|Date of judgement||4 July 2012|
|Judge(s)||Judicial Member J Block|
|Court or Tribunal||Administrative Decisions Tribunal|
Land tax in respect of a special trust - no estoppel against the operation of a tax statute-obligations of taxpayer to advise if land held by a special trust
Maritime Electric Company Ltd v General Davies Ltd  AC 610
Thrasyvoulou v Secretary of State for the Environment  2 AC 273
This matter involved an application by EK Anderson Investments Pty Ltd as the trustee of the CACS Property Trust(“the Taxpayer”) for a review by the Administrative Decisions Tribunal (“the Tribunal”) of land tax reassessments referable to the Taxpayer’s property at Mascot (“the Property”) issued by the Chief Commissioner of State Revenue (“the Chief Commissioner”) under the Land Tax Management Act 1956 (“the LTMA”) for the land tax years 2007 to 2011. The Chief Commissioner reassessed the land (“the Reassessments”) on the basis that the trust was a special trust and therefore was not entitled to the land tax threshold.
Judicial Member Block affirmed the Chief Commissioner’s decision, noting that the relevant legislation makes it clear that the Taxpayer was under an obligation to inform the Chief Commissioner of the fact that the Property was owned by a trustee of a special trust.
udicial Member Block dismissed the Taxpayer’s contention that the Chief Commissioner should have initially assessed the Property correctly. He noted that the Chief Commissioner was never under any legal obligation to consult land title records in raising land tax assessments, and even if he had consulted those records, they would not have disclosed the existence of the Trust or the fact that the Trust was a special trust (because land title records do not generally record details of trust ownerships of land). He noted in any case that the Chief Commissioner could not be estopped from correctly reassessing land tax in accordance with the LTMA.
The Taxpayer had at all time during the land tax years 2007 to 2011 and since the date of its acquisition, owned the Property in its capacity as the trustee of the CACS Property Trust (“the Trust”). The Trust was at all times and in particular during the relevant land tax years a “special trust” as defined in s.3A of the LTMA.
The Chief Commissioner was not made aware that the Property was owned by the Applicant in its capacity as the trustee of the Trust until 28 October 2011, when Mr Anderson informed the Office of State Revenue (“the OSR”). Prior to that date, each of the land tax assessments issued by the Chief Commissioner had identified only “EK Anderson Investments Pty Limited” as the Taxpayer.
On 6 December 2011, after the Taxpayer had submitted a form disclosing that the Property was owned by the Trust, the Chief Commissioner issued the Reassessments for the 2007 to 2011 land tax years to the Applicant in a single Land Tax Assessment Notice. Those reassessments were made on the basis that the Trust was classified as a “special trust” within the meaning of ss.3A and 25A of the LTMA.
The Taxpayer in correspondence with the Chief Commissioner following the Reassessments accepted that there was no issue concerning the legality of the imposition of the land tax on the basis that the trust was a special trust, but rather was “...disputing retrospective action when the assessment forms received from (the Chief Commissioner) never asked the question whether the company was a trust or not”.
The Taxpayer objected to the Reassessments, indicating in an attached letter that the basis of the objection was that it was “reasonable to assume [the] assessments are correct” and that the OSR had never asked whether the Property was held by a trust.
The objection was disallowed on 12 March 2012.
Mr Anderson as the agent for the Taxpayer did not tender any sworn evidence either by himself or by anyone else. During the course of his submissions he made a number of statements of fact. He told the Tribunal that the Taxpayer had been paying land tax in respect of the Property for over 20 years. He stated that he did not inform the Chief Commissioner as to the fact that the Property was in fact owned by the Trust or that the Trust was a special trust.
He also indicated to the Tribunal that his understanding regarding the special trust issue was that there was a legislative change in 2005 as a result of which the concept of a special trust was first introduced into the LTMA.
Mr Anderson then informed the Tribunal that the Taxpayer had relied on an accountant to ensure that the Taxpayer properly complied with its land tax obligations in respect of the Property. Mr Anderson mentioned that the accountant had contacted the OSR in 2005 when he considered special trusts first became relevant for land tax purposes. Mr Anderson claimed that the OSR had informed his accountant that the relevant legislative change in 2005 had no effect on trusts in respect of which there was no change in the beneficiaries of the relevant trust.
Mr Anderson then proceeded to comment that the Taxpayer was entitled to assume that the original assessments were correct. He submitted that the Taxpayer considered that he had been “entrapped” by the Chief Commissioner’s actions in issuing retrospective assessments and he submitted that the Chief Commissioner had not exercised his powers with sufficient care. He also noted that the Chief Commissioner was under a moral obligation to ensure that assessments were correct.
The Chief Commissioner submitted that the decision of the Chief Commissioner to reassess the Property to additional land tax for the land tax years 2007 to 2011 should be affirmed since:
Judicial Member Block found that the decision of the Chief Commissioner to issue the Reassessments must be affirmed. He noted in this regard that the relevant legislation makes it clear that the Taxpayer was under an obligation to inform the Chief Commissioner of the fact that the Property was owned by the Trust and that the Trust was a special trust.
Judicial Member Block dismissed the Taxpayer’s contention that the Chief Commissioner, who had access to the land title records of the Property, should have assessed the Property correctly. He noted that the Chief Commissioner was never under any legal obligation to consult land title records in raising land tax assessments. He also noted that land title records would not have disclosed the existence of the Trust in respect of the Property or the fact that the Trust was a special trust because those records did not record details of the trust’s ownership of the land.
Tribunal Member Block also noted that the Chief Commissioner is required to assess (or reassess) land tax in accordance with the LTMA, and no conduct of a revenue authority, including the alleged failure of the Chief Commissioner to ask for information about possible trust ownership, can estop the operation of a taxing statute (paras 28 to 31).