|Date of judgement||17 April 2019|
|Judge(s)||S Higgins, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal|
TAXES and DUTIES – land tax
On 17 April 2019, Senior Member Higgins of the NSW Civil and Administrative Tribunal (“the Tribunal”) delivered her decision in the above proceedings, confirming the land tax assessments issued by the Chief Commissioner of State Revenue (“the Chief Commissioner”) to the applicant for the 2016 and 2017 land tax years..
The applicant, Thomas Fanous as trustee for the Thomas Fanous Unit Trust, owned land at Ambarvale (“the Land”). The Land was purchased by the applicant in September 2015.
The Unit Trust was constituted by a trust deed dated 7 July 2015 and stamped under the Duties Act 1997 (NSW) on 24 August 2015 (“the 2015 Trust Deed”).
In August 2016, the Applicant submitted the 2015 Trust Deed to the Chief Commissioner for assessment of land tax. The Chief Commissioner determined that the 2015 Trust Deed created a “special trust” pursuant to s. 3A of the Land Tax Management Act 1956 (NSW) (“the LTM Act”) and issued land tax assessments for the 2016 and 2017 land tax years on this basis. As a consequence of this determination, the applicant was not entitled to the land tax threshold.
The applicant subsequently provided the Chief Commissioner with a second trust deed, describing this deed as the “correct” trust deed and advising that the 2015 Trust Deed was the “wrong” or “incorrect” trust deed. This deed was stamped on 9 May 2017 (“the 2017 Trust Deed”).
The 2017 Trust Deed had the same commencement and execution date as the 2015 Trust Deed and was determined by the Chief Commissioner to create a “fixed trust”.
The Applicant requested that the Chief Commissioner reconsider the initial assessments for the 2016 and 2017 land tax years on the basis that the 2017 Trust Deed was the correct trust deed to create the Trust. The Chief Commissioner refused, and following disallowance of objections, the matter ultimately came before the Tribunal for review.
Section 3A of the LTM Act defines both “special trust” and “fixed trust” for the purposes of the land tax regime:
“3A Special trust — meaning
It was accepted by both parties that the 2015 Trust Deed created a special trust and that the 2017 Trust Deed created a fixed trust. The issue for determination by the Tribunal was whether the 2016 and 2017 land tax assessments should be reassessed based on the fact that the 2017 Trust Deed created a fixed trust.
The applicant submitted that the 2016 and 2017 land tax assessments should be reassessed based on the 2017 Trust Deed, given that it was the “correct” trust deed and was operative from its commencement date of 7 July 2015. It was implicit in the applicant’s submission that both trust deeds had been created at the same time in 2015 and that the incorrect deed was presented for stamping.
The Chief Commissioner submitted that there was considerable doubt that both trust deeds were created and executed at the same time, pointing to the lack of evidence from the applicant about the creation of each deed.
Even if both trust deeds were created at the same time, the Chief Commissioner submitted that he was required to assess the applicant’s liability for land tax as at the taxing dates, being 31 December 2015 and 31 December 2016, based on the 2015 Deed because it was the only deed that had been stamped at those dates.
The Tribunal determined that the applicant had failed to discharge his onus of proving that the 2016 and 2017 land tax assessments should be reassessed by the Chief Commissioner.
While noting that it was doubtful that both trust deeds were created July 2015, Senior Member Higgins did not make a finding in relation to the creation of the trust deeds.
The Tribunal found the applicant’s contention that the 2017 Trust Deed should be retrospectively applied and the assessments varied was misconceived. Although the 2017 Trust Deed had a commencement date of 7 July 2015, it did not become operative for the purposes of the land tax regime until it was stamped, being on 9 May 2017. The Tribunal also referred to s.304 of the Duties Act which provides that an instrument is not available for use in law or equity unless duly stamped .
Senior Member Higgins ultimately held, at , that “a retrospective application of the 2017 Trust Deed would be inconsistent with the provisions of the LTM Act and the Taxation Administration Act. To allow such a retrospective operation would also undermine operation of the land tax legislative scheme”.
The land tax assessments for the 2016 and 2017 land tax years were confirmed.