Delmege & Anor v Chief Commissioner of State Revenue

Supreme Court of NSW|2014-04-02|Before: White J

Solicitors: Evangelos Patakas & Associates (Plaintiffs) Crown Solicitors Office (Defendant) File Number(s): 2010/159278

Judgment 1HIS HONOUR: These proceedings concern the liability of the plaintiffs to land tax for the years 2002-2006. The particular issue is whether a property at 1758 Pittwater Road, Bayview ("the Bayview property") that was purchased by the plaintiffs (Mr and Mrs Delmege) in about April 2001 and sold by them in May 2007 was exempt from land tax pursuant to s 10T of the Land Tax Management Act 1956 (NSW) on the ground that it was their intended principal place of residence. That section and related sections were repealed as at 31 December 2003. The plaintiffs contend that by reason of the transitional provisions s 10T continued to operate so as to provide an exemption from land tax in respect of the 2004-2006 land tax years. 2There were earlier proceedings instituted in this Court in 2008 by which the plaintiffs challenged assessments raised by the defendant ("the Chief Commissioner") for the 2004-2006 land tax years. It was common ground, and remains common ground, that if the plaintiffs were not entitled to rely on s 10T, they were not entitled to an exemption from land tax in respect of the Bayview property for the 2004-2006 land tax years. Shortly before the hearing of the 2008 proceedings the Chief Commissioner provided written submissions in which he contended that even if s 10T had a continued operation as asserted by the plaintiffs, the plaintiffs did not satisfy the requirements of that section. The Chief Commissioner had earlier allowed an objection for the 2002 and 2003 land tax years. In his written submissions in the 2008 proceedings the Chief Commissioner submitted that the decision to allow the objection for those land tax years was erroneous and that he might make a reassessment of the taxation liability of the plaintiffs for those years. 3The result of the Chief Commissioner's having taken this position was that the 2008 proceedings were initially adjourned. Gzell J ordered that upon the Chief Commissioner undertaking to issue amended assessments to the plaintiffs with respect to the 2002 and 2003 land tax years and raise the issue of s 10T(2)(c) of the Land Tax Management Act with respect to the 2004-2006 land tax years by amended assessment or otherwise, the proceedings be adjourned. The Chief Commissioner was ordered to pay the plaintiffs' costs thrown away on the indemnity basis (Delmege v Chief Commissioner of State Revenue [2009] NSWSC 1052). That order was made on 1 October 2009. On the same day the Chief Commissioner issued new assessments for each of the 2002-2006 land tax years. Objections to those assessments were made by the plaintiffs on 27 November 2009. The objections were disallowed by the Chief Commissioner on 28 April 2010. The summons in the 2008 proceedings had sought the setting aside of the earlier assessments made by the Chief Commissioner in respect of the 2004-2006 land tax years on 23 November 2006. Because those assessments had been replaced by the new assessments of 1 October 2009 the summons in the 2008 proceedings was dismissed on 15 December 2010 and a fresh summons was filed in these proceedings to challenge the 1 October 2009 assessments for the 2002-2006 land tax years. 4The plaintiffs submit that the Chief Commissioner had no authority to issue new assessments for the 2002-2004 land tax years because more than five years had passed after the initial assessment of the plaintiffs' liability for land tax in those years (Taxation Administration Act 1996 (NSW), s 9(3)). 5During the hearing the issues were narrowed. The plaintiffs did not pursue their contention that the Bayview property was their actual place of principal residence. Nor did they pursue their contention that by reason of the manner in which the Chief Commissioner had conducted the 2008 proceedings he was estopped from relying upon the provisions of Schedule 1A to the Land Tax Management Act (which commenced from 31 December 2003) and was required to confine his case solely to his argument about s 10T. There was no substance to either of those contentions which were rightly abandoned. For his part, the Chief Commissioner did not dispute that the plaintiffs intended to use and occupy the Bayview property solely as their principal place of residence but contended the exemption under s 10T was not available because s 10T(2)(c) was not satisfied. 6The principal issues are: a.whether, in respect of the 2002 and 2003 land tax years an exemption under s 10T of the Land Tax Management Act is not available to the plaintiffs because the land was used and occupied by other persons for parts of those years; b.whether by reason of the transitional provisions in Schedule 4 cl 13 of the State Revenue Legislation Further Amendment Act 2003 (NSW) that introduced Schedule 1A to the Land Tax Management Act and inserted Pt 15 to Schedule 2 to that Act, and in particular clause 35 in that part, the provisions of the Land Tax Management Act as they were in force immediately before 31 December 2003 continued to apply to determine the availability of the exemption for the 2004-2006 land tax years; c.if so, whether the exemption under s 10T is not available to the plaintiffs because the land was used and occupied by others for parts of those periods; and d.whether the Chief Commissioner was precluded from raising new assessments for the 2002-2004 land tax years on 1 October 2009 by reason of s 9(3) of the Taxation Administration Act; 7I have concluded that the concession under s 10T was not available to the plaintiffs for the 2002 and 2003 land tax years, but that the Chief Commissioner was not entitled to reassess the plaintiffs' liability by the notices of reassessment of 1 October 2009. I have concluded that the assessments for the 2004 to 2006 land tax years should be confirmed.

The relevant legislation 8Section 8 of the Land Tax Management Act 1956 provides: "8 Date of ownership for purposes of land tax Land tax shall be charged on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. In this section year means the period of twelve months commencing on the first day of January." 9By s 9(1) land tax is payable by the owner of land on the taxable value of all of the land owned by that owner which is not exempt from taxation under the Act. Prior to 31 December 2003 s 10 of the Land Tax Management Act relevantly provided: "10 Land exempted from tax (1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10AA, 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act: ... (r) with respect to taxation leviable or payable in respect of the year commencing on 1 January 1998 or any succeeding year, land that has a land value in respect of the year of less than the premium tax threshold and that is used and occupied as the principal place of residence of the owner of the land (or, if there are joint owners, as the principal place of residence of one or more of them) and for no other purpose (except as provided by subparagraph (iii)), being: ... (ii) a parcel of residential land, or ... (1D) In paragraph (r) of subsection (1) residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes: ..." 10Section 10T provided: "10T Concession for unoccupied land intended to be owner's principal place of residence (1) If the Chief Commissioner is satisfied that the owner of land (or, if there are joint owners, any one or more of them) intends to use and occupy the land solely as his or her principal place of residence, that intended use and occupation of the land is to be regarded as its actual use and occupation for the purposes of section 10 (1) (r). (2) This section does not apply unless: (a) (Repealed) ... (c) while the owner is the owner, the land is not used or occupied except as his or her principal place of residence. ... (3) A person is not entitled to have his or her intended use and occupation of land taken into account for land tax purposes if: (a) the person or any joint owner of the land is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 10 (1) (r), or (b) the person has already received the exemption in respect of any other land in respect of a previous tax year, or (c) the person or any joint owner of the land owns land outside New South Wales which is the principal place of residence of the person or joint owner. (4) This section applies to a person's ownership of land only for the 2 tax years immediately following the tax year in which: (a) the person became owner, or (b) the person, whose land was eligible for an exemption from tax under section 10 (1) (r) in that tax year, ceased to be able to use and occupy the land as his or her principal place of residence because of damage to or destruction of the residence on the land by an event such as fire, earthquake, storm, accident or malicious damage, unless the Chief Commissioner extends or further extends its operation in a particular case on the basis of an acceptable delay in that case. (4A) This section does not apply in respect of land referred to in subsection (4) (b) unless the land concerned was the principal place of residence, for the purposes of section 10 (1) (r), of the person referred to in subsection (4) (b) immediately before the relevant damage or destruction occurred. (5) An acceptable delay is a delay in the commencement or completion of the building or other work necessary to enable the intended use and occupation of the land to become its actual use and occupation that the Chief Commissioner is satisfied is due primarily to reasons beyond the control of the owner." 11Schedule 4 to the State Revenue Legislation Further Amendment Act 2003 commenced on 31 December 2003 (s 2(2)). By clause 5 of Schedule 4 para (r) of s 10(1) was omitted and the following paragraph inserted in its place: "(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A." 12Schedule 1A of the Land Tax Management Act now contains the provisions concerning the "Principal place of residence exemption". Clause 6 of Schedule 1A provides: "6 Concession for unoccupied land intended to be owner's principal place of residence (1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence. Note. It is an offence under section 55 of the Taxation Administration Act 1996 to make a statement to a tax officer, or give information to a tax officer, orally or in writing, knowing that it is false or misleading in a material particular. (2) This clause does not apply unless: (a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and (b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and (c) the intended use and occupation of the land is not unlawful. (3) This clause applies in respect of the assessment of a person's ownership of land only in the period of: (a) 4 tax years immediately following the year in which the person became owner of the land, or (b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 4 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner's intended use and occupation of the land are physically commenced on the land. (4) (Repealed) (5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least 6 months. (6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly. (7) This clause does not apply in respect of land owned by a person if: (a) the person or any member of the person's family (within the meaning of clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 9D or under this Schedule, or (b) the person owns land outside New South Wales that is the principal place of residence of the person or a member of the person's family (within the meaning of clause 12), or (c) the land, or the land if combined with any adjoining land of which the person is an owner, is capable of having more than 2 residences or residential units lawfully built on it. (8) For the purposes of this clause: unoccupied land means land that is not being used or occupied for any purpose." 13The plaintiffs concede that if Schedule 1A applies in respect of the 2004-2006 land tax years, then the principal place of residence exemption is inapplicable because the plaintiffs did not take up actual use and occupation of the land as their principal place of residence by the end of the period to which clause 6 applied in respect of an assessment of their ownership, let alone, continue to so use and occupy the land for at least six months. 14Liability to land tax is imposed by s 9(1) of the Land Tax Management Act itself. The liability of an owner of land to land tax does not depend upon the making of an assessment. Section 8(1) of the Taxation Administration Act provides: "8 General power to make assessment (1) The Chief Commissioner may make an assessment of the tax liability of a taxpayer." 15"Assessment" is defined in s 3 of the Taxation Administration Act as follows: "assessment means an assessment made by the Chief Commissioner under Part 3 of the tax liability of a person under a taxation law, and includes: (a) a reassessment and a compromise assessment under Part 3, and (b) an assessment by the Supreme Court or the Civil and Administrative Tribunal on an application for a review." 16Section 9 relevantly provides: "9 Reassessment (1) The Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer. ... (3) The Chief Commissioner cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability, unless: (a) the reassessment is to adjust tax to give effect to a decision on an objection or review as to the initial assessment, or (b) at the time the initial assessment or a reassessment was made, all the facts and circumstances affecting the liability under the relevant taxation law of the person in respect of whom the assessment or reassessment was made were not fully and truly disclosed to the Chief Commissioner and, as a result, the tax liability was assessed at a lower amount than the Chief Commissioner would otherwise have assessed it, or (c) the reassessment is authorised to be made more than 5 years after the initial assessment by another taxation law, or (d) the reassessment is made as a consequence of an application by a taxpayer, being an application made within 5 years after the initial assessment of the liability, and the reassessment reduces the tax liability. (4) The initial assessment of a tax liability remains the initial assessment of the liability for the purposes of this Act even if it is withdrawn under section 13." 17Sections 13, 14 and 16 provide: "13 Withdrawal of assessment The Chief Commissioner may withdraw an assessment (being an assessment for which a notice of assessment has been issued) at any time within 5 years after the date of issue of the notice, whether or not the amount of tax specified in the assessment has been paid. 14 Notice of assessment, reassessment or withdrawal of assessment (1) The Chief Commissioner may issue a notice of assessment (showing the amount of the assessment). (2) If the Chief Commissioner has not issued a notice of assessment of the tax liability of a taxpayer, the Chief Commissioner must issue the notice if a request to do so is made by the taxpayer within 5 years after the liability arose. (3) If the Chief Commissioner makes a reassessment, the Chief Commissioner must issue a notice of assessment (showing the amount of the reassessment). (4) If the Chief Commissioner withdraws an assessment, the Chief Commissioner must issue a notice of withdrawal of assessment. (5) The notice is to be in a form approved by the Chief Commissioner. ... 16 Validity of assessment The validity of an assessment is not affected because a provision of a taxation law has not been complied with." 18Section 86 provides that a taxpayer who is dissatisfied with an assessment that is shown in a notice of assessment served on the taxpayer may lodge a written objection with the Chief Commissioner. The Chief Commissioner must consider the objection and either allow the objection in whole or in part or disallow it (s 91). Sections 96 and 97 provide that a taxpayer may apply either to the Civil and Administrative Tribunal (formerly the Administrative Decisions Tribunal) or the Supreme Court for a review of a decision of the Chief Commissioner that has been the subject of objection under Division 1 if the taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection or if 90 days have passed and the objection has not been determined. Section 100 relevantly provides: "100 Provisions relating to applications for review ... (2) The applicant's and respondent's cases on an application for review are not limited to the grounds of the objection. (3) The applicant has the onus of proving the applicant's case in an application for review. ..." 19Section 101(1) relevantly provides: "101 Powers of court or tribunal on review (1) The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit." 20No court or a tribunal or other body or person has jurisdiction or power to consider any question concerning an assessment or other decision of the Chief Commissioner under a taxation law except as provided in Part 10 of the Taxation Administration Act (s 103A). 21Section 119 provides: "119 Evidence of assessment Production of a notice of assessment, or of a document signed by the Chief Commissioner purporting to be a copy of a notice of assessment, is: (a) conclusive evidence of the due making of the assessment, and (b) conclusive evidence that the amount and all particulars of the assessment are correct, except in objection or review proceedings when it is prima facie evidence only."

Purchase, occupation and use of the Bayview property 22Mr and Mrs Delmege married in 1997. It was the second marriage for both of them. They both had children from their prior marriage. Mr Delmege lived in a property in Surfview Road, Mona Vale that was owned by a company of which he became the director and shareholder. He resided in the Mona Vale property paying rent. In 1997 Mrs Delmege moved into that property with him. They wanted to purchase a property that would become their matrimonial home. They acquired the Bayview property in 2001. Their initial intention was to renovate the property, but they decided against that course. Instead, they decided to knock down the existing house and build a new one. In 2002 they instructed an architect, Mr Drew Dickson, to draw up architectural drawings and plans for the construction of a new dwelling. This took some time. Mr and Mrs Delmege consulted a number of architects before settling on using the services of Mr Dickson. They had many discussions over a long period about the design of a new house, a larger garage, a rebuilding of a boathouse and pool and entertainment area, and re-landscaping. A development application was lodged with the Pittwater Council in about March 2004. There were various objections and revised plans were submitted. Council approval was given in about July 2005. After obtaining approval from the Pittwater Council, Mr and Mrs Delmege consulted builders and other professionals and received quotes for the building work up to mid-2006. By that time, and because of difficulties that Mr Delmege was experiencing in his business, they decided they could no longer afford to build the new house on the Bayview property. Mr Delmege was under financial pressure. They decided to sell the property which they did in May 2007. 23During all of this period Mr and Mrs Delmege maintained their principal place of residence at Surfview Road, Mona Vale. 24After the Bayview property was purchased Mr and Mrs Delmege moved some of their furniture into the property where it remained during their period of ownership. Mr Delmege parked three of his cars in the garage and moored a boat off the jetty. In the first year of their ownership they rebuilt the jetty at a cost of about $80,000. 25Mr Delmege deposed that he and his wife occupied the Bayview property sporadically during the five years they owned it. They stayed overnight on the Bayview property only a few times a year as their Mona Vale property was only a five minute drive away and Mrs Delmege had all of her belongings, and her medications, at the Mona Vale property. They spent more time at the Bayview property during the day, particularly on weekends, and entertained family and friends a number of times per year, and rested and recuperated there themselves reasonably frequently. 26Between August 2001 and November 2002 Mr and Mrs Delmege allowed a family friend, Mr Lindsay Hughes and his wife, to reside in the Bayview property. Mr and Mrs Hughes owned a house, also on Pittwater Road. They lived at the Bayview property whilst their house was being renovated. During that period, Mr and Mrs Delmege had full access to the property, but they did not stay there overnight. During the period of the Hughes' occupation Mr and Mrs Delmege did not spend much time at all at Bayview. Mr Delmege said that Mr Hughes and his wife paid approximately $1,000 per week as a contribution to outgoings, in particular, the cost of a gardener, a lawnmower man and a pool maintenance man. Mrs Delmege doubted that Mr and Mrs Hughes paid that much. Mr Delmege said that the site was nearly an acre in size and was landscaped and gardened and so the gardener and lawnmower man were kept busy and he charged accordingly. Both Mr Hughes and Mr Delmege characterised the payments not as rent, but as a contribution to outgoings. 27In cross-examination, but not in his affidavit, Mr Delmege said that Mr Hughes asked if he could caretake the property and he accepted the offer knowing that that would limit the risk of vandalism. Mr Hughes did not give evidence. There was evidence that he was elderly, lived interstate, that his wife was in poor health and that he was unwilling to sign an affidavit. However, he had provided a statutory declaration on 13 December 2007 that was read without objection. In that statutory declaration he made no reference to his being asked to act as a caretaker. Nor did he refer to being asked to occupy the property as a protection against vandalism. 28Whilst I accept that Mr Delmege saw it as potentially advantageous to have the property occupied by Mr and Mrs Hughes rather than being left empty at the time and at risk of burglary and vandalism, I do not accept that that was the sole or principal reason for the Hughes' occupation. The principal reason was that Mr and Mrs Hughes needed somewhere to stay whilst their house was being renovated and they were friends. 29In an affidavit sworn on 1 October 2009 in the 2008 proceedings, Mr Delmege deposed that a Mr John Gilmore had stayed at the Bayview property for about two years from late 2003 until early 2005. Mr Gilmore was the son of a friend of Mr Delmege's. Mr Delmege repeated that evidence in his affidavit of 7 August 2013 in these proceedings, although that evidence was not read in the plaintiff's evidence in chief. The reason the evidence was not read was that Mrs Delmege had deposed that Mr Gilmore and his family stayed at the Bayview property for no more than six months at most in 2003. However, electricity accounts were issued addressed to Mr Gilmore on 16 June 2003 for a period commencing 28 April 2003. (An invoice had been issued addressed to Mr Delmege for the period finishing on 27 April 2003.) Further electricity bills were issued to Mr Gilmore up to at least 10 December 2004. (Invoices are missing for the period from 9 December 2004 to 29 January 2005. An invoice was issued to Mr Delmege on 12 July 2005 for the period from 29 January to 14 June 2005.) 30Mr Gilmore was not called. It is clear that Mrs Delmege's evidence that he resided at the property only for six months was incorrect. Mr Gilmore completed an incoming passenger movement card on 13 March 2004 showing his intended address as 1758 Pittwater Road, Bayview. It is true, as counsel for the plaintiffs submitted, that Mr Gilmore's electoral enrolment details did not show him residing at any time at the Bayview property. On 9 October 2004 he gave his new residential address as being 2 Milson Road, Cremorne Point. In the absence of evidence from Mr Gilmore I conclude that he resided in the Bayview property until about 10 December 2004, being the last period for which it was shown an electricity account was issued in his name. 31The records of Energy Australia showed Mr Gilmore as a tenant. Mr and Mrs Delmege gave evidence that there was no residential tenancy agreement. They did not regard any of the occupants of the property as tenants. They did not declare any payments received as income, nor the expenses of the property as deductions. Mrs Delmege deposed that all that was requested of the Hughes' or Mr Gilmore was a contribution of a monthly nominal payment to meet outgoings. The Gilmores stayed in a two-bedroom house on the property called a caretaker's cottage which had access to the garage to the main property, but Mr and Mrs Delmege had full access to the house and the grounds. Mr Delmege deposed that he was not aware that Mr Gilmore had changed the electricity account into his own name. He assumed that his staff paid the electricity accounts for the property. He deposed that he allowed Mr Gilmore to stay at the property to give the impression that the house was lived in all the time to deter potential burglars or vandals. I accept that evidence. I infer that it was an arrangement of mutual convenience. 32On 5 October 2005 Mr Delmege instructed Mr Dickson to obtain a construction certificate for the new house. A fee proposal from a firm of consulting engineers was obtained. However, on 18 November 2005 Mr Delmege instructed Mr Dickson to "continue deferring the work indefinitely". 33Mrs Delmege's daughter, Ms Holly Stubington, stayed at the Bayview property from April to July 2006. She and her family needed a place to stay because they had sold their house and not yet purchased a new house. They moved to the ground floor of the main house (not the first floor). They did not pay rent or contribute to outgoings. At this time in 2006 Mr Delmege's three cars were parked in the garage, his boat was moored at the jetty and he and Mrs Delmege kept some belongings such as a dining set, furniture and other things they needed for their use and for entertaining and dining at the Bayview property at the house. Mr and Mrs Delmege used the property for weekend recreational activities, such as lunches and barbecues, boating and swimming.

Assessments for land tax and disclosure of information to the Chief Commissioner 34Mr and Mrs Delmege owned other land upon which land tax was payable. The land in Surfview Road, Mona Vale was their principal place of residence, but that land was owned by a company and was not exempted from land tax. On 20 March 2002, Mr Delmege signed a variation return for the 2001 land tax year that was submitted to the Office of State Revenue on 14 June 2002. It disclosed the acquisition of other parcels of land in 2000 and 2001 and the acquisition of the Bayview property in April 2001. The Bayview property was listed under a heading "Principal place of residence (your own home)". This was misleading. The Bayview property was not the plaintiffs' actual principal place of residence. 35On 25 June 2002 the Office of State Revenue issued an assessment for the 2002 tax year based on land owned as at 31 December 2001. The Bayview property had a land value of $3,960,000. The assessment stated that it was exempt under s 10(1)(r)(ii) of the Land Tax Management Act as land used and occupied as the principal place of residence and not exceeding the premium property tax threshold. 36The premium property tax threshold was a threshold determined for a land tax year under s 12 of the Premium Property Tax Act 1998 (NSW). That Act was repealed in 2004. The premium property tax threshold was determined each year by the Valuer-General. In fact, the land value of the Bayview property was well in excess of the threshold. The threshold for the 2002 land tax year was $1,414,000. Section 6 of the Premium Property Tax Act provided: "6 Levy of land tax on land other than flats (l) In the case of land that is a principal place of residence and would be exempt from taxation under the Land Tax Management Act 1956 by section 10(1)(r) of that Act but for the fact that the land has a land value of not less than the premium tax threshold for that land tax year, land tax is payable by the owner of the land on the land value of the land as if it were the only land owned by the owner. (2) Section 9 (1) of the Land Tax Management Act 1956 does not apply to land to which this section applies." Section 8 prescribed the rate of land tax payable under s 6. 37The plaintiffs do not contest that land tax was payable to the extent the land value exceeded the threshold, but such payments have been made. The plaintiffs do not contend that full and true disclosure had been made at the time the assessment was issued on 25 June 2002 (Taxation Administration Act, s 9(3)(b)). 38A new assessment was issued two days later, that is, 27 June 2002, for the 2001 and 2002 tax years. This assessment deleted any reference to the Bayview property. 39An assessment for the 2003 tax year was issued on 12 March 2003. In that year the Bayview property was taxed to the extent its land value exceeded the premium tax threshold, but was otherwise treated as exempt. The tax was calculated in terms of ss 6 and 8 of the Premium Property Tax Act. 40An assessment was issued on 2 April 2004 for the 2004 land tax year. Again, the Bayview property was taxed pursuant to s 6 of the Premium Property Tax Act only to the extent the land value exceeded the premium tax threshold. 41On 23 May 2005 an assessment was issued for the 2005 tax year. By that time the Premium Property Tax Act had been repealed. The Bayview property was treated as exempt under s 10(1)(r) of the Land Tax Management Act. 42On 23 November 2006 the Chief Commissioner wrote to the plaintiffs enclosing new notices of assessment for land tax for the 2002-2006 years. Land tax was assessed for each of the 2002-2006 years on the basis that the Bayview land was not entitled to an exemption from land tax. 43On 2 March 2007 a firm of chartered accountants carrying on business under the name PKF provided an objection against the land tax assessment. In support of the objection PKF stated that the plaintiffs had acquired the Bayview land with the intention of occupying it as their principal place of residence. PKF said that whilst Mr Delmege was prepared to live in the premises, his wife was not and that they ultimately agreed to demolish rather than renovate the residence and construct a new one to achieve what they had originally intended, that is to reside on the Bayview land as their principal place of residence. In the notice of objection PKF stated that: "The taxpayers have resided on the Bayview land on a regular basis, i.e. at some stage during most weeks. The taxpayers also allowed a family with whom they are friendly to reside on the Bayview land for some 18 months during 2004 and 2005 whilst that family's residence was being constructed nearby. Whilst that family so resided, the taxpayers had full and free access to the Bayview land." 44This statement was not supported by the evidence adduced in this case. The Hughes' possession was in 2001-2002, not 2004-2005. Mr Gilmore's possession was in 2003 and 2004. The plaintiffs did not "reside" on the Bayview land on a regular basis at some stage during most weeks. They did not reside on the Bayview land at all. They resided in the Mona Vale property, but used the Bayview land and intended that it would become their permanent place of residence. 45The objection also stated that, "During mid-2006 the taxpayer's daughter resided on the Bayview land. During this period the taxpayers had full and free access to the Bayview land." This was correct. 46PKF asserted that as the Bayview land was not an investment property, and as the plaintiffs had not claimed a principal place of residence exemption in respect of any other property, and because the plaintiffs used and occupied the Bayview property, logic dictated that it was used and occupied as their principal place of residence. This was not logical. The assertion was that the Bayview land was the plaintiffs' actual principal place of residence, not their intended place of residence. But the property at Surfview Road, Mona Vale was their actual principal place of residence notwithstanding that no principal place of residence exemption could be claimed with respect to that land because it was owned by a company. Nonetheless, the objection also relied on s 10T or clause 6 of Schedule 1A on an alternative basis. 47The Office of State Revenue carried out an investigation. As part of that investigation the plaintiffs provided further information to the Chief Commissioner. This included the statutory declaration of Mr Hughes dated 13 December 2007 that he and his family had resided on the property between August 2001 and November 2002 and a statutory declaration by Ms Stubington that she had been allowed by her mother and stepfather to reside on the property between April and July 2006. The Office of State Revenue also obtained details of the electricity accounts. On 30 September 2009 the Crown Solicitor advised the plaintiffs' solicitor that as a consequence of the plaintiffs' objection of 2 March 2007 the Chief Commissioner had exercised his powers under s 72(1) of the Taxation Administration Act to require Energy Australia to provide information. The information obtained from Energy Australia included information that Mr Gilmore (described as a "tenant") had been Energy Australia's customer for the supply of electricity to the Bayview property from 28 April 2003 to 28 January 2005. The Chief Commissioner was aware that the plaintiffs did not themselves reside in the property. He was aware of the occupation of the property by Mr and Mrs Hughes, by Mr Gilmore for the period shown in the electricity accounts and by Ms Stubington. 48On 6 May 2008 the Chief Commissioner allowed the objection against the assessment for the 2002 and 2003 land tax years. He accepted that the "concession" under s 10T was available for those years. A refund for the 2002 and 2003 years was provided. The Chief Commissioner rejected the objection to the assessment for the 2004-2006 years on the basis that clause 6 of Schedule 1A applied as from the 2004 tax year. 49The Chief Commissioner issued a new notice of assessment on 5 May 2008 of the land tax as assessed for the 2002 and 2003 years being an assessment based on the Bayview property's only being assessed for premium property tax for those years. This was a reassessment that amended the earlier assessments. By the time of the 6 May 2008 assessment the plaintiffs had made a full and true disclosure of matters relevant to their claim for exemption under s 10T of the Land Tax Management Act, save for the occupation of Mr Gilmore. However, the Chief Commissioner was aware of that occupation and the information available to the Chief Commissioner suggested, wrongly, but in a way that was adverse to the taxpayers, that Mr Gilmore was in occupation as a tenant. Mr Gilmore did not have the right of exclusive possession. Notwithstanding that information, the Chief Commissioner allowed the taxpayers' claim under s 10T. Hence, the plaintiffs say that the Chief Commissioner cannot rely upon the qualification to what would otherwise be a bar in s 9 of the Taxation Administration Act to the Chief Commissioner's making a reassessment of a tax liability more than five years after the initial assessment of that liability. The plaintiffs submit that even if there was not a full and true disclosure at the time the initial assessment was made or the reassessment was made, nonetheless it cannot be said that had a full and true disclosure been made prior to the initial assessment, the tax liability would have been assessed at a lower amount given the assessment made on 6 May 2008. I deal with that submission below.

Liability for land tax in the 2002 and 2003 years 50The Chief Commissioner conceded that s 10T(1) was satisfied. That is, it is common ground that the plaintiffs intended to use and occupy the Bayview property solely as their principal place of residence. (The Chief Commissioner did not submit that the plaintiffs lacked the requisite intention as at 31 December 2005 notwithstanding the evidence referred to at [32] above.) The plaintiffs never commenced that use and occupation, but it is common ground that up to 31 December 2005 (the taxing date for the 2006 land tax year) they had that intention. The question is whether s 10T(2)(c) is satisfied. 51There is an immediate problem with s 10T(2)(c). It is common ground that a word is missing. If s 10T(2)(c) were read literally, s 10T(1) would have no work to do because the land that was intended to be used at some time in the future as a taxpayer's principal place of residence would not have been actually so used. It is common ground that s 10T(2)(c) must be read as if the word "intended" were inserted before "principal place of residence". 52So understood, the use and occupation that Mr and Mrs Delmege made of the land was a use as their intended principal place of residence. But what of the occupation of Mr and Mrs Hughes and Mr Gilmore? 53Counsel for the plaintiffs submitted that the only relevant time for considering the effect of use and occupation by other parties was as at 31 December immediately preceding the land tax year in question. That was because land tax is charged on land as owned at midnight on 31 December immediately preceding the year for which land tax is levied. 54Whilst s 8 charges land tax at a single point in time for the succeeding year, s 10T(2)(c) requires a determination as to how the land has been used and occupied not at the same moment as land tax is charged, but for a period expressed by the words "while the owner is the owner". That is, the concession under s 10T(1) does not apply if the land is used or occupied except as the owner's intended principal place of residence at any time "while the owner is the owner", even if it is not being used or occupied except as the owner's intended principal place of residence at the time the charge for land tax is imposed by s 8. In my view, once land has been used otherwise than as the owner's intended principal place of residence the concession under s 10T(1) ceases to be available for any future land tax year. 55The question then is whether the use and the occupation of the land by Mr and Mrs Hughes, and later by Mr Gilmore, means that the land was not used or occupied except as the plaintiffs' intended principal place of residence. (The occupation by Ms Stubington is irrelevant for present purposes because land tax for the 2006 year was imposed as at midnight on 31 December 2005 and her occupation of the land did not commence until April 2006.) 56Section 10T(2)(c) is not satisfied merely because there was an incidental advantage to the plaintiffs in having the property occupied by Mr and Mrs Hughes and later by Mr Gilmore. Mr and Mrs Hughes occupied the property because their house was being renovated. Mr and Mrs Delmege were happy to oblige. Whilst Mr Delmege saw that there was some advantage in having the property occupied as a deterrent to burglars or vandals, that was not the sole or dominant reason for the occupation of the property by Mr and Mrs Hughes. The same is true of the occupation of the property by Mr Gilmore. In both cases the land was used and occupied by third parties for their own advantage. In my view the incidental advantage to the plaintiffs of having the property occupied does not mean that the land was not used or occupied except as the plaintiffs' intended principal place of residence. Rather, the land was used and occupied to provide accommodation as needed by Mr and Mrs Hughes and Mr Gilmore. 57It follows that the concession under s 10T(1) was not available for any of the land tax years in question, even if s 10T continued to be applicable on and from 31 December 2003. However, in case I am wrong in this conclusion I will deal with the argument that the transitional provisions had the effect that s 10T remained applicable.

Effect of transitional provisions 58If, contrary to my view, the plaintiffs were entitled to the benefit of the concession in s 10T(1) in respect of the 2002 and 2003 land tax years, they claim an entitlement to the benefit of s 10T for the following land tax years. If s 10T had not been repealed, the plaintiffs would nonetheless only have been entitled to the benefit of the concession in subs (1) for the two tax years immediately following the tax year in which they became the owner of the land unless the Chief Commissioner had extended or further extended the operation of the section on the basis of an acceptable delay which would have to be due primarily to reasons beyond the control of the plaintiffs (s 10T(4) and (5)). Had the section not been repealed it would have been open to the plaintiffs to have sought an extension of the operation of the section, and if the plaintiffs are right in their construction, it would be open to them to seek such a further extension, notwithstanding the repeal of s 10T. But no application for an extension had been sought nor granted by 31 December 2003 when s 10T was repealed. 59Clause 13 of Schedule 4 to the State Revenue Legislation Further Amendment Act 2003 inserted transitional provisions into the Land Tax Management Act as Part 15 of Schedule 2 of that Act. Clauses 33 and 35 of Schedule 2 provide: ""33 Definition In this Part: 2003 amending Act means the State Revenue Legislation Further Amendment Act 2003. ... 35 Application of principal place of residence exemption amendments (1) The amendments made to this Act by the 2003 amending Act (other than the amendments referred to in clause 34) apply in respect of a land tax year commencing on or after 1 January 2004 and do not affect any existing liability for land tax. (2) Subject to subclause (1), a reference in Schedule 1A to the principal place of residence exemption, in relation to land owned and occupied as a principal place of residence before 31 December 2003, is a reference to section 10 (1) (r) of this Act (as in force immediately before its substitution by the 2003 amending Act). (3) Subject to subclause (1), a reference in clause 8 of Schedule 1A to a period in which land was actually used and occupied as a principal place of residence by the owner extends to any such period that occurred, or started, before 31 December 2003." 60Clause 35(1) in Schedule 2 provides that the amendments made by the 2003 amending Act do not affect any existing liability for land tax. That means that the 2003 amending Act did not affect any existing exemption or concession that related to an existing liability for land tax. But the existing liability for land tax related only to the 2003 and prior land tax years. It is unnecessary to decide what the position would have been had the plaintiffs obtained an extension of the operation of s 10T(1) under subs (4) because no such extension had been granted. The effect of clause 35(1) as it applies to the present case is that the Chief Commissioner could not contend that clause 6 of Schedule 1A applied to the plaintiffs' liability for land tax for the 2003 and prior land tax years. 61Counsel for the plaintiffs relied on subclauses 35(2) and (3). Those sub-clauses dealt with references in Schedule 1A to land owned and occupied as a principal place of residence before 31 December 2003, or (in the case of clause 35(3)) to land "actually" so used and occupied. Where s 10T(1) applies, an owner's intended use and occupation of land solely as his or her principal place of residence is to be regarded as his or her actual use and occupation for the purposes of s 10(1)(r). 62Clause 2 of Schedule 1A described the circumstances in which land would be exempt from taxation in respect of the year commencing on 1 January 2004 or any succeeding year. The exemption conferred by that clause was referred to as the "principal place of residence exemption" (Clause 2(4)). Clause 6 provided the concession for unoccupied land that was intended to be the owner's principal place of residence. Where the Chief Commissioner was satisfied that the owner intended to use and occupy the land solely as his or her principal place of residence, the owner was taken "for the purposes of the principal place of residence exemption" to use and occupy that land as his or her principal place of residence. That concession, however, was subject to qualifications, including the qualification in clause 6(5) that the plaintiffs acknowledge they do not satisfy. 63Counsel for the plaintiffs submitted that the effect of clause 35(2) was that where land was used and occupied as at 31 December 2003 as a principal place of residence it was to be treated as continuing to be so used and occupied thereafter because s 10(1)(r) would continue to apply after 31 December 2003. Counsel submitted that as a corollary where land is deemed to be used and occupied as a principal place of residence as at 31 December 2003 (by operation of s 10T(1)), it is to be treated as continuing to be so used and occupied on the commencement of Schedule 1A without regard to clause 6 of Schedule 1A and the requirement for six months' actual use and occupation in clause 6(5). 64But subclause 35(2) is subject to subclause (1). Subclause (1) makes it clear that the amendments made by the 2003 amending Act do apply in respect of a land tax year commencing on or after 1 January 2004. In my view, subclauses 35(1) and (2) were intended to have an harmonious operation. The plaintiffs' construction does not give weight to the opening words of subclause (2) (that is, that it is subject to subclause (1)). 65Subclause 35(3) was necessary because clause 8 of Schedule 1A provided a concession where a person was the owner of land that had been used and occupied by him or her as his or her principal place of residence for at least six months and also used and occupied other land that he or she did not own as his or her principal place of residence. The person was taken to continue to use and occupy the former residence as his or her principal place of residence for a stipulated maximum period. Subclause 35(3) made it clear that regard could be had to the person's use and occupation of the land for a continuous period of at least six months even though that period was wholly or partly before 31 December 2003. 66In short, because subclause 35(2) is subject to subclause 35(1), I do not think that the implication contended for by the plaintiffs from subclause 35(2) arises. 67Accordingly, even if s 10T were satisfied, it would not apply to the plaintiffs' liability for land tax for the 2004 and later land tax years.

Validity of reassessments for the 2002 and 2003 land tax years 68Counsel for the Chief Commissioner submitted that the reassessments of 1 October 2009 were authorised under s 101(1)(d) and (e) of the Taxation Administration Act, whether or not they were also authorised under s 9 of that Act. It was submitted for the Chief Commissioner that on 1 October 2009 Gzell J had ordered or directed or otherwise empowered the Chief Commissioner to raise reassessments for the 2002-2006 land tax years in reliance on s 10T(2)(c) of the Land Tax Management Act so as to enable the plaintiffs to object to that new additional basis of assessment. 69The actual order of Gzell J was that: "Upon the defendant by his counsel undertaking that he will issue amended assessments to the plaintiffs with respect to the 2002 and 2003 land tax years, and raise the issue of Land Tax Management Act s 10T(2)(c) with respect to the 2004-2006 land tax years by amended assessment or otherwise, I stand this matter back into the ECM Court. I order the defendant to pay the plaintiffs' costs thrown away by the adjournment on an indemnity basis and forthwith upon assessment or agreement." 70Gzell J did not make an order authorising, directing or empowering the Chief Commissioner to issue an amended assessment. Rather, his Honour adjourned the proceedings on the Chief Commissioner's undertaking that he would issue amended assessments. Gzell J did not address the question of the Chief Commissioner's power to issue amended assessments. He did not purport to confer any such power. 71The assessments of 1 October 2009 were reassessments of the earlier assessments for the 2002 and 2003 land tax years. The 1 October 2009 assessments assessed the plaintiffs as being liable for greater sums in respect of the 2002 and 2003 land tax year than had previously been assessed. Section 9(3) applied to the Chief Commissioner's ability to make such reassessments. As noted above the initial assessment for the 2002 land tax year was made on 25 June 2002 and the Bayview property was treated as wholly exempt under s 10(1)(r)(ii). An assessment issued two days later deleted reference to the Bayview property. There was a reassessment on 22 November 2006 (within the five-year period specified in s 9(3)) at which time the Bayview property was assessed as being liable for land tax without any exemption or concession. The objection to that assessment was allowed resulting in a new assessment for the 2002 land tax year on 6 May 2008 whereby the Bayview property was separately taxed under the Premium Property Tax Act, but was allowed the concession under s 10T. That was also a reassessment, but was a reassessment made to give effect to the decision on the objection and thus authorised under s 9(3)(a). (The assessment on 22 November 2006 was made less than five years after the initial assessment.) 72The initial assessment for the 2003 land tax year assessed the Bayview property for tax only in so far as it exceeded the premium tax threshold. There was a reassessment on 22 November 2006, and a further reassessment on 6 May 2008 following objection to the 22 November 2006 assessment. The reassessment of 6 May 2008 was in the same amount as the initial assessment. 73The plaintiffs did not, at any relevant time, disclose the occupation of Mr Gilmore. However, the Chief Commissioner was aware of that occupation when he made his reassessment on 6 May 2008. I do not think it necessary to decide whether as at the date of the 6 May 2008 reassessment there had not been full and true disclosure to the Chief Commissioner. A possible view is that the reference in s 9(3)(b) to full and true disclosure to the Chief Commissioner is to disclosure made by the person liable to pay tax or someone on his or her behalf. Although it has been said in relation to a cognate provision in the Income Tax Assessment Act 1936 (Cth) that a taxpayer is not required to disclose that which is known to the Commissioner (M I M Holdings Ltd v Federal Commissioner of Taxation (1997) 36 ATR 108 at 119, citing Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 at 619), information which the Chief Commissioner learns as a result of the exercise of his compulsory powers in requiring the production of documents from third parties might not come within the concept of a taxpayer's making disclosure to the Chief Commissioner. Nonetheless, and assuming that issue in favour of the Chief Commissioner, the question is whether as a result of the absence of full and true disclosure, the tax liability was initially assessed on 25 June 2002 at a lower amount than the Chief Commissioner would otherwise have assessed it. 74The Chief Commissioner submitted that the onus of establishing the matters in s 9(3)(b) lies on the taxpayer and not on the Chief Commissioner. He relied on the decision in McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 as approved in FJ Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360. 75McAndrew was concerned with the effect of ss 170, 173, 177 and 190(b) of the Income Tax and Social Services Contribution Assessment Act 1936-1955 (Cth). Section 170 relevantly provided: "(1) The Commissioner may, subject to this section, at any time amend any assessment by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid in respect of the assessment. (2) Where a taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax, the Commissioner may - a)Where he is of opinion that the avoidance of tax is due to fraud or evasion - at any time; and (b) In any other case - within six years from the date upon which the tax became due and payable under the assessment, amend the assessment by making such alterations therein or additions thereto as he thinks necessary to correct an error in calculation or a mistake of fact or to prevent avoidance of tax as the case may be. (3) Where a taxpayer has made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and an assessment is made after that disclosure, no amendment of the assessment increasing the liability of the taxpayer in any particular shall be made except to correct an error in calculation or a mistake of fact; and no such amendment shall be made after the expiration of three years from the date upon which the tax became due and payable under that assessment." 76Section 173 provided that an amended assessment was an assessment for the purposes of the Act. 77Sections 175, 177 and 190 relevantly provided: "175. The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. ... 177.(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and (except in proceedings on appeal against the assessment) that the amount an all the particulars of the assessment are correct. ... 190. Upon every such reference or appeal - a)The taxpayer shall be limited to the grounds stated in his objection; and b)The burden of proving that the assessment is excessive shall lie upon the taxpayer." 78Section 177(1) was materially to the same effect as s 119 of the Taxation Administration Act. Section 190(b) was to the same effect as s 100(3). Section 170(1) was to the same effect as s 9(1) of the Taxation Administration Act. Section 170(2) and (3) was differently expressed from the present provisions. Section 9(3) gives the Chief Commissioner a wider power to make a reassessment than was conferred on the Commissioner of Taxation by s 170(2) and (3). The issue under s 170 was whether the taxpayer had the burden of showing that full and true disclosure of all material facts necessary for the assessment had been made. If full and true disclosure of material facts had been made, the Commissioner of Taxation could not amend an assessment after three years from the date of the initial assessment and even then, only to correct an error in calculation or a mistake of fact. If full and true disclosure had not been made and there had been an avoidance of tax, that is, the initial assessment was for less than the tax payable, the reassessment could only be made within six years from the date on which tax became due and payable under the initial assessment, unless the avoidance of tax was due to fraud or evasion in which case there was no time limit. 79The elements of these provisions are different. Significantly for the purposes of the onus of proof, the structure of the provisions is different. Section 170(2) and 170(3) of the Income Tax and Social Services Contribution Assessment Act set out the conditions upon which the Commissioner could amend an assessment either in the case where there had been a full and true disclosure of all material facts (s 170(3)), or where there had not (s 170(2)). Neither provision took the form of s 9(1) and (3) where the statute expresses a power to reassess, then a ground of defeasance or exclusion of the power, and then a qualification to the ground of defeasance or exclusion in a particular case, namely where there was not full and true disclosure, with the result that the tax liability was assessed at a lower amount than it would otherwise have been assessed. 80In McAndrew the High Court held that where on any appeal a regular notice of assessment or copy thereof was produced, then the burden rested on the taxpayer of proving the particular fact or facts which could take the case outside s 170(2). That is, the taxpayer had the onus of proving that he did make a full and true disclosure of all of the material facts necessary for the assessment or that there had not been an avoidance of tax (at 269). Dixon CJ, McTiernan and Webb JJ held that the conditional time bars in s 170(2) and (3) were matters that went to the substantive liability of a taxpayer so as to be within the exception in s 177(1) permitting a challenge to the amount and particulars of the assessment in proceedings on appeal against the assessment and continued at (271): "An appeal, however, is a proceeding given by statute to a taxpayer for the purpose of impugning an assessment otherwise conclusively imposing liability upon him. If there were no more than that, it would be enough to cast upon the taxpayer the burden of establishing his objections. On ordinary principles he must establish the facts which give him a prima facie title to the relief he seeks from the Court. But there is more than that. For s 190(b) expressly places upon the taxpayer the burden of proving that the assessment is excessive. 'Excessive' is the word chosen to correspond with the word 'amount' in s 177(1). The 'amount' no doubt reflects the 'particulars'. It is perhaps not a good choice. For the replacement by s 190(b) of the words which appeared in the corresponding previous legislation in the exception in s 177(1) has perhaps caused the difficulty. The words of that legislation were 'except in proceedings on appeal against the assessment when it shall be prima facie evidence only'. But bearing in mind that the word 'excessive' relates to the amount of the substantive liability it is not difficult to see that it will extend over the area in which the conditions mentioned in s 170(2) find a place. For the fulfilment of those conditions goes to the power of the commissioner to impose the liability by amendment. If he cannot amend consistently with s 170(2) and so increase the amount of the assessment then it must be excessive." 81In my view the same reasoning applies to the relevant provisions of the Taxation Administration Act. The fact that s 9 adopts a different structure for the setting of the conditional time limitation in s 9(3) does not affect the applicability of this reasoning. If s 9(3) were considered alone then, the onus would be on the Chief Commissioner to establish the facts in s 9(3)(b) so as to justify the making of a reassessment more than five years after the initial assessment (Vines v Djordjevitch (1955) 91 CLR 512 at 519-520). It is because in review proceedings the notice of assessment is prima facie evidence (although only prima facie evidence) of the amount or particulars of the assessment, which is reinforced by s 100(3), that the onus rests on the taxpayer to establish that the conditions authorising the Chief Commissioner to make a reassessment more than five years after the initial assessment of the liability are not satisfied. 82However, as Kitto J said in McAndrew (at 273) the question of the burden of proof refers to the burden of establishing a case, fixed at the beginning of the hearing and which does not shift during the course of it. It does not refer to an evidential burden that might arise to rebut a conclusion which can otherwise be drawn from the evidence adduced in the course of the hearing. In the present case the Chief Commissioner, with full knowledge of the material facts, assessed the plaintiffs' tax liability on 6 May 2008 in the same amount as was initially assessed for the 2003 year and assessed the plaintiffs' tax liability for the 2002 year on the basis that the concession in s 10T applied and the property was only liable to tax to the extent it exceeded the premium property tax threshold. It was only during the course of the 2008 proceedings, and even then only at the last moment when counsel prepared supplementary submissions shortly before the hearing, that the Chief Commissioner took a different view as to the plaintiffs' liability for the 2002 and 2003 land tax year. That evidence, in the absence of contradiction, is sufficient to discharge the plaintiffs' onus of establishing that the condition in s 9(3)(b) under which the Chief Commissioner could make a reassessment more than five years after the initial assessment was not satisfied. 83Section 9(3) does not provide that the Chief Commissioner can make a reassessment more than five years after the initial assessment if there has not been full and true disclosure and as a result the tax liability was assessed at a lower amount than was payable. Rather, if the taxpayer can show that there was full and true disclosure, or, if there were not, that the absence of full and true disclosure did not result in the Chief Commissioner's assessing the tax liability at a lower amount than he would otherwise have assessed it, then the reassessment can be revoked in review proceedings. That is a different question from whether the tax was assessed at a lower amount than was payable. The plaintiffs have made good this ground of challenge in respect of the 2002 and 2003 land tax years. 84It follows that the reassessments of 1 October 2009 in respect of the 2002 and 2003 land tax years should be revoked. 85It also follows that the plaintiffs' liability to the Chief Commissioner should be determined on the basis that they are not liable for the full amount of land tax payable for the 2002 and 2003 years, notwithstanding my finding at [57]. This is so, notwithstanding that a taxpayer's liability does not depend on an assessment. As the High Court said in McAndrew (at 271) a provision such as s 9(3) goes to the "substantive liability" of the taxpayer. The necessary implication of the limitation on the Chief Commissioner's power to make a reassessment more than five years after the initial assessment is that he also cannot claim that the taxpayer is liable for an amount for which he is precluded from making a reassessment.

Liability for land tax for the 2004 land tax year 86The new assessment made on 1 October 2009 in respect of the 2004 land tax year was also made more than five years after the initial assessment. The assessment issued on 2 April 2004 for the 2004 tax year assessed the plaintiffs as being liable for a total land tax of $44,740. The Bayview property was taxed in accordance with ss 6 and 8 of the Premium Property Tax Act. There was a reassessment on 22 November 2006 for the 2004 tax year. The total tax assessed to be payable was $88,330. The reason for the new assessment was said to be a change to the "exemption/concession" for the Bayview property. There was no new assessment nor reassessment made for the 2004 land tax year on 6 May 2008 when the Chief Commissioner allowed the plaintiffs' objection to the assessment for the 2002 and 2003 years. The new assessment issued on 1 October 2009 for the 2004 land tax year was in the same sum of $88,300 as set out in the reassessment of 22 November 2006. 87I accept that the issue of the new assessment on 1 October 2009 involved the withdrawal of the assessment (which was itself a reassessment) of 22 November 2006 and its replacement by the assessment issued on 1 October 2009. However, the notice of assessment issued on 1 October 2009 for the 2004 land tax year was not a reassessment. A reassessment of an initial assessment is an amendment of the initial assessment, not an independent and additional assessment (Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 at 54; White Industries Australia Pty Ltd v Federal Commissioner of Taxation [2003] FCA 599; (2003) 129 FCR 276 at [30], 282-283; Metricon Qld Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 982 at [27]). The initial assessment had already been amended by a reassessment of 22 November 2006 which was within time. The assessment of 1 October 2009 was a reissue of the assessment made on 22 November 2006. The assessment of 22 November 2006 was a reassessment but because it was not amended there was not a reassessment in respect of the plaintiffs' tax liability for the 2004 land tax year on 1 October 2009. Section 9(3) did not preclude its issue.

Conclusion 88For these reasons I conclude that the Chief Commissioner's reassessments of 1 October 2009 in respect of the 2002 and 2003 land tax years should be revoked, but that the assessments issued on that date in respect of the 2004-2006 land tax years should be confirmed. There should be a recalculation of what amount, if any, is owing to the Chief Commissioner as a result of those conclusions having regard to the payments made by the plaintiffs. 89I stand the proceedings over to a date to be fixed in order to make orders to give effect to these reasons. I direct the plaintiffs' counsel to bring in short minutes of order in accordance with these reasons. I will deal with questions of costs at that time.

Amendments 17 February 2015 - Para 18, full stop removed in penultimate sentence between "Division 1" and "If" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 February 2015

State Revenue Legislation Further Amendment Act 2003(NSW)

Premium Property Tax Act 1998(NSW)

(Taxation Administration Act 1996(NSW)

Taxation Administration Act 1996(NSW)s 9(3), s 9(3)(b)

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Judgment (11 paragraphs)

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