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Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107;
Day v Harness Racing New South Wales [2014] NSWCA 423;
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60;
Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 274;
R v Mailes [2001] NSWCCA 155, (2001) 53 NSWLR 251;
Sweeney v Fitzhardinghe (1906) 4 CLR 716.
Background
The Applicant applied to the Tribunal seeking review of the Assessment of land tax for the 2020 land tax year on a property at Redfern (“the Property”) containing seven flats. The Applicant claimed the land was used for low cost accommodation in accordance with Treasurer’s Guidelines (“LCA Guidelines”) approved under section 10Q of the Land Tax Management Act (LTMA).
The Chief Commissioner disallowed the applicant’s objection to the assessment on the ground that the requirements of the guidelines approved for the 2020 land tax year under s 10Q in relation to boarding houses had not been met.
The Statutory Framework
Section 10Q (Low-cost accommodation—exemption/reduction) provides that land is exempted from land tax if the Chief Commissioner is satisfied the land is used and occupied primarily for low cost accommodation, in accordance with guidelines approved by the Treasurer. The Treasurer’s Guidelines for the 2020 land tax year are published in Revenue Ruling LT 106 (boarding houses) and Revenue Ruling LT 107 (Low cost accommodation).
Applicant's submissions
The Applicant’s submissions may be summarised as follows:
The Applicant agreed with the Chief Commissioner that the exemption for boarding houses did not apply to the property because it consisted solely of self-contained flats.
The tariffs charged were reasonable if one considered all that was included in them. The seven apartments each had its own self-contained newly-renovated kitchen, with all equipment, utilities, cleaning of bathrooms, carpets and courtyards, Internet, refrigerator, microwave, utensils, mugs, glasses, crockery and pots and pans. If these expenses were deducted from the tariffs, the rent for each flat would fall well below the maximum allowed for LCA.
The definition of “tariff” was included in Revenue Ruling LT 106 (Boarding Houses) but was not included in LT 107 (LCA). The Applicant argued that the definition in LT 106 should not be applied to LT 107 because boarding houses did not include the same tariff items as furnished flats, eg furniture, utilities, internet and cleaning; the maximum tariffs in LT 106 and LT 107 were not the same, reflecting differences in their components.
The tariffs for the Property included items that are not normally included in other low-cost accommodation or boarding houses, as most LCA units were unfurnished, with the tenant responsible for all utilities, refrigerators and other kitchen implements. Most boarding houses had a shared kitchen, while the seven apartments in the Property each had its own self-contained newly-renovated kitchen, with all equipment, utilities, cleaning of bathrooms, carpets and courtyards, Internet, refrigerator, microwave, utensils, mugs, glasses, crockery and pots and pans.
The maximum tariffs specified in the LCA guidelines were expressed in a footnote to exclude GST. As rent itself is not subject to GST, all amounts of GST that had been paid for management fees, insurance and other goods and services carrying GST should be deducted from the tariffs. If GST was deducted from the tariffs charged in 2019, the tariffs fell well below the maximum tariffs allowed.
Further support for the position that “tariff” could refer to different inclusions was demonstrated by LT 106’s distinction between the maximum tariff for a boarding-house that did not supply full board, and one that did.
The fact that the Applicant’s daughter occupied one of the seven flats in 2019 should not automatically exclude the Applicant from any land tax exemption. References to using and occupying the land was inappropriate for a property that provides multiple occupancies, each on a separate tenancy agreement, in which the Applicant’s daughter only lived in one of seven flats. For that one flat the Applicant was happy to pay land tax pro rata.
Section 10(Q)(3) allowed for discretion in the factors that were to be considered when interpreting LT 107, by providing that a guideline ‘may’:
apply generally or be limited in its application by reference to specified exceptions or factors, and/or
apply differently according to different factors of a specified kind.
Being charged land tax made operating the Property unviable and would discourage the Applicant and other private individuals from providing much needed low cost accommodation, and had socio-economic implications for individuals, communities and the Government.
Chief Commissioner’s submissions
The Chief Commissioner’s submissions may be summarised as follows:
The Applicant did not use and occupy the land in accordance with the guidelines because the rents charged by the Applicant to the tenants in the relevant period (1 July 2019 to 31 December 2019) exceeded the tariff limits prescribed in the Treasurer’s Guidelines.
Alternatively, even if the maximum tariff limits were satisfied, the Applicant was not entitled to the section 10Q exemption because the Applicant’s daughter had used and occupied part of the Property for at least some of the period from 1 July 2019 to 31 December 2019, contrary to clause 2(ii) of LT 107.
Decision
Senior Member Walker upheld the Chief Commissioner’s assessment for the following reasons:
Under the guidelines for the relevant period, the maximum tariff that could be charged was $261 for one-bedroom accommodation. All seven flats in the property contained one-bedroom and the rentals charged ranged from $285 to $340 a week. Consequently, prima facie all exceeded the maximum tariff permitted by the LCA guidelines.
Both LT 106 and LT 107 were approved at the same time and as such they may be viewed as part of a scheme of delegated legislation. To give the LCA guidelines a sensible operation, it is therefore necessary to recognise that some definitions, in this case the definition of a tariff, have been omitted and are to be found in LT 106. The Second Reading Speech introducing the 1994 Amending Act which introduced s. 10Q(2)(e) (in its present form) supports this.
Under LT 106 ’Tariff’ means the cost of a room or bed as well as electricity, water and other charges, excluding Commonwealth GST. However, rent as such is input taxed and exempt, so rent could never include any amount of GST. It therefore includes the whole amount of the weekly rent payable by a tenant, with no reduction for the value or cost of any “inclusions” or other extras. None of the tariffs satisfied the maximum limit and the exemption under s 10Q cannot apply.
The Tribunal has no discretion in relation to the application of the LCA guidelines. The LCA guidelines operate as a form of delegated legislation, not as a source of ideas and guidance for the decision-maker. They are binding rules that limit the availability of the section 10Q exemption and the Tribunal must determine whether the Treasurer’s Guidelines are met. Section 10Q confers a discretionary power in relation to the contents and drafting of the Treasurer’s Guidelines, not to their application by the decision-maker (the Chief Commissioner)[1].
Despite the socio-economic needs of individuals, communities and the government and the fact the Applicant is indeed performing a community service, there was no discretion to determine the matter having regard to these considerations.
Under Clause 4(ii) of LT 107 an exemption or reduction is not available where “any” of the persons using and occupying the land was a member of the owner’s family. The applicant is not entitled to any exemption or reduction in taxable land value for the 2020 tax year solely because the applicant’s daughter used and occupied part of the property for at least part of the period from 1 July 2019 to 31 December 2019.