Raissis v Chief Commissioner of State Revenue

[2021] NSWCATAD 99

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99

Hearing dates:

9 February 2021

Date of orders:

26 April 2021

Decision date:

26 April 2021

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

J S Currie, Senior Member

Decision:

1.   Each of the Chief Commissioner’s assessments of land tax covering the land tax years 2016 to 2020 inclusive is confirmed.

2. The Chief Commissioner’s decision to disallow the application of clause 6 of Schedule 1A of the Land Tax Management Act in respect of the Applicants’ liability for land tax on the relevant property for the land tax years 2016 to 2020 inclusive is affirmed.

3.   The Chief Commissioner’s decision to impose interest consisting of both the market rate component and the premium component for land tax on the relevant property for the land tax years 2016 to 2020 inclusive is affirmed.

Catchwords:

TAXES AND DUTIES — land tax — liability — exemptions — principal place of residence — concession for unoccupied land intended to be a future principal place of residence: Land Tax Management Act 1956 (NSW), Schedule 1A, Part 3, clause 6 — taxpayer’s onus of proof — onus not satisfied — Chief Commissioner’s assessments confirmed and decisions affirmed.

TAXES AND DUTIES — administration — interest — market rate and premium components — grounds for remission — Taxation Administration Act 1996 (NSW), Part 5, Division 1 — Chief Commissioner’s decisions affirmed.

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

First Home Owner Grant (New Homes) Act 2000 (NSW)

Land Tax Management Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

AES Wiring Pty Ltd v Chief Commissioner of State Revenue [2012] NSWADT 11

B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481

Bates v Chief Commissioner of State Revenue [2004] NSWADT 13

Black v Chief Commissioner of State Revenue [2011] NSWADT 66

Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd (RD) [2004] NSWADTAP 19

Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184

Commissioner of Taxation v Miller (1946) 73 CLR 93

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

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81; (1975) 8 ALR 155

Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2010) 79 NSWLR 724

Raissis v Chief Commissioner of State Revenue [2019] NSWCATAD 112

Uechtritz v Chief Commissioner of State Revenue [2013] NSWADT 111

Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261

Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773

Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160

Ziino v Commissioner of State Revenue [2004] VCAT 1707

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Spiro Raissis (First Applicant)
Emanuel Raissis (Second Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
S Richardson (Respondent)

Solicitors:
Applicants (self-represented)
Crown Solicitor (Respondent)

File Number(s):

2020/00182216

Publication restriction:

Nil

REASONS FOR DECISION

What is this matter about?

1. This matter concerns the application of the “principal place of residence” exemption (“the PPR exemption”) from liability for New South Wales land tax, the operative legislative provisions for which appear in Schedule 1A to the Land Tax Management Act 1956 (“the LTM Act”).

2. The applicants are Mr Spiro Raissis and Mr Emanuel Raissis (collectively “the Applicants”). They seek administrative review of a number of assessments and decisions by the Chief Commissioner of State Revenue (“the Chief Commissioner”) concerning their liability for land tax for their jointly owned land at Paddington, Sydney (“the Paddington Property”), under which they were denied the benefit of the PPR exemption for the Paddington Property for each land tax year between 2016 and 2020.

3. The Chief Commissioner’s decisions under review were:

1. a decision to withhold the benefit of the PPR exemption on the Paddington Property for each of the tax years 2016 to 2020 inclusive; and

2. a decision to impose interest on unpaid land tax which included both the market rate component and the premium component allowed for under section 22 of the Taxation Administration Act 1996 (“the Administration Act”).

4. It would appear that there were two components to the Chief Commissioner’s decision to withhold the benefit of the PPR exemption, as follows:

1. Firstly, in respect of the 2020 tax year, the Chief Commissioner withheld the benefit of the general PPR exemption set out in clause 2 of Schedule 1A of the LTM Act, which I have referred to as “the Clause 2 exemption” and which I have described in more detail at [26] below.

2. Secondly, with particular reference to the assessments for each of the 2016 to 2020 tax years, to withhold the benefit of the land tax concession set out in clause 6 of Schedule 1A of the LTM Act (“the Clause 6 concession”), which I have described in more detail at [27]-[29] below. Essentially, the clause grants a concession from land tax to the owner of unoccupied land which is intended to become his or her principal place of residence, subject to the exceptions and limitations I have noted below.

5. Although there were a number of assessments and some revisions and adjustments of assessments for various tax years, it is apparent and was uncontested that:

1. on 6 February 2020 the Chief Commissioner issued a land tax assessment notice to Mr Spiro Raissis in respect of the 2020 tax year, under which the Paddington Property was not exempted from land tax. Mr Spiro Raissis objected to that assessment and on 1 May 2020 an objection decision was issued by the Chief Commissioner disallowing Mr Spiro Raissis’ objection;

2. although tax years 2016 to 2019 inclusive had been dealt with by various other assessments and notices, on 4 May 2020 the Chief Commissioner issued a land tax assessment notice to Mr Spiro Raissis and Mr Emanuel Raissis in respect of land tax for each of those years and 2020, under which the Paddington Property was not exempt from land tax. Mr Emanuel Raissis and Mr Spiro Raissis objected to that land tax assessment and on 15 October 2020 the Chief Commissioner disallowed the objection; and

3. by the Chief Commissioner’s notice of determination of objection dated 15 October 2020, he imposed interest on the land tax which had not been paid by the due date in respect of the Paddington Property. The Chief Commissioner imposed interest which comprised both of the components available to him under section 22 of the Administration Act, namely the market rate component and the premium component, which, by operation of s 22(3) of that Act, is 8% per annum. The Applicants seek a review of the imposition of interest generally; but as I understand their case they seek in particular a reversal of the decision to impose the premium component.

Matters for determination by the Tribunal

6. It fell to me to determine:

1. whether, in respect of each of the Chief Commissioner’s relevant assessments, the assessment should be confirmed or revoked, or whether one of the other orders available to me under section 101 of the Administration Act should be made in respect of the assessment; and

2. whether each of the Chief Commissioner’s decisions which gave rise to the matters set out at [5](1) to (3) above was the correct and preferable decision, in which case it would be affirmed; or should be set aside or varied, in which case I also had to determine whether to make any of the orders available under sections 63 and 65 of the Administrative Decisions Review Act 1997 (“the ADR Act”) in respect of that decision.

7. In this situation, the decision under review by this Tribunal is the operative decision of the Chief Commissioner (in this case, the decision reflected by the relevant assessment or assessments). That, and not the Chief Commissioner’s ruling made on an objection, is the subject of the review: Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184, per Basten JA at [28].

My decisions

8. I decided that:

1. each of the Chief Commissioner’s assessments of land tax covering the land tax years 2016 to 2020 inclusive should be confirmed;

2. the Chief Commissioner’s decision to disallow the application of clause 6 of Schedule 1A of the Land Tax Management Act in respect of the Applicants’ liability for land tax on the relevant property for the land tax years 2016 to 2020 inclusive was the correct and preferable decision and should be affirmed; and

3. the Chief Commissioner’s decision to impose interest consisting of both the market rate component and the premium component on the Applicants’ liability for land tax on the relevant property for the land tax years 2016 to 2020 inclusive was the correct and preferable decision and should be affirmed.

9. These are my reasons for those decisions.

Uncontested facts

10. The facts summarised at [3] to [5] above are uncontested.

11. The following facts also appear to be uncontested:

1. the Applicants were joint owners of the Paddington Property at all relevant times;

2. the Applicants became the owners of the Paddington Property on 26 October 2015 (the date on which the transfer of title to them was registered);

3. that Mr Emanuel Raissis commenced occupation of the Paddington Property on 23 December 2019;

4. the dates on which the relevant assessment notices, a land tax variation return, objections and objection decisions were made and delivered.

The Bondi Property and the Bondi Decision

12. It is also uncontested that since October 2015 the Applicants have been the owners of a property at Bondi, Sydney (“the Bondi Property”). They brought proceedings in this Tribunal seeking a review of the Chief Commissioner’s assessment of land tax on the Bondi Property for the 2018 land tax year, based on the assertion that Mr Emanuel Raissis used and occupied that property as his principal place of residence in that tax year. By orders made on 11 June 2019, (“the Bondi Decision”) the Tribunal found that Mr Emanuel Raissis had done so, that he should be exempt from land tax on the property for the 2018 land tax year and that the relevant decision to impose that tax should be set aside: see Raissis v Chief Commissioner of State Revenue [2019] NSWCATAD 112.

The relevant statutory provisions

13. For convenience of reference, the text of all relevant statutory provisions referred to in these Reasons is set out in the Appendix.

The ADR Act: Tribunal’s role

14. The role of the Tribunal in determining an application for administrative review under section 63 of the ADR Act is:

“… to decide what the correct and preferable decision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law.”: s 63(1).

15. For the purpose of making its decision, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision: ADR Act, s 63(2). The effect of these two subsections is often described as requiring the Tribunal to “stand in the shoes” of the maker of the decision under review. However, the Tribunal is required to decide what the correct and preferable decision is having regard to the material that is before it at the hearing. It is clear that the Tribunal may take into account material that was not before the primary decision-maker: Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 77.

The Administration Act

16. Part 3 of the Administration Act deals generally with assessment of tax liability and section 8 empowers the Chief Commissioner to make an assessment of that liability. That Part also deals with such complementary matters as reassessment, withdrawal of assessments and notices to be given by the Chief Commissioner.

17. Part 5 of that Act deals with interest and penalty tax. In summary, section 21 provides that if a tax default occurs the taxpayer is liable to pay interest on the tax unpaid at an interest rate time to time applying under Division 1 of that Part. By operation of section 22 the interest rate is the sum of the “market rate component” and “the premium component” and s 22(2) and (3) define those terms, respectively, as follows:

1. The market rate component is the Bank Accepted Bill rate rounded to the second decimal place or another rate specified by order of the Minister.

2. The premium component is 8% per annum.

18. Section 25 of the Administration Act grants the Chief Commissioner discretion to remit the market rate component or the premium component of interest or both by any amount “in such circumstances as the Chief Commissioner considers appropriate”.

19. Part 10 deals with objections and reviews and includes provisions for the grounds for objections (section 87), time limits and objections made out of time (sections 89 and 90), the determination of objections and the giving of notice of a determination (sections 91 and 93). Section 95 effectively requires interest, under sections 21 and 22 as described above, to run on amounts payable following the determination of any objection.

20. Division 2 of Part 10 deals with reviews by this Tribunal and by the Supreme Court. Relevantly, section 96 allows a taxpayer to apply to this Tribunal for an administrative review under the ADR Act if the taxpayer is dissatisfied with the Commissioner’s determination of the taxpayer’s objection or 90 days (not including any period of suspension under s 92) have passed since the objection was served on the Chief Commissioner and he has not determined that objection.

Taxpayer’s onus of proof

21. It is of fundamental importance that under s 100(3) of the Administration Act, in a review of this nature by the Tribunal the applicant has the onus of proving his, her or its case and that requires them to prove all matters necessary to enable the Tribunal to answer the statutory question in their favour. The requisite standard of proof is the balance of probabilities: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31]; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481, per Allsop P at [87] and [104]; Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81; (1975) 8 ALR 155.

The LTM Act

22. The LTM Act establishes the scheme for the imposition and assessment of land tax on land in New South Wales, the liability of landowners for that tax and the objection and review processes which are available to taxpayers in respect of any assessment of land tax by the Chief Commissioner.

“Principal place of residence”

23. An exemption from land tax liability for a taxpayer’s principal place of residence (“PPR”) is provided for in s 10(1)(r) of the LTM Act.

24. Section 3(1) of that Act defines “principal place of residence” of a person as:

the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

25. The terms of the exemption and related concessions are set out in Schedule 1A of the Act.

The clause 2 exemption – current residence

26. Part 2 and in particular clause 2 of Schedule 1A contain the central provisions for the PPR exemption in respect of a taxpayer’s current residence. For convenience of reference the full terms of clause 2 are set out in the Appendix to these Reasons, but essentially:

1. The clause provides that land used and occupied by land owners as their principal place of residence and for no other purpose is exempt from land tax for any year commencing 1 January 2005, provided that the land is a parcel of residential land, a strata lot or (subject to further provisions) land comprised of two or more strata lots.

2. Significantly, subclause (2) confirms that land will not be regarded as being used and occupied as the taxpayer’s principal place of residence unless:

(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or

(b) in any other case, Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence.

The clause 6 concession – unoccupied land intended to become the taxpayer’s principal place of residence

27. As noted above, clause 6 of Schedule 1A provides a concession to the owner of unoccupied land which the owner intends to use and occupy solely as his or her principal place of residence.

28. As might be expected, the availability of that concession is subject to exceptions and limitations. Under subclause 6(2) it will not be available unless:

1. the owner intends to carry out or is carrying out building or other work necessary to facilitate their intended use and occupation of the land;

2. if those building works have physically commenced, no income has been derived from its use and occupation; and

3. the intended use and occupation is not unlawful.

29. By operation of the relevant subclauses of clause 6, except where a person other than the owner uses and occupies the land for residential purposes (in which case there are special provisions), the concession only applies for 4 years immediately following the year on which the relevant taxpayer became the owner of the property.

The evidence

Documentary material

30. I considered all the documentary material which was provided as part of the Tribunal’s file, including:

1. the application;

2. the Applicants’ bundle of documents filed on 17 August 2020 headed: “Submissions/evidence”, which included amongst other things a statutory declaration of Mr Emanuel Raissis made on 10 August 2020 and a declaration of Mr Spiro Raissis also made on 10 August 2020 and a copy of electricity bills for the Paddington Property;

3. the Applicants’ bundle of documents filed on 17 December 2020 headed: “evidence in reply” which included amongst other things a statutory declaration by Mr Spiro Raissis made on 10 December 2020;

4. documentation filed by the Chief Commissioner in 3 stages, on 29 July 2020, 3 December 2020 and 29 January 2021 pursuant to his obligation under section 58 of the ADR Act; and

5. written submissions by Counsel for the Chief Commissioner dated 30 November 2020.

Oral testimony and submissions

31. At the hearing I heard oral submissions from each of Mr Spiro Raissis and Mr Emanuel Raissis and from Mr Richardson of Counsel on behalf of the Chief Commissioner. I also considered the written submissions from each of the parties as noted in the previous paragraph and a List of Authorities from the Crown Solicitor, which was provided without objection.

The real issues

32. Under section 36 of the Civil and Administrative Tribunal Act 2013 (NSW), I am required to give effect to a “guiding principle”, which is that I should facilitate the just, quick and cheap resolution of the real issues in the proceedings. Under that section each of the parties and their respective legal representatives must assist me to do that.

33. In order to facilitate the resolution of the real issues, it is obviously necessary for me to identify the real issue or issues.

Analysis of the possible issues

34. It seems clear and the parties were in consensus that the central issue in these proceedings is whether, as at 31 December 2019, the Paddington Property was used and occupied by Mr Emanuel Raissis as his principal place of residence. (For convenience of reference I shall refer to that issue as “issue 1”).

35. If it was, then the validity of the Chief Commissioner’s land tax assessments for 2016, 2017 and 2019 is in issue. It was put to me by Counsel for the Chief Commissioner and I agree (nothing persuasive to the contrary having been put to me by the Applicants), that land tax liability for the 2018 tax year is not in issue. That is because Mr Emanuel Raissis cannot claim the Clause 6 concession in respect of that land tax year because of the result in the Bondi Proceedings, which recognised the Bondi Property as his principal place of residence for the 2018 land tax year. Of course a taxpayer can have only one principal place of residence for each tax year: Black v Chief Commissioner of State Revenue [2011] NSWADT 66 at [81].

34. If however issue 1 is answered in the negative, then the Clause 6 concession cannot be available. That must follow from clause 6(5) of the Schedule which provides that (in the circumstances in which Clause 6 operates) the exemption is revoked if the person (here, Mr Emanuel Raissis) failed to actually use and occupy the land as his principal place of residence by the end of a particular period being “the period in which this clause applies”. In the circumstances of this case that must be a reference to the period set out in subclause (3)(a) of clause 6, namely:

4 tax years immediately following the year in which the person became the owner of the land

37. It is uncontested that Mr Emanuel Raissis became the owner of the Paddington Property on 26 October 2015 (the date on which the transfer of title to him and his brother was registered). The 4 tax years which immediately followed that year were 2016, 2017, 2018, and 2019. The 2019 tax year expired on 31 December 2019.

38. So, in order to satisfy the time limit in clause 6(5), Mr Emanuel Raissis must have used and occupied the relevant land, being the Paddington Property, as his principal place of residence by 31 December 2019.

39. The question of whether he did so is precisely the focus of enquiry in issue 1.

40. So, if issue 1 is answered in the negative, the Chief Commissioner’s land tax assessments for the 2016, 2017 and 2019 tax years are not open to challenge on the basis of the PPR exemption or relevant concessions and so cannot be in issue in these proceedings.

41. Finally, it is clear that the third issue for determination by me is whether, as sought by the Applicants, there should be any remission of the interest on the land tax debt, either that calculated as the market rate component or the premium component.

Summary of the real issues

42. It follows that the real issues in these proceedings are:

1. whether, as at 31 December 2019, the Paddington Property was used and occupied by Mr Emanuel Raissis as his principal place of residence;

2. if it was, whether each of the Chief Commissioner’s assessments for the tax years 2016, 2017 and 2019 was correct. However if issue 1 is resolved in the negative then that issue does not need to be decided; and

3. in any case, whether there should be any remission of the interest on the land tax debt, either the market rate component or the premium component.

The Chief Commissioner’s case

43. In essence, the case put by the Chief Commissioner is that each of the relevant land tax assessments was valid and proper under the provisions of the relevant legislation and that each of the Chief Commissioner’s decisions under review was properly made. In particular, the Chief Commissioner contended that the Paddington Property was not the principal place of residence of either of the Applicants but in particular of Mr Emanuel Raissis as at 31 December 2019. The Chief Commissioner also contends that his decision to impose interest comprising both the market rate component and the premium component was the correct and preferable decision.

The Applicants’ case

44. In essence, the Applicants’ case rests on their contention that the Paddington Property was Mr Emanuel Raissis’ principal place of residence as at 31 December 2019 and that accordingly the Chief Commissioner’s relevant assessments subject to this review were wrong. They also contend that the Chief Commissioner’s decision to impose interest at both the market rate component and the premium component was not the correct and preferable decision.

Consideration

Issue 1: Principal place of residence as at 31 December 2019

The Applicants’ case as to this issue

45. I concluded that the Applicants had failed to satisfy their onus of establishing that as at midnight on 31 December 2019 Mr Emanuel Raissis used and occupied the Paddington Property as his principal place of residence. I reached that conclusion for the reasons which commence at [63] below.

The relevant case law

46. I began by considering what appear to be the leading and most relevant recent cases on this issue.

General principles

47. In Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 (“Yen-Cheng”), at [19] to [23], the Tribunal provided a useful summary of the considerations applicable to determining a person’s principal place of residence, as follows:

1. The LTM Act does not provide any technical or legal meaning for the expression “principal place of residence”, so the expression has its ordinary meaning.

2. In ascertaining whether a particular residence of a person is the principal place of residence of the person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of the use and occupation of the residence in each case: Dean v Commissioner of Stamp Duties (Qld) (No 2) [1996] 2 Qd R 557 per Fryberg J.

3. Older cases appear to accept that one formulation of a place of residence is “the place where [the person] eats, drinks and sleeps”. (See, for example, Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699, at 706.) However, the Victorian Civil and Administrative Tribunal, in Ziino v Commissioner of State Revenue [2004] VCAT 1707 (“Ziino”), added a note of caution in the following terms:

“…. while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters… One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house... Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases...”.

4. Other indications of a principal place of residence include evidence of the taxpayer’s use of the address of the property as the residential address for purposes of his or her mail, and whether that is the address shown on his or her driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills.

“Reside”

48. It is also useful to consider the High Court’s observations as to the verb “reside”. In Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99, (“Miller”) the Chief Justice Sir John Latham thought there was no judicial authority making it impossible to apply the ordinary meaning of the word “reside”. He adopted the formulation suggested in Levene v Commissioners of Inland Revenue [1928] AC 217 at 222, where Viscount Cave LC had relied upon the Oxford English Dictionary meaning of the term, being:

“to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place.”

49. Latham CJ also observed that a person is not the less “resident” at the property simply because from time to time he or she leaves it for the purpose of business or pleasure. It seems clear that, in at least some situations, the taxpayer’s absences, even frequent absences, for business or other purposes, do not prevent a property from being treated as that person’s principal place of residence, but only if the application of other criteria justified that conclusion: Uechtritz v Chief Commissioner of State Revenue [2013] NSWADT 111 (“Uechtritz”).

50. In Uechtritz the taxpayer was a prominent and successful businessman who was reported to be in the course of transitioning to retirement. The Tribunal accepted evidence that he intended to retire and use the subject property (at Byron Bay) as his principal place of residence in retirement, notwithstanding that he would continue his substantial investment, philanthropic and social activities, which involved reasonably frequent travel and use of another substantial residence owned by him at Rose Bay in Sydney, even though he had made the Rose Bay residence available for use by other family members and it was so used.

51. The Tribunal accepted that his use of and residence at the Byron Bay property was substantial and that he had other connections with that property and the region, notwithstanding his ownership and occasional extended use of the Rose Bay property. The Tribunal concluded that the Byron Bay property was his permanent place of residence. But it also commented, at [61], that Mr Uechtritz’s particular “variegated and peripatetic lifestyle” made the case unusual.

First Home Owners Grant cases

52. Some assistance is provided by cases which considered whether particular property had been occupied as the “principal place of residence” of a taxpayer for the purposes of the First Home Owners Grant. It must be remembered that the eligibility criteria for such grants are different from those applicable to the PPR exemption and the Clause 6 concession in respect of land tax. In particular, section 12(1) of the First Home Owner Grant (New Homes) Act 2000 requires an applicant to satisfy the Chief Commissioner that they “occupy” the principal place of residence for the periods described in the subsection, whereas Schedule 1A, clause 2(1) of the LTM Act requires land for which the principal place of residence exemption is sought to have been “used and occupied” by the owner, subject to the conditions of that clause and Part 2; the use of the land being an additional consideration.

53. However, with that distinction in mind, the cases in relation to the First Home Owners Grant do provide a useful guide to ascertaining a principal place of residence.

54. In Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 (“Bates”) the Tribunal found that an applicant who had resided for about two months at a property which she had recently purchased had “occupied” the property for the purposes of section 12(1) of the relevant Act but had not done so as “her principal place of residence”.

55. The Tribunal confirmed that the intention of the applicant is relevant, but it is not determinative of the issue. Nor is the fact that the applicant resided in the property for a short period of time. These matters, if established, must be considered in light of all the evidence, including where the applicant resided otherwise during any relevant period, the reasons given by the applicant for not residing there, whether that arose from matters entirely out of control of the applicant and the nature of the applicant’s residence at the property.

56. The Tribunal observed that this list was by no means exhaustive, as each case must be considered in the context of its particular facts. The Tribunal concluded that Ms Bates had not satisfied the residential requirement of the Act.

A degree of permanence; not a “transient or temporary” connection

57. What is clear is that in order for a taxpayer to be regarded as occupying and using residential property as a principal place of residence, it must be established that his or her occupation has a degree of permanence to it. A connection to that place which is only “… of a transient, temporary, contingent or passing nature is not sufficient”: Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 at [42] (“Ferrington”).

The principles in Ferrington

58. Ferrington was another case involving the consideration of a grant under the First Home Owners scheme. In that case the taxpayer entered into a contract to purchase her home on 24 April 2001. On 5 June 2001 settlement of her purchase took place. On or about that date she moved into the property and connected the utilities, but on 28 June 2001 (that is, approximately 3 weeks later) she moved out and returned to live at her parents’ home, which had been her prior place of residence. She then let the newly-purchased property to tenants.

59. The Administrative Decisions Tribunal at first instance set aside the Chief Commissioner’s decision which was to refuse the First Home Owners Grant and to impose a penalty of 20%. The Tribunal’s decision at first instance was upheld by the Appeal Panel of the Tribunal.

60. In its reasons for decision, the Appeal Panel suggested important tests for determining a taxpayer’s “principal place of residence” and the degree of permanence required in order to satisfy that concept. The tests were these:

1. The phrase “principal place of residence” should be given its ordinary meaning in the context in which the phrase appears.

2. Consideration as to whether a person has been residing at or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling.

3. The intention of the person concerned, gauged objectively, is relevant but not determinative of the issue.

4. In order for there to be a finding that a particular person occupied a property as their principal place of residence their occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose.

5. The duration of a person’s residence is relevant but not determinative of the issue. A particular person’s occupation of a home, while short, may have the requisite degree of permanence to it, but as the Appeal Panel put it at [42]:

“But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or other passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one’s principal place of residence.”

6. Significantly, the Appeal Panel noted that it is the nature of the occupation which provides the element of permanence. The fact that a period of actual occupation is short will in practice make it harder for the taxpayer to demonstrate that the occupation was as his or her principal place of residence, but it will not make such a conclusion impossible.

7. The reasons for a person’s departure from the property must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances. In Bates the Tribunal thought that whether non-residence at the property resulted from matters entirely out of the control of the person was a factor to be considered. But in Ferrington, the Appeal Panel, whilst noting that “that is undoubtedly correct”, cautioned that it should not be read as stipulating a requirement that the reasons for departure must be completely out of the relevant person’s control.

Use of the property: time of assessment

61. In Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2010) 79 NSWLR 724 the Supreme Court held that any determination of a person’s principal place of residence is not limited to the use to which the particular property is put on the relevant date. The Court concluded, at [4], that the relevant date for that purpose must be determined by additionally considering the use of the property during a reasonable period preceding and following the relevant date and that on the particular facts of that case 6 months before and after the relevant date was a reasonable period for enquiry.

62. Of course, as the Court made clear, the 6-month period was specific to the facts of that case. Consideration of such a lengthy period may not always be appropriate.

Analysis: Why was the Applicant’s onus not satisfied here?

The relevant principles emerging from the cases

63. The starting point must be the principal emerging from Yen-Cheng, to the effect that the relevant legislation does not provide any technical or legal meaning of the phrase “principal place of residence”, so the term must be given its ordinary meaning.

64. The recent cases serve to emphasise that much depends on the facts and circumstances of the particular case. But the cases which I have summarised above and most significantly, Ferrington, do provide useful beacons as to whether particular facts will give rise to a conclusion that the taxpayer has established his or her principal place of residence in a particular property.

65. The following principles and factors relating to the question of principal place of residence seem to me to be particularly pertinent to the position of the Applicants here:

1. the taxpayer’s intention as to his or her use and occupation of the property is a relevant factor, but significantly it is not determinative: see Bates and Ferrington.

2. The extent and quality of the taxpayer’s occupation in each case is a better guide than any expression of intention: see Yen-Cheng citing Dean v Commissioner of Stamp Duties.

3. The fact that the taxpayer has for a period slept in the particular property does not make that property his or her principal place of residence and a whole indicia of matters which are attended to in a home must be considered: Ziino. The extent and quality of the taxpayer’s occupation must be assessed objectively and must be such to indicate the requisite degree of permanence, so that an occupation which is transient, contingent or of a passing nature or for some other purpose will not satisfy the statutory requirement (Ferrington).

4. Although temporary or occasional occupation of another property may not, depending on the facts, deprive a particular property from proper characterisation as the principal place of residence (as in Uechtritz), Chief Justice Latham’s formulation in Miller is a more authoritative guide, particularly his reliance on the notion of a principal place of residence being a property which is dwelt in permanently or for a considerable time and overall is the person’s “settled or usual abode”.

Application of those principles to the present facts

66. I began by considering whether, at the appropriate times, (including in particular 31 December 2019 and the period immediately surrounding that date) there was sufficient indication in the Applicants’ evidence that the Paddington Property could be regarded as Mr Emanuel Raissis’ “settled or usual abode” or, on the contrary, whether on the evidence and an objective assessment of the nature of his occupation of the property, that occupation could properly be characterised as transient, contingent or of a passing nature or for some other purpose.

67. I concluded that, on any reasonable objective assessment of the question, at that time and indeed probably continuing substantially into calendar year 2020, the building work and fitting out of the Paddington Property could not be regarded as being so well-developed as to facilitate Mr Emanuel Raissis’ use and occupation of it as his settled or usual abode.

68. On the contrary, his occupation of the property can properly be characterised as transient and contingent.

69. In reaching those conclusions I gave particular weight to the following.

1. The contents of the table of consents and approvals to various stages of the construction of the residence at the Paddington Property, which was prepared on behalf of the Chief Commissioner, based on the documentation obtained from Woollahra Municipal Council. The table (which for convenience I will refer to as “the Consent and Construction Timeline” or “the Timeline”) was included in the Respondent’s Outline of Submissions filed on 3 December 2020. Those submissions were duly served on the Applicants and several references to the Consent and Construction Timeline were made in the course of Counsel’s submissions at the hearing. No objection to the document was taken by the Applicants. Amongst other things the Timeline indicates that:

1. although a certificate of structural adequacy was issued on 5 November 2019, an electrical compliance certificate was not issued until 18 February 2020. It seems a reasonable imputation that electrical wiring may not have been in complete form (or at the least, a form suitable for inspection) during late December 2019 or January 2020;

2. the necessary inspection of the building prior to covering waterproofing in any wet areas did not occur until 5 March 2020. Again it is a reasonable imputation that internal tiling may not have been in place in December 2019 or January 2020. That appears to be supported by the fact the plumbing and drainage certificate of compliance was not issued for a further 4 months; not until 28 May 2020; and

1. an occupation certificate was not issued until 12 August 2020, by which time Mr Emanuel Raissis had left the property.

2. The weaknesses in some of the documentary evidence produced by Mr Emanuel Raissis. His statutory declaration of 10 August 2020 attached an electoral roll change, indication of connection of electricity in January 2020 and drivers licence change. Apart from the fact that each of these items of evidence post-dates the taxing date of 31 December 2019, those documents, even in combination, do not substantiate actual residence by any particular person.

3. An Origin electricity bill, which was attachment 5 to Mr Emanuel Raissis’ document package filed on 17 August 2020, indicated that the electricity “supply start date” was 12 January 2020. That would appear to indicate that prior to that date, insofar as Mr Raissis asserts that he was sleeping and eating at and otherwise using the property, he must have been doing so without a main line electricity connection (again noting that the electricity compliance certificate was not issued until 18 February 2020). Of course, it is possible to prepare meals and perhaps to install partial lighting in residential premises without such an electricity connection and perhaps that is what happened; but if so, it is hardly persuasive as to the establishment of the principal place of residence. Again I note the onus is on the Applicants to establish that.

4. It was put to me by both the Applicants that Mr Emanuel Raissis was able to sleep at the property regularly. But it seems clear from matters referred to in (1), (2) and (3) above that his sleeping arrangements may well have been very simple and temporary; there was insufficient evidence before me to demonstrate that he regularly cooked or heated his meals at the Paddington Property and it seems unlikely that he had any electricity supply before 12 January 2020, or that such supply as he had was ready for inspection prior to 18 February 2020. Again on these matters the Applicants have not satisfied the onus which they bear in these proceedings.

5. There was no evidence as to the furniture and fittings which Mr Emanuel Raissis had available at the property or such other matters as entertainment of friends in the house. Those were the matters seen as important indicia in Ziino. In the absence of any contrary indication these matters are a strong indication that at least in December 2019 and in January 2020 the extent and quality of Mr Emanuel Raissis’ use and occupation of the property was inconsistent with it being his principal place of residence.

70. Additionally, Mr Emanuel Raissis’ testimony at the hearing at two stages, (the content of which I accepted as genuine and plausible), contained an indication that his connection to the Paddington Property at relevant times (including of course as at midnight on 31 December 2019) was of a transient, temporary or contingent nature.

1. The first instance of this was when, in the course of his answers to my questions, he conceded that for a substantial part of what he described as “the holiday period” around Christmas 2019 and New Year 2020 he was not at the property. The transcript of the relevant part of the proceedings is as follows:

SENIOR MEMBER: And where were you for the Christmas break?

WITNESS (E. RAISSIS): I went to my family’s house, to my parents’ house and we went away to Mudgee. A few things.

SENIOR MEMBER: So, over the Christmas break how much time would you have spent in the (Paddington Property) premises?

WITNESS: Ah, I took a few days off, you know the Public holidays and things. I was trying to get the house finished and move in. …

SENIOR MEMBER: So when you said the “Christmas break” what sort of dates were you talking about? What did you regard as the Christmas break?

WITNESS: Oh, that’s holidays between Christmas and New Years.”

2. Secondly, under cross-examination and subsequently in answer to questions which I raised, Mr Raissis’ evidence was that in December 2019 and January 2020 his wife and children were living with his mother at a separate house in Dillon Street, Paddington and that that period was, quite understandably, a time of some pressure in terms of close family relationships given his stated wish to complete the construction and fit-out of the Paddington Property, but that, again very understandably, he wished to reunite with his immediate family as soon as possible. I was given to understand that that reunion did not take place during that period or for some time afterwards.

71. Those items of testimony support the contention that, for that extended period which includes 31 December 2019 and would appear to extend (at least) through January 2020, Mr Emanuel Raissis’ connection to the Paddington Property can be regarded as temporary and transient and as contingent on the satisfactory resolution of the issues concerning his family.

Conclusions on this issue

72. It was not necessary for the purposes of determining this application for me to make a specific finding as to what Mr Emanuel Raissis’ permanent place of residence was as at 31 December 2019. Rather the onus was on the Applicants to satisfy me that that place, that is, the place which he used and occupied as his principal place of residence, was the Paddington Property. They failed to do so.

73. On that basis I concluded that as at 31 December 2019, the Paddington Property was not used and occupied by Mr Emanuel Raissis as his principal place of residence.

Issue 2: The 2016, 2017 and 2019 land tax assessments

74. As discussed at [36]–[40] above, because I have found that the Paddington Property was not the principal place of residence of Mr Emanuel Raissis, issue 2, which involves a review of the validity of the land tax assessments for the tax years 2016, 2017 and 2019, does not arise.

Issue 3: Remission of interest

75. Section 25 of the Administration Act grants the Chief Commissioner discretion to remit the market rate component or the premium component of interest, or both, by any amount in such circumstances as the Chief Commissioner considers appropriate.

76. I concluded, for the reasons which follow, that the Chief Commissioner’s decision to impose both the market rate component and the premium component was the correct and preferable decision and that there should be no remission of interest.

The market rate component

77. In AES Wiring Pty Ltd v Chief Commissioner of State Revenue [2012] NSWADT 11 it was confirmed that only exceptional circumstances justify remission of the market rate component of interest.

78. As I understood the Applicants’ case and in particular the oral submissions put by Mr Spiro Raissis, there were instances of unfair treatment by the Chief Commissioner, including delaying the issue of relevant assessments in order to cause financial pressure and difficulty for the Applicants. Although I understood the allegations to be supported by Mr Emanuel Raissis, they were strenuously denied by the Chief Commissioner and no material or persuasive evidence of treatment which was “unfair” was presented. I found the allegations not to have been established.

79. Additionally, as I read the Applicants’ document numbered 1 lodged on 17 August 2020, the Applicants appear to assert that the Chief Commissioner threatened the Applicants (with a costs order), wrongfully used information obtained in confidence during a mediation meeting, engaged in “dirty work” using “dirty lawyers” and delayed proceedings by requesting non-important information relating to asbestos “and thereby displayed unconscionable conduct and bias”. Those assertions were unsupported by any independent testimony or other evidence. They were in their entirety rejected by the Chief Commissioner.

80. I found both sets of allegations to be unproven. There was nothing before me to establish that they had any proper foundation.

81. There was nothing else before me which justified or indeed supported the contention that in this case there were exceptional circumstances which justified the remission of the market rate component of interest.

Premium component

82. In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd (RD) [2004] NSWADTAP 19 (“Incise Technologies”) at [62] the Tribunal adopted suggestions on behalf of the Chief Commissioner that there were four cumulative criteria for justifying any remission of the premium component and those criteria were adopted by the Supreme Court of New South Wales in Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773.

83. The criteria were these:

1. the full payment of all principal tax owing and not in dispute. The Appeal Panel in Incise Technologies thought that criterion should be clarified to mean that all principal tax that has been assessed and is not in dispute has been fully paid at the time of the request for remission of interest;

2. the taxpayer has cooperated in providing relevant information to the Chief Commissioner so as to enable assessments to be issued;

3. such cooperation by the taxpayer has occurred prior to the Chief Commissioner commencing any investigation or, at the very least, within reasonable time after a request for information is made by the Chief Commissioner; “i.e. the taxpayer has taken reasonable care”; and

4. there has been no wilful default in not paying tax on time.

84. I understand the submissions of the Chief Commissioner to be to the effect that these four criteria have not all been satisfied and there is no ground upon which the Tribunal, as part of this review, should remit the premium component.

85. The onus of establishing that all four criteria have been satisfied is on the Applicants. They have put nothing of substance forward in relation to this, other than by repeating their allegations of unfair treatment.

86. As I read the history of their communication with the Chief Commissioner it seems to me that they have not established that they have completely cooperated in providing all relevant information to the Chief Commissioner to enable assessments to be issued. Again, the onus is on the Applicants to establish their contention and they have failed to do so.

87. That being so, I cannot be satisfied that all four criteria for the remission of interest at the premium rate have been satisfied or that this interest charge should be remitted.

88. The Appeal Panel in Incise Technologies recognised that there could be other circumstances in which it would be appropriate to remit the premium component such as where the Chief Commissioner has in some way contributed to the tax default. I find that there was no such contribution to the tax default.

Conclusion on this issue

89. It followed that the Chief Commissioner’s decision to impose interest comprising both the market rate component and the premium component was the correct one.

90. For completeness, I should record that the Applicants, in support of their case for remission of interest, relied on the case of Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261(“Valencia”). Although Valencia did deal with claims by the taxpayer of “unfair victimisation”, hardship and general unfairness, the Tribunal made it clear that there was no evidence before it of unfair victimisation, that a plea of hardship could be dealt with by the Hardship Review Board under sections 106A to 106D of the Administration Act and, on the basis of the decision in Vlahos v Chief Commissioner of State Revenue [2013] NSWADT 215, that any revenue legislative provision which imposes a duty or tax involves no exercise of the principle of fairness, in the absence of a discretionary power in the particular provision. I could not see how Valencia assisted the Applicants’ case.

Conclusion

91. It followed that each of the decisions under review was the correct decision. I was also satisfied that in each case the Chief Commissioner’s decision was the proper result of the correct analysis of the information available to him and was in accordance with the relevant legislation and guidelines. It follows that each such decision was also the preferable decision.

92. The land tax assessments under review must be confirmed and each of the Chief Commissioner’s decisions under review, affirmed.

Orders

93. The formal orders will be as follows:

1. Each of the Chief Commissioner’s assessments of land tax covering the land tax years 2016 to 2020 inclusive is confirmed.

2. The Chief Commissioner’s decision to disallow the application of clause 6 of Schedule 1A of the Land Tax Management Act in respect of the Applicants’ liability for land tax on the relevant property for the land tax years 2016 to 2020 inclusive is affirmed.

3. The Chief Commissioner’s decision to impose interest consisting of both the market rate component and the premium component for land tax on the relevant property for the land tax years 2016 to 2020 inclusive is affirmed.

APPENDIX

Relevant statutory provisions

Administrative Decisions Review Act 1997 (NSW)

63 Determination of administrative review by Tribunal

(1) In determining an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law.

(2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision.

(3) In determining an application for the administrative review of an administratively reviewable decision, the Tribunal may decide:

(a) to affirm the administratively reviewable decision, or

(b) to vary the administratively reviewable decision, or

(c) to set aside the administratively reviewable decision and make a decision in substitution for the administratively reviewable decision it set aside, or

(d) to set aside the administratively reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal.

Civil and Administrative Tribunal Act 2013 (NSW)

36 Guiding principle to be applied to practice and procedure

(1) The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The Tribunal must seek to give effect to the guiding principle when it—

(a) exercises any power given to it by this Act or the procedural rules, or

(b) interprets any provision of this Act or the procedural rules.

…

Land Tax Management Act 1956 (NSW)

10 Land exempted from tax

(1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act—

…

(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A,

…

Schedule 1A Principal place of residence exemption

Part 1 Preliminary

1 Definitions

(1) In this Schedule—

"principal place of residence exemption"—see clause 2.

"residential land"—see clause 3.

"strata lot" means a lot under the Strata Schemes Development Act 2015.

"taxing date"—means midnight on the thirty-first day of December.

(2) For the purposes of this Schedule, a reference to the owner of land includes, if there are joint owners, any one or more of those joint owners.

Part 2 Principal place of residence exemption

2 Principal place of residence exemption

(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is—

(a) a parcel of residential land, or

(b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots.

(2) Land is not used and occupied as the principal place of residence of a person unless—

(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or

(b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence.

(3) If the owner of land is entitled to the exemption conferred by this Schedule, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption.

(4) The exemption conferred by this Schedule is referred to as the "principal place of residence exemption".

(5) The principal place of residence exemption is subject to the restrictions set out in Part 4

…

Part 3 Concessions in application of principal place of residence exemption

6 Concession for unoccupied land intended to be owner’s principal place of residence

(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.

(2) This clause does not apply unless—

(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and

(b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and

(c) the intended use and occupation of the land is not unlawful.

(3) This clause applies in respect of the assessment of a person's ownership of land only in the period of—

(a) 4 tax years immediately following the year in which the person became owner of the land, or

(b) if, after the person became owner and before the building or other works physically commence, the land is used and occupied for residential purposes by another person—4 tax years immediately following the tax year in which the other person ceases to use and occupy the land for those purposes.

(4) Without limiting subclause (3) (a)—

(a) this clause does not apply in respect of the assessment of a person's ownership of land in a period referred to in subclause (3) (b) unless the Chief Commissioner is satisfied that, by the end of the first of the 4 tax years concerned—

(i) the building or other works will be, or have been, physically commenced, or

(ii) significant steps will be, or have been, taken to enable those works to physically commence, and

(b) if the building or other works are not physically commenced by the end of that tax year (or the Chief Commissioner is not satisfied that, by the end of that tax year, significant steps have been taken to enable those works to physically commence)—

(i) the principal place of residence exemption applying by operation of this clause to the land is taken not to have applied to the land in respect of that tax year (unless subclause (3) (a) applied to the assessment in that tax year), and

(ii) land tax liability is to be assessed or reassessed accordingly.

(5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least 6 months.

(6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.

…

**********

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

Amendments

03 June 2021 - Duplicate ([16]-[19]) and unnecessary ([77]) paragraphs deleted; typographical and grammatical errors corrected throughout

Decision last updated: 03 June 2021