Solfon Investments Pty Ltd atf Solfon Family Trust v Chief Commissioner of State Revenue [2019] NSWCATOD 11

Background

The Taxpayer sought a review of the Land Tax Assessment Notices for the 2015 to 2018 land tax years issued by the Chief Commissioner to the Taxpayer, in relation to a property in Cecil Hills NSW.

The key facts are:

1. The Taxpayer, Solfon Investments Pty Ltd atf the Solfon Family Trust was incorporated on 6 December 2012.
2. The Trust was established under a trust deed, executed on 6 December 2012.
3. The Trustee of the Trust is the Applicant and Taxpayer and the beneficiaries of the Trust are the Directors of the Taxpayer.
4. In early December 2013, the Taxpayer’s registered address and principal place of business was changed to an address in Revesby NSW.
5. The Taxpayer purchased the Cecil Hills Property in September 2014 and changed its registered address and principal place of business from Revesby to Cecil Hills.
6. On 21 September 2015, the Chief Commissioner issued a Land Tax Assessment Notice to the Taxpayer for the 2015 land tax year. The Notice was sent to the Revesby address.
7. The Chief Commissioner issued further Land Tax Assessment Notices for the 2016 and 2017 tax years, and these were also sent to the Revesby address.
8. The Directors of the trustee Company were unaware of any of the Notices issued by the Chief Commissioner in 2015, 2016 or 2017 at the time they were issued.
9. On 3 July 2017, the Chief Commissioner issued a Land Tax Notice to the Taxpayer seeking payment of the outstanding land tax for the 2015 to 2017 land tax years. That Notice was addressed to the Taxpayer at its registered Cecil Hills address.
10. On 5 February 2018, the Chief Commissioner issued a Land Tax Assessment Notice for the 2018 land tax year. This Notice was also sent to the Cecil Hills address.
11. On 11 February 2018, an objection was lodged on behalf of the Taxpayer to the Notices that had been issued for the 2015, 2016, 2017 and 2018 land tax years.
12. On 23 March 2018, the Chief Commissioner disallowed the applicant’s objection.
13. the applicant lodged an application for review of the assessments by the Tribunal on 12 April 2018.

Issues

The issues for determination by the Tribunal were:

1. Whether the principal place of residence (PPR) exemption in Schedule 1A of the Land Tax Management Act 1956 (LTM Act) applies to the Cecil Hills Property;
2. The significance, if any, of the fact that the Chief Commissioner’s Land Tax Assessment Notices for 2015, 2016 and 2017 were sent to the wrong address and the Taxpayer was not made aware of the Notices until October 2017; and
3. Whether the Tribunal has jurisdiction to review the instalment plan offered by the Chief Commissioner.

Tribunal Decisions

Issue (i) – PPR exemption

Part 2 of Schedule 1A of the LTM Act provides for the principal place of residence (PPR) exemption, subject to certain restrictions contained in Part 4 of Schedule 1A Clause 11 provides that the PPR exemption does not generally apply to land owned by companies and trustees of special trusts.

Under the terms of the Solfon Family Trust, the trust property includes the Property, and the Taxpayer (as trustee of the Trust) is the owner of the legal estate in the Property (i.e. the registered proprietor): [32].

The land is ‘owned’ by the applicant who is a ‘company’ as these terms are defined in s 3(1) of the LTM Act. Accordingly, the PPR exemption in cl 2 of Schedule 1A does not apply to the land by reason of the cl 11(1)(a) restriction.

The Trust Deed makes no provision for a fixed entitlement of the beneficiaries in respect of income or capital of the Trust: [33]. Therefore, the equitable estate in the Property is not owned by a person or persons who are the owners of the land for land tax purposes: [34]. Therefore, the Trust is a special trust, and the PPR exemption in cl 2 of Schedule 1A does not apply to the land by reason of the cl 11(1)(c) restriction.

Accordingly, the principal place of residence exemption does not apply: [35].

Issue (ii) – Notices sent to wrong address

Section 116 of the Taxation Administration Act 1996 (NSW) (TA Act) contains general provisions specifying how notices of assessment may be served on taxpayers.

Section 16 of the TA Act provides that the validity of an assessment is not affected because a provision of a taxation law has not been complied with [46].

While the Chief Commissioner is given the power to make an assessment of land tax, the liability for land tax arises without the need for an assessment: [42].

Accordingly, notwithstanding the fact that the Land Tax Assessment Notices for 2015, 2016 and 2017 were sent to the Revesby address and not the Cecil Hills address, the Assessments were nevertheless validly issued and payable by the Taxpayer: [47].

Issue (iii) – Tribunal’s power to review instalment plan

Section 96 of the TA Act provides that a Taxpayer may apply to the Tribunal for review of a decision of the Chief Commissioner if the decision has been the subject of an objection.

The objection lodged by the Taxpayer only related to the Land Tax Assessments for the relevant tax years (i.e. 2015 to 2018). It made no reference to the Chief Commissioner’s decision regarding an instalment plan. Accordingly, the Tribunal has no jurisdiction to review this aspect of the Chief Commissioner’s decision: [53]

Orders

1. The 2015, 2016, 2017 and 2018 land tax assessments of the Chief Commissioner in regard to the land owned by the Taxpayer are confirmed.
2. The Tribunal has no jurisdiction to review the Chief Commissioner’s instalment plan.

Link to decision

Solfon Investments Pty Ltd atf Solfon Family Trust v Chief Commissioner of State Revenue [2019] NSWCATOD 11