capable of being described as a residence or as a dwelling house? To be a residence it must be capable of being resided in, that is a person must be able to live there. To be able to live in the structure, it would be necessary to satisfy the requests of the State and local governments in respect of a structure that is to be lived in as a residence. This would include provision of bathroom facilities in these circumstances."
and to Pearse v Chief Commissioner of State Revenue [2007] NSWADT 14 at [38 - 40] which was in respect of a claim for a principal place of residence exemption where the use of the premises as a residence, not in accordance with a permissible use, was considered.
The representative of the respondent submitted that the subject land was not exempt for the 2007 tax year as neither paragraph 3(i)(a) nor 3(ii) of RR78 had been complied with. That less that 80% of the accommodation on the subject land was actually occupied by long term residents and that only 45% had been so occupied. Reliance was placed on the comprehensive 'Occupancy Report 01/01/06 - 31/12/06' prepared by or on behalf of the applicant being annexure "A" to the affidavit of Liam John Boyle dated 20 August 2010 and "Occupancy Report by Resident" prepared by or on behalf of the respondent being annexure "B" to the affidavit of Liam John Boyle dated 20 August 2010. Mr Boyle stated that:
"...
4. I cross-checked the names, room numbers and dates for period of stay contained in the original report against the names, room numbers and dates for period of stay contained in the occupancy report prepared by the Crown Solicitor's Office ("the CSO report").
...
6. The CSO report contains a column labelled '2006 Bed Nights' (column 5). The numbers in this column are the numbers of nights each resident stayed in the Glebe property for the corresponding period of stay stated in column 3.
7. The CSO report contains a column labelled "Category' (column 4). This column was prepared on the assumption that a 'long term resident' is a person who stayed for a period of 90 or more nights at the Glebe property between 1 January 2006 and 31 December 2006.
8. In determining whether a person was a 'long term resident' of the Glebe property between 1 January 2006 and 31 December 2006, no account was taken of any nights the person may have stayed at a property other than the Glebe property between 1 January 2006 and 31 December 2006 or at any time before or after that period."
That the "Percentage of total bed nights occupied by long term residents = 45%".
The representative of the respondent made the following submissions in respect of the interpretation of paragraph 3 RR78:
"28. Further, a literal approach to the construction of the Guidelines produces the following anomalous results:
(a) s.10Q does not refer to "boarding houses", but rather "low cost accommodation:, and the Guidelines do not say that a "boarding house" is "low cost accommodation" - on a literal approach, neither s.10Q nor the Guidelines would apply to the Land for the Tax Year;
(b) a "long term resident" is only a person who resides at a boarding-house for 3 consecutive months or for any periods totalling 3 months and not a day more or less - on a literal approach, there would be no "long term residents" on the Land for the Tax Year because no one person stayed for exactly 3 consecutive months or for any periods totalling 3 months; and
(c) the premises operated on the Land would not be a "boarding house" under paragraph 4 of the Guidelines, because a "boarding house" must be used and occupied by at least three (3) long term residents, which is not the case here if a literal approach is adopted.
29. In contrast to the Applicant's literal approach, the Respondent submits that a contextual approach is the correct method of construing the factual determinants of a "long term resident". This contextual approach requires an understanding of the operation of land tax generally and the terms of s. 10Q specifically.
30. In terms of the general operation of land tax, s. 8 of the Act and s. 3AJ of the Land Tax Act 1956 (relevantly in respect of the Tax Year) make it clear that land tax is an annual tax. Specifically, for the Tax Year, land tax was charged and levied according to the facts that occurred between 1 January 2006 and midnight on 31 December 2006.
31. As for the specific terms of s. 10Q, in accordance with the general operation of land tax, s. 10Q applies on a year by year basis and did so for the Tax Year. This is confirmed by s. 10Q(1) generally and the following specific provisions of s. 10Q.
32. First, under s. 10Q(1)(c), for the exemption to apply for the Tax Year, the Respondent had to be satisfied that the land was used and occupied in accordance with guidelines approved by the Treasurer for the purposes of s. 10Q. For the Tax Year, the Guidelines were contained in the Ruling. The preamble to the Ruling made it clear that its purpose was to outline the approved guidelines applying to the "2007 tax year" (i.e. the Tax Year). The Guidelines included that land used as the site of a boarding-house would be entitled to an exemption for the Tax Year where, during the year ended 31 December 2006, occupation of at least 80% of the available accommodation was by "long term residents" (being persons who resided (past tense) at a boarding-house for 3 consecutive months or for any periods totalling 3 months).
33. Second, under s. 10Q(1)(b), an application for exemption is required to be made in accordance with s. 10Q. Relevantly, s. 10 Q(5) provides that an owner is required to apply to the Respondent for an exemption in the approved form and to furnish the Respondent with such evidence as he may request. For the Tax Year, that approved form comprised an "Application for Exemption - Boarding Houses Tax Year 2007". The form required the owner to state the address and legal description of the land for which the exemption was claimed. It was clear from the form that the reference to "a boarding house" was the boarding house on the land for which the owner was claiming an exemption and not any other "boarding house". The form required the owner to make a statutory declaration about, among other things, the occupation of the boarding house accommodation by long term residents during the year ended 31 December 2006. In defining "long term residents", paragraph 3(i)(a) used the past tense of "person who resided". Also, the form required the owner to provide details to the Respondent of the boarding house tenancy for the year ended 31 December 2006."
The representative of the respondent submitted that in the analysis referred to in paragraph 23 above the respondent made the following assumptions (for these proceedings only) to identify long term residents for the Land Tax Year:
"(a) "accommodation" is measured in terms of "bed nights", i.e. how many beds on the Land were available and/or were occupied each night during the period 1 January 2006 to 31 December 2006;
(b) "3 consecutive months or for any periods totalling 3 month" is considered to be 90 days or more in total during the period 1 January 2006 to 31 December 2006; and
(b)(sic) a "long term resident" is a person who resided on the Land for 90 days or more in total during the period 1 January 2006 to 31 December 2006."
The representative of the respondent submitted that in reply to the applicant's literal construction of clause 3(ii)(a) that "80% of the accommodation was occupied by long term residents" was incorrect as those occupants were only ones that the applicant considered to be long term residents. This interpretation is incorrect. This was because it relied on a construction that the time to identify a long term resident was unlimited and beyond 30 December 2006 when the RR78 relates to the land tax year 2007.
The representative of the respondent submitted that the applicant had not made an application for relief pursuant to clause 3(iii) of RR78. That such an application would only be considered on a case by case basis. There was no statutory basis for this clause, if an application was made any relief would be by way of an ex gratia relief from land tax. The Tribunal may only exercise functions conferred or imposed by statute.
The respondent applied for costs on the basis that:
- the applicant failed to disclose the additional facts and that the applicant bears the onus to prove his case;
- the applicant, prior to the current remittal proceedings, failed to accept that it bore the onus of proving that at least 80% of the occupants of the accommodation on the land were "long term residents";
- it was the respondent who pointed out to the applicant the flaws in its case before the first hearing in this matter;
- the applicant delayed in providing the material on which it relied in this remittal hearing from 16 April 2010 to 1 July 2010; and
- the applicant's contentions regarding the construction and factual determinants of a "long term resident" has, in the opinion of the respondent, no tenable basis in fact or law.
Decision
All land in New South Wales is subject to land tax unless an exemption is available. "Section 10Q low cost accommodation - exemption/reduction" sets out the circumstances where an exemption is available where land is used and occupied primarily for low cost accommodation. Revenue Ruling No LT79 is the ruling that applies to "Exemption - Land used and occupied primarily for Low Cost Accommodation - 2007 Tax Year" - this excludes its operation from application to boarding houses. RR78 is the ruling that refers to exemption in Section 10Q LTMA for "Land Used and Occupied Primarily for a Boarding House - 2007 Tax Year".
Subparagraph 3(iii) of RR78 has not been considered by the respondent and no applications made to do so prior to the hearing of the referred matter. A decision by the respondent would require an exercise of the discretion set out in the subparagraph. The applicant has submitted that the subparagraph provides alternative relief which should be granted to the applicant on the basis that it was the 1st year of operations and was the 'start up' year. The subparagraph provides the respondent with a discretion on a case by case basis where less than 80% of the accommodation available was occupied by long term residents. There is no decision and therefore no jurisdiction to appeal to the Tribunal in respect of subparagraph (3)(iii).
In the event that paragraph 3 of RR78 is construed to permit accumulation of time of a 'long term resident' beyond 30 December 2006 then the applicant would bear the onus, in accordance with s10 TAA, to prove that the use of the premises, where that long term resident resided for the periods to be accumulated, were premises that permitted that use and were used legally. The use and occupation of the premises as a boarding house so that those premises may be considered in an application for exemption pursuant to RR78 must be in accordance with the use and occupation permitted by State and local government requirements: see Reuman and Pearse. The applicant has not discharged this onus.
The additional facts raised by the respondent do not impact on the use of the property during the year ended 31 December 2006 being the relevant period to which RR78 applied. Therefore the respondent may not rely on any additional facts relating to the permitted use of the subject property. If the applicant was permitted to rely on the submitted proposition in respect of extending the bed nights to periods including the years commencing 1 January 2007 and continuing to the date of this decision as referred to in paragraph 17 above then the applicant would have the onus of providing evidence that the use was in accordance with a legally permitted use. In view of the decision referred to at paragraph 31 above on this point it is unnecessary to consider whether this onus has been discharged.
RR78 imports the "Guidelines Approved by the Treasurer" for the 2007 tax year as paragraphs 3, 4 and 5. The submission that the guidelines approved by the Treasurer and incorporated in RR78 provide an infinite period, during which accommodation periods may be accumulated, does not provide certainty or permit auditing of any concession claimed.
The interpretation of any statutory provision must take into account the rules of construction which include considering the literal approach, conceptual approach and the interpretation that reflects the intention of the legislature. The submission of the applicant that the interpretation of the provisions of RR78 should be a literalistic interpretation requires that 'a long term resident' be labelled as such in order that consideration can be given to paragraph 3 of the Guidelines. This being on the basis that the facts of any matter should not be confined to any particular time nor to any particular boarding house. This does not take into account the context of the Guidelines set out in RR78, section 10Q LTMA or LTMA generally. The interpretation of the Revenue Ruling must be construed taking into account the intention of the legislation being to encourage low cost accommodation and to apply the provisions of section 10Q LTMA. The interpretation of the section 10Q LTMA must consider the grammatical construction of the section, the context as a whole, the meaning intended by Parliament and if literally clear and unambiguous then it must be interpreted to give effect to unqualified words.
The relevant statute to be considered in terms of the rules of statutory construction is section 10Q LTMA. This section permits guidelines to be approved by the Treasurer for the purposes of the section. The provisions of RR78 as approved by the Treasurer are not subject to the statutory rules of construction, being guidelines they must be read as a whole relating to an annual tax being the land tax and to the facts that occur in the relevant year. RR78 applies only to the 2007 tax year. Any application in relation to an exemption or reduction in land tax must be supplied to the respondent in accordance with section 10Q(5) LTMA. Accordingly an application must be in respect of the relevant land and relating to the tax year 2007 which ended on 31 December 2006.
The evidence supplied by way of the statutory declarations of Mr Liam John Boyle disclose that the occupancy rate was less than 45% for the relevant year and accordingly the provisions of paragraph 3(i)(a) of RR78 have not been satisfied.
As paragraph 3 of RR78 should be construed as described in paragraph 34 above the question as to whether the additional facts which occurred after 30 December 2006 be considered does not arise. If those facts needed to be considered then they should have been disclosed to the respondent in entirety prior to the hearing on 1 December 2008 as required by section 8 TAA in order to satisfy the onus born by the applicant.
In the event that the interpretation referred to in paragraph 17 above as suggested by the applicant was followed then this would lead to the inability to determine the occupancy rate at any time let alone as at 31 December 2006. It would also lead to the requirement that to be included as a 'long term resident' for the purposes of calculating the 80% then each person would need to be labelled as such. This is not envisaged in section 10Q LTMA nor in RR78.
The interpretation of paragraph 3(i)(a) of RR78, submitted by the representative of the applicant, that the letter 'a' where appearing before the words 'boarding-house for ...' referred to a class of accommodation and not to the words as set out in the Preamble to RR78 at paragraph 1 would lead to uncertainty and prevent the provisions of section 10Q being given effect to. The interpretation of paragraph 3(i)(a) must take into account the whole of RR78 in that the tax is applied to 'the land used and occupied primarily for a boarding house' and therefore the words "a boarding-house" are descriptive of the land subject to land tax during the 2007 tax year. This limits the ability to include the period of time to be considered for the application of the 80% threshold to that between 1 January 2006 and 31 December 2006.
The non disclosure of the use of the subject property in a manner which may not have been in accordance with the Council requirements does not alter the situation, taking into account the evidence furnished, when considering the preferred interpretation as set out above in respect of the Guidelines. No consideration has been given to this apparent non disclosure.
In view of the complexity of establishing the bed nights as set out in paragraph 9 above it is considered that it was necessary for the applicant to provide the material to enable the respondent to undertake the necessary review of that material. It is considered that the delay which occurred in doing this does not warrant an award of costs against the applicant.
The applicant has not established that the land was used as the site of a boarding house which would be entitled to an exemption from land tax for the 2007 tax year where, during the year ended 31 December 2006, at least 80% of the accommodation available to boarding house residents was occupied by long term residents as defined in paragraph 3(i)(a) RR78.
On the basis of the analysis of the occupancy records and the evidence provided to the Tribunal the 80% threshold was not reached at any time during the 2007 tax year
Orders
1. The 80% threshold requirement as set out in Revenue Ruling No. LT 78 was not reached at any time for the 2007 Tax Year.
I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.
Registrar
Decision last updated: 15 June 2011
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