RAPP and COMMISSIONER OF STATE REVENUE
[2016] WASAT 123
•14 OCTOBER 2016
RAPP and COMMISSIONER OF STATE REVENUE [2016] WASAT 123
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2016] WASAT 123 | |
| LAND TAX ASSESSMENT ACT 2002 (WA),TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | CC:335/2016 | DETERMINED ON THE DOCUMENTS | |
| Coram: | JUDGE T SHARP (DEPUTY PRESIDENT) | 14/10/16 | |
| 36 | Judgment Part: | 1 of 1 | |
| Result: | Commissioner's decision affirmed Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | MOYNA RAPP COMMISSIONER OF STATE REVENUE |
Catchwords: | Land tax Exemption Primary residence Newly subdivided private residential property Land tax reckoned retrospectively |
Legislation: | Interpretation Act 1984 (WA), s 5 Land Tax Assessment Act 1976 (WA) Land Tax Assessment Act 2002 (WA), s 5, s 7, s 14, s 17, s 19, s 20, s 21 Land Tax Assessment Amendment Act 1980 (WA) Land Tax Assessment Bill 2001 (WA) Planning and Development Act 2005 (WA), s 135 Revenue Laws Amendment (Taxation) Act 2009 (WA), s 6(1), s 6(2) Revenue Laws Amendment (Taxation) Bill 2009 (WA) State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 31, s 31(1), s 31(3) Taxation Administration Act 2003 (WA), s 13, s 16, s 40 Taxation Legislation Amendment Act (No 3) 2015 (WA), s 7 Taxation Legislation Amendment Bill (No 3) 2015 (WA) Transfer of Land Act 1893 (WA) |
Case References: | Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257 Ferguson and Commissioner of State Revenue [2010] WASAT 179 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 State of South Australia v ATSA Pty Ltd (1980) 29 ALR 367 Tamas v Victorian Civil and Administrative Tribunal (2003) 9 VR 154 |
Orders | 1. The decision of the respondent to disallow the applicant's objection to land tax for the year 2015/2016 is affirmed.,2. The application is dismissed. |
Summary | In 2007, the applicant and her husband (now deceased) acquired a 16 hectare property in Prinsep Road, Jandakot. The property included two houses, one of which was derelict.,Land tax was payable on the property until, in May 2015 the applicant informed the Commissioner of State Revenue that it was then to become her primary residence. She was also in the process at that time of subdividing the property into two lots, Lot 98 and Lot 99. Lot 98 comprised approximately 12 hectares, and included the applicant's residence. Lot 99 comprised 4 hectares and was vacant land.,The Commissioner for the 2015/2016 assessment year exempted the property from land tax under the primary residence exemption. The Commissioner then reassessed the property under s 14 of the Land Tax Assessment Act 2002 (WA).,Section 14 provides, relevantly, that when a property previously exempt from land tax as the taxpayer's residence is subdivided, land tax on the value of the 'taxable portion' of that property is payable for each of the five financial years reckoned retrospectively from and including the financial year in which the land is subdivided.,At first sight, this might seem a curious provision but when the history and purpose of s 14 is considered, it becomes clear that s 14 was to address a perceived unfairness. When a lot or parcel of land includes a private residence which is used as the owner's primary residence, the Act now allows for the whole of the land, irrespective of the area of the land, to be totally exempt from land tax. Previously, limitations applied if the size of the lot exceeded 2.0234 hectares, but when those limitations were removed, s 14 was enacted. This provides that if the land exceeds 2.0234 hectares and is then subdivided, the 'taxable portion' of that land is reassessed retrospectively for up to five years. The 'taxable portion' is in effect the area of the land equal to the part of the land which has been split off from the residence by the subdivision. However, the retrospectivity only applies for those of the five years when the residence exemption was allowed.,The applicant considered that she was being assessed for land tax on Lot 99, which she said did not exist on 30 June 2015. Therefore in her submission she should not be assessed until the following year. During the 2015/2016 assessment year, the year in which the subdivision took place, she says that the primary residence exemption should continue to apply.,The Tribunal considered that s 14 should be given its literal grammatical meaning and, when applied to the facts of this case, found that the Commissioner's decision was correct. The Tribunal concluded that it was not Lot 99 which was assessed for land tax but the 'taxable portion' of the whole property, being an amount of land equal to what became Lot 99. The Tribunal agreed that land tax was payable only for the 2015/2016 assessment year, because during the previous assessment years full land tax had already been levied and paid on the property and no exemption applied.,The Tribunal also considered the applicant's argument that she had been assured by an officer from the Office of State Revenue that her land would be exempt from land tax during the 2015/2016 year. While not making any finding as to whether or not that assurance was in fact given, the Tribunal found that the Commissioner could not be bound by any such assurance.,The Tribunal dismissed the applicant's application for costs. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : LAND TAX ASSESSMENT ACT 2002 (WA)
- TAXATION ADMINISTRATION ACT 2003 (WA)
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Land tax Exemption Primary residence Newly subdivided private residential property Land tax reckoned retrospectively
Legislation:
Interpretation Act 1984 (WA), s 5
Land Tax Assessment Act 1976 (WA)
Land Tax Assessment Act 2002 (WA), s 5, s 7, s 14, s 17, s 19, s 20, s 21
Land Tax Assessment Amendment Act 1980 (WA)
Land Tax Assessment Bill 2001 (WA)
Planning and Development Act 2005 (WA), s 135
Revenue Laws Amendment (Taxation) Act 2009 (WA), s 6(1), s 6(2)
Revenue Laws Amendment (Taxation) Bill 2009 (WA)
State Administrative Tribunal Act 2004 (WA), s 27, s 29, s 31, s 31(1), s 31(3)
Taxation Administration Act 2003 (WA), s 13, s 16, s 40
Taxation Legislation Amendment Act (No 3) 2015 (WA), s 7
Taxation Legislation Amendment Bill (No 3) 2015 (WA)
Transfer of Land Act 1893 (WA)
Result:
Commissioner's decision affirmed
Application dismissed
Summary of Tribunal's decision:
In 2007, the applicant and her husband (now deceased) acquired a 16 hectare property in Prinsep Road, Jandakot. The property included two houses, one of which was derelict.
Land tax was payable on the property until, in May 2015 the applicant informed the Commissioner of State Revenue that it was then to become her primary residence. She was also in the process at that time of subdividing the property into two lots, Lot 98 and Lot 99. Lot 98 comprised approximately 12 hectares, and included the applicant's residence. Lot 99 comprised 4 hectares and was vacant land.
The Commissioner for the 2015/2016 assessment year exempted the property from land tax under the primary residence exemption. The Commissioner then reassessed the property under s 14 of the Land Tax Assessment Act 2002 (WA).
Section 14 provides, relevantly, that when a property previously exempt from land tax as the taxpayer's residence is subdivided, land tax on the value of the 'taxable portion' of that property is payable for each of the five financial years reckoned retrospectively from and including the financial year in which the land is subdivided.
At first sight, this might seem a curious provision but when the history and purpose of s 14 is considered, it becomes clear that s 14 was to address a perceived unfairness. When a lot or parcel of land includes a private residence which is used as the owner's primary residence, the Act now allows for the whole of the land, irrespective of the area of the land, to be totally exempt from land tax. Previously, limitations applied if the size of the lot exceeded 2.0234 hectares, but when those limitations were removed, s 14 was enacted. This provides that if the land exceeds 2.0234 hectares and is then subdivided, the 'taxable portion' of that land is reassessed retrospectively for up to five years. The 'taxable portion' is in effect the area of the land equal to the part of the land which has been split off from the residence by the subdivision. However, the retrospectivity only applies for those of the five years when the residence exemption was allowed.
The applicant considered that she was being assessed for land tax on Lot 99, which she said did not exist on 30 June 2015. Therefore in her submission she should not be assessed until the following year. During the 2015/2016 assessment year, the year in which the subdivision took place, she says that the primary residence exemption should continue to apply.
The Tribunal considered that s 14 should be given its literal grammatical meaning and, when applied to the facts of this case, found that the Commissioner's decision was correct. The Tribunal concluded that it was not Lot 99 which was assessed for land tax but the 'taxable portion' of the whole property, being an amount of land equal to what became Lot 99. The Tribunal agreed that land tax was payable only for the 2015/2016 assessment year, because during the previous assessment years full land tax had already been levied and paid on the property and no exemption applied.
The Tribunal also considered the applicant's argument that she had been assured by an officer from the Office of State Revenue that her land would be exempt from land tax during the 2015/2016 year. While not making any finding as to whether or not that assurance was in fact given, the Tribunal found that the Commissioner could not be bound by any such assurance.
The Tribunal dismissed the applicant's application for costs.
Category: B
Representation:
Counsel:
Applicant : In Person
Respondent : Ms R Panetta
Solicitors:
Applicant : N/A
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211
Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800
Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257
Ferguson and Commissioner of State Revenue [2010] WASAT 179
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
State of South Australia v ATSA Pty Ltd (1980) 29 ALR 367
Tamas v Victorian Civil and Administrative Tribunal (2003) 9 VR 154
Introduction
1 This matter comes before the Tribunal by way of an application under s 40 of the Taxation Administration Act 2003 (WA) (TA Act), made by the applicant on 11 March 2016.
2 The applicant seeks a review of a decision by the respondent (Commissioner) that land tax is payable for a property situated at 43 Prinsep Road, Jandakot for the 2015/2016 assessment year (Prinsep Road Property).
Proceedings in the Tribunal
3 At the first directions hearing on 27 April 2016, the Commissioner at her own request was invited to reconsider her decision by 11 May 2016 pursuant to s 31(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The matter, following reconsideration, was then referred to mediation on 24 May 2016.
4 The mediation, which did not in fact conclude until 22 June 2016, was then terminated without a resolution being achieved.
5 At a further directions hearing on 20 July 2016, the parties agreed that this matter involved a discreet question of law, which could be determined entirely on the documents.
6 The Commissioner filed her statement of issues and contentions and a bundle of documents on 17 August 2016. The applicant filed her responsive statement on 31 August 2016 along with her bundle of documents.
7 On 7 September 2016, the Commissioner filed further submissions and the Tribunal's decision was reserved on that date.
Facts
8 The facts of this matter are largely agreed and are set out in an Agreed Statement of Facts dated and filed with the Tribunal on 3 August 2016.
9 On 26 March 1993, the applicant and her husband (now deceased) acquired a property situated at 16 Marjorie Avenue, Shelley. That property consisted of five units, one of which was the primary residence of the applicant and her husband.
10 On 8 May 2007, the applicant and her husband became the registered proprietors of the Prinsep Road Property, comprising Lot 333 on Deposited Plan 53583 and being the whole of the land in Certificate of Title Volume 2658 Folio 96.
11 The Prinsep Road Property was assessed for land tax from the date of its acquisition under the Land Tax Assessment Act 2002 (WA)(LTA Act) until May 2015, when the applicant notified the Commissioner that her primary residence was now the Prinsep Road Property. This notification was treated by the Commissioner as an application for a residential exemption under s 21 of the LTA Act in relation to the Prinsep Road Property.
Decision on the application for residential exemption
12 On l9 May 2015, the Commissioner informed the applicant by email that, in response to her earlier notification of the change in primary residence, the residential exemption that had earlier been applied to the unit at Marjorie Ave had now been removed (with effect from 19 January 2015) and a 50% residential exemption had been granted in relation to the Prinsep Road Property that would be effective from 30 June 2015.
13 The 50% residential exemption was based on the Commissioner's original estimate of the extent to which the Prinsep Road Property was being used by the applicant as her sole or principal residence. The Commissioner now concedes that this estimate was incorrect.
Objection to the decision on the application for residential exemption
14 By letter dated 7 August 2015, the applicant objected to the Commissioner's decision.
15 In her objection, the applicant explained that:
a) she resides in one of two houses on the Prinsep Road Property;
b) the second house is derelict and not capable of being occupied as a residence; and
c) the entire Prinsep Road Property (including the derelict house and all land surrounding the house in which she lives) is for her private use and enjoyment.
Investigation carried out by the Commissioner
16 In September 2015, the Commissioner ordered a further investigation to ascertain who, as at 30 June 2015, was using the Prinsep Road Property and for what purpose.
17 The investigation was conducted by Ms Kanako Sato on behalf of the Commissioner and on 12 October 2015, Ms Sato reported as follows:
a) The applicant took up residence at the Prinsep Road Property in December 2014.
b) The second house on the Prinsep Road Property is derelict and uninhabitable.
c) On 23 March 2015, the applicant had applied to subdivide the Prinsep Road Property into two blocks of 12 and 4 hectares respectively in size. The bigger block identified was Lot 98 on Deposited Plan 405382 (Lot 98) and encompassed both houses, whilst the other block was Lot 99 on Deposited Plan 405382 (Lot 99) and was vacant land. Accordingly, Lot 98 comprised approximately 75% of the original lot, whilst Lot 99 was to occupy approximately 25% of the original lot.
d) On 21 September 2015, the Western Australian Planning Commission approved the subdivision.
18 The applicant asserts (and the Commissioner denies) that during the investigation, she was assured by Ms Sato and others that the whole of the Prinsep Road Property would be fully exempt from land tax for the 2015/2016 assessment year, because the newly created lots were not in existence at 30 June 2015 and would not become assessable for land tax until 30 June 2016.
19 On 12 October 2015, the applicant was registered as the sole proprietor of Lots 98 and 99.
Issue of assessment notice for 2015/2016 assessment year
20 On 28 October 2015, a land tax notice of assessment was issued to the applicant for the 2015/2016 assessment year based upon a 50% residential exemption being granted in relation to the Prinsep Road Property.
21 On 17 November 2015, the applicant again objected in these terms:
a) As at midnight on 30 June 2015 the Prinsep Road Property had not been subdivided. The subdivision of the Prinsep Road Property was not registered until September 2015.
b) The applicant continued to use the whole of the Prinsep Road Property as her residence whilst the subdivision application was in process. She had not ceased to use the area designated for subdivision as her residence at midnight on 30 June 2015. The subdivision application did not inhibit the applicant from doing so in any way.
Determination of objection
22 On 13 January 2016, the Commissioner allowed the objection in part. The residential exemption granted in respect of the Prinsep Road Property was increased from 50% to 75% for the 2015/2016 assessment year and a reassessment notice was issued.
Reconsideration and further reassessments
23 Following the applicant's application to the Tribunal for review of the Commissioner's decision and the Commissioner's reconsideration, on 11 May 2016 the Commissioner issued a further reassessment notice for the 2015/2016 assessment year based upon a 100% residential exemption being granted in relation to the Prinsep Road Property. On the same day, the Commissioner also issued a second notice for the 2015/2016 assessment year assessing land tax under s 14 of the LTA Act in relation to the Prinsep Road Property. The second notice was based on a taxable value of $775,229 which in turn was based on a 'taxable portion' (pursuant to s 14(5) and s 14(6) of the LTA Act) of 4.0545 hectares.
24 This is now the decision under review; s 31(3) of the SAT Act.
Issues
25 The Commissioner formulates the issue for determination as simply whether or not any land tax is payable by the applicant on the Prinsep Road Property for the 2015/2016 assessment year under s 14 of the LTA Act. The applicant agrees with this formulation.
Legislation
26 The relevant provisions of the TA Act are as follows:
13. Assessments
(1) An assessment is a determination
(a) of the amount of tax payable under a Taxation Act or of a portion of such an amount; or
(b) that no tax is payable; or
(c) that a person is liable to pay tax or is exempt from liability to pay tax; or
(d) that an instrument, event or transaction is liable to tax or is exempt from tax.
(2) An assessment may be made in relation to any one or more, or all, of the components of the tax payable by a taxpayer.
(3) The receipt by the Commissioner of an amount as payment of tax does not constitute an assessment of tax liability.
16. Reassessments
(1) The Commissioner must make a reassessment
(a) if specifically required to do so under a taxation Act; or
(b) if specifically required to do so under a direction given in the course of review proceedings; or
(c) if a taxation Act provides for a rebate or refund of tax in particular circumstances, and the circumstances were not taken into account when the previous assessment was made.
(2) Subject to subsection (5), the Commissioner may also make a reassessment
(a) on his or her own initiative, if it appears that a previous assessment is or may be incorrect for any reason; or
(b) on the application of the taxpayer.
(3A) Despite subsections (1) and (2), the Commissioner cannot make a reassessment in relation to an interim assessment unless specifically required to do so by section 39(1) or a direction given in the course of review proceedings.
(3B) A reference in this Act to an assessment following an interim assessment does not include a reference to a reassessment of an interim assessment.
(3) A reassessment may be made whether or not any amount of tax has been paid on the previous assessment.
(4) A reassessment may consolidate 2 or more separate assessments into a single assessment.
(5) If an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
40. Right of review by State Administrative Tribunal
(1) A person dissatisfied with the Commissioner's decision on an objection or on an application for an extension of time for lodging an objection may apply to the State Administrative Tribunal for a review of the decision.
(2) A person ceases to be entitled to apply to the State Administrative Tribunal for a review of a decision on an objection against an interim assessment if the assessment following the interim assessment is made before the person makes an application under subsection (1) for a review of the decision.
(3) Subsection (1) does not apply to, or in respect of, a decision if this Act expressly provides that the decision is not subject to review under this Act.
5. Taxable land
Land tax is payable, in accordance with the land tax Acts, for each financial year for all land in the State except land that is exempt under section 17.
7. Liability to pay land tax
(1) Land tax payable on land for an assessment year is payable by the person who is or was the owner of the land at midnight on 30 June in the previous financial year.
…
14. Newly subdivided private residential property, tax payable on
(1) Land tax is payable in accordance with this section when private residential property is subdivided if
(a) the property was exempt or partially exempt from land tax under Part 3 Division 2 for any of the 5 financial years reckoned retrospectively from and including the financial year in which the land was subdivided; and
(b) the area of the property is greater than 2.0234 hectares; and
(c) the subdivision was not carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land.
(2) Land tax is payable by the subdividing owner of the property on the value of the taxable portion of the property (calculated under subsections (5) and (6)) for each of the 5 financial years reckoned retrospectively from and including the financial year in which the land is subdivided.
(3) The amount of land tax payable for each of those 5 financial years is assessed, at the rate applicable for that year under the Land Tax Act 2002, as if the taxable portion of the property were the only land of the subdividing owner on which land tax was payable for that year.
(4) However, if land tax has already been levied on any part of the taxable portion of the property under another provision of this Act for any of those 5 financial years, then
(a) if a partial exemption did not apply to that part of the taxable portion for the year under Part 3 Division 2 no land tax is payable under subsection (2) on that part for that year; or
(b) if a partial exemption applied to that part of the taxable portion, or an interest in it, for that year under Part 3 Division 2 land tax is payable for that year under subsection (2) on the part of the property to which the partial exemption applied.
(5) The taxable portion of the property is the portion that remains after subtracting from the whole area of the property the greater of the following areas
(a) the area of the lot or parcel or portion of land on which the private residence was situated at the time of the subdivision;
(b) 2.0234 hectares.
(6) For the purposes of subsection (2), the value of the taxable portion of the property for a financial year is
(a) if the financial year is 2008/09 or earlier the amount that bears to the unimproved value of the whole of the property at midnight on 30 June immediately before the financial year the same proportion as the area of the taxable portion bears to the whole area of the property; or
(b) in any other financial year the amount that bears to the taxable value of the whole of the property for the financial year the same proportion as the area of the taxable portion bears to the whole area of the property.
(7) Nothing in this section affects the liability of any person to pay land tax on the taxable portion of the property for any financial year after that in which the land is subdivided.
(8) Despite section 17(4) of the Taxation Administration Act 2003, the Commissioner must make any reassessment necessary to give effect to this section.
17. Exempt land
(1) Land is exempt from land tax for an assessment year if
(a) the Commissioner grants an exemption for the assessment year under section 20; or
(b) it is exempt for the assessment year under another provision of this Part.
(2) Unless this Part provides otherwise, an exemption under a provision of this Part referred to in subsection (1)(b) applies, in accordance with section 18, to the whole or part of a lot or parcel of land.
19. Applying for exemption or concession
The Commissioner may require an owner of land
(a) to lodge an application in the approved form for an exemption or concession under this Part; and
(b) to give the Commissioner any information within the owner's knowledge or control that is relevant to deciding whether or not the land is eligible for an exemption or concession.
20. Commissioner's power to exempt land
(1) A taxpayer may apply to the Commissioner for an exemption, concession or further concession for any of the following land
(a) any proportion of private residential property that is used by an individual for a purpose that is not an exempt purpose, where the private residential property is exempt to some extent under section 21, 22 or 23 because of its use by the individual as his or her primary residence as provided in the respective section;
(b) land that is not exempt under section 23 for an assessment year because it was exempt under that section in the previous financial year, or because the estate derived rent or income in the assessment year;
[(c)-(e) deleted]
(f) land that is not exempt under section 42 because of the operation of section 42(3) or (4);
(g) Crown land of which a person is taken to be the owner under section 8(1) and which is not otherwise subject to an exemption or concession;
(h) land sold by a religious body that would otherwise be taxable under section 32(2);
(i) land sold by an educational institution that would otherwise be taxable under section 33(2).
(2) The Commissioner may grant the exemption, concession or further concession for the whole or part of a lot or parcel of land the subject of an application under subsection (1) if the Commissioner is satisfied that there are reasonable grounds for doing so.
(3) If the Commissioner refuses to grant the exemption or concession, the applicant may appeal to the Minister against the Commissioner's decision.
(4) An appeal may be made within 60 days after the date on which notice of the Commissioner's decision was issued, or within any further time allowed by the Minister for reasonable cause shown by the applicant.
(5) The obligation to pay, or the right to receive and recover land tax, is not affected by any appeal to the Minister.
(6) The Minister is to consider the appeal with all reasonable dispatch, and may either disallow it or, if the applicant satisfies the Minister that there are reasonable grounds for doing so, allow it wholly or in part.
(7) The Minister is to give notice of the Minister's decision on the appeal to the applicant.
(8) The Commissioner is to make any reassessment necessary to give effect to a decision of the Commissioner or the Minister under this section.
21. Residences owned by individuals, exemptions for
(1) Private residential property (except property held in trust) is exempt for an assessment year if, at midnight on 30 June in the financial year before the assessment year, it is owned
(a) by an individual who uses it as his or her primary residence; or
(b) by a husband and wife, at least one of whom uses it as his or her primary residence; or
(c) by persons who have lived in a de facto relationship with each other for at least 2 years, whether or not they still live on that basis, at least one of whom uses it as his or her primary residence.
(2) However, if the property is also owned by another person or persons, it is exempt if each owner who does not use it for that purpose is an owner only because of a requirement by a financial institution for a guarantee of money advanced on the security of the property.
subdividing owner, in relation to land, means
(a) the owner of the land on the day on which the land is subdivided; or
(b) if the ownership of the land changes on that day the first owner on that day;
owner
(a) in relation to land (except an interest in a home unit), means a person who is entitled to the land for any estate of freehold in possession; or
(b) in relation to an interest in a strata title home unit, means the proprietor of the lot as defined in the Strata Titles Act 1985; or
(c) in relation to a nonstrata home unit, means a person who is entitled to an exclusive right to occupy the home unit because the person
(i) is a shareholder in the body corporate which owns the land on which the building containing the home unit is erected; or
(ii) is the registered proprietor of an undivided share in the land on which the building containing the home unit is erected;
or
(d) in relation to any liability to pay land tax for land (including an interest in a home unit), if a person or body is taken to be the owner of the land under section 8, means the person or body[.]
primary residence, in relation to an individual, means the individual's sole or principal place of residence;
private residence means a building or part of a building that was occupied, or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals, except a building or part of a building that is
(a) used as a hotel, motel, hostel, lodging house or boarding house; or
(b) ordinarily used for holiday accommodation; or
(c) used as an educational institution, college, hospital or nursing home; or
(d) used as a club; or
(e) used as a home for aged or disabled persons by an eligible organisation within the meaning of the Aged or Disabled Persons Care Act 1954 of the Commonwealth; or
(f) prescribed or of a prescribed class;
private residential property means
(a) a lot of land on which there is a private residence; or
(b) a parcel of land on which there is a private residence constructed so that part of the residence stands on each of the lots of land that constitute the parcel; or
(c) an interest in a home unit; or
(d) for the purposes of sections 24, 24A, 27, 27A and 28 a lot of land on which a private residence is being or has been constructed[.]
29 In accordance with cl 2 of the glossary to the LTA Act, 'lot' is defined as follows:
Lots and parcels of land
(1) In this Act unless the contrary intention appears
lot means a defined portion of land
(a) which is the whole of the land the subject of
(i) a Crown grant issued under the Land Act 1933; or
(ii) a certificate of title registered under the Transfer of Land Act 1893; or
(iii) a certificate of Crown land title or qualified certificate of Crown land title, created and registered under the Transfer of Land Act 1893; or
(iv) a survey into a location or lot under the Land Administration Act 1997 section 27(2); or
(v) a partlot shown on a diagram or plan of survey of a subdivision deposited with the Land Information Authority; or
(vi) a conveyance registered under the Registration of Deeds Act 1856; or
(vii) a lot depicted on a strata plan or surveystrata plan where the land the subject of the plan has been subdivided within the meaning given in clause 3(1)(d) or (e); or
(viii) an entitlement to occupy a nonstrata home unit;
(b) depicted on a plan or diagram available from, or deposited with, the Land Information Authority and for which a separate Crown grant or certificate of title has been or can be issued; or
(c) depicted on a diagram or plan of survey of a subdivision approved by the Western Australian Planning Commission.
…
30 Clause 3 of the glossary to the LTA Act sets out the meaning of 'subdivided' in the LTA Act as follows:
Subdivided land
(1) Land is subdivided when
(a) a plan of subdivision of the land is approved by the Western Australian Planning Commission for the purposes of section 135 of the Planning and Development Act 2005; or
(b) a transfer, conveyance, lease or mortgage of any land is approved by the Commission under section 147(1) of that Act or an application for the creation and registration of a certificate of title is approved by it under section 147(2) of that Act and the effect of the approval is to allow a dealing with a part of the land which is less than a whole lot; or
(c) on an application for review under section 251 of that Act, the State Administrative Tribunal gives an approval referred to in paragraph (a) or (b); or
(d) in the case of land that is the subject of a strata plan
(i) if the plan is required to be accompanied by a certificate under the Strata Titles Act 1985 section 25 the plan is approved by the Commission; or
(ii) if not an occupancy permit or a building approval certificate required under the Strata Titles Act 1985 section 5B(2) is granted under an application mentioned in the Building Act 2011 section 50(1)(a) or (b);
or
(e) a statement is endorsed on a plan under section 25B of the Strata Titles Act 1985.
(2) An approval referred to in subclause (1) is conclusively presumed to have been given on the date appearing in the approval as endorsed on the plan, instrument or application referred to in that paragraph.
31 The relevant provisions of the SAT Act are as follows:
27. Nature of review proceedings
(1) The review of a reviewable decision is to be by way of a hearing de novo, and it is not confined to matters that were before the decisionmaker but may involve the consideration of new material whether or not it existed at the time the decision was made.
(2) The purpose of the review is to produce the correct and preferable decision at the time of the decision upon the review.
(3) The reasons for decision provided by the decisionmaker, or any grounds for review set out in the application, do not limit the Tribunal in conducting a proceeding for the review of a decision.
29. Tribunal's powers in review jurisdiction
(1) The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decisionmaker in making the reviewable decision.
(2) Subsection (1) does not limit the powers given by this Act or the enabling Act to the Tribunal.
(3) The Tribunal may
(a) affirm the decision that is being reviewed; or
(b) vary the decision that is being reviewed; or
(c) set aside the decision that is being reviewed and
(i) substitute its own decision; or
(ii) send the matter back to the decisionmaker for reconsideration in accordance with any directions or recommendations that the Tribunal considers appropriate,
and, in any case, may make any order the Tribunal considers appropriate.
(4) The fact that a decision is made on reconsideration as required under subsection (3)(c)(ii), does not prevent the decision from being open to review by the Tribunal.
(5) The decisionmaker's decision as affirmed or varied by the Tribunal or a decision that the Tribunal substitutes for the decisionmaker's decision
(a) is to be regarded as, and given effect as, a decision of the decisionmaker; and
(b) unless the enabling Act states otherwise or the Tribunal orders otherwise, is to be regarded as having effect, or having had effect, from the time when the decision reviewed would have, or would have had, effect.
(6) Without limiting subsection (5)(a), the decisionmaker has power to do anything necessary to implement the Tribunal's decision.
(7) Despite subsection (5)(a), the decision as affirmed, varied, or substituted is not again open to review by the Tribunal as a decision of the decisionmaker.
(8) Subsection (5)(a) does not affect an appeal under Part 5 against the Tribunal's decision.
(9) To avoid doubt it is declared that this section and section 27 do not extend to requiring or enabling the Tribunal to deal with a matter that is different in essence from the matter that was before the decisionmaker.
31. Tribunal may invite decisionmaker to reconsider decision
(1) At any stage of a proceeding for the review of a reviewable decision, the Tribunal may invite the decisionmaker to reconsider the decision.
(2) Upon being invited by the Tribunal to reconsider the reviewable decision, the decisionmaker may
(a) affirm the decision; or
(b) vary the decision; or
(c) set aside the decision and substitute its new decision.
(3) If the decisionmaker varies the decision or sets it aside and substitutes a new decision, unless the proceeding for a review is withdrawn it is taken to be for the review of the decision as varied or the substituted decision.
32 The parties' respective positions are as follows.
Applicant
33 The applicant says that the term 'financial year', where it appears in the LTA Act, means 'the period of 12 months ending on 30 June immediately before that year'; applicant's response dated 31 August 2016 at paragraph 7.
34 The applicant believes that she has been assessed for land tax on Lot 99 for the 2015/2016 assessment year. The applicant says that this assessment must be incorrect because Lot 99 was not created until 21 September 2015 and therefore it did not exist on 30 June 2015. It would therefore not be assessable for land tax until the 2016/2017 assessment year. The 'parent lot' (the parties refer to the Prinsep Road Property as the parent lot and to Lots 98 and 99 as the 'child lot' or 'children lots' and for ease of reference I will adopt the same terminology) is, in the applicant's view, the assessable land for the 2015/2016 assessment year and the parent lot for that year should continue to be fully exempt.
35 The applicant also contends that she was told by officers from the Office of State Revenue that the Prinsep Road Property 'would be 100% exempt'; applicant's response dated 31 August 2016, at paragraph 72b.
36 Finally, the applicant is seeking a reimbursement of her legal expenses by way of a cost order for $3,303.04.
Commissioner
37 The Commissioner contends that, even though she granted a 100% exemption for the Prinsep Road Property for the 2015/2016 assessment year, the Commissioner is empowered to tax retrospectively the land under s 14 of the LTA Act, provided that the relevant criteria of that provision are met.
38 The Commissioner says that s 14 of the LTA Act applies in certain situations involving land that is a private residential property that was previously exempt or partially exempt from land tax under Part 3 Division 2 (dealing with private residential property and which includes s 21of the LTA Act) but is subsequently subdivided.
39 The Commissioner points out that:
a) the term 'private residential property' is defined in cl 1 of the Glossary to the LTA Act to mean, relevantly, 'a lot of land on which there is a private residence';
b) the term 'private residence' is defined in cl 1 of the Glossary to the LTA Act to mean, as far as is relevant, 'a building or part of a building that was occupied, or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals ...';
c) the term 'lot' is in turn defined in cl 1 of the Glossary to the LTA Act as having the meaning given in cl 2, which states, so far as is relevant, that 'lot' means a defined portion of land which is the whole of the land the subject of a certificate of title registered under the Transfer of Land Act 1893 (WA) and includes a defined portion of land depicted on a diagram or plan of survey of a subdivision approved by the Western Australian Planning Commission;
d) the LTA Act provides that land is subdivided when a plan of subdivision of the land is approved by the Western Australian Planning Commission for the purposes of s 135 of the Planning and Development Act 2005 (WA);
e) the 'subdividing owner' is 'the owner of the land on the day on which the land is subdivided'; and
f) the term 'financial year' is not defined in the LTA Act but is defined in s 5 of the Interpretation Act 1984 (WA) to mean 'the period of 12 months ending on 30 June'. It does not include the additional words 'immediately before that year'.
40 Because of the reference to 'private residential property' in the opening words of s 14(1) of the LTA Act, the subsequent references to 'property' in s 14 are all, in the Commissioner's view, references to the parent lot.
41 Consequently, the text of s 14 of the LTA Act provides that the land that is being reassessed under s 14 of the LTA Act is the whole of the Prinsep Road Property, not Lot 99. However, the reassessed land tax is based on the value of the taxable portion of the whole of the Prinsep Road Property as calculated under s 14(5) and s 14(6), which may involve consideration of the area of Lot 99.
42 Section 14 of the LTA Act, the Commissioner says, operates to retrospectively tax a subdividing owner of property greater than 2.0234 hectares previously exempt or partially exempt as a private residential property in certain situations.
43 The retrospective taxation of the land is for any of the previous five financial years from and including the financial year in which the land was subdivided.
44 The Commissioner says that it is the parent lot that is being reassessed for land tax, and the children lots created are only relevant in the calculation of the area of the taxable portion of the parent lot. The children lots themselves are not being taxed, merely the taxable portion of the parent lot. The Commissioner considers that this must be the case because in those financial years preceding the subdivision that are relevant to s 14, there were no children lots in existence that could have been taxed and therefore subject to a reassessment. There was only the parent lot and so it is the parent lot that may be reassessed under s 14 if the relevant criteria are satisfied.
45 The Commissioner, finally, denies that any of her officers gave any of the assurances claimed by the applicant but says that, in any event, she is not bound by any such assurances.
Disposition
Interpretation of s 14 of the LTA Act general principles to be applied
46 As Buss JA said in Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 at [160]:
The modern approach to statutory construction is purposive. The statutory text is the surest guide to Parliament's intention. A decision as to the meaning of the text must begin by considering the context, in its widest sense. This will include the general purpose and policy of the provision. (Citations omitted)
47 The same approach to statutory interpretation in Western Australia was taken by Edelman J in Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 2] [2014] WASC 55 where his Honour said at [14]:
The key integers in the exercise of determining the effect of Parliament's intention in s 64(2) [of the Proceeds of Crime Act 2002 (Cth)] are statutory text, context, and purpose. The starting point, and the end point, is the text. But, although the statutory text is the 'surest guide' to Parliament's intention, the text must be read in the widest sense of context, including the general purpose and policy of the provision.
48 In addition to the general purpose and policy of the provision, the context of a provision also includes:
a) the relevant Act as a whole; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381;
b) the mischief which is to be remedied; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; and
c) the legislative history and any extrinsic materials;Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257 (Consolidated Media)at [39].
49 However, legislative history and extrinsic materials cannot be relied upon to displace the clear meaning of the text, nor is their examination an end in itself;Consolidated Mediaat [39].
50 Furthermore, taxation statutes are to be interpreted in a technical manner; Charles Lloyd Property Group Pty Ltd v Commissioner of State Revenue (2011) 84 ATR 775 at 781; Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 at 816.
Legislative history of s 14 of the LTA Act
51 The Commissioner has helpfully provided in her statement of facts, issues and contentions a summary of the legislative history, policy and purpose of s 14 of the LTA Act since its enactment in 2002. I consider that it is complete and accurate to that extent and I will include that summary in these reasons.
52 However, before I do that, I should add that s 14 in fact has its genesis in the Land Tax Assessment Act 1976 (WA) (1976 Act) after it was amended by the Land Tax Assessment Amendment Act 1980 (WA) (1980 Amendment Act).
53 This is relevant because when the LTA Act was enacted in 2002, it was Parliament's clear intention that the purpose of the LTA Act was to re-enact the 1976 Act so that it 'is contemporary in style and far easier to comprehend than the [1976 Act].' It was expressly stated that the Land Tax Assessment Bill 2001 (WA) 'does not alter the policy settings of the [1976 Act] in any significant matter'; Western Australia, Parliamentary Debates, Legislative Assembly, 5 December 2001 (Mr Ripper, Treasurer).
54 Accordingly, to understand the purpose and policy of s 14 of the LTA Act, as well as the 'mischief to be remedied', it is also necessary to consider the policy and purpose of the equivalent provisions of the 1976 Act.
55 The 1976 Act, as originally enacted, provided that a lot or parcel of land not exceeding 2.0234 hectares (my emphasis) was exempt from land tax if a dwelling was constructed on it which was used by the owner solely or principally as his or her ordinary place of residence. If the lot or parcel exceeded 2.0234 hectares, the lot was only exempt to the extent of 2.0234 hectares.
56 In 1980, by the 1980 Amendment Act, those provisions were amended to remove the 2.0234 hectare limitation. According to the Parliamentary Debates in respect of the relevant Bill, the reason for this was to 'eliminate the inequitable situation that now exists between owners of residentially occupied land of an area less than 2.0234 hectares and those owners who reside on a lot in excess of that area'; Western Australia, Parliamentary Debates, Legislative Council, 15 October 1980 (Mr IG Medcalf, Leader of the House).
57 The second reading speech went on to say this:
… In addition, the amendment will also cure automatically the situation that confronts a taxpayer with limited financial means, who is required to pay the tax on the area in excess of 2.0234 hectares and who, for one reason or another, is unable or unwilling to subdivide his land.
…
However, in order to prevent taxpayers from taking unfair advantage of the proposed extension of the present residential exemption, the Bill will also include a provision to tax retrospectively land in excess of 2.0234 hectares, which is subsequently subdivided after residential exemption has been allowed.
It is proposed that any assessment raised under this provision will be for a maximum period of five years from the 198081 assessment year.
…
The person liable for the tax is to be the owner of the property on the day the approval of the chairman of the Town Planning Board is endorsed on the plan or diagram of the subdivision.
…
However, under this provision, tax will be payable only on the lesser of the subdivided area in excess of 2.0234 hectares or the subdivided area which does not contain the residence.
In other words, the present area of 2.0234 hectares will not be subject to the arrears of tax. However, after the time of the subdivision, assessments in accordance with the provisions of the Act will be raised on the area of subdivided land with the exception of the lot upon which the residence is located.
For example, a 'residential' landowner presently not liable for tax, who subdivides his half-hectare residential property into two lots, would not be assessed for five years' back tax on the second lot as his property does not exceed the 2.0234 hectares, but would be subject to 'normal' land tax until that block is sold.
Similarly, in the case of a 'residentially' exempted 10-hectare lot, were the subdivided land to be 9 hectares, leaving a residence on one hectare, then the arrears of tax would be assessed only on 7.98 hectares 10 hectares minus 2.02 hectares although future land tax assessments would be raised on the subdivided portion of 9 hectares. Furthermore, the tax will be levied only in those years in which the land was wholly or partially exempted. In addition, the tax is to be calculated on the basis that it is the only land owned.
58 The 1976 Act was repealed by the LTA Act upon its enactment in 2002. I turn now to the Commissioner's summary of the history, policy and purpose of s 14.
59 From 1 July 2003 until 30 June 2009, s 14 of the LTA Act read:
(1) Land tax is payable in accordance with this section when private residential property is subdivided if -
(a) the property was exempt or partially exempt from land tax under Part 3 Division 2 for any of the 5 financial years reckoned retrospectively from and including the financial year in which the land was subdivided; and
(b) the area of the property is greater than 2.0234 hectares.
(2) Land tax is payable by the subdividing owner of the property on the unimproved value of the taxable portion of the property (calculated under subsections (5) and (6)) for each of the 5 financial years reckoned retrospectively from and including the financial year in which the land is subdivided.
(3) The amount of land tax payable for each of those 5 financial years is assessed, at the rate applicable for that year under the Land Tax Act 2002, as if the taxable portion of the property were the only land of the subdividing owner on which land tax was payable for that year.
(4) However, if land tax has already been levied on any part of the taxable portion of the property under another provision of this Act for any of those 5 financial years, then -
(a) if a partial exemption did not apply to that part of the taxable portion for the year under Part 3 Division 2 no land tax is payable under subsection (2) on that part for that year; or
(b) if a partial exemption applied to that part of the taxable portion, or an interest in it, for that year under Part 3 Division 2 land tax is payable for that year under subsection (2) on the part of the property to which the partial exemption applied.
(5) The taxable portion of the property is the portion that remains after subtracting from the whole area of the property the greater of the following areas -
(a) the area of the lot or parcel or portion of land on which the private residence was situated at the time of the subdivision;
(b) 2.0234 hectares.
(6) The unimproved value of the taxable portion of the property is the amount that bears to the unimproved value of the whole of the property the same proportion as the area of the taxable portion bears to the whole area of the property.
(7) Nothing in this section affects the liability of any person to pay land tax on the taxable portion of the property for any financial year after that in which the land is subdivided.
(8) Despite section 17(4) of the Taxation Administration Act 2003, the Commissioner must make any reassessment necessary to give effect to this section.
60 The explanatory memorandum accompanying the Land Tax Assessment Bill 2001 (WA) relevantly explained in relation to cl 14:
This clause provides for the retrospective taxation of land in excess of 2.0234 hectares, which is subdivided after a residential exemption has been allowed in previous assessment years.
Subclause (1) sets out the circumstances in which this clause will apply. Essentially, this occurs where 'private residential property' (as defined in the Glossary) greater than 2.0234 hectares is subdivided, and that property was the subject of an exemption or partial exemption under Division 2 of Part 3 for any of the 5 years from and including the financial year in which subdivision takes place.
A definition of 'subdivided' is provided in the Glossary.
To illustrate this time period, if previously exempt land is subdivided in August 2002, the land tax would be retrospectively charged for the financial years 2002/03, 2001/02, 2000/01, 1999/00 and 1998/99.
In this regard, land that was previously subject to a rebate under clauses 27 or 28 would not fall into this category, as it is not property that was 'exempt or partially exempt' .
Subclause (2) provides that the subdividing owner is liable to pay the retrospectively assessed land tax. The 'subdividing owner' is defined in the Glossary as the owner of the land on the day the land is subdivided, or if the ownership of the land changes on that day, the first owner on that day.
The use of a 'subdividing owner' recognises that it is not desirable or practicable to raise this tax against the previous owner or owners of the property, who were entitled to and enjoyed the benefit of the exemption provision while the land was only being used as their residence.
This clause also provides for the tax to be assessed for each of the five years of assessment at the appropriate rate and valuation on the taxable portions of the property. The meaning of 'taxable portion of the property' is set out in subclause (5).
Subclause (3) specifies that the land to be taxed under this clause cannot be aggregated with any other land owned by the subdividing owner for assessment purposes. This clause applies the rate under the Land Tax Act 2001 on that basis.
Subclause (4) makes allowance for any tax that has been charged on any part of the taxable portion of the property during the relevant period.
…
Subclause (5) provides the meaning of 'taxable portion of the property'. This is the amount that remains after deducting from the whole area of the property the greater of:
≥ the area of the lot or parcel or portion of land on which the private residence is situated at the time of subdivision; or
≥ 2.0234 hectares.
'Private residence' is defined in the Glossary.
Subclause (6) provides for the determination of the proportionate unimproved value of the taxable portion of the property.
This value will be determined by an arithmetical calculation of the taxable area over the whole of the previously exempted area as a proportion of the total unimproved value of that whole exempted area.
Subclause (7) ensures that the provisions of this clause will not affect a person's liability for tax in any year of assessment following the year in which the land was subdivided.
The effect of this provision is that the tax is levied against the person who is to use the land, or the surplus area, for a purpose other than the person's residence.
However, tax will only be payable on the lesser of the subdivided area in excess of 2.0234 hectares or the subdivided area which does not contain the residence. In other words, the area of 2.0234 hectares will not be subject to the retrospective tax.
For example, a 'residential' land owner, presently not liable for tax, who subdivides his half hectare residential property into two lots, would not be assessed retrospectively on the second lot as his property does not exceed the 2.0234 hectares. However, he would be subject to 'normal' land tax until that vacant subdivided block is sold.
Similarly, in the case of a 'residentially' exempted 10 hectare lot, were the subdivided land to be 9 hectares, leaving a residence on 1 hectare, then the arrears of tax would only be assessed on 7.9766 hectares (10 hectares 2.0234 hectares), although future land tax assessments would be raised on the subdivided portion of 9 hectares.
Furthermore, the tax will only be levied in those years in which the land was wholly or partially exempted.
Subclause (8) is a reassessment power requiring the Commissioner to make any reassessment necessary to apply the clause. The provisions relating to the issue of notices and other administrative matters are set out in the Taxation Administration Bill. This provision applies despite the 5 year reassessment period set down in clause 17 of the Taxation Administration Bill.
2009 amendments
61 The 2009 amendments, effective from 1 July 2009, largely concerned the value of the taxable portion of the land.
62 Section 6(1) of the Revenue Laws Amendment (Taxation) Act 2009 (WA) (2009 Act) deleted the word 'unimproved' in s 14(2) of the LTA Act.
63 Section 6(2) of the 2009 Act deleted s 14(6) of the LTA Act and replaced it with:
(6) For the purposes of subsection (2), the value of the taxable portion of the property for a financial year is -
(a) if the financial year is 2008/09 or earlier the amount that bears to the unimproved value of the whole of the property at midnight on 30 June immediately before the financial year the same proportion as the area of the taxable portion bears to the whole area of the property; or
(b) in any other financial year the amount that bears to the taxable value of the whole of the property for the financial year the same proportion as the area of the taxable portion bears to the whole area of the property.
Section 14 of the Land Tax Assessment Act provides that certain land that has been exempt from land tax as a result of it being used for residential purposes that is subsequently subdivided can be retrospectively assessed for land tax for five years.
Subclause (1) deletes the reference in section 14(2) of the Land Tax Assessment Act to 'unimproved value' so that it refers to 'value'. This provision, in conjunction with section 14(6), ensures that either the unimproved value or taxable value is used when making a retrospective assessment, depending on the assessment year.
Subclause (2) deletes and replaces section 14(6) of the Land Tax Assessment Act so that any assessments made in respect of financial years prior to 2009-10 are made on the unimproved value of land, and from 2009-10 onwards are made on the taxable value of land.
2015 amendments
65 The 2015 amendments, effective from 27 May 2015, concerned the criteria applicable under s 14(1) of the LTA Act.
66 Section 7 of the Taxation Legislation Amendment Act (No 3) 2015 (WA)inserted a third criterion namely:
(c) the subdivision was not carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land.
67 The explanatory memorandum for the Taxation Legislation Amendment Bill 2015 (WA) explained in relation to cl 7:
Section 14 of the Land Tax Assessment Act applies when land that was exempt or partially exempt on the basis of being private residential property is subdivided.
Where this section applies, tax is reassessed for five financial years, commencing with the year in which the subdivision occurred, in respect of that portion of the land other than where the private residence is situated. Currently, a compulsory acquisition by a government authority may trigger the application of the retrospective assessment provisions.
This clause amends section 14(1) by providing that for land tax to be payable in accordance with the section, the subdivision must not have been carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land.
This ensures that land owners will not be penalised by the reassessment provisions where the sole reason for the subdivision of their land was to facilitate a compulsory resumption by a government entity.
The amendments reflect the current administrative practice of the Commissioner of State Revenue as set out in Commissioner's Practice LT 2 'Newly Subdivided Residential Property'. Interpretation of s 14 of the LTA Act conclusions
68 When the words of s 14 of the LTA Act are considered in their context, including the general purpose and policy of that section, it is in my opinion clear that those words should be given their literal or grammatical meaning.
69 Further, I consider that the references to 'the property' throughout s 14 are references to, in this case, the whole of the Prinsep Road Property. The use of the definite, rather than indefinite, article before 'property' throughout s 14 is a reference back to 'private residential property' specified in the opening lines of s 14(1) of the LTA Act. '[I]t is a natural and correct use of English to employ the definite article when one is referring to a person or thing already identified expressly or by implication.'; Tamas v Victorian Civil and Administrative Tribunal(2003) 9 VR 154 at 157.
70 On that basis and for the reasons which follow, I therefore conclude that, for the relevant assessment year, land tax is payable on the Prinsep Road Property and not on Lot 99. However, to establish how much tax is payable on the Prinsep Road Property, s 14(2) requires a calculation of what is the taxable portion of the parent lot under s 14(5), which in the circumstances of this case is the part of the Prinsep Road Property which became Lot 99. Section 14(6) then requires a calculation of the value of that taxable portion.
Application of s 14
71 Section 14(1) of the LTA Act provides that land tax is payable in accordance with s 14 when private residential property is subdivided if:
a) 'the property' (meaning in my view the private residential property) was previously exempt or partially exempt from land tax under Part 3 Division 2 of the LTA Act;
b) the area of 'the property' (again, the private residential property) is greater than 2.0234 hectares; and
c) the subdivision was not carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land.
72 Section 14(2) of the LTA Act provides that land tax is payable by the subdividing owner on the value of the taxable portion of 'the property' (again, the Prinsep Road Property) as calculated under s 14(5) and (6) of the LTA Act for each of the five financial years reckoned retrospectively from and including the financial year in which the land is subdivided, namely the 2015/2016 financial year.
73 The following facts are not in dispute between the parties:
a) the Prinsep Road Property was 'private residential property' within the meaning of the LTA Act at the relevant time;
b) the Prinsep Road Property was subdivided for the purposes of the LTA Act on 21 September 2015;
c) the Prinsep Road Property was exempt under Part 3 Division 2 (namely s 21 of the LTA Act) for the financial year during which the Prinsep Road Property was subdivided (that is, the 2015/2016 financial year);
d) the Prinsep Road Property had an area greater than 2.0234 hectares;
e) the subdivision was not carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land; and
f) the applicant is the 'subdividing owner' of the property.
74 Accordingly, it follows that s 14(1) of the LTA Act is enlivened and land tax payable by the applicant on the Prinsep Road Property under s 14(2).
How is the land tax payable on the Prinsep Road Property calculated?
75 Applying s 14(5) of the LTA Act in this case means that the taxable portion of the Prinsep Road Property is the portion that remains after subtracting from the whole area of the Prinsep Road Property, either:
a) the area of the lot on which the private residence was situated at the time of the subdivision; or
b) 2.0234 hectares,
- whichever is the greater.
76 The reference to 'the lot' in s 14(5)(a) of the LTA Act refers to the child lot that arises for the purposes of the LTA Act upon the subdivision under cl 3(1)(a) of the Glossary, that child lot being 'a defined portion of land … depicted on a diagram or plan of survey of a subdivision approved by the Western Australian Planning Commission'; cl 2(1)(c) of the Glossary.
77 The relevant child lot in this case is Lot 98 which is the child lot on which the private residence was situated at the time of the subdivision. Lot 98 is also greater in area than 2.0234 hectares and so, when calculating 'the taxable portion of the property' in the present case, the Commissioner is required to apply s 14(5)(a) of the LTA Act, and not s 14(5)(b).
78 This means that in the present case, the taxable portion of the parent lot, namely the Prinsep Road Property, is effectively the area represented by Lot 99. In other words, the taxable portion of the Prinsep Road Property is the whole area of the parent lot minus the area of Lot 98 (the lot on which the private residence was situated at the time of subdivision), which equals the area of Lot 99.
79 Although the area represented by Lot 99 is the 'taxable portion' of the Prinsep Road Property for the purposes of s 14(5) of the LTA Act, it is not, as the applicant seems to believe, Lot 99 that is taxed under s 14. Rather, it is the parent lot (that is, the Prinsep Road Property). However, the land tax that is payable in relation to the parent lot is only payable on the value of the taxable portion of the Prinsep Road Property. The tax is payable by the subdividing owner, in this case the applicant, for each of the five financial years reckoned retrospectively from and include the financial year in which the Prinsep Road Property was subdivided, namely the 2015/2016 financial year; s 14(2) of the LTA Act.
80 The value of that taxable portion of the Prinsep Road Property is the amount that bears to the taxable value of the whole of the property for the relevant financial year or years the same proportion as the area of the taxable portion bears to the whole area of the property; s 14(6)(b) of the LTA Act.
81 Of course, land tax was already payable during each of the five financial years reckoned retrospectively from and including the financial year in which the Prinsep Road Property was subdivided except for the 2015/2016 financial year. Accordingly, the Commissioner retrospectively taxed the Prinsep Road Property only for the 2015/2016 financial year under s 14(4) of the LTA Act.
82 I consider that the Commissioner's assessment is correct.
The applicant's estoppel argument
83 The applicant in her response dated 31 August 2016 at paragraph 72b says that the Commissioner 'does not wish to acknowledge two officers' decision … made at my property when conducting the investigation to determine if my [Prinsep Road Property] (now Lots 98 and 99) were taxable at any level. They both agreed that both lots (98 and 99) would be 100% exempt from land tax for the 2015/16 assessable year and Lot 99 would only become assessable for land tax from July 2016.'
84 In State of South Australia v ATSA Pty Ltd (1980) 29 ALR 367 at 397, Williams AJ said this:
In my opinion, the Act in question here, being a statute designed to raise revenue, must be regarded as enacted for the benefit of the public, for the purpose for which a government raises revenue is to enable it to carry on government and semi-government activities in a way which it believes will be for the public good and to make expenditure of various kinds with the same object. I do not see that in this regard it matters that there will always be some members of the public who will not agree that some or all of those activities or expenditure are for the public benefit. The law as to estoppel against a statute enacted for the benefit of a section of the public is authoritatively laid down in Maritime Electric Co Ltd v General Dairies Ltd [1937] AC 610, a decision of the Privy Council. In that case the appellant was under a statutory duty to furnish a reasonably adequate supply of electricity and was strictly limited as to its charges. Through a mistake in failing to multiply the meter reading by 10, the respondents were charged with only one-tenth of the electricity supplied to them. On a claim by the applicants to recover the balance of nine-tenths, it was held that the applicants were not estopped from recovering the sum claimed. At p 620 Lord Maughan, delivering the advice of the Privy Council, said:--
The sections of the Public Utilities Act which are here in question are sections enacted for the benefit of a section of the public, that is on grounds of public policy, in a general sense. In such a case and their Lordships do not propose to express any opinion as to statutes which are not within this category - where, as here, the statute imposes a duty of a positive kind, not avoidable by the performance of any formality, for the doing of the very act which the plaintiff seeks to do, it is not open to the defendant to set up an estoppel to prevent it. This conclusion must follow from the circumstance that an estoppel is only a rule of evidence which under certain special circumstances can be invoked by a party to an action; it cannot therefore avail in such a case to release the plaintiff from an obligation to obey such a statute, nor can it enable a defendant to escape from a statutory obligation of such a kind on his part. It is immaterial whether the obligation is onerous or otherwise to the party suing. The duty of each party is to obey the law. To hold, as the Supreme Court has done, that in such a case estoppel is not precluded, since, if it admitted, the statute is not evaded, appears to their Lordships, with respect, to approach the problem from the wrong direction: the court should first of all determine the nature of the obligation imposed by the statute, and then consider whether the admission of an estoppel would nullify the statutory provision.
86 The applicant's further argument that she 'will still be paying land tax on my other property' must be rejected as irrelevant.
Costs
87 It is apparent that the applicant's application for payment of part of her costs was made in anticipation of the applicant succeeding in her substantive application to have the Commissioner's assessment set aside.
88 In any event, the SAT Act provides that, in general, parties bear their own costs in a proceeding of the Tribunal. There are no circumstances in this case which would justify a departure from this rule.
Orders
1. The decision of the respondent to disallow the applicant's objection to land tax for the year 2015/2016 is affirmed.
2. The application is dismissed.
I certify that this and the preceding [88] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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