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Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 235

Date of judgement 27 July 2017 Proceeding No. 2016/378344 & 378448
Judge(s) S Frost, Senior Member
Court or Tribunal New South Wales Civil and Administrative Tribunal (Administrative and Equal Opportunity Division)
Legislation cited Land Tax Management Act 1956
Catchwords STATE TAXES – land tax – land used and occupied primarily for low cost accommodation – boarding house accommodation – whether the Tribunal satisfied that the land is used and occupied in accordance with guidelines approved by the Treasurer
Cases cited Perry Properties Pty Ltd v Chief Commissioner of State Revenue (2013) 85 NSWLR 240; [2013] NSWCA 274

Background

The Taxpayer sought review of the Chief Commissioner’ decision to deny the land tax exemption for low cost boarding houses for two properties, referred to in the Addison Road Property and the Glebe Point Road Property. Both properties were registered as general boarding houses under the Boarding Houses Act 2012. Both properties provided dormitory style accommodation to residents. Accommodation was offered to residents on a per bed basis, and accordingly residents were charged a weekly tariff per bed.

Statutory Framework

Section 10Q of the em>LTMA provided:

  1. “Land is exempted from taxation under this Act leviable or payable in respect of the year commencing on 1 January 1995 or any succeeding year if:
    1. the land is used and occupied primarily for low cost accommodation, and
    2. application for the exemption is made in accordance with this section, and
    3. the Chief Commissioner is satisfied that the land is so used and occupied in accordance with guidelines approved by the Treasurer for the purposes of this section.”

As both parties agreed that the requirements in s.10Q(1)(a) and (b) were satisfied, the key issue in these proceedings was whether the properties were, within the meaning of s.10Q(1)(c) of the LTMA, “used and occupied in accordance with guidelines approved by the Treasurer for the purposes of [that] section”.

The relevant guidelines for the purposes of s.10Q(1)(c) were set out in Revenue Ruling No. LT 095 (for the 2015 land tax year) and Revenue Ruling No. LT 098 (for the 2016 land tax year) (together the “Rulings”). For present purposes, the guidelines were relevantly identical, and importantly provided that an entitlement to an exemption required that “the maximum tariff charged per room” be no more than a fixed amount set out in the Rulings.

The weekly tariff charged by the Taxpayer at both properties, on a per bed basis, fell below the maximum tariff limits in the Rulings. However, taking into account the fact that the rooms at both properties accommodate more than one person, the “per room” figures in the Rulings were exceeded whenever a room had more than one occupant.

Submissions

The Taxpayer submitted that:

  1. the term “accommodation” should be taken to mean a bed or a room;

  2. accommodation was not offered on a “per room” basis at either property that was the subject of these proceedings, as it was offered on a “per bed” basis;

  3. the term “low cost accommodation” implies that the matter should be considered by reference to the amount the resident is actually paying; and

  4. the guidelines should be read as requiring a consideration of the maximum tariff charged for each bed in the room, considered on a “bed by bed” basis.

The Chief Commissioner submitted that the plain words of the guideline required that the tariff be considered on a “per room” basis. Further, the Chief Commissioner relied on the NSW Court of Appeal decision in Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 274, which makes it clear that the purpose of the land tax guidelines is to identify particular low-cost accommodation that should receive the exemption (and not to identify all low-cost accommodation as being eligible for exemption).

Decision

The Tribunal noted that the tariff figures contained in the Rulings were expressed to be “per room” figures, not “per bed”. The Tribunal commented that the language of the Rulings is “clumsy”, in that the word “tariff” is defined in the Rulings to mean “the cost of a room or bed”, whereas the tariff limits are expressed to be “per room”. Nonetheless the Tribunal accepted the Chief Commissioner’s submission that the tariff charged per room must be the sum of each of the amounts charged for the individual beds in that room, and found (at [23]) that the words “per room” cannot be read in any way other than literally.

Senior Member Frost also noted that it was likely to follow from his conclusion in this case that a dormitory-style boarding house would be less likely to attract the exemption in s. 10Q than a boarding house offering accommodation in private rooms. In this regard Senior Member Frost agreed (at [24]) with the Chief Commissioner’s submission that the s. 10Q exemption was not available for all low-cost accommodation, but rather it was confined to those subsets of low-cost accommodation that are within the guidelines approved by the Treasurer from time to time, and referred approvingly to Perry Properties Pty Ltd v Chief Commissioner of State Revenue (2013) 85 NSWLR 240 at 247-248; [2013] NSWCA 274 at [25]-[29].

Orders

The Tribunal confirmed the Chief Commissioner’s land tax assessments for the 2015 and 2016 land tax years.

Link to decision

Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 235

Last updated: 9 August 2017