Watt and Anor and Commissioner Of State Revenue

[2006] WASAT 220

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   DEVELOPMENT & RESOURCES

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION:   WATT & ANOR and COMMISSIONER OF STATE REVENUE [2006] WASAT 220

MEMBER:   JUSTICE M L BARKER (PRESIDENT)

HEARD:   DETERMINED ON THE PAPERS

DELIVERED          :   2 AUGUST 2006

FILE NO/S:   DR 102 of 2006

BETWEEN:   STEPHEN MELVILLE WATT

JUDITH ANNE WATT
Applicants

AND

COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Land tax - Construction of a dwelling house delayed at relevant times - Whether exemption for "private residential property" in s 21 or s 24 of the Land Tax Assessment Act 2002 (WA) applies - No exemption available

Legislation:

Land Tax Assessment Act 2002 (WA), s 21, s 24
State Administrative Tribunal Act 2004 (WA), s 27(2)

Taxation Administration Act 2003 (WA), s 40

Result:

Decision of Commissioner of State Revenue affirmed
Review application dismissed

Category:    B

Representation:

Counsel:

Applicants:     Self-represented

Respondent:     Ms KH Loh

Solicitors:

Applicants:     Self-represented

Respondent:     State Solicitor

Case(s) referred to in decision(s):

Semmens and Commissioner of State Revenue [2006] WASAT 219

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The applicants owned land on which they proposed to construct a new dwelling house.  The applicants had entered into an arrangement with a building company for a new dwelling house to be constructed.  However, due to delays - which the applicants believe were due to the "building boom" in Western Australia - the construction of the dwelling house had been delayed.

2. Notwithstanding these unfortunate circumstances, the Tribunal found that the Commissioner was correct in finding that the "private residential property" exemptions created by section 21 and section 24 of the Land Tax Assessment Act 2002 (WA) could not be satisfied by the applicants and therefore they did not qualify for any exemption from land tax.

3. The Tribunal observed that if any exemption from land tax were to be created to cover this situation, it would need to be created by the Parliament of Western Australia.

4. Accordingly, the Tribunal affirmed the decision of the Commissioner of State Revenue to impose land tax and dismissed the review application.

Issue

1. The primary issue for determination by the Tribunal is whether the Commissioner of State Revenue (the Commissioner) was correct in disallowing the applicants' objection to the assessment of land tax assessment being for the years ending 30 June 2005 and 30 June 2006 on land being Lot 5 on diagram 28786, being Certificate of Title Volume 1273 folio 604, with the street address of 5 Fairbairn Street, Mosman Park (the land), when at those material times the applicants owned the land and had contracted for the construction of a residential dwelling house on the land, but the construction had been delayed.

Facts

1. At all material times the applicants were the registered proprietors of the land.

2. The applicants entered into an arrangement with a building company to build a new dwelling house on the land.  The commencement date of the construction works was on or about 17 February 2004 and the construction works were to be completed sometime in May 2005.

3. In November 2003, the applicants rented other property in which to live.

4. From January 2004 the land was vacant land.

5. On 30 November 2005, the Commissioner issued an assessment for land tax in the amount of $7052 to the applicants for the assessment years 1 July 2004 to 30 June 2005, and 1 July 2005 to 30 June 2006 in respect of the land (the assessment).

6. As at 12 January 2006, the construction of the new dwelling house had not been completed on the land and was not expected to be completed for several months.

7. As at 12 January 2006, the applicants were residing at the other rented property.

8. By letter, dated 12 January 2006, the applicants objected to the assessment.

9. By letter, dated 30 January 2006, the Commissioner disallowed the applicants' objections, though the Commissioner deferred the requirement for the applicants to pay the land tax for the assessment year ending 30 June 2006.

10. The applicants then applied to the Tribuanl for review of the Commissioner's refusal under s 40 of the Taxation Administration Act 2003 (WA).

Contentions and findings

1. The applicants contend that it is unfair that they should have to pay land tax on the land in circumstances where building times have been extended dramatically, approximately doubled, due to a skills shortage in the State and that they are unable to have the proposed house completed to permit them to live in it.

2. The applicants say it has been an extremely frustrating time for them both, with considerable extra strain coupled with additional costs of extended rental and continually rising building costs.

3. The applicants believe there must be "some allowance" in the system of land tax assessment to consider these circumstances.

4. The applicants believe the correct and fair course of action would be to cancel the assessment.

5. The applicants ultimately put their case this way:

   "The applicant can only restate the inflexibility of the current system of a twelve month exemption from assessable land tax during a primary residential construction.  This is an unachievable exemption given today's highly charged and overstretched construction environment and therefore unfair and unreasonable to expect the applicant's to incur further landholding costs that are entirely out of their control."

6. To that end, the applicants acknowledge that the primary issue "whilst not a legal one" is whether the Commissioner should have a standard 12 month exemption of land tax for the purpose of building a new private residential property.

Finding

1. The Tribunal has considered the same issue in its decision in Semmens and Commissioner of State Revenue [2006] WASAT 219. The law relating to the imposition of land tax and exemption from land tax in the case of "private residential property" is there set out in detail.

2. For the reasons given in Semmens and Commissioner of State Revenue, the applicants in the present case, as in the Semmens case, are unable to satisfy the exemption requirements of s 21 or s 24 of the Land Tax Assessment Act 2002 (WA).

Conclusion and Orders

1. For the reasons given above, the decision of the Commissioner not to allow an exemption to the assessment of land tax made in this case is the correct and preferable decision: State Administrative Tribunal Act 2004 (WA), s 27(2).

2. As the Tribunal said in the matter of Semmens and Commissioner of State Revenue, whether or not the law relating to land tax should be altered to account for the frustration of landowners such as the applicants, is a matter for the Parliament of the State.

3. The Tribunal makes the following orders:

   1.The decision of the Commissioner of State Revenue to impose land tax for the assessment years ending 30 June 2005 and 30 June 2006 in respect of the land with the street address of 5 Fairbairn Street, Mosman Park, is affirmed.

   2.The review application is dismissed.

   I certify that this and the preceding [26] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

   ___________________________________

   JUSTICE M L BARKER, PRESIDENT