|Date of judgement||21 April 2015|
|Judge(s)||NS Isenberg, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal|
Land tax - principal place of residence exemption; absence from former residence; income derived from use or occupation of a former residence
The Taxpayers, Geoffrey and Sandra Bright, sought review of the Chief Commissioner’s land tax assessment of the Taxpayers’ former principal place of residence (“PPR”) at Mary St, Longueville (“the Property”) for the 2012 and 2013 land tax years (“relevant period”). The property was rented during the relevant period. The Taxpayers rented accommodation, initially in Melbourne, and then in Sydney, and then moved into a property in Sydney which they purchased in June 2013.
The Tribunal determined that the Taxpayers were not entitled to the exemption for their former PPR because it was rented for more than 6 months in both calendar years preceding the two tax years, and the rental income exceeded the amount reasonably required to cover council, water and energy rates and charges and maintenance costs.
Since 1987 the Taxpayers occupied the Property as their PPR. In 2011, Mr Bright moved to Melbourne for employment. The Taxpayers rented accommodation in Melbourne. The Property was leased from 30 May 2011, initially for a 12 month period.
The Taxpayers returned to Sydney on 1 December 2011, however they were unable to take up residence at the Property as it was still subject to a lease. Instead, the Taxpayers resided in rented accommodation in Sydney. On 30 March 2012, prior to the expiration of the initial lease for the Property, a further 12 month lease was entered into for the Property.
In June 2013 the Taxpayers purchased a property at Shackel Ave, Clovelly in which they resided from 1 July 2013 and in respect of which they were granted a PPR exemption for the 2014 land tax year. The Property remained leased until 30 June 2014.
The issue for the Tribunal to consider was whether the Property was exempt from land tax pursuant to s.10(1)(r) and cl. 8 of Sch. 1A of the Land Tax Management Act (“LTM Act”) (the concession for absence from a former exempt residence). Under clause 8 the Chief Commissioner must be satisfied that if income was derived under a lease or licence or other arrangement, the period of such occupation did not exceed 6 months or 182 days in the calendar year immediately preceding the relevant tax year (cl. 8(7)(a) of Sch. 1A to the LTM Act), or the income derived, regardless of the duration of the occupancy, was no more than was reasonably required to cover council, water and energy rates and charges and maintenance costs of the owner in respect of the residence (cl. 8(7)(b) of Sch. 1A to the LTM Act).
The Taxpayers submitted that they had wished to sell the Property in mid-2013 however they were unable to do so as their agent leased the property for an additional period without their knowledge.
The Taxpayers also submitted that they did not derive a “great financial benefit” from the rent of the Property as they had incurred additional expenses, such as the cost of renting other accommodation in Sydney and Melbourne, as result of renting the Property. Further, it was the Taxpayers’ contention that the Assessment had resulted in an unfair and unjust outcome.
The Tribunal accepted that from the time the Taxpayers ceased to reside at the property in May 2011 until the Taxpayers’ moved into the Clovelly property, they had satisfied the requirements specified in clause 8(1) of Schedule 1A .
However, the Tribunal was not satisfied that the Taxpayers met the requirements specified in cl.8(7)(a) of Sch.1A to the LTM Act because, during the relevant period, the Property was leased for a period exceeding 6 months in each tax year and income was derived under the lease .
Furthermore, the Tribunal concluded that the Taxpayers’ did not satisfy clause 8(7)(b) because the income derived from the lease was more than was reasonably required to cover council, water and energy rates and charges and maintenance costs of the owner in respect of the Property . The other expenses incurred by the Taxpayers, being the cost of alternate rental accommodation in Melbourne and Sydney and flights from Melbourne to Sydney to visit family members, were not relevant under cl. 8(7)(b) .
Finally, the Tribunal considered the Taxpayers’ submission that the Chief Commissioner’s decision to impose land tax for the relevant land tax years was “unfair and unjust”. The Tribunal noted that the LTM Act does not provide a general discretion to the Chief Commissioner to take into account special circumstances that may apply in respect of a land owner, including hardship, and concluded that Taxpayers had not satisfied, on the balance of probabilities, that land tax was not payable by them in respect of the relevant period in accordance with the Assessments.
The decision of the Chief Commissioner to assess the property was affirmed.