Dynset Pty Ltd v Chief Commissioner of State Revenue [2002] NSWSC 1060 | Case summary

REASONS FOR DECISION 1 The applicant seeks a review of a decision made by the respondent under the Land Tax Management Act 1956 (NSW) (the "LTM Act") to assess to land tax for the 2006 land tax year, the land at 9 Boyle Avenue, Banora Point, New South Wales ("the Property"). 2 The Property was assessed by the respondent on the basis that the applicant held the Property in the relevant year as a trustee of a "special trust" as provided by sections 3A and 25A of the LTM Act. 3 The applicant's case was that the Property was held by the applicant in the relevant land tax year as a bare trustee for Mr and Mrs Anderson and they were entitled to the principal place of residence exemption for the 2006 land tax as provided for by Schedule 1A of the LTM Act. Factual Background 4 The general background to this matter has been usefully summarised by the Respondent as follows: "4 The applicant is a trustee of the Anderson Trust. Leigh Geoffrey and Leza Anderson are directors of the applicant. They are also two of the beneficiaries of the Anderson Trust. 5 On 7 May 2004, Leigh Geoffrey and Leza Anderson entered into a contract to purchase the Property for $530,000.00. 6 Although the Andersons were named as the purchasers on the contract for sale, the transaction was completed by the transfer of the Property to the applicant. In turn, the applicant became the registered proprietor of the Property. 7 The purchase was financed with the aid of a loan from Resi Mortgage Company, which was secured by a mortgage over the Property granted by the applicant in favour of Perpetual Trustees Victoria Ltd. 8 On 30 November 2004, a Land Tax 2005 - Registration Form was lodged in relation to the Property. Dynset Pty Ltd as Trustee for the Anderson Trust was recorded as the owner of the Property. The principal place of residence exemption was sought in relation to the property. 9 On 3 April 2006, the Chief Commissioner issued an assessment to the applicant requiring the payment of land tax in respect of the Property for the 2005 land tax year, in the amount of $2,884.00. 10 On 2 October 2006, the Chief Commissioner issued an assessment to the applicant requiring the payment of land tax in respect of the Property for the 2006 land tax year, in the amount of $4,369.00 ('2006 Assessment"). 11 On January 2007, the Chief Commissioner issued an assessment to the applicant requiring payment of land tax in respect of the property for the 2007 land tax year, in the amount of $4,006.30 (the assessment included land tax liability interest on tax payable for 2006 land tax year). 12 In each of the land tax years, the Property was assessed on the basis that it was held by the applicant as trustee for the Anderson Trust and the Trust is a "special trust" in accordance with section 3A of the LT Management Act. Special trusts and non-concessional companies do not have the benefit of the land tax threshold (which was $352,000.00 for the 2006 land tax year): see section 3AJ of the Land Tax Act 1956 (NSW); see also Div. 4A of the LT Management Act. 13 By way of a letter dated 21 April 2007, Blundell Madigan Lawyers, acting for Dynset Pty Ltd as the trustee of the Anderson Trust and Leigh and Leza Anderson, lodged an objection to the 2006 Assessment. The solicitors stated that "it was necessary for the transfer of the Property to be prepared in the name of Dynset Pty Ltd as trustee for the Anderson Trust as the equity in the Property needed to be used as security for other borrowings". However, it was asserted that the Property is "held by Dynset Pty Ltd on a resulting trust for Mr and Mrs Anderson". It was then said that the resulting trust is a "fixed trust" and that the principal place of residence exemption in clause 2 of Schedule 1A to the LT Management Act applied." 14 By way of further letter dated 11 May 2007, Blundell Madigan Lawyers argued that the Property was not acquired by the applicant in its capacity as trustee for the Anderson Trust. Again it was asserted that the Property was purchased by Mr and Mrs Anderson in the name of Dynset Pty Ltd, which, in turn, held the Property on a resulting trust for the Andersons. Mr and Mrs Anderson were the owners of the land by virtue of section 25(1) of the LT Management Act." 5 On 5 September the respondent disallowed the applicant's objection on the grounds that the Property was owned by the applicant in its capacity as trustee for the Anderson Trust and that the applicant was not entitled to the principal place of residence exemption because under clause 11(1)(c) of Schedule 1A to the LT Management Act a company was not entitled to the exemption. 6 On 2 November 2007, an application was lodged with the Tribunal seeking a review of the respondent's decision on the grounds that the Property was the principal place of residence of Leigh and Leza Anderson and that it was held in trust by the applicant for them. 7 The documents provided by the respondent pursuant to s 58 of the Administrative Decisions Tribunal Act 1997, included copies of all correspondence with Blundell Madigan Lawyers, solicitors for the applicant, certified copy of the Anderson Trust Deed, Financial Report for the Anderson Trust for the years 2004, 2005 and 2006 and income tax returns filed by the Anderson Trust for years 2004, 2005 and 2006. 8 In addition, the respondent produced two other exhibits - a copy of a statutory declaration made by Mr Leigh Geoffrey Anderson and Mrs Leza Anderson on 24 May 2004 and a file produced by Property Pack Australia Pty. Ltd containing documents relating to the purchase of the Property. Relevant Statutory Provisions 9 Land Tax is imposed on land in New South Wales by the combined operation of the Land Tax Act 1956 ("the Land Tax Act") and the LTM Act. The Land Tax Act imposes a land tax and prescribes the rates of land tax payable and is to be read and construed with the LTM Act. The LTM Act makes provision relating to the imposition, assessment and collection of land tax upon unimproved values of certain lands. The reference to various provisions of the two Acts in this decision are to these provisions in the terms relevant to the land tax year in question. 10 Pursuant to sections 7, 8, and 9 of the LTM Act, land tax is payable by the owner of land upon the taxable value of the land owned by the owner as at midnight on 31 December immediately preceding the year for which the land tax is payable and which is not exempt from taxation under the Act. 11 "Owner" is defined in s.3(1) of the LTM Act to include: "(a) in relation to land, every person who jointly or severally, whether at law or in equity: (i) is entitled to the land for any estate of freehold possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, … (d) a person who, by virtue of this Act, is deemed to be the owner." 12 Under the LTM Act trustees and equitable owners are liable in respect of land tax in certain circumstances. 13 The liability of trustees is set out in section 24, which provides as follows: " 24 Trustees Any person in whom land is vested as a trustee shall be assessed and liable in respect of land as if he or she were beneficially entitled to the land: Provided that where he or she is the owner of different lands in severalty, in trust for different persons who are not for any reason liable to be jointly assessed, the land tax so payable by the person shall be separately assessed in respect of each of those lands; Provided also that when a trustee is also the beneficial owner of other land, he or she shall be separately assessed for that land, and for the land of which he or she is a trustee, unless for any reason he or she is liable to be jointly assessed independently of this section." 14 In the case of an "equitable owner", section 25 provides as follows: " 25 Equitable owner (1) The owner of any equitable estate or interest in land is liable in respect of land tax as if he or she were the legal owner of the estate or interest and land tax is to be assessed accordingly. (2) For that purpose: (a) the owner of the legal estate is taken to be the primary taxpayer and the owner of the equitable interest is taken to be the secondary taxpayer, and (b) there is to be deducted from the land tax payable by the secondary taxpayer in respect of the land such amount (if any) as is necessary to prevent double taxation. (3) This section does not apply in respect of land that is subject to a special trust. (4) This section is subject to the other provisions of this Act, in particular sections 25A and 26." 15 A "special trust" has the meaning given by section 3A of the LTM Act and provides as follows: " 3A Special trust - meaning (1) For the purposes off this Act, a trust is a special trust if: (a) the trust property includes land, and (b) the trustee of the trust is the owner of the legal estate of the land, and (c) the trust is not a fixed trust. (2) For the purposes of this section, a trust is a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes (disregarding section 25(3)). (3) For the purposes of determining whether a trust is a fixed trust under this section, any equitable interest of the trustee as trustee of the trust is to be disregarded. (3A) If a trust satisfies the relevant criteria, the persons who are beneficiaries of the trust under the trust deed are taken to be owners of an equitable estate in the land that is the subject of the trust and, accordingly, the trust is taken to be a fixed trust. Note. Under section 25, owners of an equitable estate or interest in land are liable in respect of land tax as if they were legal owners of the land. Owners of an equitable estate in land are treated as secondary taxpayers. (3B) For the purposes of this section, the relevant criteria are as follows: (a) the trust deed specifically provides that the beneficiaries of the trust: (i) are presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust, and (ii) are presently entitled to the capital of the trust, and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property, (b) the entitlements referred to in paragraph (a) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed. (4) A trust is not a special trust :

…" 16 Under section 25A of the LTM Act, the Chief Commissioner may classify a trust as a special trust for land tax purposes, on the application of the trustee of a trust, or, on the Chief Commissioner's own motion. 17 Section 10 of the LTM Act sets out various categories of land that enjoy exemption from land tax. Section 10, in relation to the "principal place of residence exemption", provides as follows: "10 Land exempted from tax (1) Except where otherwise expressly provided in the Act the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act: … (r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A." 18 Clause 2 of Schedule 1A of the LTM Act which sets out in detail the provisions dealing with the principal place of residence exemption at the relevant time provided as follows: "2 Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing on 1 January 2004 or any succeeding year, if: (a) the land has a land value in respect of the year of less than the premium tax threshold, and (b) the land is: (i) a parcel of residential land, or (ii) a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986. (2) Land is not used and occupied as the principal place of residence of a person unless: (a) the land and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence. (3) If the owner of land is entitled to the exemption conferred by this clause, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption. (4) The exemption conferred by this clause is referred to as the principal place of residence exemption. (5) The principal place of residence exemption is subject to the restrictions set out in Part 4." 19 "Residential land" is defined in Clause 3 of Schedule 1A of the LTM Act as follows: "(1) In this Schedule, 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 adopted for residential purposes, other than a building or buildings: (a) comprised of lots within a strata plan or residential units, or (b) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner, or (c) from any part of which income is derived. (2) Land does not cease to be used and occupied as provided by subclause (1) by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the building are, designed, constructed or adapted." 20 The principal place of residence exemption as provided by Clause 2 of Schedule 1A of the LTM Act is subject to certain restrictions as set out in Clause 11 of Schedule 1A, which was in the following terms as at 31 December 2005: " Part 4 Restrictions 11 Exemption does not apply to land owned by companies and trustees (1) Land is not exempt from taxation under the principal place of residence exemption if: (a) the land is owned by a company, unless the land is owned by a trustee company acting in its representative capacity or a company acting in its capacity as trustee of a concessional trust, or (b) the owner of the land, or each of the joint owners, who use and occupy the land as a principal place of residence is an owner only by reason of being a trustee, or (c) the land is owned, or jointly owned, by a person who is a trustee acting in the person's capacity as trustee of a special trust Note. The expression trustee company (as referred to in subclause (1) (a)) is defined in section 3 (1). (2) For the purposes of the principal place of residence exemption, land that is owned by a company acting in its capacity as trustee of a concessional trust is taken to be used and occupied as the principal place of residence of the owner of the land only if the person, or one of the persons, who so uses and occupies the land is a person who is a beneficiary of the trust. …" Submissions 21 The applicant was represented by a director as agent at the hearing and essentially relied on the submissions that had been made by the applicant's solicitors in lodging the objection to the assessment. 22 The applicant's case was that the Property was held by the applicant as a resulting trust for Mr and Mrs Anderson and in support relied on the High Court decision in Calverley v Green (1984) 155 CLR 242 and on the following facts: (1) On 7 May 2004 Mr and Mrs Anderson entered into a Contract to purchase the Property; (2) In order to fund the purchase Mr and Mrs Anderson took a loan with Resi Mortgage in the sum of $335,790.40; (3) To fund the purchase, it was necessary for the transfer of the property to be prepared in the name of Dynset Pty Ltd as Trustee for the Anderson Trust as the equity in the property needed to be used as security for other borrowings. This was required by the lender; and (4) The purchase was completed on 16 June 2004. 23 In addition, it was submitted that the property has been used as a residential property by Mr and Mrs Anderson as their principal place of residence. 24 The reasons for the objection were set out in the applicant's written objection as follows: "A. Section 25 of the Land Tax Management Act 1956 ("the Act") deems Mr and Mrs Anderson (as beneficiaries of the Trust and as equitable owners of the land) as the owners of the land for Land Tax purposes (Section 25(1)); B. The Trust is a "fixed trust" for the purposes of the Act because: (i) The equitable estate in the land the subject of the Trust is owned by Mr and Mrs Anderson who are owners of the land for Land Tax purposes (Section 3A(2)). Please note Section 25(3) is to be disregarded for the purposes of this test - Section 3A(2) and (3); (ii) The principal place of residence exemption set out in Item 2 of Part 2 of Schedule 1A to the Act applies because: a. The land is used and occupied by Mr and Mrs Anderson (the owners of the land within the meaning of that phrase in the Act by virtue of Section 25) as their principal place of residence and for no other purpose (Schedule 1A Part 2, 2(1); b. The restrictions specified in Part 4 of Schedule 1A to the Act do not apply because: The Land is jointly owned by Dynset Pty Ltd in its capacity as a Trustee (Item 11(1)(a)); The company (Dynset Pty Ltd does not own the land in its own right but as Trustee; Item (6) of clause 11 of Part 4 of Schedule 1A applies, and the Act deems Mr and Mrs Anderson ("natural persons") to be the owners of the land by virtue of the provisions of Section 25(1) of the Act." 25 The respondent's case was that the applicant had not discharged its onus of establishing that it held the Property in its own capacity on a resulting trust for Leigh and Leza Anderson (and that it did not hold the Property in its capacity as trustee for the Anderson). Reliance was placed by the respondent on various authorities including: Black Uhlans Incorporated v New South Wales Crime Commission & Ors [2002] NSWSC 1060, Napier v Public Trustee (W.A.) (1980) 32 ALR 153, Nelson v Nelson (1995) 184 CLR 538, Calverley v Green (1984) 155 CLR 242, Killen v Rennies & Anor [2005] NSWCA 392, Durnford v Chief Commissioner of State Revenue [2003] NSWADT 269, Salvo v New Tel Ltd [2005] NSWCA 281, Stephension Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 and Re Williams and Commissioner of State Revenue [2004] VCAT 1367. 26 In support of the above submission, the respondent placed reliance on the following matters which it was submitted emerged "from the evidence and documentary materials before the Tribunal: The applicant is the registered owner of the property; The solicitor who acted for the applicant and the Andersons on the objection to the Chief Commissioner stated that the property was transferred to "Dynset Pty Ltd as trustee for the Anderson Trust" at the lender's insistence so that the "equity in the Property could be used as security for other borrowings"; The Property was substituted for another property to secure the loan from the Resi Mortgage Company; The 2006 financial statements for the Anderson Trust record the debt secured by the Property as a non-current liability of the Anderson Trust for the 2005 and 2006 financial years; The interest on the loan secured by the Property is claimed by the Anderson Trust as a business expense; It seems that repayments of the loan have been made from an account held by Dynset Pty Ltd as trustee of the Anderson Trust; The Property is the business address for the Anderson Trust; Dynset Pty Ltd as trustee for the Anderson Trust was recorded as the owner of the property in the land tax return lodged with the Chief Commissioner; Correspondence sent by the solicitor who acted on the purchase of the Property to the applicant is headed "The Anderson Trust Purchase From Skinner"; Correspondence from Leigh and Leza Anderson to Resi Mortgage Company concerning the discharge of the Property as security is headed "Dynset Pty Ltd ATF The Anderson Trust"; The Transfer of the Property to the applicant was stamped under s. 18(3) of the Duties Act 1997 (NSW), not section 55 (which is concerned with resulting trusts)." 27 The respondent further submitted that the Anderson Trust was a special trust. This submission was made on the basis that the rights and entitlements of the beneficiaries, as settled by the High Court in CPT Custodian Pty Ltd v. Commissioner of State Revenue (Vic) (2005) 224 CLR 98, were governed by the various clauses of the Trust Deed of the Anderson Trust and which, when properly examined, allowed the respondent to make that conclusion. In particular, the respondent relied on the following written submissions: "28. Firstly, it cannot be said that the beneficiaries of the Anderson Trust are "entitled to the land for any estate of freehold in possession". Clause 3.01 of the Anderson Trust Deed relevantly provides that the "Trust Fund and the trust shall terminate and vest absolutely on the vesting date. Upon the vesting date the Trustee shall stand possessed of the Trust Fund and the income thereof in trust for such of the Primary Beneficiaries and in such proportions and for one to the exclusion of the other or others as the Trustee may in its absolute discretion by instrument in writing appoint" (emphasis added). 29. The Trust is defined to include all "other monies and property which any person or company may donate transfer or assign to or vest in the Trustee to be held upon Trust; and [a]ll other property and moneys acquired by the Trustee under the provisions of this Deed; and [a]ny income accumulated by the Trustee pursuant to the power so to do herein contained; and [t]he property and investments…representing the [aforementioned] property and moneys… and in to which the same or any part thereof which may be converted…"; see Schedule. The "Primary Beneficiaries" under the Anderson Trust are Leigh Geoffrey Anderson, Leza Anderson, Karl Geoffrey Anderson, Leza Nadine/Anderson and Natalie Richelle/Anderson "together with any spouse or child of the abovementioned primary beneficiaries and any company (other than a company acting as Trustee of this Settlement)": see Schedule. 30. The Trust Deed confers on the Trustee extensive powers and discretions to deal with the Trust Fund and the income from the Trust Fund (cll. 3, 4, 5, 6, 7, 8, 9 and 14). For example, the Trustee may, at its absolute discretion, set aside net income from the Trust Fund for the primary Beneficiaries (clauses 4.01, 5.02, 6.01), or elect to apply and invest moneys forming part of the Trust Fund (clauses 5.01 and 7.01), or, at its discretion, convert or sell part of the Trust fund (clauses 8.01 (a)). Subject to any express provision in the Trust Deed, the Trustee's discretionary powers are "absolute and uncontrolled": clauses 14.01. 31. There is no provision in the Anderson Trust Deed which confers on the beneficiaries a proprietary interest to the land of the Trust: see GTN Developments, esp. at points 8 and 11 in paragraph [60]. Rather, the Trustee stands possessed of the Trust Fund in trust for the beneficiaries. It is at the Trustee's discretion to resolve to distribute land forming part of the Trust Fund to any of the beneficiaries: see for example, clause 8.01(c). 32. Moreover, the income that the beneficiaries may receive is defined by the discretionary powers of the Trustee to apply the Trust Fund and the income of the Trust Fund in various ways. As such, the beneficiaries' entitlement to income is "not a total of all receipts derived from each asset the subject of the fund but rather such if any income as may be derived from the product of the application of gross receipts in various ways": see CPT Custodian, at paragraph [37]. The interest the beneficiaries have in the due administration of the Anderson Trust is not a proprietary interest: see Lygon Nominees Pty Ltd v Commissioner of State Revenue (2007) 66 ATR 736, at paragraph [77]; GIN Developments, at point 8 in paragraph. [60]." 28 It was accordingly, submitted by the respondent that "it cannot be said that, as at 31 December 2005, the beneficiaries of the Anderson trust were entitled to the land the subject of the Trust for any estate of freehold possession". Findings and Reasons for Decision 29 The principal issue in this matter is whether the Trustee held the property in the relevant land tax year as a bare trustee and the owners for land tax were in fact the Andersons. A subsidiary issue arises if it is held that the applicant was the owner of the Property - If the applicant was the "owner", was the Anderson Trust a special trust? 30 The courts determine beneficial ownership of land with the assistance of presumptions. As a staring point, it is presumed that "the beneficial ownership of real property is commensurate with the legal title". (Currie v Hamilton (1984) 1 NSWLR 687 at 690 per McLelland J). In this matter the legal title of the Property is held by the applicant. 31 As was observed by Campbell J in Black Uhlans Incorporated v New South Wales Crime Commission & Ors at paragraph [128] in "some situations this first presumption is displaced by a presumption of a resulting trust, while in other factual situations a presumption of advancement operates". 32 His Honour went on to state in what circumstances a presumption of resulting trust can be established, as follows: "129 A presumption of a resulting trust can operate in, broadly, three different types of factual situation. The first is where property is conveyed at law, but the entire beneficial interest in that property is not disposed of. The second is where property has been conveyed at law, on a basis which, initially, disposes of the entire interest, but at a later time equitable obligations attaching to the property fail or are set aside. The third situation is that a presumption of resulting trust arises where one person provides the purchase price of property, which is conveyed into the name of another person." 33 The third situation was explained by Gibbs CJ in the High Court in Calverley v Green at p.246 as follows: "Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other as gives arise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such - not, e.g. , as a loan." 34 The presumption of a resulting trust is rebuttable by evidence. "Only by taking into account both evidence which tends to cut down the presumption, and evidence which tends to strengthen the finding about intention which the presumption dictates can the Court reach a conclusion about whether, on the whole of the evidence, the presumption has been rebutted": Black Uhlans Incorporated v New South Wales Crime Commission & Ors per Campbell J at paragraph [138]. The extent of the beneficial interest of a party must be determined at the time when the trust was created: Calverley v Green per Gibbs CJ at p 262. 35 In this matter the purchase contract was signed by the Andersons and they were the borrowers of funds from Resi Mortgage Company, which were used to finance the purchase of the Property. On that evidence alone it is difficult not to conclude that the Andersons were the beneficial owners of the Property and that the applicant was a mere trustee. 36 But as suggested by his Honour Campbell J in Black Uhlans Incorporated any conclusion to rebut the presumption must be made "on the whole of the evidence", it is necessary to examine all the relevant subsequent transactions relating to the Property. This question of true ownership of property usually arises in circumstances when there is a dispute between two quite independent persons. In this matter, both the Andersons and the applicant are related and it is understandable why the Andersons have sought the exemption. They are the directors of the applicant and have used the Anderson Trust as a business and investment vehicle for a number of years with full control of the operations of the Anderson Trust. They have used and occupied the Property as their principal place of residence. 37 Discretionary trusts are often set up for business and income tax reasons but in law discretionary trusts have a fairly independent status from the beneficiaries. It is in those circumstances that a trustee company may be denied the principal place of residence exemption. 38 The Property was transferred to the applicant along with the mortgage liability relating to the Property. The applicant was the guarantor of the loan and the Property was used by the applicant as a security for the loan which included moneys advanced to the applicant for other investment and business activities of the applicant. Further, the loan secured by the property was recorded in the 2006 financial statements as a liability of the Anderson Trust for the 2005 and 2006 financial years. And repayments in respect of the loan were made from an account held by the applicant as trustee of the Anderson Trust. 39 The respondent has also set out in his submissions (see paragraph 26) a number of other matters that emerge from the evidence and documentary materials which it was submitted support the view that the Property was trust property. These are clearly relevant matters that need to be considered in reaching any conclusion. 40 The onus was on the applicant to establish that it held the Property in the relevant land tax year in its own capacity on a resulting trust for the Andersons. It has failed to do so. Reliance merely on the original contract for purchase and the loan, which created a prima facie case, did not go further to establish the creation of a resulting trust. On the contrary, the evidence of transactions and events subsequent to the transfer of the title to the applicant establish that the property was held by the applicant in its capacity as trustee for the Anderson Trust. 41 The question that remains is whether the respondent was correct in treating the Anderson Trust as a "special trust" within s 3A(1) of the LTM Act. 42 Under s 3A(1) of the LTM Act, a trust is a "special trust" if: (a) the trust property includes land, and (b) the trustee of the trust is the owner of the legal estate in the land, and (c) the trust is not a fixed trust. 43 In this matter, there is no dispute that the applicant is the owner of the legal estate of the Property and on the basis of the findings by this Tribunal the Property is trust property of the Anderson Trust. The only question that needs to be addressed is whether for purposes of section 3A of the LTM Act, the Anderson Trust was a fixed trust in the relevant land tax year. 44 Under section 3A(2) of the LTM Act, "a trust is a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes". This question has to be determined having regard to the definition of "owner" in section 3 of the LTM Act. "Owner" is defined to include: "(a) in relation to land, every person who jointly or severally, whether at law or equity: (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession or otherwise." 45 A trust can also be treated as a "fixed trust" under section 3A(3A) if it satisfies the following "relevant criteria" set out in section 3A(3B): "(a) the trust deed specifically provides that the beneficiaries of the trust: (i) are presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust, and (ii) are presently entitled to the capital of the trust, and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property, (b) the entitlements referred to in paragraph (a) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed." 46 The position of the beneficiaries of the Anderson Trust is entirely governed by the various clauses of the Anderson Trust Deed. As correctly pointed out by the respondent, under clause 3.01 of the Anderson Trust Deed the trustee, on the vesting date, will stand possessed of the Trust Fund and any income thereof "in trust for such of the Primary Beneficiaries and in such proportions and for one to the exclusion of the other or others as the Trustee may in its absolute discretion by instrument in writing appoint". 47 The Trust Fund is defined to include all property acquired by the trustee. The applicant stands possessed of the Trust Fund in trust for the beneficiaries with the discretion under clause 8.01(c) of the Trust Deed, without the need for any consent of any beneficiary, to distribute land forming part of the Trust Fund to any of the beneficiaries. 48 Various clauses in the Trust Deed give the applicant extensive powers and discretions to deal with the Trust Fund and income of the Anderson Trust. These clauses have been cited by the respondent in his submissions (see paragraph 27). These clauses on a proper examination reveal that the Anderson Trust was in the relevant land tax year a discretionary trust and that as at 31 December 2005, none of the beneficiaries were entitled to any legal or equitable right to the land the subject of the Trust for any estate of freehold in possession. No beneficiary was, as at 31 December 2005, in relation to the land held by the Anderson Trust, entitled to receive or was in receipt of, or if the land was let to a tenant would have been entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession or otherwise. The beneficiaries may have had a contingent right to receive income from the Anderson Trust but that was dependent on the exercise of the discretionary powers given to the applicant. It has been held that such a contingent right does not constitute an "entitlement" to income: Executor Trustee and Agency Co of South Australia Limited v Deputy Commissioner of Taxes (SA) (1939) 62 CLR 545. 49 It has also been held in Pearson v Commissioner of Taxation (2006) 32 ALR 55 at paragraph [14] by Edmonds J in the Full Federal Court (with whom Dowsett and Allsop JJ agreed) that - "A beneficiary is 'presently entitled' to a share of the income of the trust estate if, but only if: (a) the beneficiary has an interest in the income which is both vested in interest and vested in possession; and (b) the beneficiary has a present legal right to demand and receive payment of the income, whether or not the precise entitlement can be ascertained before the end of the relevant year of income and whether or not the trustee has the funds available for immediate payment." 50 In the present matter, the beneficiaries on 31 December 2005 did not have an interest in the income or capital of the Anderson Trust, which was both vested in interest and in possession and also did not have any present legal right to demand and receive payment of the income or capital of the Anderson Trust. It would therefore follow that the applicant was also not in a position to satisfy the required "relevant criteria" for purposes of the alternative test to establish a fixed trust under section 3A(3B) in the relevant land tax year. Order The objection decision made by the respondent is affirmed.

Dynset Pty Ltd v Chief Commissioner of State Revenue

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