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TAXES AND DUTIES – land tax – whether land subject to a ‘fixed trust’ – trust deed constituting a unit trust amended by including and giving paramountcy to provisions adopting substantially the same language as s 3A (3B) of the Land Tax Management Act 1956 which describes the criteria requited by s 3A (3A) to be satisfied for the trust to be taken to be a ‘fixed trust’ – whether criteria satisfied depends on interpretation of amended deed applying orthodox principles of construction – criteria satisfied and trust taken to be a ‘fixed trust’
The taxpayer held taxable land upon trust. The question of law is whether Sayden Pty Limited as trustee of the Griffin Property Unit Trust (Unit Trust) is liable for land tax with respect to the 2011 land tax year as a fixed trust or as a special trust.
Background
The applicant, Sayden Pty Ltd was the legal owner of land which would ordinarily attract land tax. This land was held as trustee for the Griffin Family Trust. On 23 November 2010 the applicant granted to itself a life estate in the land which was to be held as trustee for the Griffin Property Unit Trust. The life estate was to be measured by the lives of two individuals.
On 11 December 2010 the trust deed was amended by the inclusion of a new clause. The question was whether the inclusion of this new clause had the effect of converting the trust from a special trust to a fixed trust, as those terms are comprehended by section 3A of the Land Tax Management Act 1956 ("the Act"). If it did have that effect, the trust would be entitled to the land tax threshold.
The Chief Commissioner of State Revenue, however, found the amendment was not sufficient and issued a land tax assessment for the relevant period.
Gzell J, with whom Meagher JA and Tobias AJA agreed, held that if a trust deed specifically provides that the beneficiaries are presently entitled to the income subject to the payment of the trustee’s proper expenses and they are presently entitled to the capital of the trust and may require the trustee to wind up the trust and distribute the trust property to the net proceeds of the trust property, the trust satisfies the relevant criteria and by reason of s3A (3A) of the Land Tax Management Act 1956, the beneficiaries are taken to be the owners of an equitable estate in the land the subject of the trust and the trust is a fixed trust.
The Court outlined the five provisions in the Deed identified by the ADT Appeal Panel as being inconsistent with the full vesting of a present entitlement in the beneficiaries. In each instance, the Court found that when effect is given to the introductory words of clause 2 (c), the inconsistencies are resolved and the relevant criteria were satisfied.
It was also held that the phrase 'Notwithstanding any other provision of this Deed' means to the exclusion of any other provision of this Deed or in spite of any other provision of this Deed. Gzell J stated that 'While the expressions in the statute are of general form, they do not lack precision. They are operative rather than conclusory and, in my view, the necessary specificity is present in the Deed.'
Leave Sought by the Respondent
During the final address, counsel for the Respondent sought leave to raise an argument that clause 2 (c)(ii) of the Deed contains only an implied power to distribute land in specie whereas s 3A(3B)(a)(ii) of the Land Tax Management Act 1956 requires a power to distribute trust property in specie. The Court of Appeal granted leave for the Respondent to raise that argument.
The Respondent submitted that the Deed did not provide for the in specie distribution of investments of the Fund other than the land and hence the Unit Trust failed to satisfy that criteria. The Court rejected this argument as at the relevant date, 31 December 2010, the only asset of the Fund was the interest in the land. As such, for as long as that situation continued, section 3A (3B)(a)(ii) of the Land Tax Management Act was satisfied. However, if the Fund at some later time included assets other than land, the position may be different if clause 2(c) of the Deed remained in the present form.
Orders
The appeal was allowed with the orders of the ADT Appeal Panel of 2 May 2012 being set aside and the original decision of the ADT dated 7 December 2011 restored. An order was made that the Respondent pay the costs of the Appellant’s appeal and of the proceedings before the ADT Appeal Panel.
