Background
The facts were as follows:
- In June 2000, the Applicants purchased a residential property in Sydney (“the land”) and resided there until 26 March 2013, when the Applicants vacated the land to allow for a new principal place of residence to be built.
- On 26 March 2013, the house on the land was demolished and building work commenced.
- The Applicants resided in a rental property whilst construction occurred.
- From 22 May 2013 to 9 April 2017, building work was delayed due to Council stop work orders; the builder abandoned the site; the Applicants engaged in Court proceedings against the builder and home warranty insurance after the builder went into liquidation.
- On 27 July 2017, the Applicants entered into a building contract with another builder.
- On 4 August 2017, building works recommenced.
- On 9 September 2018, the Applicants returned to live in their newly built home on the land.
The applicants submitted, and the CCSR did not dispute, that the events which prevented the Applicants from using and occupying the land as their PPR from 26 March 2013 to 9 September 2018 were beyond their control.
Issues
- whether cl. 6 (intended PPR) or cl. 8 (former PPR) of Sch 1A of the LTMA applied so as to exempt the land from land tax; and
- if not, whether the Tribunal can or should exempt the land from land tax or reduce the amount payable, by reason of the relevant events being beyond the control of the Applicants.
Tribunal Decision
Clause 6- Unoccupied land intended to be the owner’s PPR
The Tribunal held that, as at midnight on 31 December 2017, the land was unoccupied, and Mr and Mrs Zhang intended to use it as their PPR. However cl. 6(3) limited the application of the deeming provisions to the four land tax years immediately following the year in which a person became owner of the land. Mr and Mrs Zhang purchased the land in 2000. The four land tax years immediately following that year were the 2001, 2002, 2003 and 2004 land tax years. The cl. 6 exemption did not apply to any subsequent tax year, and therefore did not apply in respect of the 2018 land tax year.
Clause 8- Former PPR
The Tribunal noted the effect of cl 8(1) was to deem an owner of land to continue to use and occupy the land as their PPR after ceasing to do so for up to 6 years, if they had occupied the land as their PPR for at least six months, and did not own other land during their absence which they used and occupied as a PPR. The Tribunal found that the Applicants satisfied these requirements.
However, the effect of cl. 8(3A) was to exclude the operation of cl 8(1) if the land remained incapable of being used and occupied as a PPR for more than four years.
The Tribunal noted that cl 8(3A) uses the phrase, ‘capable of being used and occupied as a residence’. The term ‘residence’ must be given its ordinary meaning, and a structure which is uninhabitable is incapable of being used as a residence.
The Tribunal was satisfied that the land was incapable of being used and occupied as a PPR by 26 March 2013 when the house on the land was demolished. The land became capable of being used and occupied as a PPR when the new dwelling was built to a reasonably habitable stage. Whilst the evidence did not establish precisely when that occurred, building works recommenced on 4 August 2017 and the Zhang’s moved into their new home on 9 September 2018.
The Tribunal determined that the four-year period referred to in cl. 8(3A) commenced on 26 March 2013 and ended on 26 March 2017. As such, the Tribunal found that the exemption provided by cl. 8(1) ceased on 26 March 2017 and therefore the exemption did not apply in respect of the 2018 land tax year.
Whether the Tribunal could exempt the land because events were beyond the owners’ control
The Tribunal assumed that the events which prevented the Applicants from using and occupying the land as their PPR were beyond their control. However, the Tribunal highlighted that land tax is to be charged on land in accordance with the provisions of the LTMA unless the legislation provides that an exemption applies. Despite the fact that the events which excluded the application of the exemptions were beyond the control of the Applicants, the Tribunal found that, as the exemptions provided by cll. 6 and 8 did not apply and no other exemption provisions applied, the Tribunal did not have the power to exempt the land from land tax or to reduce the amount of land tax payable.
Orders
- The land tax assessment of the CCSR in respect of the 2018 land tax year is confirmed.
Read the full decision
