|Date of judgement||23 May 2016|
O’Connor AM, ADCJ; Deputy President, Appeals|
R Deutsch, Senior Member
|Court or Tribunal||NSW Civil and Administrative Tribunal – Appeal Panel|
STATE REVENUE – Land tax – principal place of residence exemption – concession in relation to unoccupied land intended to be the owner’s principal place of residence after completion of building works – concession not applicable if owner in the meantime uses and occupies other land owned by him as principal place of residence – Tribunal held correct the Commissioner’s assessment of other land as exempt and not the unoccupied land – Appeal by owner - questions of law – the Tribunal’s characterisation of the issue before it – application of taxpayer’s onus – construction of ‘principal place of residence’, ‘use’ and ‘occupation’ – whether in light of undisputed facts Tribunal’s finding manifestly unreasonable – appeal dismissed. Land Tax Management Act 1996, s 3(1), s 10(1)(r); Sch 1A, cl 2(2)(a), cl 6(7)(a), cl 6(3)(b)
The Taxpayer sought review of the Chief Commissioner’s 2014 land tax assessment requiring him to pay land tax on his property at Randwick (the “Randwick property”). The Taxpayer believed that the property should have been afforded the concession for unoccupied land intended to be his principal place of residence (clause 6, Schedule 1A, Land Tax Management Act 1956 “LTMA”). The Chief Commissioner instead determined that the Taxpayer’s property in Panania (the “Panania property”) was his principal place of residence (PPR).
On 19 November 2015 Senior Member Isenberg of the NSW Civil and Administrative Tribunal had determined that the land tax assessment under review was correct and that the Panania property was the Taxpayer’s principal place of residence. The Taxpayer applied for a further review of the assessment to the NCAT Appeal Panel. The Appeal Panel upheld the Chief Commissioner’s decisions that the Panania property was the Taxpayer’s PPR and the Randwick property was therefore not exempt.
The Taxpayer lived at the Randwick property from 1993 to September 2011 at which time he moved out and demolished the house in order to build a new dwelling on the land. He moved to the Panania property, pending completion of the new residence. However the work on the Randwick property was delayed because of the liquidation of the building company and the pursuit by the Taxpayer of a home warranty claim.
For the 2013 land tax year, the Chief Commissioner determined that the Panania property was the Taxpayer’s principal place of residence. This meant that , even though the Taxpayer intended to move back to the Randwick property, it did not attract the general concession for unoccupied land under clause 6(7)(a) because the Taxpayer was entitled to have his actual use of the Panania property taken into account.
The Taxpayer applied to the Tribunal for review of the 2013 land tax assessment but was unsuccessful.
In December 2013 the Taxpayer moved from the Panania property to a property in Arncliffe which was not owned by him. Thereafter, the Taxpayer claimed that for the 2014 tax year, unlike the 2013 tax year, the Panania property was not his principal place of residence. Therefore, he claimed he was entitled to the PPR exemption for the Randwick property.
For the 2014 land tax year, the Tribunal at first instance upheld the Chief Commissioner’s decision that the Panania property remained the Taxpayer’s principal place of residence, triggering cl 6(7)(a), meaning the exemption for an intended PPR could not apply.
In line with previous authority, notably Aronstan v Chief Commissioner of State Revenue  NSWADT 8, the Tribunal approached the issue of whether cl 6(7)(a) applied by asking whether Panania (in the Chief Commissioner’s submission) or Arncliffe (in the Taxpayer’s submission) was being used and occupied as the principal place of residence as at the taxing date, informed by the circumstances surrounding that date.
The Taxpayer appealed the Tribunal’s decision on the basis that the Arncliffe property, not the Panania property was his PPR. The Chief Commissioner argued that the Panania property remained the Taxpayer’s PPR, and in addition included a Notice of Contention with the Tribunal’s consideration of cl 6(3)(b).
Schedule 1A of the LTMA, and specifically clause 2(1), provides an exemption from land tax if the land is used and occupied as an owner’s principal place of residence and for no other purpose.
Part 3 of Schedule 1A of the LTMA provides some concessions, including the concession in clause 6(1) which states that an owner of unoccupied land is nevertheless entitled to claim it as his or her principal place of residence, provided that the conditions under clauses 6(2), (3), (5), (6) and (7) are satisfied.
The Appeal Panel was satisfied that grounds 3, 5 and 6 of the Taxpayer’s appeal raised questions of law (relating to cl 6(7)(a)), namely:
The Appeal Panel noted that there was evidence going both ways in relation to whether the Panania property remained the Taxpayer’s principal place of residence as at the taxing date or if Arncliffe had become his principal place of residence.
The Appeal Panel found that although the Tribunal had characterised the question before it in different ways at paragraphs ,  and  of its decision, it had not mischaracterised the question in a way that might have led it into error. It was clearly identified that there were two locations which may be considered for the Taxpayer’s principal place of residence in each of the Tribunal’s formulations. Having regard to the circumstances, also before and after the taxing date, the Tribunal was not satisfied that the Panania property had been replaced by Arncliffe as the principal place of residence.
The Appeal Panel determined that all the Tribunal had needed to address was whether the evidence, viewed overall, satisfied it that Arncliffe was the principal place of residence of the Taxpayer, in a situation where he continued to make use of two residences for domestic purposes, Arncliffe and Panania.
The Appeal Panel held the Taxpayer failed to satisfy the onus of proving that Arncliffe had become his principal place of residence and conversely, that Panania had ceased to be his principal place of residence.
Section 3 of the LTMA states that ‘principal place of residence’ means ‘the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person’ but does not provide any further meaning to the words ‘place of residence’. The Taxpayer referred to English cases which dealt with the meaning of ‘place of residence’ as having consideration to where a person ‘eats, drinks and sleeps’.
The Taxpayer’s evidence was not contested as to matters such as where he ate, drank and slept at Arncliffe as opposed to Panania. However the Appeal Panel noted that concentration on where a person usually eats, sleeps and drinks, while clearly relevant, may mislead. The Appeal Panel noted the Taxpayer had a ‘day-time house’ (Panania) and a ‘night-time house’ (Arncliffe). However, the Taxpayer’s use of the Panania property appeared to be residential in nature, as evidenced through utility bills. It was also noted he had not made administrative changes such as amending his address on the electoral roll.
The Appeal Panel took the view that the Tribunal had appropriately taken the various activities of the Taxpayer into account.
The Appeal Panel held that the Tribunal at first instance, having regard to the material and evidence before it, had reached a conclusion which was not plainly unjust or so unreasonable as to suggest that it failed properly to exercise its discretion.
Cl 6(3)(b) as it applied for the 2013 tax year provided an exemption for up to four tax years after the date on which a tenant vacates a property. The exemption commenced when the owner commenced building work. The Chief Commissioner asked the Appeal Panel to infer that the words ‘is used and occupied for residential purposes by a person other than the owner’ means a ‘person other than the owner being in occupation to the exclusion of the owner’ (as would be the case in a normal tenancy).
The Appeal Panel held that the words in cl 6(3)(b) did not admit of the qualification pressed by the Chief Commissioner. The words do not exclude the possibility that the other person (the tenant) may be using and occupying the land while the owner also uses and occupies the land. The Appeal Panel therefore did not think it open to qualify the words of cl 6(3)(b) in the way suggested by the Chief Commissioner.
The LTMA was amended by the State Revenue Legislation Amendment Act 2016, and the amended provisions apply for the 2017 land tax year. The amendments to clause 6 allow the exemption period of up to 4 years to commence as soon as the tenant vacates the land and before building work commences, provided building work has commenced or significant steps to allow building work to commence have been taken (eg lodgement of a development application) before the end of the first of the four tax years.
Prior to the amendment, as was applicable in this case, if the land was used and occupied by a person other than the owner after its acquisition by the owner, the exemption for up to 4 tax years did not commence until the tenant vacated the land and building works physically commenced on the land.