|Date of judgement||16 November 2011|
|Judge(s)||J Needham SC, Deputy President|
M Hole, Judicial Member
C Bennett, Non Judicial Member
|Court or Tribunal||Administrative Decisions Tribunal Appeal Panel|
|Appealed from||Administrative Decisions Tribunal, Revenue Division|
|Team||T2 Commercial/Property Law (Litigation)|
|Appellant's representative||Mr Ian Young of Counsel (instructed by Robert Richards)|
|Respondent's representative||Mr Andrew Rider of Counsel|
The taxpayer sought a review of the decision of the Chief Commissioner of State Revenue (”Chief Commissioner”) to disallow their objection to land tax assessments issued for the 2008 land tax year pursuant to the Land Tax Management Act 1956 ("the LTMA") in respect of the applicants' property at Lennox head ("the property"). At issue was whether the property was exempt from land tax because it was the principal place of residence of the beneficiary of a resulting trust.
At first instance, the Tribunal affirmed the decision of the Chief Commissioner that the PPR exemption did not apply because the registered owner was a company. On appeal, the Appeal Panel affirmed the decision of the Tribunal in an ex tempore judgment.
The taxpayer sought review of the respondent's decision to assess the applicant for land tax for the 2008 land tax year pursuant to the Land Tax Management Act 1956 ("the Act") in respect to a parcel of land at Lennox Head ("the property").
The property was purchased in March 2005 by the applicant company as agent for its sole director, NH. NH provided the purchase money for the transfer of the land. It was agreed between the parties that the applicant company held the property on a resulting trust for NH. Whether NH occupied the property as his principal place of residence was in issue between the parties.
The Chief Commissioner determined the Objection to the assessment on the basis that the taxpayer could not take the benefit of the principal place of residence "(PPR") on the basis that Sch.1A cl.11(1)(a) precluded the PPR because "the land is owned, or jointly owned, by a company".
The matter was listed for hearing on the basis that the Tribunal would make a final determination on the legal question of whether the taxpayer, the registered proprietor of the property, being a company, can take the benefit of the PPR by virtue of the operation of s.10(1)(r) and Sch.1A cl11(1)(a) of the Act. At the hearing of the matter, the Tribunal reframed the question to be "If NH occupied the property at Lennox Head as his principal place of residence at all material times for the 2008 Land Tax Year, whether the Chief Commissioner's assessment in respect of the property was correct".
The taxpayer's arguments were:
The taxpayer sought to distinguish the decision in Chief Commissioner of Land Tax v Macary Manufacturing Pty Limited (1999) 48 NSWLR 299, as not applying to a situation of resulting trust.
The parties agreed that, for the purpose of the determination, the Tribunal was to assume that NH occupied the property as his principal place of residence.
On the question of whether the taxpayer as bare trustee was the "owner" of the land, the Tribunal agreed with the Chief Commissioner and held that (applying Chief Commissioner of Land Tax v Macary Manufacturing Pty Limited (1999) 48 NSWLR 299 affirmed in BBLT Pty Limited v Chief Commissioner of the Office of State Revenue 2003 ATC 5063), a registered proprietor of land which holds it on trust, even on a bare trust, enjoys an estate in possession, and is entitled to the rents and profits of the land (as per both limbs of the meaning of "owner" under the Act).
The Tribunal concluded that the principle in Chief Commissioner of Land Tax v Macary Manufacturing Pty Limited applied to resulting trusts.
In terms of the construction of the Act, the Tribunal noted:
Accordingly, the Tribunal affirmed the decision of the Chief Commissioner to assess the taxpayer for land tax.
“The registered proprietor of an estate in fee simple holds (at law) an estate in possession notwithstanding the imposition of a trust requiring the proprietor to hold that estate on behalf of beneficiaries. Nothing turns on whether the trust is active or bare.”