Background
The Applicants own a property at 17-19 Bona Vista Avenue, Maroubra (“Property”), under a strata plan which comprises ten units. The units are owned in various combinations by the Applicants. The first and second applicants are married. The third and fourth Applicants are their sons.
On 25 May 2020, the Chief Commissioner issued notices of assessment to land tax to all of the applicants for the 2020 land tax year; to the first applicant for the 2016 - 2020 land tax years and to the second applicant for the 2020 land tax year. The Chief Commissioner exempted unit 8 on the basis that it was the principal place of residence of the first and second Applicants.
On 1 July 2020, the applicants lodged an objection to those assessments. On 9 December 2020, the Chief Commissioner disallowed the objections, but issued amended assessments to apply the PPR exemption to unit 10 instead of unit 8.
On 28 January 2021, the Applicants lodged an Application for Review of the assessments.
Issues
The issues before the Tribunal were:
- Should the PPR exemption be available for the 2020 tax year with respect to Units 8 and 10 pursuant to Schedule 1A, cl. 12(8) of the Land Tax Management Act 1956 (“LTMA”).
- Should the assessments issued to the first applicant for the 2016 to 2020 land tax years be set aside on the basis that the Chief Commissioner acted in a manner that was harsh, unconscionable, unfair or inequitable (“Second Issue”); and
- Should the Tribunal order a review of the amounts owed under the assessments (“Third Issue”).
Procedural Issues
Two days before the hearing the Applicants informed the Chief Commissioner that the first and second applicants would not be available for cross examination because of ongoing medical issues. The Applicants filed medical certificates with the Tribunal.
The day before the hearing, the Chief Commissioner lodged submissions objecting to the Tribunal receiving into evidence the statutory declaration of the first Applicant and the affidavit of the second Applicant due to the inability for the Chief Commissioner to cross examine them on key factual matters contained in their evidence.
The evening before the hearing, the Applicants filed an application to adjourn the proceedings. However the Tribunal concluded that an adjournment would not be consistent with the principle of “just, quick and cheap resolution of the real issues in the proceedings ” and would be futile given the medical evidence provided by the Applicants which suggested that the first and second applicant would never be able to attend the hearing regardless of the date or the mode of the hearing.
The Tribunal decided to take into account both the statutory declaration of the first Applicant and the affidavit of the second Applicant for reasons which are explained at [38] to [44], and included:
- There is no absolute right to cross-examine and it is a matter of discretion, which the Tribunal concluded was informed by the facts of the case;
- The absence of relevant provisions about the exercise of discretion in the Civil and Administrative Tribunal Act 2013 or the Civil and Administrative Tribunal Rules 2014;
- Where the Tribunal exercises the discretion to allow evidence to be adduced despite the lack of opportunity for cross examination, the Tribunal may afford less weight to such evidence.
Submissions and Decisions
First Issue – PPR exemption
The Applicants claimed as follows:
- Despite being legally married, the first and second Applicants did not cohabit as at 31 December 2019. The first applicant lived in Unit 10 and the second applicant lived in Unit 8 for about seven years. It was due to the first and second applicants’ religious beliefs that a divorce was not sought.
- The first and second Applicants had no intention of resuming cohabitation as at 31 December 2019 because of their advanced age and poor health as indicated by their evidence.
The Chief Commissioner submitted:
- The only evidence proffered that the first and second applicants did not intend to resume cohabitation was the statutory declaration and affidavit, respectively. The Chief Commissioner did not have the opportunity to cross-examine the first and second applicants on their evidence.
- Evidence that the first and second applicants registered the strata plan in May 2019 as joint tenants rather than tenants in common, that they referred to each other as “spouses” in their individual taxation returns and shared a bank account and private health insurance cast doubt on the veracity of the Applicants’ evidence.
- The Tribunal should not be satisfied that the Applicants have discharged their onus of disproving cohabitation, meaning only 1 of units 8 and 10 was exempt.
The Tribunal concluded that the Applicants had not discharged their onus of proving the availability of the PPR exemption. Emphasising In the marriage of Clarke, Senior Member Goodman noted at [89] that:
“in the context of a section which posits that persons are spouses, the expression “not cohabiting” may suggest a legislative intention that the spouses are not only not living together, but that there has also been a severance of the marital relationship”.
The Tribunal concluded it could not be persuaded by the Applicants evidence that the first and second applicants were not living together because:
- Units 8 and 10 were adjacent to each other, with approximately 3 metres between the doors of the units.
- The second applicant’s taxation returns for the years ended 30 June 2019 and 30 June 2020 each record that her home address was Unit 10 and not Unit 8.
- The electoral roll records Unit 8 as being the address for both the first and second applicants.
- “There is no detail provided of matters such as their activities on a day-to-day basis, including the extent of contact they had with each other” (at [94]).
As the Tribunal was not satisfied that the first and second applicants were not cohabiting as at 31 December 2019, it was determined unnecessary at [102] to consider whether the first and second Applicants had any intention of resuming cohabitation.
Second Issue – claims that assessments were harsh, unconscionable, unfair or inequitable
The Applicants claimed that while the assessments issued to the first applicant for the 2016 to 2019 land tax years, were validly issued, the assessments ought to be set aside on the basis that the assessments were harsh, unconscionable, unfair or unequitable. This was argued on the basis that the first Applicant is an elderly gentleman who has contributed to Australian society.
The Chief Commissioner argued there was no statutory basis on which to challenge the validity of the assessments on such grounds because the Applicants acknowledged that the assessments were validly issued. Moreover, liability for land lax is mandatory by the operation of the land tax legislation and concepts such as fairness and equity do not apply.
Senior Member Goodman held that “the applicants have provided no evidence in support of their submissions and this is sufficient to dispose of this issue” (at [107]).
Third Issue - review of the amounts owed under the assessments
The Applicants argued that the Tribunal should order a review of the amounts owed under the assessments to allow the Applicant’s accountant to ascertain the accuracy of the figures used in those assessments.
The Chief Commissioner argued that the powers of the Tribunal as set out in s. 101 of the Taxation Administration Act (“TAA”) do not empower the Tribunal to make the order sought by the Applicants to have their accountant ascertain the accuracy of the assessed figures.
The Tribunal agreed that s. 101(1)(e) of the TAA empowers the Tribunal to “make any further order as it thinks fit”, but Senior Member Goodman declined to utilise this power to order a review of the amounts because the Applicants’ evidence did not support the necessity of making such an order (at [115]).
Orders
The Tribunal affirmed the December Reassessments issued by the Chief Commissioner.
Link to decision
https://www.caselaw.nsw.gov.au/decision/17ba4868de6bc16cb8dadcbd
