Chu v Chief Commissioner of State Revenue - [2021] NSWCATAD 238 - NSWCATAD 2021 case summary — Zoe

NSWNSWCATAD

Chu v Chief Commissioner of State Revenue

[2021] NSWCATAD 238

NCAT Administrative and Equal Opportunity|2021-08-13

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NCAT Administrative and Equal Opportunity

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2021-08-13

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Judgment (21 paragraphs)

[1]

What was this matter about?

Ms Mei Yee Chu ("Ms Chu" or "the Applicant"), is a permanent resident of Australia although not an Australian citizen. She is a citizen of Hong Kong. She is a director and executive of a company whose principal line of business, as I understand it, involves the sale of Australian opals, particularly to customers in Hong Kong and major cities in China. Over recent years, her business responsibilities have required her to be out of Australia for extended periods.
At relevant times, Ms Chu owned real estate in Greater Sydney, being a house at Riverstone and a home unit at Westmead which I have referred to collectively as "the Properties".
On 29 July 2020 the NSW Chief Commissioner of State Revenue ("the Chief Commissioner" or "the Respondent") assessed Ms Chu as liable for surcharge land tax for each of the 2017, 2018, 2019 and 2020 land tax years in respect of the Properties. Ms Chu objected to that assessment. On 14 December 2020 the Chief Commissioner disallowed her objection. Ms Chu made further objections in writing by an email dated 20 January 2021, but on 29 January 2021 the Chief Commissioner confirmed that his assessments had already been subject to objection and no further review could be undertaken.
By her application, which was received by the Registry on 11 March 2021, Ms Chu sought administrative review of the Chief Commissioner's decision to issue the assessment for surcharge land tax in respect of the Properties.
It fell to me to determine whether that decision by the Chief Commissioner was the correct and preferable decision, in which case it should be affirmed or whether it should be varied or set aside and which if any other orders which are available under ss 63 and 65 of the Administrative Decisions Review Act 1997 ("the ADR Act") should be made.
I decided that the Chief Commissioner's decision was the correct and preferable one and that his decision must be affirmed. These are my reasons for those decisions.

[3]

Facts relating to the assessment and objection process

The following facts relating to the assessment and objection process were usefully summarised in the Chief Commissioner's written submissions and were apparently uncontested. 1. On 20 March 2018 Chief Commissioner issued a nil land tax assessment notice to Ms Chu for the 2018 land tax year. That assessment did not assess her as liable for any surcharge land tax and no land tax was payable in respect of Properties as they were below the land tax threshold. 2. On 24 July 2020 the Chief Commissioner advised Ms Chu an audit was being conducted into her surcharge land tax liability. 3. On 28 July 2020 Ms Chu lodged a land tax registration return in which she declared she was a permanent resident of Australia and a citizen of Hong Kong. That return also included details of the Properties, but claimed no exemptions. 4. Following conclusion of that audit, on 29 July 2020 the Chief Commissioner issued a Land Tax Assessment Notice to Ms Chu for a total of $36,831.75, which included a discount of $552.60 for payment on or before 7 September 2020. 5. On 5 September 2020 Ms Chu lodged an objection to the assessments in that Assessment Notice. The objection was made on the following grounds: 1. that there was a genuine need for Ms Chu to be away from Australia more than 200 days do frequent travelling to China conduct trading business her capacity as a director of an Australian company which sells Australia opals in various cities in China; 2. the need a surcharge and tax was a financial burden and was unfair in circumstances where Ms Chu was absent in order to carry out export business which was beneficial to Australia; and 3. she had not been assessed as liable for surcharge land tax in the 2018 assessment (as described at (1) above. 1. On 14 December 2020 the Chief Commissioner determined the objection by disallowing it as a whole, on the grounds that: 1. Ms Chu was not ordinarily resident in Australia the 2016, 2017, 2018 2019 calendar years; and 2. she did not occupy either of the Properties as her principal place of residence for a continuous period of 200 days in any of the relevant calendar years.

[7]

"Foreign person"

The definition which is key to liability for surcharge land tax is that of "foreign person". Over the course of the tax years relevant to this matter there have been changes to the way in which the definition has applied. In summary they are as follows: 1. The LT Act as in force during the 2017 tax year, by s 5A(1) imposed surcharge land tax on land owned by a "foreign person" and, by s 5A(6) defined "foreign person" to have the same meaning as in Chapter 2A of the Duties Act. In turn, s 104J(1) of that Act, which is within Division 2A, provided that "foreign person": " means a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section." (Emphasis added) 1. The Commonwealth Foreign Acquisitions and Takeovers Act 1975 ("FA&T Act") by section 4 defines a foreign person as an individual not "ordinarily resident" in Australia and by section 5 provides that an individual who is not an Australian citizen is ordinarily resident in Australia at a particular time (and so is not foreign person at that time) if and only if: 1. they had "actually been in Australia" during 200 or more days in the period of 12 months immediately preceding that time (which I have referred to as "the 200 days Test"); and 2. at that time either: 1. they are in Australia and their continued presence here is not subject to any time limitation imposed by law, or 2. they are not in Australia, but immediately before their most recent departure from Australia, their continued presence here was not subject to any such time limitation. 1. As contemplated in s104J(1) of the Duties Act as cited in (1) above, s104J (2) of that Act added that the definition of foreign person in the FA&T Act was modified for Australian citizens: they would be taken to be ordinarily resident in Australia whether or not they were "ordinarily resident" here under the definition. 2. With effect for the 2018 tax year there was a minor change introduced by a new subsection 5A(6) of the Duties Act which provided that in sections 5A, 5B and 5C references to "foreign person" had the same meaning as in Chapter 2A of the Duties Act. 3. With effect for the 2019 and 2020 tax years a new sub-section (5) was added to section 5A of the LT Act but it merely confirmed that in that sections 5B and 5C "foreign person" had the same meaning as in Chapter 2A (that is, s 104J) of the Duties Act which in turn, as explained above, picked up the definition in the FA&T Act and so applied the 200 days Test to determine whether a particular person was a "foreign person".

[11]

Ms Chu's case

Ms Chu's case was that she is entitled to exemption from surcharge land tax for each of the 2017 to 2020 tax years. As I understood it from my reading of all her documentary material, she asserted that that was so on the following 5 grounds (the titles to the grounds being mine): 1. "Deemed presence in Australia" ground. 1. Ms Chu asserted that she was ordinarily resident in Australia without having been physically present in Australia during the relevant periods, with particular reference to the 200 days Test. She based that on her assertions that she needs to travel to and from China to pursue her business, the core activities of which need to be undertaken in China; that she only leaves Australia for business reasons; that her children are enrolled in and study at Australian universities; that her business is an Australian business and that her personal and business bank accounts are in Australia. 1. "Benefit to Australia" ground 1. Ms Chu asserted that the very nature of her business is international and is focused on Australia- China trade and is therefore of considerable benefit to Australia and that she should not be penalised for being outside Australia for a genuine need to conduct that business. In this regard, Ms Chu also relied on the Department of Home Affairs' approval of her applications for a Resident Return Visa ("RRV") and, I take it that she contended that that demonstrates some form of recognition, binding on the Governments of the Commonwealth and of New South Wales, of her status as ordinarily resident in Australia. 1. "Covid pandemic" ground 1. Ms Chu asserted that at relevant times she was unable to return to Australia due to flight restrictions imposed as a result of the Covid pandemic and that meant she was unable to return to Australia and stay for a minimum of 200 days in the 2019 and 2020 calendar years. 1. "Financial hardship" ground. 1. Ms Chu asserted that any liability for surcharge land tax would impose a considerable financial burden on her that if she is forced to return to resume residence in Australia her business can only operate at a loss and that accordingly she has suffered and will continue to suffer financial hardship as a result of the imposition of the surcharge land tax. 1. "Unfairness/retrospectivity" ground. 1. Ms Chu asserted what I understood to be a general "unfairness" ground, to the effect that surcharge land tax has been imposed only since 2017 which was after the date on which she purchased the Properties and established her business and it is therefore unfair to impose liability for surcharge land tax on her, because in those circumstances it would be a retrospective imposition of taxation.

Chu v Chief Commissioner of State Revenue

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