The Trustees for the Ruttle Family Trust v The Commissioner of Land Tax

[1990] QLC 5

[1990] QLC 5

 

  LAND COURT,

BRISBANE.

28th February, 1990.

Re:Appeal against assessment of Land Tax (A89-100)

The Trustees for the Ruttle Family Trust
  - v -
  The Commissioner of Land Tax

-  DECISION  -

The Commissioner of Land Tax has issued notices of assessment of land tax to the abovenamed under Assessment No. 85165 (t) E3284 in respect of land owned at midnight on 30th June, 1987 and 30th June, 1988.  Objections were lodged against these assessments and disallowed by the Commissioner.  The trustee has exercised the right of appeal to the Land Court against such decisions.
              When the matter came on for hearing evidence was given by Mr. G.H.J. Ruttle in support of the grounds of appeal.  The assessments in question relate to tax payable in respect of Lot 6 on RP206065, Parish of Mooloolah containing 7.744 hectares.  This parcel of land is situated at Old Palmwoods Road, Woombye and erected upon the land is the residence which is exclusively used as the principal place of residence of all of the beneficiaries of the trust.
In making the assessment the Commissioner has done so having regard to the provisions of Section 11(6E) of the Land Tax Act 1915 as amended. This provision was inserted by Section 6 of the Land Tax Act Amendment Act 1985 and reads:-

"(6E)Where a person (other than a person who is an absentee) is an owner of land in the capacity of trustee and that land comprises one parcel the area whereof exceeds 1.05 hectares that is used exclusively as the principal place of residence of all the beneficiaries of the relevant trust who were such beneficiaries at midnight on 30 June immediately preceding the financial year in and for which the land tax is levied, in calculating the taxable value of all land of which the person is owner in that capacity there shall be deducted an amount that bears to the unimproved value of that parcel the same proportion as 1.05 hectares bears to the area of that parcel."

The unimproved value of the subject land at the relevant date as determined by the Valuer-General under the provisions of the Valuation of Land Act (as amended) is the sum of $55,000 and this is the valuation which the Commissioner must adopt for the purposes of his Act. Under the provisions of the Act where an owner owns land comprising one (1) parcel, the area whereof does not exceed 1.05 hectares that is used exclusively as his principal place of residence he is exempt from the payment of land tax [Sections 11(6A) and (6B)]. Where the parcel exceeds that area different provisions apply. In this case acting under his powers contained in Section 11 (6E) of the Act the Commissioner has assessed land tax on the land in the following manner based on the Valuer-General's unimproved value of the land of $55,000.
               Valuer-General's unimproved value       $55,000.00

Less proportional value of 1.05 ha =
                   1.05 x 55,000  $ 7,457.00
  7.744

Taxable value  $47,543.00

In evidence for the trust Mr. Ruttle argues that this is an incorrect interpretation of the provisions of Section 11(6E) of the Act. He makes reference to the Valuer-General's valuation of a contiguous parcel of 1.002 ha. This land is exclusively used as the principal place of residence of a Mr. and Mrs. Brown. The Valuer-General has valued this parcel at $31,500. Mr. Ruttle argues that this establishes an appropriate unimproved value of a large parcel not exceeding 1.05 ha. While the subject land is much larger in area, the area in excess of the home site is only suitable for agricultural or grazing purposes. It would not be permissible to build another home upon the balance land without a subdivision and the real value in the subject land is in the area upon which the home is built. He argues the sum of $31,500 should be deducted from the Valuer-General's valuation of $55,000 and tax should be levied on this. It should not be levied in the manner adopted by the Commissioner.
              No evidence was given by or on behalf of the Commissioner as the facts are not in dispute.  Counsel for the Commissioner submits that the subsection is quite clear in setting out the formula for calculating the amount of the deduction which is granted to the taxpayer.  The intent of the subsection is to allow a deduction for the notional homesite and to impose land tax on the remainder.  He submits that land tax is levied and paid upon the unimproved value of all land within Queensland which are owned by taxpayers which are not exempt from taxation under the Act but the mere fact that the home is built on one particular small section of a large parcel has nothing to do with an overall unimproved value.
              The submissions made by counsel for the Commissioner are well founded and the provisions of subsection (6E) are quite clear.  The Commissioner is required to "deduct an amount that bears to the unimproved value of that parcel the same proportion as 1.05 hectares bears to the area of that land."  "Proportion" means "a portion or part in its relation to the whole". This is dealing with the area of the land and nothing else. The value of $55,000 is the overall unimproved value which, in relation to improved land, means the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist (S.3). This is the same definition as is set out in the Valuation of Land Act. The Commissioner has properly interpreted the subsection in arriving at the appropriate allowance to be made. It follows that the appeal must fail.
Counsel for the Commissioner made submissions on the question of costs. He directed my attention to the provisions of Section 28 (2) of the Land Tax Act which reads:

"If the value of the land as finally fixed by the Court is the value at which it has been entered by the taxpayer in his land tax return or in any objection lodged by him, or is nearer to that value than the value placed upon it by the Commissioner, costs shall be awarded against the Commissioner, otherwise costs shall be awarded against the taxpayer."

This question was considered by the then learned President of this Court in Benson -v- The Commissioner of Land Tax 1986 - 87 11 Q.L.C.R. 164, where at Page 165 he said:

"It is important initially to note that contrary to the discretionary provisions contained in many Acts relating to costs, the instant provisions are expressed in mandatory terms."

In disallowing this appeal I have in effect found that the value of the land is the value placed upon it by the Commissioner.  Accordingly, I have no alternative but to award costs against the taxpayer. 
Accordingly, I order that the appellant pay the respondent's costs of and incidental to this action. The amount of such costs shall be ascertained and fixed by the Taxing Officer of the Supreme Court at Brisbane according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court and in accordance with the provisions of Section 41 (9) of the Land Act as amended.

President of the Land Court