Chen v Chief Commissioner of State Revenue [2024] NSWCATAD 164

Background

The Applicant owns a residential property at Narara ("Narara Property") and another at Niagara Park ("Niagara Park Property"). She was assessed to surcharge land tax for both properties for the 2019, 2021, 2022 and 2023 land tax years ("Relevant Tax Years"). The 2020 land tax year was not in dispute. The Applicant bought the Niagara Park Property jointly with her husband in 2003. After her husband died, the Applicant became the sole owner of the Niagara Park Property, and her sole ownership included all the Relevant Years.  The Applicant bought the Narara Property solely in her name in 2015.

The Applicant is a Chinese citizen who moved to Australia around 2000 and has never held Australian citizenship. On 23 December 2017, she was issued a Return (Residence) (class BB subclass 155) visa. That visa contained a travel facility until 23 December 2022. On 8 January 2023, she was granted a further Return (Residence) (class BB subclass 155) visa which contained a travel facility until 8 January 2024.

The Applicant’s movement records indicate she was present in Australia for each relevant calendar (and land tax) year for the following number of days:

1. 198 days in the 2018 calendar year (2019 land tax year);
2. 303 days in the 2019 calendar year (2020 land tax year);
3. 0 days in the 2020 calendar year (2021 land tax year);
4. 0 days in the 2021 calendar year (2022 land tax year);
5. 0 days in the 2022 calendar year (2023 land tax year).

Narara Property

On 9 January 2023 the Applicant was assessed for surcharge land tax for the Narara Property for the Relevant Tax Years in the amount of $60,013.30 ("Narara Assessments").

On 10 June 2023, the Applicant filed an objection to the Narara Assessments and on 10 August 2023, the Respondent disallowed the Applicant’s objection.

Niagara Park Property

On 10 August 2023, the Respondent also reassessed the Applicant as liable to surcharge land tax for the Niagara Park Property for the Relevant Tax Years in respect of only 50% interest (as well as 100% of the Narara Property). This reassessment was incorrect, as the Applicant owned 100% of both properties during the Relevant Tax Years.

On 18 December 2023, the Respondent reassessed the Applicant again as liable for surcharge land tax based on 100% ownership of the Niagara Park Property for the Relevant Tax Years ("Niagara Park Reassessments").

On 19 January 2024, the Niagara Park Assessments were the subject of an objection lodged by the Applicant. The objection referred only to the 2021, 2022 and 2023 land tax years ("Niagara Park Objection") and omitted an objection to 2019 land tax year.

On 31 January 2024, the Respondent disallowed the Niagara Park Objection.

Administrative Review Application

On 27 February 2024, the Tribunal ordered (by consent) that the Administrative Review Application, originally filed on 18 December 2023, in respect of a review of the Narara Assessments, be amended to include a review of the Niagara Park Reassessments.

The Statutory Framework

Surcharge Land Tax

Section 5A(1) of the Land Tax Act 1956 (NSW) ("LTA"),  provides that surcharge land tax is payable in respect of "residential land" owned by a "foreign person" (at midnight on 31 December in any year commencing with 2016).

For the purposes of the LTA, an individual is a "foreign person" at a given time if that person is not an Australian citizen and is not "ordinarily resident" in Australia. A person is "ordinarily resident" in Australia if the person satisfies both of the following:

• The person has been in Australia for 200 or more days in the 12 months preceding the time ("200-day requirement"); and
• As at the time, the person is either:
• In Australia and the person’s continued presence in Australia is not subject to any limitations as to time imposed by law¹;  or
• Not in Australia, but immediately before the person’s most recent departure from Australia, the person’s continued presence was not subject to any limitation in time imposed by law.

A foreign person is exempt from liability to pay surcharge land tax in respect of the land for a land tax year where the land is their principal place of residence, but only if the person is eligible for the exemption under s 5B of the LTA which provides for an exemption from surcharge land tax if the land is used and occupied as the owner’s principal place of residence for a continuous period of 200 days in the land tax year ("residence requirement"). The residence requirement is not satisfied during a period of the person’s physical absence from Australia.

There is no discretion in the legislation that allows the Tribunal to override the legislative criteria, despite the impact of COVID-19 restrictions, or otherwise².

Submissions

The Applicant submitted that:

1. The surcharge land tax should be waived because she was prevented from returning to Australia by COVID-19 border closures. This was out of her control, similar to a "force majeure". For this reason, she could not meet the 200-day requirement;
2. The Narara Property was her principal place of residence and was therefore exempt from surcharge land tax; and
3. The Respondent made numerous "mistakes" – including not warning her of any liability to surcharge land tax until 2023 and issuing assessments which were wrong.

The Respondent submitted that:

1. The Applicant was a foreign person for the purposes of surcharge land tax for the Relevant Tax Years, and did not qualify for any exemptions;
2. There is no discretion to waive the surcharge land tax; and
3. The Applicant did not object to the 2019 surcharge land tax assessment for the Niagara Park Property, so the Tribunal has no jurisdiction to review it.

Decision

The Tribunal held that the Applicant was a foreign person for the purpose of s. 5A of the LTA for each Relevant Tax Years as she did not satisfy the requirements in s 5(1)(a) of the FATA and was not "ordinarily resident" in Australia.

Subject to an exemption; she was liable to surcharge land tax in respect of the Narara Property and the Niagara Park Property.

For the following reasons, no exemption applied:

• The Applicant was not a permanent resident of Australia as at midnight on 31 December 2022 (an application for the new visa was lodged prior to 31 December 2022, but did not issue until 8 January 2023 and did not have any retrospective effect).
• the Applicant was a permanent resident at the relevant time for the 2019, 2021 and 2022 land tax years, the Tribunal was not satisfied that the Applicant used and occupied the Narara Property for the required "continuous period of 200 days" (evidenced by lease agreements and tenancy of the Narara Property, and that the Applicant was physically outside Australia from 30 October 2019 to 5 May 2023).
• There was insufficient evidence to conclude that the Narara Property was her principal place of residence for the required 200-day period in any of the disputed land tax years.

The Tribunal also dismissed the Applicant’s overarching submissions that the assessment to surcharge land tax were "unfair and unjust" on the basis that appeals to leniency or fairness are not relevant considerations to the validity of an assessment.

The Tribunal also noted that the Applicant had not met her onus; the Respondent, nor the Tribunal, had discretion to waive surcharge land tax; and no penalties were imposed on the assessments.

Orders

1. The assessments of surcharge land tax for the 2019, 2021, 2022 and 2023 land tax years in respect of the Narara Property were affirmed.
2. The assessments of surcharge land tax for the 2021, 2022 and 2023 land tax years in respect of the Niagara Park Property were affirmed.
3. The Tribunal had no jurisdiction to review the assessment of surcharge land tax for the Niagara Park Property for the 2019 land tax year.

Read the full decision

Footnotes

¹ LTA, s. 2A, read with Duties Act, s. 104J(1) and FATA, s. 5
² Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238 ("Chu") at [29].