Pandanas Qld Pty Ltd v Chief Commissioner of State Revenue; Harris v Chief Commissioner of State Revenue; O’Shea v Chief Commissioner of State Revenue; Brown v Chief Commissioner of State Revenue [2017] NSWCATAD 106
Background
In 1973 the Pottsville Motel (the motel) was constructed. On 5 September 2011, the motel was purchased by Pottsville Beach Pty Ltd. Initially, the company continued to operate the motel. Mr Shane Harris was at all relevant times the director of that company.
Mr Harris, a builder, undertook renovations of the motel. Pottsville Beach Pty Ltd lodged an application with Tweed Shire Council for a strata subdivision consisting of 25 lots, which was ultimately granted with attached By-laws. Clause 31 of the By-laws stated that all lots “shall only be used for short term holiday/tourist accommodation purposes” (ie up to 90 days) and “shall not be used for any form of permanent residential occupation”.
Between February 2014 and August 2014, a number of the units were sold, and the purchasers lodged applications for a grant under the New Home Grant Scheme pursuant to Division 1A of Part 8 of Chapter 2 of the Duties Act 1997. Section 69 provides:
The nature of the scheme
This scheme is intended to help people who are acquiring a new home that is their first home. Under the scheme, the acquisition is subject to a concession or exemption from duty.
The definition of “home” and “new home” in s.87G is:
87G Definitions
In this Division:
home means a building (affixed to land) that:
- may lawfully be used as a place of residence, and
- is, in the Chief Commissioner’s opinion, a suitable building for use as a place of residence.
new home means a home that has not been previously occupied or sold as a place of residence.
Further, s.83 relevantly provides:
83 Types of agreements or transfers that are eligible
…
- In relation to a new home purchase or an off the plan purchase only, a reference in this Division to a new home includes a reference to a substantially renovated home.
- A substantially renovated home is a renovated home:
- that is new residential premises within the meaning of section 40–75 (1) (b) of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, and
- that, as renovated, has not been previously occupied or sold as a place of residence…
In issue was whether each of the units were “new” when the Applicants took possession. The basis of this assertion was that the renovations and re-configuration was such that when the applicants took possession, the units had been substantially renovated and therefore “new”.
Initially, Mr Shane Harris commenced proceedings in his own name on behalf of several Applicants. This proceeding was dismissed and individual Applicants commenced their own proceedings which were heard together, arising as they did out of the same factual background and turning on the same legal issues.
Mr Harris gave evidence about the extent of the renovations carried out by him to the motel, although he was unable to produce records to show the extensive work on the units. He also gave evidence that there were permanent residents in some of the units. The Tribunal understood Mr Harris’ reference to “permanent residents” to mean guests who stayed for longer periods of up to 90 days.
Decision
The Tribunal concluded that the evidence did not establish that on the balance of probabilities that the work performed to renovate the motel satisfied the statutory requirements to be described as “substantial renovations” so as to allow the units to fall into the statutory definition of a new home: (para 28).
Further, the Tribunal held that the individual units did not meet the statutory definition of a “home”, being a building which may be lawfully used as a place of residence: (para 30). The Tribunal also held that the units did not meet the definition of “homes” as they could not “lawfully” be used as residences, noting clause 31 of the By-Laws: (para 34). The Tribunal applied the reasoning in Re Taylor [1995] 2QdR that a by-law is a law binding on all, and not merely an agreement: (para 35).
All of the Applications were dismissed.
Link to decision
Pandanas Qld Pty Ltd v Chief Commissioner of State Revenue; Harris v Chief Commissioner of State Revenue; O’Shea v Chief Commissioner of State Revenue; Brown v Chief Commissioner of State Revenue [2017] NSWCATAD 106
