Watson v Commissioner for Act Revenue (Administrative Review)
[2020] ACAT 46
•26 June 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
WATSON v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2020] ACAT 46
AT 108/2019
Catchwords: ADMINISTRATIVE REVIEW – land tax – statutory interpretation – legislative purpose – whether applicant is liable for land tax incurred during a period where the property was unoccupied due to sale of the property – where new owner intended to make property the principal place of residence – meaning of ‘owner’ – meaning of ‘person’ – where wording of the legislation ambiguous – what material may be considered by the tribunal when engaging in statutory construction – reviewable decision confirmed
Legislation cited: Land Tax Act 2004 ss 9, 10, 11, 11A, 11B, 11C, 11CA, Dictionary
Land Tax Amendment Act 2018
Legislation Act 2001 ss 138, 139, 140, 141, 142, 160, Dictionary
Revenue Legislation Amendment Act 2019
Subordinate
Legislation cited: Land Tax Amendment Bill 2018
Revenue Legislation Amendment Bill 2019 (No.2)
Cases cited:Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 248 CLR 1
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297
Minister for Immigration and Ethnic Affairs v Tang Jia Xin [1994] HCA 31; (1974) 69 ALJR 8
Morro and Ahadizard v Australian Capital Territory [2009] ACTSC 118; (2009) 4 ACTLR 78
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137
SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362The Amalgamated Society of Engineers v The Adelaide Steamship Co Ltd [1920] HCA 54; (1920) 28 CLR 129
Tribunal:Senior Member P Spender
Date of Orders: 26 June 2020
Date of Reasons for Decision: 26 June 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL AT 108/2019
BETWEEN:
PHILIP WATSON
Applicant
AND:
COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL:Senior Member P Spender
DATE:26 June 2020
ORDER
The Tribunal orders that
1.The decision under review is confirmed.
………………………………..
Senior Member P Spender
REASONS FOR DECISION
1.The reasons below explain why the Tribunal has made the order set out above. In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the current panel.
2.In summary, the Tribunal has concluded that ‘a person’ in the former section 11C(1)(b) of the Land Tax Act 2004 (the LTA) means ‘owner’. In coming to this conclusion, the Tribunal has considered the literal meaning of the words and found them to be ambiguous. The context and purpose of the legislation favours this interpretation and it is supported by the extrinsic materials. The consequence of this construction is that the applicant as owner is liable for land tax at the appropriate rate for quarter 3, 2018-2019 while this provision was operative. Therefore, the decision under review is confirmed.
Background
3.The applicant applied for a review of a decision dated 23 October 2019 (the application) of a delegate of the respondent (the delegate). The decision was an objection to an earlier decision of a delegate of the Commissioner to impose land tax upon the property for quarter 3, 2018-2019, that is, the period 1 January 2019 to 31 March 2019. The land tax for the relevant period was assessed at $521.81.
4.The Tribunal is informed that the respondent may have assessed other purchasers for land tax in a similar way to the circumstances presently under consideration by the Tribunal in this application.
Agreed facts
5.The parties agreed upon the following facts for the purposes of the application:
(a)The applicant purchased a unit in Kingston (the property) on or around 15 January 2013.
(b)The applicant rented the property out to tenant(s) at various times, including from the quarter beginning 1 July 2018 until the tenant moved out of the property.
(c)The tenant vacated the property on or after 1 December 2018.
(d)The applicant sold the property to a purchaser (the purchaser) pursuant to a contract of sale dated 25 January 2019.
(e)The sale of the property to the purchaser was completed on 20 February 2019.
(f)The property was vacant after the tenant moved out of the property until the sale of the property to the purchaser was completed on 20 February 2019.
(g)The purchaser moved into the property on or before 28 February 2019.
(h)The purchaser stated in his Buyer Verification Declaration (BVD) that he intended to occupy the property as his principal place of residence.
The legislation
6.Land tax is levied by the ACT Government and administered by the respondent. The imposition and administration of land tax is governed by the LTA. As discussed below, broadly speaking, the purpose of the LTA is to raise revenue via land tax but another purpose (which applies to the amendments to the LTA that are in contention in the present proceedings) is ensuring that properties are not left vacant for extended periods.[1]
[1] Respondent’s submission 1 April 2020 at [5]
7.Land tax is regulated by Part 2 of the LTA. Pursuant to section 9, land tax at the appropriate rate is imposed on each parcel of rateable land that is residential land. Land tax is taken to be payable on a parcel of land on the first day of the quarter if it is not exempt under that part from land tax on that day (section 8A). However, under section 9(2) land tax is not imposed on a parcel of land that is exempt under sections 10 or 11. The primary exemption is property that is occupied by one or more owners as their principal place of residence (section 11A). There are other exemptions that apply in relation to the death of an owner, a life tenant, if nil or nominal rent is paid or if the land becomes unfit for occupation (sections 11D – 11I). A further exemption applies for land provided for affordable community housing (section 13A).
8.The primary issue that arises in this application is whether the circumstances gave rise to an exemption under Part 2 of the Act. The relevant version of the LTA was Republication 25, which operated from 1 July 2018 to 27 March 2019. That version of the LTA incorporated amendments made by the Land Tax Amendment Act 2018 (Land Tax Amendment Act). According to the Explanatory Statement, the Land Tax Amendment Bill 2018 (Land Tax Amendment Bill):
change[d] the way land tax is imposed on residential land. It introduce[d] a ‘principal place of residence’ test as the primary determinant of liability for land tax in place of a ‘rented’ test.[2]
[2] Explanatory Statement Land Tax Amendment Bill page 2
9.The relevant provisions of the LTA after the passage of the Land Tax Amendment Act that were in contention in this application are as follows:
11A Principal place of residence exemption
(1)This section applies if a parcel of land is, on the 1st day of a quarter, occupied as the principal place of residence of 1 or more owners of the parcel of land.
(2)The parcel of land is exempt from land tax. …
11B Moving out of principal place of residence
(1) This section applies if an owner of a parcel of land—
(a)occupies the parcel as the principal place of residence; and;
(b)stops occupying the parcel as the principal place of residence.
(2) The parcel of land is exempt from land tax for the 1st quarter after the date the owner stops occupying the parcel as the principal place of residence.
(3) Subsection (2) does not apply if the parcel of land is rented by a tenant.
11C Moving into principal place of residence
(1) This section applies if—
(a)a person becomes the owner of a parcel of land for occupation as the principal place of residence of the person; or
(b)a parcel of land stops being rented so it can be occupied as a principal place of residence by a person.
(2) The parcel of land is exempt from land tax for the 1st quarter after the date—
(a)for subsection (1) (a)—the person became the owner of the parcel; or
(b)for subsection (1) (b)—the parcel stopped being rented.
(3) Subsection (2) does not apply if the parcel of land is—
(a)not occupied as the principal place of residence of the person within 3 months after the date—
(i)the person became the owner of the parcel; or
(ii)the parcel stopped being rented; or
(b)rented by a tenant, other than the vendor of the parcel of land under a rental arrangement with the person for not longer than 3 months.
10.‘Owner’ is defined in the Dictionary of the LTA as follows:
owner, of a parcel of land means—
(a) the registered proprietor of an interest in the parcel (other than an interest in a lease granted by a person other than the Territory or the Commonwealth); or
(b) if the registered proprietor has sold the interest to another person (the new owner) and the new owner is in possession of the parcel but not yet registered as the proprietor—the new owner; or
(c) a mortgagee in possession of the parcel; or
(d) a person holding the parcel under a sublease from the Territory, if the Territory holds the parcel under a lease from the Commonwealth; or
(e) for a parcel held under a land sublease—the sublessee.
11.Following the events that form the basis of the application, the Act was amended by the Revenue Legislation Amendment Act 2019 (the Revenue Legislation Amendment Act) to substitute new provisions for sections 11B and 11C and inserting a new provision – section 11CA – as follows:
11B Moving out of principal place of residence
(1) This section applies if an owner of a parcel of land—
(a)occupies the parcel as the principal place of residence; and
(b)stops occupying the parcel as the principal place of residence.
(2) The parcel of land is exempt from land tax for the 1st quarter after the date the owner stops occupying the parcel as the principal place of residence. …
(3) Subsection (2) does not apply if the parcel of land is rented by a tenant.
11C Moving into principal place of residence—new owner
(1) This section applies if a person becomes the owner (the new owner) of a parcel of land, to be occupied by the new owner as their principal place of residence.
(2) The parcel of land is exempt from land tax for the 1st quarter after the date the new owner becomes the owner of the parcel. …
(3) Subsection (2) does not apply if, within 3 months after the date the new owner becomes the owner of the parcel—
(a)the new owner does not occupy the parcel as their principal place of residence; or
(b)(b) the parcel is rented by a tenant, other than the seller of the parcel under an agreement with the new owner for a period of not longer than 3 months.
11CA Moving into principal place of residence—ending rental
(1) This section applies if a parcel of land stops being rented so it can be occupied by the owner of the parcel as their principal place of residence;
(2) The parcel of land is exempt from land tax for the 1st quarter after the date the parcel stopped being rented;
(3) Subsection (2) does not apply if, within 3 months after the date the parcel stopped being rented—
(a)the owner does not occupy the parcel as their principal place of residence; or
(b)the parcel is rented by a tenant.
12.The Explanatory Statement of the Revenue Legislation Amendment Bill 2019 (No.2) (Revenue Legislation Amendment Bill) stated as follows:
Move in exemption
Amendments in the Bill clarify the operation of section 11C of the Land Tax Act with respect to the types of circumstances and parties eligible for the exemption – these being persons moving in to occupy a property as a PPR [principal place of residence] after they become an owner of the property, and owners who move in to occupy a property as a PPR after a rental ceases.[3]
[3] Explanatory Statement Revenue Legislation Amendment Bill page 4
13.As elaborated below, this case concerns a question of statutory interpretation, therefore the following provisions of the Legislation Act 2001 (the Legislation Act) apply.
Part 14.2 Key principles of interpretation
138 Meaning of working out the meaning of an Act—pt 14.2
In this part:
working out the meaning of an Act means—
(a)resolving an ambiguous or obscure provision of the Act; or
(b)confirming or displacing the apparent meaning of the Act; or
(c)finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable; or
(d)finding the meaning of the Act in any other case.
139 Interpretation best achieving Act’s purpose
(1) In working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation.
(2) This section applies whether or not the Act’s purpose is expressly stated in the Act.
140 Legislative context
In working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole.
141 Non-legislative context generally
(1) In working out the meaning of an Act, material not forming part of the Act may be considered.
(2) In deciding whether material not forming part of an Act should be considered in working out the meaning of the Act, and the weight to be given to the material, the following matters must be taken into account:
(a)the desirability of being able to rely on the ordinary meaning of the Act, having regard to the purpose of the Act and the provisions of the Act read in the context of the Act as a whole;
(b)the undesirability of prolonging proceedings without compensating advantage;
(c)the accessibility of the material to the public.
(3) Subsection (2) does not limit the matters that may be taken into account.
(4) For subsection (2) (c), material in the register is taken to be accessible to the public.
142 Non-legislative context—material that may be considered
(1) In working out the meaning of an Act, material mentioned in table 142, column 2 may be considered. …
(2) …
(3) This section does not limit the material that may be considered in working out the meaning of an Act or statutory instrument.
Table 142 column 1 item Column 2 Act 4 any explanatory statement (however described) for the bill that became the Act, or any other relevant document, that was presented to the Legislative Assembly before the Act was passed 5 the presentation speech made to the Legislative Assembly during the passage of the bill that became the Act 160 References to people generally
(1) In an Act or statutory instrument, a reference to a person generally includes a reference to a corporation as well as an individual.
Dictionary
individual means a natural person.
The reviewable decision
14.The reviewable decision was made on 23 October 2019.[4] As stated above, it was made in response to an objection lodged by the applicant on 2 May 2019. The delegate disallowed the objection. The reasons stated as follows:
(a)Under the various republications of the Land Tax Act 2004 (the LTA) in effect up to 30 June 2018, the owner of rented, residential land was liable for land tax. From 1 July 2018, the LTA was amended to impose quarterly land tax on a parcel of residential land if the land was not exempt from land tax on the first day of a quarter. ln essence, the owner of residential land would be liable for land tax should the land be rented on the first day of a quarter or not used as the owner’s principal place of residence on the first day of a quarter. Exemptions from land tax are provided under sections 10, 11, 11A to 11I;[5]
(b)On 30 January 2019, Lexmerca, on behalf of the taxpayer, applied to the ACT Revenue Office (the Office) for a ‘Certificate of Rates, Land Tax and Other Charges’, which was provided the next day. The certificate issued included an amount charged for land tax for quarter 3, 2018-19;
(c)On 15 February 2019, the taxpayer was issued with the land tax assessment notice for quarter 3, 2018-19, for $521.81;
(d)As recorded on the transfer, registered on 4 March 2019, the contract settled on 20 February 2019 and under the definition of owner in the LTA, on that date the purchaser became the owner of the land for the purposes of land tax;[6]
(e)[The decision set out the definition of ‘owner’ in the Dictionary of the LTA];
(f)On 10 March 2019, the taxpayer queried his liability for land tax for that quarter and was advised that he was liable as the property was vacant on 1 January 2019;
(g)On 2 May 2019, [an objection to the assessment] was lodged on behalf of the taxpayer, submitting that the land was exempt from land tax under section 11C(2)(b);
(h)The objection assert[ed] that the meaning of ‘person’ in section 11C(1)(b) should include the purchaser who was not yet the owner as at 1 January 2019. If so, then the land would be exempt from land tax for quarter 3, 2018-19, given that it stopped being rented in quarter 2, 2018-19.[7]
[4] T-Documents pages 7 and 12
[5] T-Documents pages 7 and 12
[6] T-Documents page 8
[7] T-Documents page 9
15.The delegate noted that ‘person’ is not defined in the LTA but is defined widely in section 160 the Legislation Act. Both the applicant and the purchaser fell within this definition. The parties to the present proceedings agreed with this proposition. However, the delegate concluded that the word ‘person’ is intended to have a narrower meaning in section 11C(1)(b) and this narrower meaning displaced the general definition from the Legislation Act.[8]
[8] Relying on various provisions of the Legislation Act 2001 T-Documents page 10
16.The LTA does not provide a specific meaning of ‘person’, so the delegate considered the Explanatory Statement to the Land Tax Amendment Bill to ‘work out the meaning’ of the LTA pursuant to section 142 of the Legislation Act.
17.With respect to the exemptions available in sections 11A, 11B and 11C, the delegate quoted the Explanatory Statement as follows:
Exceptions will be introduced in certain circumstances: for owners [delegate’s emphasis] moving in or out of a principal place of residence. … [9]
New sections 11B and 11C provide that owners [delegate’s emphasis] who either move out of a parcel of land or purchase a parcel of land are exempt from land tax for the quarter after the event occurs. This ensures owners [delegate’s emphasis] are not liable for land tax while their parcel of land is vacant for short periods while they are moving in or out. These exemptions do not apply if the parcel of land is rented.[10]
[9] Explanatory Statement Land Tax Amendment Bill page 2
[10] Explanatory Statement Land Tax Amendment Bill page 2
18.Therefore, the delegate concluded that the intention of the exemption in section 11C was to only benefit the owner of the land. The delegate stated:
As described above, the LTA expressly defines owner and that definition does not include a prospective purchaser who has simply entered into a contract of sale. This is consistent with the LTA that imposes land tax on the owner of a parcel of land on given assessment dates and as follows, exempts an owner from the payment of tax in certain circumstances.[11]
[11] T-Documents page 11
19.The delegate noted that the applicant’s interpretation – that the exemption applies after a parcel of land stops being rented so it can be occupied as a principal place of residence of a purchaser – would mean that an owner (as vendor) would need to have knowledge and regard of the prospective use of a property by an intending purchaser who has yet to obtain possession. This appeared to be beyond the scope of the exemption.[12]
[12] T-Documents page 11
The primary area of contention
20.The primary area of contention is section 11C(1)(b) (extracted above) which states that the section applies if a parcel of land stops being rented so it can be occupied as a principal place of residence by a person (emphasis added). The applicant contended that ‘a person’ in this provision includes a purchaser so the land tax exemption extends to circumstances where a parcel of land stops being rented so it can be occupied as a principal place of residence by an incoming purchaser. The respondent contended that section 11C(1)(b) is referring only to an owner, therefore the reference to ‘a person’ in that provision needs to be read as a reference to an owner, not the broader meaning contended by the applicant.
The applicant’s contentions
21.The applicant’s primary contention was that the exemption under section 11C(1)(b) applied because the property had ‘stopped being rented’ so it could be occupied by the purchaser as a principal place of residence.[13] Section 11C does not refer to the ‘owner’ but rather to a ‘person’. This suggests that a ‘person’ under section 11C should have a broader meaning than just the owner. If it was the intention of the legislators that the exemption under section 11C would apply only in respect of the owner of a parcel of land, then this section should refer to ‘the owner’ rather than ‘a person’.[14] The applicant argued that in ordinary terminology, ‘a person’ “could include the owner, a tenant, a buyer, relatives and friends of any of the foregoing. In fact, any one at all”.[15]
[13] Applicant’s Submission 20 January 2020 at [22] and [25]
[14] Applicant’s submission 20 January 2020 at [40]
[15] Applicant’s submission 20 January 2020 at [32]
22.As stated above, the parties agreed that the word ‘person’ has the meaning that is defined in section 160 and the Dictionary of the Legislation Act. The implication is that the person has to be a natural person because that person must be capable of residing in the property. The parties also agreed that both the applicant and the purchaser in the present case fall within this definition.
23.The applicant further contended that section 11C(3) added additional requirements, so if the property is left vacant or if the ‘person’ does not move in within three months to make it their principal place of residence, there is no exemption. According to the applicant’s argument, this interpretation then makes it a simple factual ‘wait and see’ test, i.e. did a ‘person’ occupy it as their principal place of residence within three months of the tenant vacating?[16]
[16] Applicant’s submission 20 January 2020 at [27]
24.The applicant contended that the delegate’s decision was in error because of the following:
·person’ in s 11C(l)(b) is a clear and broad term, and includes a buyer;
·that the normal broad meaning of ‘person’ is confirmed by neighbouring sections of section 11C(l)(b) (i.e. sections 11A-11B) which use the term ‘owner’ when they clearly intend to refer to ‘existing owner’;
·that the Explanatory Statement to the Land Tax Amendment Bill cannot override the clear normal broad meaning of ‘person’ in s 11C(1)(b);
·alternatively, the Explanatory Statement does not support the delegate’s findings about the meaning of that term; and
·section 11C(l)(b) LTA refers to an owner-seller’s ‘knowledge and regard of the prospective use of the property by an intending purchaser’ because it means whether in fact a person occupied the property within 3 months of the tenant vacating.[17]
[17] Applicant’s submission 20 January 2020 at [53]
25.The applicant’s contentions squarely raised questions about the interpretation of section 11C(1)(b). This further raises the question of what material may be considered by the Tribunal when engaging in statutory construction. The applicant argued that the Tribunal should not have regard to extrinsic material because the text of section 11C(1)(b) is clear on its face. The applicant relied upon a statement by Gray J in Morro and Ahadizard v Australian Capital Territory [18] (Morro) where his Honour commented:
I referred earlier to the Attorney-General’s presentation speech and the Explanatory Statement. These extrinsic materials are adopted by the defendant as the premise upon which the defendant’s submissions are based. However, the use of these materials is not to be determinative or a substitute for the text of the legislation.[19]
[18] [2009] ACTSC 118; (2009) 4 ACTLR 78 at [36]
[19] Citing Minister for Immigration and Ethnic Affairs v Tang Jia Xin [1994] HCA 31; (1974) 69 ALJR at [11]
26.In this case, the respondent relied upon the Explanatory Statements for the Land Tax Amendment Bill and the Revenue Legislation Amendment Bill. The applicant relied on the Presentation Speech for the Land Tax Amendment Bill in an alternative argument to his primary argument that extrinsic material should not be used.[20]
[20] Applicant’s submission 20 January 2020 at [81]
27.The applicant referred to section 141(2)(a) of the Legislation Act which was argued to be a restatement of the literal rule of statutory construction[21] pointing to the obligation of the Tribunal to take into account the “desirability of being able to rely on the ordinary meaning of the Act.” Therefore, the meaning of ‘a person’ in section 11C of the LTA must be the meaning that is used in the Legislation Act unless the LTA displaces the meaning expressly or by a manifest contrary intention. There is no provision of the LTA that expressly or by a manifest contrary intention displaces the definition of a ‘person’ contained in the Legislation Act. Similarly, the applicant argued that the two references to single sentences in the Explanatory Statements relied upon by the delegate did not displace, either expressly or by a manifest contrary intention, the definition contained in the Legislation Act.[22]
[21] The Amalgamated Society of Engineers v The Adelaide Steamship Co Ltd [1920] HCA 54; (1920) 28 CLR 129per Higgins J
[22] Applicant’s submission 20 January 2020 at [36]-[39]
28.At the hearing of the application, the applicant argued that the Tribunal should adopt the approach to construction that was applied by the High Court in SAS Trustee Corporation v Miles (SAS Trustee Corporation).[23] In that case, the High Court referred to a comparable exercise in statutory construction as the one involved in the present case as a “constructional choice between two possibilities.”[24] The respondent agreed with this approach.
[23] SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137
[24] SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137 at [1]
29.In addressing the purpose of the LTA pursuant to sections 139 and 141(2) of the Legislation Act, the applicant argued in his written submissions that a major purpose of the LTA was ‘to prevent residential properties being unnecessarily left vacant for periods other than a short time.’[25] Further, the applicant relied the Chief Minister’s Presentation Speech for the Land Tax Amendment Bill, where the Chief Minister stated that the broadening the base of land tax is one of the initiatives contained in the Bill “to improve housing affordability”.[26] At the hearing, the representative of the applicant conceded that the major purpose of the LTA was to raise revenue but considered this purpose was modified by the legislative intention that revenue be raised and/or land tax imposed unless an exemption applied,[27] which supported the literal interpretation of the exemption in section 11C(1)(b).
[25] Applicant’s submission 20 January 2020 at [79]
[26] See Hansard 12 April 2018 page 1338, cited in applicant’s submission 20 January 2020 at [80]
[27] Transcript of proceedings 26 February 2020 page 16
30.As regards the delegate’s conclusion that the applicant’s interpretation of ‘person’ in section 11C could not apply because the vendor would need to have knowledge of the prospective use of a property by an intending purchaser, at the hearing the applicant relied upon the adjustments that are made in conveyancing practice between vendor and purchaser for, inter alia, land tax, and the fact that the buyer makes a BVD which is lodged via a portal at the Land Titles Office. In evidence filed after the hearing[28] the Tribunal noted this practice and the comment made by the applicant in his submissions that the BVD may contain information about the buyer’s intentions regarding his/her principal place of residence.[29]
[28] Witness statement of Peter Waight dated 18 March 2020
[29] Applicant’s submission 20 January 2020 at [4]
31.Regarding the subsequent amendment of section 11C(1)(b) in the Revenue Legislation Amendment Act and the statement in the Explanatory Statement to the Revenue Legislation Amendment Bill that the amendment ‘clarif[ied]’ the operation of that provision, the applicants challenged the respondent’s argument (set out below) that the new provisions were legislated to correct an error. The applicant said that it would have been relatively straightforward exercise to amend the error by replacing the words ‘a person’ with ‘the existing owner’.[30] Instead, the legislature “came up with two completely new sections.”[31] This indicates that a change of policy had occurred rather than a revision of legislation so it better expresses an existing policy.[32]
[30] Transcript of proceedings 26 February 2020 page 20
[31] Transcript of proceedings 26 February 2020 page 20
[32] Transcript of proceedings 26 February 2020 page 19
The respondent’s contentions
32.It was conceded by the respondent there is ‘some ambiguity’ in the wording of section 11C(l)(b)[33] therefore the well-established principles of statutory interpretation apply to assist the Tribunal to resolve the issue. The respondent contended that the process of interpretation begins with a consideration of the ordinary and grammatical meaning of the words of the provision having regard to their context and legislative purpose.[34]
[33] Respondent’s submission 13 February 2020 at [13]
[34] Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 248 CLR 1 per French CJ, Hayne, Kiefel and Bell JJ at [26]
33.In this approach to working out the meaning of a statute, the ‘purposive approach’, works alongside the ‘literal approach’ which requires that words in a statute be given their ordinary and natural meaning.[35]
[35] Respondent’s submission 13 February 2020 at [13]
34.The respondent said that the intersection between the literal and purposive approaches was explained in Project Blue Sky Inc v Australian Broadcasting Authority (Project Blue Sky) as follows:
[The] duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.[36]
[36] Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 per McHugh, Gummow, Kirby and Hayne JJ at [78]
35.Further, the respondent submitted that the purposive approach to interpretation is ‘reflected to a degree’ in section 139 of the Legislation Act which specifically requires the interpretation that would ‘best achieve the purpose of the Act’ be preferred to any other interpretation.[37] The respondent contended that it ‘is commonplace’ to interpret legislation by reference to other documents such as the Explanatory Statement to a Bill.[38] The respondent’s submissions quoted from the Explanatory Statement to the Land Tax Amendment Bill as follows:
Summary
The Land Tax Amendment Bill 2018 amends the Land Tax Act 2004 to implement two revenue initiatives: …
the extension of land tax to all residential dwellings that are not an owner’s principal place of residence (announced in the 2017-18 Budget); … .
This Bill changes the way land tax is imposed on residential land. It introduces a ‘principal place of residence’ test as the primary determinant of liability for land tax in place of a ‘rented’ test.
Residential land which is an owner’s principal place of residence will be exempt from land tax. Any other residential land will be subject to land tax including properties left vacant by an owner. This acts as a financial incentive for owners to put their properties into the rental market rather than leaving them vacant for long periods of time.
Exceptions will be introduced in certain circumstances: for owners moving in or out of a principal place of residence … .[39]
[37] Respondent’s submission 13 February 2020 at [16]
[38] Respondent’s submission 13 February 2020 at [17]
[39] Explanatory Statement Land Tax Amendment Bill page 1
36.The respondent agreed with the applicant’s analysis of the meaning of the word ‘person’ and conceded that applicant’s position is arguable if the Tribunal was to take a literal approach to the use of the word ‘person’ in section 11C(l)(b), that is, the principal place of residence exemption would apply where the property stopped being rented so that any person could occupy it as their principal place of residence. However, this approach ignores the purposive approach to statutory interpretation.[40]
[40] Respondent’s submission 13 February 2020 [19]
37.The respondent contended that the purpose of the LTA is stated in Explanatory Statement to the Land Tax Amendment Bill, which is to impose land tax on properties that are not being occupied by an owner as their principal place of residence.[41] Only land which is the owner’s principal .place of residence is exempt from land tax. The purpose of the Act encourages an interpretation of the word ‘person’ in section 11C(l)(b) as referring to an ‘owner’.[42] The Explanatory Statement makes it clear that the legislature intended for the exception in section 11C to apply only to owners moving in and out of a principal place of residence, not to any and all people.[43]
[41] Explanatory Statement Land Tax Amendment Bill page 1
[42] Respondent’s submission 13 February 2020 at [21]
[43] Respondent’s submission 13 February 2020 at [21] (original emphasis)
38.The respondent argued that its position is further enhanced by the subsequent amendment of the provision in 2019. The legislature acknowledged the possibility that section 11C had the potential to be unclear and the section was amended by the Revenue Legislation Amendment Act. The respondent relied on the Explanatory Statement of the Revenue Legislation Amendment Bill, in particular the extract quoted above – the ‘Move in exemption’[44] – to assert that the amendment served to clarify the original intention of the legislature not alter it.[45] The respondent submitted that the amended section 11C applies to exempt a new owner from paying land tax where they occupy a property as their principal place of residence, and the new section 11CA applies to an owner who stops renting a property so that they may then occupy it as their principal place of residence. Section 11CA replaces section 11C(l)(b).[46]
[44] Explanatory Statement Revenue Legislation Amendment Bill page 4
[45] Respondent’s submission 13 February 2020 at [23]
[46] Respondent’s submission 13 February 2020 at [23]
39.The respondent further contended that the Tribunal can take into account the consequences of giving a particular meaning to an Act.[47] While the use of a literal approach would not render the legislation ‘absurd’,[48] the literal reading does not conform to the legislative intent. Should the applicant’s interpretation of the provision be favoured, the consequences would be that he would be exempt from land tax for the first quarter of 2019 in relation to the property. This outcome is contrary to the legislature’s stated policy intention that all properties not being used for an owner’s principal place of residence are subject to land tax. This submission was extended in the hearing where the respondent pointed out that no one would be liable for land tax for that quarter – the seller would not be liable as at 1 January 2019 and the buyer would also not be subject to land tax either. Therefore, if applicant’s interpretation was accepted, there would be an entire quarter that the property would not be subject to land tax.[49]
[47] Citing Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at [22] – [25] per Mason and Wilson JJ
[48] See Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26 (1981) 147 CLR 297 at [25] per Mason and Wilson JJ
[49] Transcript of proceedings 26 February 2020 pages 45-46
Consideration
40.In SAS Trustee Corporation, the High Court referred to ‘the constructional choice’ that one must undertake when engaging in statutory interpretation.[50] In this case, the constructional choice consists of a choice between two possibilities when interpreting section 11C(1)(b) of the LTA as it was drafted at the relevant period. The section provided an exemption from the payment of land tax in particular circumstances. The section states that it applies if “a parcel of land stops being rented so it can be occupied as a principal place of residence by a person”. As stated above, the applicant argues that ‘a person’ means any person. Therefore, the exemption to land tax applies to both the applicant and the purchaser because the parcel of land stopped being rented so that it could be occupied as a principal place of residence by the purchaser in due course.
[50] See also SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362
41.By contrast, the respondent argues that the reference to ‘a person’ means owner. The exemption does not apply because although the parcel of land had stopped being rented, it was not anticipated on the first day of the quarter that it was to be occupied as a principal place of residence by the owner. ‘Owner’ is a defined term in the Dictionary of the LTA and the only relevant part of the definition is the registered proprietor of an interest in the parcel. The only person that fell within that definition on the relevant date (being 1 January 2019 – the first day of the land tax quarter) was the applicant. The purchaser did not acquire an interest as owner until 25 January 2019 at the earliest, which was when contract for sale for the property was executed.
42.The Tribunal has concluded that the constructional choice favours the respondent’s interpretation, which is that ‘a person’ means owner. In coming to this conclusion, the Tribunal has considered the literal meaning of the words and found them to be ambiguous. The context and purpose of the legislation favours this interpretation and it is supported by the extrinsic materials. The consequence of this construction is that the applicant as owner is liable for land tax at the appropriate rate for the relevant quarter while this provision was operative. Therefore, the decision under review is confirmed.
What materials may be considered by the Tribunal?
43.The applicant urged the Tribunal to take a literal approach in working out the meaning of the provision. He argued that the clear, normal, broad meaning of ‘person’ in that provision meant that it is not necessary for the Tribunal to have recourse to other interpretive material. In support of this approach, the applicant relied upon the statement of Gray J in Morro. The Tribunal notes the warning sounded by Gray J in Morro that the use of these materials is not to be to a substitute for the text of the legislation however, it is clear that the literal, contextual and purposive approaches to interpretation work in tandem. Therefore, to quote the High Court in Project Blue Sky:
[o]rdinarily … the legal meaning … will correspond with the grammatical meaning of the provision. But not always.[51]
[51] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [78] per McHugh Gummow Kirby and Hayne JJ
44.In seeking to work out the meaning of this legislation the Tribunal must consider the relevant steps in the Legislation Act. First, section 139 of the Legislation Act states that when the Tribunal is working out the meaning of an Act, it must prefer an interpretation that would best achieve the purpose of the Act to any other interpretation. The exercise that is involved in ‘working out the meaning of an Act’ is articulated in section 138 of the Legislation Act. That provision tells us that this phrase includes resolving an ambiguous or obscure provision of the Act.
45.The Tribunal considers that the meaning of the phrase ‘a person’ in the section 11C(1)(b) is ambiguous. The respondent conceded that the provision was ambiguous[52] and also conceded that applicant’s position is arguable if the Tribunal was to take a literal approach to the use of the word ‘person’ in section 11C(l)(b). However, this approach ignores the purposive approach to statutory interpretation. The Tribunal considers that on a literal reading, both interpretations put forward by the parties are plausible and neither interpretation is superior.
[52] Respondent’s submission 13 February 2020 at [13]
46.The Tribunal notes the obligation under section 140 and at general law[53] to consider the context of the legislation. On this aspect, the applicant pointed to multiple references in the LTA where the legislation uses the word ‘owner’, suggesting that the use of the term ‘a person’ in section 11C(1)(b) is the exception and therefore should bear a different meaning. This argument is persuasive however the context of the LTA includes many references to principal place of residence which are linked to ownership.[54] Therefore the context of the LTA provides some assistance but does not resolve the meaning of the phrase ‘a person’ if the Tribunal were to rely upon the literal meaning of the phrase itself in the absence of legislative purpose.
[53] For example, SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137
[54] For example, section 11A of the LTA. Further examples are provided below.
47.Pursuant to section 141 of the Legislation Act, the Tribunal may consider material not forming part of the Act. However, in deciding what weight to give to the material the Tribunal must take the following into account, as stated in section 141(2):
(a)the desirability of being able to rely on the ordinary meaning of the Act having regard to the purpose of the Act and the provisions of the Act read in the context of the Act as a whole;
(b)the undesirability approves relying proceedings without compensating advantage;
(c)the accessibility of the material to the public.
48.Subsections 141(2)(b) – (c) are not relevant to the present proceedings and section 141(2)(a) restates the literal rule argued by the applicant together with the purposive and contextual approaches which have received judicial approval in, inter alia, SAS Trustee Corporation. Section 141(2)(a) of the Legislation Act is a composite obligation which obliges the Tribunal in working out the meaning of an Act and the weight to be given to particular material to take into account (as stated above) the desirability of being able to rely on the ordinary meaning of the Act, having regard to the purpose of the Act and the provisions of the Act read in the context of the Act as a whole. Section 142 of the Legislation Act sets out the material that may be considered in the table that is reproduced above. The Explanatory Statements for the Land Tax Amendment Bill and the Revenue Legislation Amendment Bill is the material that respondent submitted that the Tribunal may rely upon. The applicant argued that it was not permissible for the Tribunal to rely upon this material because the material did not manifest a contrary intention to displace the normal broad meaning of ‘person’. However, the Tribunal considers that this is a stricter standard than is applied in the general law and sections 141 – 142 of the Legislation Act. The Tribunal notes Gray J’s words of warning about the use of this material in Morro but in this case, the use of these materials is not determinative or a substitute for the text of the legislation, rather they assist the interpretation of an ambiguous provision. This is the approach adopted by the High Court in SAS Trustee Corporation.[55]
[55] SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137 at [1] per Kiefel CJ, Bell and Nettle JJ
49.Section 141 of the Legislation Act makes it clear that once the Tribunal has engaged in determining the weight of the material under section 141(2) then the provision does not limit the matters that may be taken into account. Section 142 expressly nominates that an Explanatory Statement for the Bill that became an Act may be considered. In that respect, the Tribunal notes that, strictly speaking, only the Explanatory Statement for the Land Tax Amendment Bill may be considered because one must consider the Explanatory Statement or any other relevant document that was presented to the Legislative Assembly for the Act that was passed. The Tribunal nevertheless considers that the Explanatory Statement for the Revenue Legislation Amendment Bill (which was after Republication 25) is relevant to the construction of section 11C(1)(b) of the LTA. However, the Tribunal will consider this material on a different basis – by looking at the legislative history as part of the context of section 11C(1)(b), thus addressing section 141(2)(a) of the Legislation Act and the general law. In relation to the latter, the Tribunal notes the comments of the plurality of the High Court in SZTAL v Minister for Immigration and Border Protection:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. … This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.[56]
[56] SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [14] per Kiefel CJ Nettle and Gordon JJ (emphasis added)
50.The applicant argued in the alternative that the material in the explanatory statement did not support the respondent’s findings about the meaning of the term. This is addressed below.
What is the meaning of the term ‘a person’ in section 11 C(1)(b) of the LTA?
51.As stated above, the parties agree that the word ‘person’ has the meaning that is defined in the Legislation Act. Further, the Tribunal agrees with the implication that the person will be a natural person because that person must be capable of residing in the property.
52.The Tribunal has stated above that the literal meaning of this term will not resolve the issue of interpretation. It is therefore necessary and appropriate for the Tribunal to consider the purpose of the LTA under section 139 of the Legislation Act and the general law. The Tribunal notes that the LTA has no objects section and its long title of merely states that it is an Act about land tax. The parties agreed that the primary purpose of the LTA is to raise revenue. A secondary purpose of the LTA is stated in the Explanatory Statement to the Land Tax Amendment Bill – to ensure that properties are not left vacant for extended periods.[57] The applicant also referred to the Chief Minister’s Presentation Speech for the Land Tax Amendment Bill, where the Chief Minister stated that the broadening the base of land tax is one of the initiatives contained in the Bill “to improve housing affordability.”[58]
[57] Explanatory Statement Land Tax Amendment Bill page 2
[58] See Hansard 12 April 2018 page 1338, cited by the applicant’s submission 20 January 2020 at [80]
53.The applicant argued that the relevant purpose for the LTA was the raising of revenue by way of land tax unless an exemption applies. This narrower interpretation is consistent with the broad purposes of the Act set out above. The principal place of residence exemption is one of the major exemptions in the LTA. At several points in the Explanatory Statement to the Land Tax Amendment Bill this exemption is linked to ownership. By way of example, the Tribunal re-emphasises the text that is extracted earlier in these reasons.
Summary
The Land Tax Amendment Bill 2018 amends the Land Tax Act 2004 to implement:
…the extension of land tax to all residential dwellings that are not an owner’s principal place of residence (announced in the 2017-18 Budget)
Residential land which is an owner’s principal place of residence will be exempt from land tax. Any other residential land will be subject to land tax including properties left vacant by an owner. This acts as a financial incentive for owners to put their properties into the rental market rather than leaving them vacant for long periods of time;
Exceptions will be introduced in certain circumstances: for owners moving in or out of a principal place of residence … .[59]
[59] Explanatory Statement Land Tax Amendment Bill page 1
54.As noted above, this explanation of the exemption regarding principal place of residence is clearly linked to ownership. The ancillary purpose of ensuring properties are not left vacant for extended periods is also articulated in this statement but the vacancies are linked to the behaviour of the owner – it expressly states that properties subject to land tax include properties “left vacant by an owner.”
55.Therefore, the Tribunal concludes that the legislative intention of the Land Tax Amendment Act was to introduce a scheme which involved an exemption related to the principal place of residence of an owner not the principal place of residence of a wider group of people, as contended by the applicant.
56.The next aspect concerns how the Tribunal might interpret the subsequent amendment of the provision in 2019. The respondent relied on the Explanatory Statement of the Revenue Legislation Amendment Bill particularly the extract entitled ‘Move in exemption’ that the amended provisions served to clarify the original intention of the legislature when it enacted section 11C, not alter it. It is extracted again for ease of reference.
Move in exemption
Amendments in the Bill clarify the operation of section 11C of the Land Tax Act with respect to the types of circumstances and parties eligible for the exemption – these being persons moving in to occupy a property as a PPR [principal place of residence] after they become an owner of the property, and owners who move in to occupy a property as a PPR after a rental ceases.[60]
[60] Explanatory Statement Revenue Legislation Amendment Bill page 4
57.As stated above, the Tribunal does not rely upon this evidence due to the operation of section 142 of the Legislation Act (particularly Table 142 item 4) but rather by considering it as part of the legislative history of the provision, which broadly comes under the rubric of context.[61] The Tribunal must consider the weight to be given to this material under section 141(2) of the Legislation Act, although section 141(2) does not limit the matters that may be taken into account (section 141(3) of the Legislation Act). In this case, the Tribunal considers the material has significant weight. It also fulfils the Tribunal’s obligation under section 139 of the Legislation Act to prefer an interpretation that would best achieve the purpose of the Act. This extract is a clear statement of the legislative intention regarding section 11C(1)(b) of the LTA.
[61] SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 section 141(2)(a) Legislation Act 2001
58.The applicant argued that the Revenue Legislation Amendment Act represented a change of policy rather than amending existing legislation. Certainly, the Land Tax Amendment Act had brought about a significant change in policy as regards the circumstances in which land tax would be imposed. The applicant did not provide evidence in support of the alleged change of policy for the Revenue Legislation Amendment Act but invited the Tribunal to draw an inference that policy had been altered because of the elaborate legislative amendments to section 11C that were promulgated in that Act. As stated above, the applicant argued that the amendments could have been readily made by substitution of ‘owner’ for ‘person’ in section 11C(1)(b). In the Tribunal’s view, the relevant provisions needed more tidying up to resolve the ambiguity than is suggested by this submission. In the absence of any evidence to the contrary, the Tribunal concludes that the Explanatory Statement to the Revenue Legislation Amendment Bill supports the interpretation that the original legislative intention was to focus upon an owner’s principal place of residence rather than principal place of residence of persons at large.
59.Given that the purpose of the legislation is to raise revenue, one of the consequences of the applicant’s argument about the literal meaning of the term ‘a person’ is that neither the seller nor the buyer would be liable for land tax in the relevant quarter. This seems to be an unlikely consequence for a revenue-raising statute.
60.It is important to note that the drafting of section 11 C(1)(b) caused confusion and had a potentially deleterious effect upon the adjustments that occur between buyer and seller for conveyances of property that occurred while it was operative. The Tribunal allowed the parties to provide evidence after the hearing about conveyancing practice in the ACT and in particular the adjustments that occur between seller and buyer and the operation of the BVD. As stated above, the applicant argued that it was easy to discern the buyer’s intentions and that the respondent had notice of this via the BVD. The additional evidence did not prove that the respondent or the seller had clear knowledge of the intention of the buyer at any given time. This type of reporting is also inconsistent with the broad operation of the LTA, which is focussed on self-assessment. Conveyancing practices also cannot be determinative of legislative intention even if they are relevant to the broad context within which land tax is imposed.
61.The issues discussed in the last two paragraphs are relevant to the Tribunal’s constructional choice, as characterised by Gageler J in SZTAL v Minister for Immigration and Border Protection:
More commonly, the choice is from ‘a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural’, in which case the choice turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies’. Integral to making such a choice is discernment of statutory purpose. …[62]
[62] SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [37]-[39], citations omitted
62.The Tribunal does not consider that the two latter arguments made by the applicant render his interpretations absurd, rather that they provide further grounds for:
concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred.[63]
[63] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at [25] per Mason and Wilson JJ
Conclusion
63.As stated above, the Tribunal has concluded that ‘a person’ in the former section 11C(1)(b) of the LTA means ‘owner’. In coming to this conclusion, the Tribunal has considered the literal meaning of the words and found them to be ambiguous. The context and purpose of the legislation favours this interpretation and it is supported by the extrinsic materials. The consequence of this construction is that the applicant as owner is liable for land tax at the appropriate rate for quarter 3, 2018-2019 while this provision was operative. Therefore, the decision under review is confirmed.
………………………………..
Senior Member P Spender
HEARING DETAILS
FILE NUMBER:
AT 108/2019
PARTIES, APPLICANT:
Philip Watson
PARTIES, RESPONDENT:
Commissioner for ACT Revenue
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
Donohue & Co
SOLICITORS FOR RESPONDENT
ACT Government Solicitor
TRIBUNAL MEMBERS:
Senior Member P Spender
DATES OF HEARING:
26 February 2020
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