TKB Developments Pty Ltd v Chief Commissioner of State Revenue

[2010] NSWADT 79

CITATION:	TKB Developments Pty Ltd v Chief Commissioner of State Revenue [2010] NSWADT 79
DIVISION:	Revenue Division
PARTIES:	APPLICANT TKB Developments Pty Ltd RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	096111
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	3 February 2010
DATE OF DECISION:	24 March 2010
BEFORE:	Block J - Judicial Member
CATCHWORDS:	Valuation not within jurisdiction of the Tribunal –averaging – threshold – special trust
LEGISLATION CITED:	Land Tax Management Act 1956 Land Tax Act 1956 Valuation of Land Act 1916
CASES CITED:	Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 BBLT v Chief Commissioner of State Revenue [2003] NSWSC 1003 Moeller v Chief Commissioner of State Revenue [2009] NSWADT 190
REPRESENTATION:	APPLICANT P Aston, agent RESPONDENT A Gerard, solicitor
ORDERS:	The decision under review is affirmed

REASONS FOR DECISION

Part A. Preliminary and background

1 The Applicant as trustee of the Mundowi Unit Trust ("the Trust") seeks the review of a decision by the Chief Commissioner of State Revenue (who is usually referred to in these reasons as :"the Chief Commissioner") made under the Land Tax Management Act 1956 ("the LT Management Act") and the Land Tax Act 1956 ("the LT Act") requiring the payment of land tax amounting to $90,820 for the 2009 land tax year in respect of nine separate parcels of land located at Mundowi Road, Mount Kuringai.

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 and in addition certain correspondence between the parties and correspondence with the Tribunal, some affidavits, and lengthy written submissions by the parties. The Tribunal notes that it has drawn on the Chief Commissioner‘s submissions (“RS”) to a considerable extent for the purpose of these reasons. The Applicant's submissions relate almost entirely to an objection against valuations and in respect of which the Tribunal has no jurisdiction.

3 The parties have agreed that this matter can be dealt with without a hearing and on the papers before the Tribunal.

4 It is convenient to commence by drawing on RS in order to set out the background facts; clauses 3 to 11 of RS read (without footnotes) as follows:

3 The general background to this matter may be summarised as follows:

4 TKB Developments purchased land at 8-20 Mundowi Road, Mount Kuringai, (Folio Identifiers 57, 58 and 1071 in DP 752053) in October 2007.

5 In 2008, TKB Developments set about subdividing Lots 57, 58 and 1071 in DP 752053.2 To that end, on 10 November 2008, a plan a subdivision of Lots 57, 58 and 1071 in DP 752053 was registered, creating 12 separate and distinct parcels of land, being Lots 2-13 inclusive in DP270596.

6 Following the creation of Lots 2-13 in DP270596, TKB Developments sold Lots 5, 6 and 7. To that end, on 27 November 2008 Transfers of Lot 6 and Lot 7 from TKB Developments to Mendicant Pty Ltd were executed' and on 1 December 2008 a Transfer of Lot 5 from TKB Developments to General Electric Equipment Pty Limited was executed'.

7 On 27 May 2009, the Chief Commissioner issued TKB Developments with a Land Tax Assessment Notice ("the Notice of Assessment") for the 2009 land tax year, in respect of Lots 2, 3, 4, 8, 9, 10, 11, 12 and 13 in DP270596, in the sum of $90,820. The assessment was based on the total taxable value of each parcel of land owned by TKB Developments.' As outlined in the Notice of Assessment the "taxable value" of each parcel of land was as follows:
Lot 2 - $623,000
Lot 3 - $443,000
Lot 4 - $443,000
Lot 8 - $452,000
Lot 9 - $850,000
Lot 10 - $582,000
Lot 11 - $420,000
Lot 12 - $438,000
Lot 13 - $740,000


8 TKB Developments was also assessed under s.3 of the LT Management Act as a special trust.

9 On 27 July 2009, TKB Developments objected to the 27 May 2009 assessment on the basis that the land values used were too high.

10 On 14 August 2009, the Chief Commissioner disallowed TKB Development's objection.

11 On 7 October 2009, the applicant filed an application for review in the Administrative Decisions Tribunal.

Part B. Relevant legislation

5 In accordance with ss.7 and 8 of the LT Management Act, land tax is chargeable on the "taxable value" of all land, which is owned by taxpayers at midnight on the 31st of December immediately preceding the year for which the tax is levied.

6 As at 31 December 2008, s.9 of the LT Management Act relevantly provided:

"9 Taxable value

(1) Land tax is payable by the owner of land on the taxable value of all the land owned by that owner which is not exempt from taxation under this Act.

(2) The taxable value of that land is the total sum of the average value of each parcel of that land.

(3) The average value of a parcel of land is to be calculated, as provided for by section 9AA, on the basis of the land value of the land.

(4) The land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year.

(5) The fact that there is no land value entered in the Register on 31 December in a year as the land value of the land as at 1 July in that year does not prevent land tax being levied and charged and becoming payable for any following tax year once that land value is entered in the Register and the average value is ascertained."

7 As at 31 December 2008, s.9AA of the LT Management Act relevantly provided:

"9AA Average value of land

(1) For the purposes of this Act, the average value of a parcel of land is the average of the land value of the land in relation to the year for which the average value is being ascertained (the current land tax year) and the land value of the land in relation to the 2 preceding land tax years (the preceding land tax years).

(2) If a land value adjustment is required in relation to a parcel in the current land tax year, the average value is to be determined before that land value adjustment is made (that is, on the basis of the land value without that land value adjustment) and, despite any other provision of this Act, the Valuation of Land Act 1916 or the Heritage Act 1977, the land value adjustment is to be applied, for the purpose of assessing land tax, to the average value of the land for that land tax year (and not the land value).

(3) For the purposes of this section, a land value adjustment is:

(a) a land value reduction, being any reduction that is required to be made to the land value of land under this Act for the purpose of assessing land tax, or

(b) (Repealed)

(c) a special allowance, being any allowance made in respect of the land value of land under Division 3 or 4 of Part 1B of the Valuation of Land Act 1916.

(4) In the case of a land value reduction, the land value adjustment is to be applied to the average value of land by applying any provision of this Act that specifies that the land value is to be reduced for the purpose of assessing land tax as if a reference to the land value of land were a reference to the average value of land.

Note. For example, the reductions provided for by sections 9A, 9BA, 9C, 9D, 10 (2), (2A) and (2C), 10Q (4) and 1OR (3) will now apply to the average value of the land in a land tax year and not to the land value of the land.

(5) (Repealed)

(6) In the case of a special allowance, the land value adjustment is to be applied to the average value of the land by deducting the allowance from the average value.

(7) If a parcel of land did not exist on 31 December immediately before either or both of the preceding land tax years, the average value of the land is taken to be:

(a) If the parcel did exist on 31 December immediately before one of the preceding land tax years—the average of the land value of the land in relation to the current land tax year and the land value of the land in relation to the preceding land tax year immediately before which it did exist, or

(b) in any other case—the land value of the land in relation to the current land tax year.

(8) Subsection (2) applies in relation to an average value determined as provided for by subsection (7) in the same way as it applies to an average value determined as provided for by subsection (1).

Note. For example, if the newly created parcel qualifies for an allowance for subdivision under Division 4 of Part 1B of the Valuation of Land Act 1916 in the current land tax year, the allowance would be applied to the average value calculated as provided for by subsection

(9) The average value of a parcel of land that is heritage-protected, and that was not heritage-protected on 31 December immediately before either or both of the preceding land tax years, is to be determined as provided for by subsection (7) (as if the parcel did not exist on the date or dates of 31 December on which it was not heritage-protected).

(10) If the land value of land in relation to a land tax year is altered (whether as a result of being reascertained or on objection or appeal or for the correction of a clerical error or misdescription), the average value of the land must be reascertained on the basis of the altered land value.

(11) If the average value of a parcel of land, after applying a land value adjustment, is less than zero, the average value of the parcel is taken to be zero.

(12) For the purposes of this section, land is heritage-protected if it is either heritage restricted (within the meaning of section 14G of the Valuation of Land Act 1916) or the subject of a heritage valuation under Division 6 of Part 6 of the Heritage Act 1977, or both."

8 As at 31 December 2008, s.62TBC of the LT Management Act relevantly provided:

"62TBC Premium rate threshold-2009 land tax year and subsequent land tax years

(1) The premium rate threshold for the 2009 land tax year is $2,250,000

9 As at 31 December 2008, s.3AL of the LT Act relevantly provided:

"3AL Levy of land tax after 31 December 2008

(1) In respect of the taxable value of all the land owned by any person at midnight on 31 December in any year (commencing with 2008) there is to be charged, levied, collected and paid under the provisions of the Principal Act and in the manner prescribed under that Act, land tax for the period of 12 months commencing on 1 January in the next succeeding year and at the applicable rate.

(2) For the purposes of this section, the applicable rate is :


(a) the rate of land tax payable as specified in Part 1 of Schedule 13, except as provided for by paragraphs (b),(c) and (d), or

(b) if the land is subject to a special trust—the rate of land tax payable as specified in Part 2 of Schedule 13, or

10 As at 31 December 2008, Part 2 of Schedule 13 of the LT Act relevantly provided:

"Part 2 Land subject to special trust
Taxable value assessed under Principal Act Rate of land tax payable

is not more than the premium rate threshold 1.6 per cent of the taxable value

is more than the premium rate threshold 1.6 per cent of the premium rate threshold, plus 2 per cent of the amount by which the taxable value exceeds the premium rate threshold

11 Section 37 of the Valuation of Land Act 1916 ("the VOL Act) relevantly provides:

"37 Right of appeal

Any person entitled under Part 3 to object to a valuation may appeal to the Land and Environment Court if the person is dissatisfied with the Valuer-General's determination of any such objection to the valuation concerned (whether or not the person was the objector).

An appeal may not be made on the ground that the objection is taken to have been disallowed, as referred to in section 35C (4), unless written notice of the objector's intention to appeal on that ground has been given to the Valuer-General at least 14 days before the appeal is made.

No person or body has jurisdiction or power to conduct a review or hear an appeal in respect of the determination of an objection except as provided by this Part."

Part C. The Applicant’s contentions

12 In support of its application, the Applicant relies on submissions dated 18 December 2009. It would seem that the Applicant also relies on its letter of objection dated 7 October 2009, which is in almost identical terms to its submissions.

13 In both its submissions to the Tribunal and its objection to the assessment, the Applicant seeks review on the following basis":

1. "That the actual valuations are incorrect and do not reflect market valuations.

2 That historically the NSW Valuer General has used a valuation of 50% - 70% of the actual market value, and it is unreasonable, unfair and unconscionable to change methodologies when taxation and rates are based upon NSW Valuer General valuations.

3 That three year averaging can and should be used.

4 TKB has been unfairly burdened with the 2,250,000 million threshold, and that the taxation percent rate of 1.6% should be used."

Part D. The valuation contention

14 In both of its submissions and its objection the Applicant contends and at considerable length that the valuations utilized for the calculation of land tax for the 2009 year are incorrect in that they are too high and do not reflect market value. The first two bases of objection, as outlined previously in these reasons, go to that issue. Indeed the Applicant's submissions focus, almost entirely, on matters going to the valuation of each separate parcel.

15 Inasmuch as the Applicant contends that the assessment should be set aside on the basis that the land values of the relevant lots, determined by the Valuer-General pursuant to the VOL Act, are incorrect and a different value should have been applied to each parcel, it is clear that any such argument cannot for the reasons set out in particular in clauses 16, 17, 21 and 22 below succeed before the Tribunal.

16 The land values attributed to each parcel by the Valuer-General cannot be reviewed by the Tribunal, as the Tribunal lacks jurisdiction to do so.

17 The VOL Act provides for the methodology by which the Valuer-General must value parcels of land in NSW. It is strictly and only within the Valuer-General's jurisdiction to value individual parcels of land.

18 In accordance with s.14A (1) of the VOL Act, the Valuer-General must ascertain the land value of each parcel of land in NSW each year. Part 1B of the VOL Act provides generally for the matters the Valuer-General must consider in determining the land value of each parcel of land. In accordance with s.14CC (1) the Valuer-General must keep a Register of Land Values. In accordance with s14CC (2) (c) that Register must contain the value of land as determined by the Valuer-General; s.14CC (3) of the VOL Act provides that an entry in the Register as to land value is conclusive evidence of the land value.

19 In accordance with vs. and s.9AA of the LT Management Act the Chief Commissioner is bound to have regard to and use, when assessing land tax liability, the land value of land as determined by the Valuer-General: see in particular vs.(4) and s.9AA(6) of the LT Management Act..

20 In accordance with s.29 (1) (a) of the VOL Act, the Valuer-General causes a notice of each land valuation to be provided to the owner of the relevant land, amongst other people: see s.29(1)(b)-(d) inclusive. In accordance with s.29 (3A) any person to whom the Valuer-General has given notice under s.29 (1) may lodge with the Valuer-General a written objection to that valuation. In accordance with s.35B (1) of the VOL Act, the Valuer-General must consider and determine that objection to the valuation of the relevant land and In accordance with s.35C (1) the Valuer General must give notice to the objector of the determination of that objection.

21 Furthermore, and in the event that the objector is dissatisfied with the Valuer-General's determination of the objection, s37 (1) of the VOL Act provides for a right of appeal against the Valuer- General's decision to the Land & Environment Court.

22 Critically, so far as the Applicant's case is concerned, s.37(3) VOL Act provides that no person or body has jurisdiction or power to conduct a review, or hear an appeal in respect of the determination of an objection, except as provided for by Part 4 of the VOL Act. It follows that neither the Chief Commissioner, nor the Tribunal has jurisdiction or power to entertain an objection to valuations of land made by the Valuer-General, to review any such valuations, or to hear an appeal in respect of them: Moeller v Chief Commissioner of State Revenue [2009] NSWADT 190 at para 29, per Perrignon JM. Moreover, the determination by the Valuer-General of land values is not a decision by which an objection may be made to the Chief Commissioner under s.86 of the Taxation Administration Act. It is therefore not a matter which can be reviewed by the Tribunal: Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184; BBLT v Chief Commissioner of State Revenue [2003] NSWSC 1003.

23 In seeking to disturb the relevant Notice of Assessment on the basis that the land valuations attributed to Lots 2, 3, 4, 8, 9, 10, 11, 12 and 13 in DP270596 by the Valuer-General pursuant to the VOL Act are incorrect, the Applicant has sought relief in the wrong jurisdiction.

Part E The averaging issue and the threshold issue

24 In accordance with s.9 (1) of the LT Management Act, land tax is payable on the "taxable value" of all land which is not exempt from taxation. None of the relevant parcels of land (Lots 2-4 & 8-13 in DP 270596) in this case are exempt, nor does the Applicant contend that they are... In accordance with s.9 (2) of the LT Management Act, the "taxable value" of that land is the total sum of the "average value" of each parcel of land owned by the taxpayer. Section 9(3) provides that the "average value" of a parcel of land is to be calculated, as provided for by s.9AA of the LT Management Act, on the basis of the "land value" of the land.

25 Lots 2-4 and 8-13 in DP270596 are each, individually, single parcels of land.

26 Importantly, and as set out previously, subsection (4) of the LT Management Act provides that the "land value" of land is the land value entered in the Register.

27 s.9 (3) of the LT Management Act provides that the average value of a parcel of land is determined in accordance with s.9AA of the LT Management Act. s.9AA(1) provides that for the purposes of the LT Management Act, the "average value" of a parcel of land is the average value of the land value in relation to the to the current tax year and the land value of the land in relation to the 2 preceding tax years. In this instance, but for the reasons set out below, and in accordance with s.9AA(1), the average value of for example Lot 3 in DP 270596, for the 2009 land tax year, would be the average of the 2007, 2008 and 2009 land values.

28 However, the relevant parcels of land in this case (being Lots 2, 3, 4 and 8-13 in DP 270596) only came into existence on 10 November 2008. Therefore, there was no land value for these parcels of land for the 2007 and 2008 land tax years.

29 Section 9AA (7) (b) of the LT Management Act therefore applies.

30 Section 9AA(7)(b) provides that if a parcel of land did not exist on 31 December immediately before either or both of the preceding land tax years, the average value is taken to be the land value in relation to the current land tax year (2009). Again using Lot 3 as an example, pursuant to s.9AA (7) (b) the average value of Lot 3 is the 2009 land tax year value. This is reflected in the relevant Notice of Assessment.

31 In requesting that a "three-year averaging" be used, the Applicant is effectively seeking the application of s.9AA (1) of the LT Management Act. As none of the relevant parcels of land existed during the 2007 and 2008 land tax years this is not possible. In these circumstances s.9AA (7) (b) applies and has been correctly applied by the Chief Commissioner.

32 Sections 9AA (2), (3) and (6) of the LT Management Act have also been correctly applied by the Chief Commissioner in making the relevant assessment. As reflected in the Notice of Assessment, the land values of each of Lots 2-4 and 8-13 in DP270596 have been the subject of allowances under Div 3 of Part 1B of the VOL Act. Each lot was the subject of an allowance under ss.14L (1) (b) and 14T of the VOL Act.

33 Relevantly, in determining the average value of a parcel of land, s.9AA (2) of the LT Management Act provides that if a "land value adjustment" is required, the "average value" of the parcel is to be determined before the "land value adjustment" is made but then the "land value adjustment" is to be applied by the Chief Commissioner for the purposes of assessing land tax.

34 s.9AA (3) of the LT Management Act defines a "land value adjustment" to include a "special allowance", being any allowance made under Division 3 or 4 of Part 1B of the VOL Act. Section 14L and 14T VOL Act, which are allowances which appear in Division 3 of the VOL Act, are therefore "special allowances" and therefore required land value adjustments.

35 s.9AA(6) of the LT Management Act provides that in the case of a "special allowance", the "land value adjustment" required is to be applied to the average value of the land by deducting the allowance from the average value for the purposes of assessing land tax: see also s.9AA(2).

36 A review of the Notice of Assessment, using Lot 3 in DP 270596 as a case example, illustrates that the Chief Commissioner has correctly applied all relevant elements of s.9AA of the LT Management Act in determining the average value of each parcel of land:

37 The land value of Lot 3 was determined to be $625,000 by the Valuer­General: see also s.119 TA Act.

As the parcel of land known as Lot 3 in DP 270596 did not exist until 10 November 2008, there was no land value for Lot 3 for the 2007 and 2008 land tax years. The Chief Commissioner has therefore not applied s.9AA (1), but rather, s.9AA (7) (b) of the LT Management Act.

A "land value adjustment" to Lot 3 was made via s.14L (1) (a) and s.14T of the VOL Act: see s.9AA (3) of the LT Management Act. That "land value adjustment" was $182,000 in total, being $120,000 pursuant to s.14L (1) (a) and $62,000 pursuant to s.14T.

Pursuant to s.9AA (2) the Chief Commissioner first determined the average value before making the adjustment", that average value was $625,000.

In accordance with s.9AA (6) the Chief Commissioner then applied the land value adjustment to the average value of the land by deducting the allowance from the average value ($625,000 - $182,000 = $443,000).

In accordance with s.9AA (2) the Chief Commissioner has used the land value as adjusted for the purposes of assessing land tax. The taxable value for Lot 3 is therefore $443,000.

38 The same applies in respect of the determination of the average value of each other relevant parcel in this case.

39 Having determined, pursuant to s.9AA, the average value of each parcel the Chief Commissioner has then correctly applied s.9 of the LT Management Act. Pursuant to s.9 (2) the taxable value of the land is the total sum of the average value of each parcel of land owned by the owner. In this instance the taxable value for the 2009 land tax year for TKB Developments is $4,991,000.20

40 Section 62TBC of the LT Management Act provides that the "premium rate threshold" for the 2009 land tax year is $2,250,000.

41 Section 3AL(1) of the LT Act provides that in respect of the taxable value of all the land owned by the owner there is to be charged under the provisions of the LT Management Act land tax for the period of 12 months commencing on 1 January in the next succeeding year at the "applicable rate"; s.3AL(2)(b) of the LT Act provides that if the land is the subject of a special trust, as in this case, the rate of land tax payable is as specified in Part 2 of Sch.13 to the LT Act, and the assessment has been calculated accordingly..

42 Finally, Part 2 of Sch.13 to the LT Act provides that if the taxable value of all the land is above the "premium rate threshold" ($2,250,000), as in this case, tax is to be paid at 1.6 per cent of the premium rate threshold, plus 2 per cent of the amount by which the taxable value exceeds the premium rate threshold. Having exceeded the premium rate threshold, the Applicant is not entitled to a flat 1.6% rate. It follows that the Applicant's submission that the Applicant should only pay a taxation percentage rate of 1.6% must also fail.

Part E. Special trust.

43 The Applicant’s contentions in summary form relate almost to valuations (and in respect of which the Tribunal has no jurisdiction) and also averaging and threshold. In respect of the averaging contention averaging as sought by the Applicant is not possible for the reasons set out previously in these reasons, and as regards threshold the Applicant is again as set out previously not entitled to the relief sought. Also as set out previously the assessment was calculated on the basis that the Applicant is a special trust but the Applicant has not raised any objection to the fact that the assessment was calculated in this manner.

Part F General and conclusion

44 It is relevant to note that on 12 November 2009 the Applicant wrote to the Crown Solicitor seeking the production of a large number of documents referable to values. On 30 November 2009 the Crown Solicitor wrote to the Applicant in reply indicating that in respect of the valuation allegation neither the Chief Commissioner nor this Tribunal has jurisdiction. Nevertheless and by letter dated 2 December 2009 the Applicant wrote to this Tribunal seeking the issue of a summons requiring a large quantity of valuation information. By letter dated 14 December 2009 the Registrar of this Tribunal wrote to the Applicant refusing the issue of a summons. It is clear that the Applicant has known for some time that the valuation issue is not within the jurisdiction of this Tribunal. .

45 The Tribunal is satisfied that the assessment is correct and accordingly the decision under review must be affirmed.