Horn-Smith v Chief Commissioner of State Revenue [2021] NSWCATAD 196

Background

On 16 June 2020, the Chief Commissioner of State Revenue issued a Land Tax Assessment Notice to the Applicant for the 2017 to 2020 land tax years on the basis that the Applicant Mr Horn-Smith was liable to pay surcharge land tax on his residence at Mosman in NSW (the “Property”). (“Assessment”).

Following the disallowance of his objection, the Applicant applied to the Tribunal for review of the assessments.

The Statutory Framework

Section 5A of the LT Act imposes Surcharge land tax on a foreign person as defined in s.104J of the Duties Act 1997 (NSW) (“Duties Act”).  A “foreign person is defined as a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, but excludes

• an Australian citizen;
• a permanent resident of Australia who has lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and
• a New Zealand Citizen, who holds a sub-class 444 visa.

Submissions

The Applicant submitted that:

1. he has been residing in Australia permanently since 2010,
2. he has been in Australia for more than 200 days for each of the relevant land tax years,
3. he was and is a British Citizen holding a New Zealand visa and is entitled to apply for a further visa of this category when his current visa expires,
4. his visa is a New Zealand spousal visa and should afford him the same rights as a New Zealander living in Australia,
5. the holders of visa subclasses 309 and 820 are examples of temporary partner visa holders who are the de facto partner or spouse of an Australian citizen, Australian permanent resident or eligible New Zealand citizen, who live in Australia temporarily and are treated by the Chief Commissioner as if they held a permanent visa,
6. he holds a New Zealand spousal visa as a member of a family unit of a New Zealand citizen, which allows him to live and work in Australia for 5 years,
7. the subclass 820 and 461 visas are precedents of the Chief Commissioner treating temporary visa holders as permanent resident visa holders,
8. although these visas are technically “temporary” in nature, they are used by people that intend to live in Australia in more permanent circumstances, and the Chief Commissioner therefore treats these individuals as permanent residents,
9. it is not the intention of the legislation to capture persons in his circumstances who genuinely live in Australia on a full-time and permanent basis,
10. the Mosman property was and is his only residence, whether in Australia or elsewhere.

The Chief Commissioner submitted that:

1. only a person who holds a Partner (Provisional) visa (subclass 309 or 820) will be treated in the same way as a permanent resident visa holder for the purposes of surcharge land tax and duty;  it does not follow that the holder of another class of visa will or should also be treated that way,
2. the Applicant holds a temporary New Zealand Citizen Family Relationship visa, but the potential to renew such a visa does not mean it operates as a permanent visa, nor is it the equivalent of a partner visa; under the terms of the Applicant’s visa his continued presence in Australia is subject to limitation as to time;  he is therefore not 'ordinarily resident in Australia' and is a foreign person who is subject to surcharge land tax on the property,
3. section 5 of the FAT Act provides that an individual who is not an Australian citizen is ordinarily resident in Australia at a particular time only if certain conditions are satisfied; the conditions are that the individual has actually been in Australia for a minimum number of days during a specified period and that at the particular time the individual's continued presence in Australia was not subject to any limitation as to time imposed by law, and
4. temporary visas (including the Subclass 461 visa held by the Applicant) impose time limits on a person’s lawful presence in Australia, making the holders ‘foreign persons.

Decision

SM Isenberg rejected the Applicant’s submission that the Ruling implies that consideration will be given to the holder of a Subclass 461 visa and that some temporary visas can be treated as ‘permanent resident’ visas.  The Senior Member also rejected the Applicant’s submission regarding the substantive intention of the legislation because it was not supported by any authorities or evidence, and therefore did not satisfy the onus of proof.

SM Isenberg noted that the Applicant’s wife was a Cook Islander with rights to New Zealand citizenship and was entitled to enter Australia on a Sub Class Visa 444.  As to the contention that the Applicant was a permanent resident of Australia at any relevant date SM Isenberg found at [37] that there was no evidence before the Tribunal that the Applicant satisfied any of the requirements of either s. 5 of the Australian Citizenship Act 2007 or s. 30 of the Migration Act 1958 to remain indefinitely in Australia; to be a permanent resident of Australia; or to hold a permanent visa.  Citing ss. 5A and 5B of the LT Act, SM Isenberg found that there was no evidence before the Tribunal that the Applicant had complied with his relevant obligations under those preceding provisions. SM Isenberg also noted the Applicant’s concession that he did not meet the requirements for permanent residency.

In regard to other issues raised in the Applicant’s submissions, the Senior Member rejected the claim of a ‘discriminatory ruling’. He further rejected the implied submission that the NSW law breaches or is otherwise inconsistent with the Commonwealth Constitution (At [48]).

SM Isenberg also rejected the notions of being able to use the Mosman property to create a rental return to offset the land tax surcharge; that the 461 visa has intentionally been excluded from the partner visa exemption list; that the time limit imposed by law on his visa should be restricted to the 12 month assessment period; and that there is discrimination against 461 partner visas.

Further, the Senior Member rejected the notion that the Tribunal does not have jurisdiction, citing s. 28(1) of the CAT Act. He also rejected the submissions regarding the application of natural justice, which the Applicant admitted he did not fully understand during the course of the hearing.

SM Isenberg rejected 8 of the Applicant’s reply submissions, which he found to contain factually incorrect statements, and submissions on the intent of Parliament in passing certain law; submissions on the Australian Constitution; allegations of legislative ambiguity and the possibility of oversight by Parliament in passing the relevant legislation.

SM Isenberg rejected the Applicant’s oral submissions relating to discrimination, natural justice, inconsistency, and a hypothetical question regarding future ownership of the Property by his wife.

In summary, the Senior Member held at [70] that he was not satisfied on the balance of probabilities on the material before him that the Applicant had satisfied the onus placed upon him. Accordingly, the correct and preferable decision of the Tribunal was to affirm the decision of the Chief Commissioner under review.

Orders

1. The decision under review is affirmed.

Link to decision

https://www.caselaw.nsw.gov.au/decision/17a89a0af2c65602ee49e07e