Du v Chief Commissioner of State Revenue

Material before the Tribunal

1. The Applicant relied upon: 1. Written submissions dated 17 August 2022; 2. A letter from China Eastern Airways dated 2 February 2021confirming the Applicant's flight from China to Sydney on 10 April 2020 was cancelled and changed to 17 December 2020; 3. An email from Revenue NSW confirming that the Applicant was approved a waiver of quarantine fees; 4. Further submissions dated 18 September 2022 attaching excerpts from the Respondent's website relating to Land Tax.
2. The Respondent relied upon: 1. A bundle of documents lodged in accordance with s 58 of the ADR Act; 2. A Tender Bundle of Documents; 3. A supplementary Tender Bundle of Documents; 4. Written submissions dated 15 September 2022.
3. The Applicant's submissions were really in the nature of a combination of evidence and submissions. The Applicant was not required for cross examination. At the conclusion of the hearing, the Applicant's husband also made a short statement stating that the Assessment has caused his wife significant anxiety.

Relevant Legislation

1. Section 5A of the Land Tax Act 1956 (NSW) (LTA) provides that surcharge land tax is payable for the 2017 and subsequent land tax years in respect of all residential land owned by foreign persons at midnight on 31 December in the year preceding the relevant land tax year.
2. For the 2018 land tax year s 5A(6) provided: (6) in this section and sections 5B and 5C: Foreign person and residential land have the same meaning as in Chapter 2A of the Duties Act 1997.
3. Section 5A was amended with effect from 5 March 2018 to repeal s 5A(6). The definition of foreign person has since that time been contained in s 2A of the LTA. Section 2A of the LTA provides: In this Act - foreign person has the same meaning as in Chapter 2A of the Duties Act 1997. …
4. Section 104J(1) of the Duties Act 1997 (NSW) provides that a foreign person "means a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section." The modifications to that section are not relevant in this case.
5. Section 4 of the Foreign Acquisitions and Takeovers Act 1975 (Cth) FATA defines foreign person as an individual not "ordinarily resident" in Australia.
6. Section 5 of the FATA provides that an individual who is not an Australian citizen is "ordinarily resident" in Australia at a particular time if and only if - 1. the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time, and 2. at that time - 1. the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law, or 2. the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law.

TA Act

1. The TA Act applies in respect of "taxation laws" which are defined in s 4 of the TA Act to include the LTA.
2. Section 96 of the TA Act provides that a taxpayer may apply to the Tribunal for an administrative review of a decision of the Respondent that has been the subject of an objection.
3. Section 100 of the TA Act provides that the Applicant's and Respondent's cases on an application for review are not limited to the grounds of the objection. Section 100(3) provides that the Applicant has the onus of proving the Applicant's case in an application for review.
4. Section 101 of the TA Act sets out the powers of the Tribunal in dealing with an application for review and provides that the Tribunal may, amongst other things, confirm or revoke the assessment or other decision to which the application relates, make an assessment or other decision in place of the assessment or decision to which the application relates or remit the matter to the Respondent for determination in accordance with its finding or decision.

Facts

1. The following facts are not in dispute.
2. The Applicant is a citizen of China and a permanent resident of Australia having come to Australia in 1996.
3. During the 2018-2021 land tax years the Applicant owned Unit 511 and throughout that period that unit was rented to tenants.
4. In each of the years ending 31 December 2017 to 31 December 2020 the Applicant was overseas for significant periods of time. In each of those years, the Applicant was in Australia for less than 200 days in total.
5. In the periods when the Applicant was overseas she was residing in China at a property owned by her elderly parents. The Applicant was required to spend time with her parents in the 2017 to 2019 years in order to take care of them as they were both unwell. Her father passed away in December 2018 and her mother passed away in February 2019. In the 2020 year the Applicant was booked on a flight from China to Sydney in April 2020 but, because of travel restrictions imposed as a result of the covid pandemic, that flight was cancelled and it was not until December 2020 that the Applicant was able ultimately to return to Sydney.
6. In December 2021 in response to a request by the Respondent to do so, the Applicant lodged a Land Tax Registration Return. In that return she stated that she was a citizen of China, a permanent resident of Australia and ordinarily resident in Australia.
7. In December 2021, having been advised by the Respondent that, based on her immigration records, it appeared that she had been onshore in Australia for less than 200 days in each of 2017, 2018, 2019 and 2020, the Applicant also wrote to the Respondent requesting an exemption in respect of any foreign surcharge land tax based on her not being able to have satisfied the requirement to be in Australia by reason of having to care for her parents and because of her inability to return as a result of her flight cancellation in 2020.
8. On 31 January 2022 the Respondent issued the Assessment.

Applicant's submissions

1. The Applicant acknowledges that she was not in Australia in the 12 months preceding 31 December in each of the 2017 to 2020 years for 200 days or more. However, she submits that surcharge land tax should not be imposed because: 1. She is a permanent resident who has lived in Australia for 25 years and should be treated differently from persons who are truly "foreign persons". She was not able to live in Australia for 200 days or more in the relevant years as she was caring for her parents or prevented from doing so by reason of covid related travel restrictions; 2. She was not aware of any obligation to pay surcharge land tax. The Respondent at no time notified her of her liability to surcharge land tax. She says if she had been advised, then she would have taken steps to avoid the liability arising. She points to the information on the Respondent's website which states that "If you are liable to land tax, you will receive an annual assessment notice that will include a list of all NSW land you owned on 31 December the previous year and how much land tax you must pay" and "You should only receive one assessment notice each year". She says that she never received the letters that the website states the Respondent will issue. She submits that the Respondent was negligent in not advising her of her liability and it is unfair that she must take the consequences caused by the Respondent's dereliction of duty; 3. The receipt of the Assessment, which is a large sum of money for her, has caused her significant distress and has had an emotional and psychological impact on her; and 4. Revenue NSW approved a waiver of her Quarantine Fees and she believes that the land tax surcharge should also not be imposed based on the same reasons.

Consideration

1. Section 100(3) of the TA Act makes it clear that in reviews of this nature by the Tribunal the Applicant has the onus of proving her case. This requires her to prove all matters necessary for the Tribunal to answer the statutory question in her favour on the balance of probabilities. Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [28] - [31]; Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99.
2. Under s 5A of the LTA surcharge land tax is payable in respect of residential land owned by foreign persons as at 31 December in the year immediately preceding the relevant tax year.
3. As at 31 December in each relevant year, the Applicant owned Unit 511 and it is not in dispute that Unit 511 was residential land.
4. Accordingly, the question is whether in each relevant tax year the Applicant was a "foreign person" for the purposes of s 5A of the LTA.
5. The Applicant is not an Australian citizen.
6. Foreign person is defined in s 4 of the FATA as a person who is not "ordinarily resident".
7. Section 5 of the FATA provides that an individual who is not an Australian citizen is "ordinarily resident" in Australia at a particular time if and only if the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time and, at that time, their continued presence in Australia is not subject to any limitation as to time imposed by law.
8. The words "has actually been in Australia" in s 5 of the FATA require physical presence in Australia: Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216 at [50].
9. The concept of being "ordinarily resident" is solely governed by the words of s 5 of the FATA, as adopted by s 104J of the Duties Act: Gao at [50]. Meeting the 200 day requirement is the only way a person like the Applicant can be classed as "ordinarily resident" in Australia for the purposes of surcharge land tax: Lawrence v Chief Commissioner of State Revenue [2022] NSWCATAD 266 at [35].
10. While her reasons for being in Australia for less than 200 days in each relevant tax year are understandable, it nevertheless remains the case, and she concedes, as a matter of fact the Applicant was not in the 12 months immediately preceding each of the relevant tax years in Australia for 200 or more days.
11. The fact that the reason the Applicant was absent from Australia was to care for her elderly and ill parents and because of travel restrictions imposed as a result of the covid pandemic, does not alter that fact.
12. As Senior Member Currie stated in Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238 at [29]: The position in this State is quite clear: in order to be "ordinarily resident" in Australia the taxpayer must have been physically present in Australia and the reasons for a person not actually being in Australia for the 200-day period are not relevant in assessing liability for duty under section 5A. Those principles have been confirmed recently by the decisions of this Division of the Tribunal in Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216 at [59] and Barsoum v Chief Commissioner of State Revenue [2020] NSWCATAD 282 at [78],("Barsoum").
13. Nor is there any provision in the LTA which grants or allows the Respondent or, therefore, the Tribunal any discretion to exempt the taxpayer from surcharge land tax if the statutory criteria are not met: Chu at [30].
14. As the Tribunal stated in Lawrence at [38]: Furthermore, the fact that Mr Lawrence may have been able to satisfy the 200 day requirement in 2020 if the borders had remained open is irrelevant. He did not satisfy the requirement, and the legislation does not provide any relief for any person who fails that test: Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238 at [30].
15. Accordingly, the Applicant was not "ordinarily resident" as defined and was, therefore, a foreign person for the purposes of s 5A of the LTA. As such, she is liable to pay surcharge land tax in respect of Unit 511 unless an exemption applies.
16. Section 5B of the LTA provides for an exemption from surcharge land tax in respect of residential land if it is used and occupied as the owner's principal place of residence. However, that section does not extend to exempt other land. The Applicant has stated that her principal place of residence for the relevant tax years was Unit 802 and the Respondent now concedes that she is entitled to an exemption from surcharge land tax for the relevant tax years in respect of that property. Accordingly, that exemption cannot apply in respect of Unit 511, which, in any event, was tenanted during the relevant years.
17. Nor is there any discretion available to the Respondent or the Tribunal to grant an exemption on the grounds of "unfairness".
18. As the Tribunal stated in Galle v Chief Commissioner of State Revenue [2022] NSWCATAD 285 at [26] - [28]: 26.I reject the Applicants' submissions that I should exercise a discretion to exempt them from surcharge duty on the basis that it would be unfair to them. 27.There is no legislative provision or authority which gives the Chief Commissioner or the Tribunal a discretionary power to exempt a taxpayer from surcharge duty if the statutory criteria are not met: Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238 at [30]. 28.Arguments based on notions of "fairness" and "justice" cannot succeed in the absence of any foundation in the legislation: Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 123. Consequently, questions of unfairness including on the bases that the Applicants did not know about the surcharge duty and intended to stay in Australia and have done so, are not relevant. The Respondent is required to administer the law in accordance with its terms.
19. The fact that, in another context, the Respondent was able to exercise a discretion to waive payment of certain fees is not relevant.
20. Nor is it relevant that the Respondent had not earlier advised the Applicant as to her liability or issued assessments at an earlier time. I reject the Applicant's submission that the Respondent has been negligent or has somehow been derelict in his duties in that regard. It is the obligation of the taxpayer to make enquiries as to their position and whether they are liable to tax and there is no obligation on the Respondent to notify taxpayers in advance of their potential liability: Giunta v Chief Commissioner of State Revenue [2005] NSWADTAP 19; Sjarifudin v Chief Commissioner of State Revenue [2021] NSWCATAD 347 at [47]. The excerpts the Applicant has referred to from the Respondent's website do not alter that position. In any event, the Applicant had not disclosed to the Respondent that she was a foreign person for the purposes of the LTA, so on the information available to the Respondent, prior to undertaking their investigation, he could not have issued earlier assessments for surcharge land tax.
21. While I accept that the Assessment has caused the Applicant considerable anxiety, the fact that the Applicant has suffered distress or may suffer financial hardship as a consequence of the Assessment are also not matters that the Tribunal can take into account. The Tribunal must apply the law according to its terms: Sjarifudin at [47].

Conclusion

1. Accordingly, it follows that I conclude that the correct and preferable decision is that surcharge land tax should be assessed for Unit 511 for the relevant tax years.
2. The Respondent has conceded that the principal place of residence exemption should apply to exempt surcharge land tax for the relevant tax years in respect of Unit 802.
3. I propose, therefore, to remit the Assessment back to the Respondent for re-determination in accordance with these Reasons for Decision.

Orders 1. The Assessment is remitted to the Respondent for determination in accordance with these Reasons for Decision.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 11 October 2022