Faytrouni v Chief Commissioner of State Revenue

Land Tax Management Act (LTMA)

1. Pursuant to s 7 of the LTMA land tax is levied on the taxable value of all land in New South Wales unless it is exempt under the LTMA.
2. Land tax is charged on land owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied: s.8 LTMA.
3. Section 10 (1)(r) LTMA provides: 10 Land exempted from tax (1) Except where otherwise expressly provided in this 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,
4. The principal place of residence exemption and related concessions are set out in Schedule 1A of the LTMA. Clause 2 of Schedule 1A of the LTMA provides, relevantly, 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 1 January 2005 or any succeeding year, if the land is - (a) a parcel of residential land, or (b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots. (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. … (4) The exemption conferred by this Schedule is referred to as the principal place of residence exemption.
5. Clause 6 of Schedule 1A of the LTMA provides for a concession for land which is unoccupied but intended to be the owner's principal place of residence. It provides, relevantly, as follows: 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. … (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, after the person became owner and before the building or other works physically commence, the land is used and occupied for residential purposes by another person - 4 tax years immediately following the tax year in which the other person ceases to use and occupy the land for those purposes. … (8) For the purposes of this clause - unoccupied land means land that is not being used or occupied for any purpose.

Taxation Administration Act (TAA)

1. The TAA applies in respect of "taxation laws" which are defined in s 4 of the TA Act to include the LTMA.
2. As previously mentioned, s 96 of the TAA 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. Also as mentioned above, s 99 of the TAA provides that an application for review must be made not later than 60 days after the date of issue of the notice of the Respondent's determination of the objection but that the Tribunal may allow a person to apply for a review after that 60-day period.
4. Section 100 of the TAA 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. This requires the Applicant to prove, on the balance of probabilities, all matters necessary to enable the Tribunal to answer the statutory question in his favour: Cornish Investments Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 25 at [28] - [31].

Material before the Tribunal

1. The parties requested the matter be determined on the papers and, being satisfied that the matter could be adequately determined in the absence of the parties, on 11 July 2023 the Tribunal made an order dispensing with a hearing pursuant to s 50(2) of the NCAT Act.
2. On 26 July 2023 the Tribunal made further orders requesting the parties provide evidence and submissions as to whether the Tribunal should make an order under s 41 of the NCAT Act extending the time for lodging the application.
3. The Applicant relied upon: 1. His application lodged on 24 March 2023 and the materials attached to that application; 2. A letter dated 1 June 2023 containing submissions attaching five annexures; 3. A letter dated 26 June 2023 responding to a request for information by the Respondent; and 4. Submissions dated 3 August 2023 as to the extension of time to lodge the application.
4. The Respondent relied upon: 1. Documents filed pursuant to s 58 of the ADR on 4 May 2023; 2. A tender bundle filed on 29 June 2023; 3. Submissions filed on 29 June 2023.

Facts

1. The following facts are not in dispute unless otherwise indicated.
2. The Applicant purchased the Property in August or September 2020 and settlement of the Property occurred in November 2020.
3. The Property was purchased subject to an existing tenancy which was a residential tenancy agreement under the Residential Tenancies Act 2010 (NSW).
4. The Applicant says that he issued the tenant with a notice to vacate the Property on 16 November 2020. However, he says, the tenant refused to vacate the property claiming he was an essential worker. He says that emergency laws brought in as a result of the Covid 19 Pandemic response prevented him from evicting the tenant.
5. The tenant moved out of the Property in March 2021 and the Applicant moved into the Property after the tenant vacated in March 2021.
6. On 2 June 2021 development consent was granted for renovations to the Property.
7. On 11 October 2021 the Respondent issued a land tax assessment to the Applicant in respect of the Property for the 2021 land tax year.
8. On 30 November 2021 the Applicant lodged a land tax variation return claiming an exemption in respect of the Property as his intended principal place of residence.
9. On 17 December 2021 the Respondent advised the Applicant that the claim for an exemption in respect of the Property as his intended principal place of residence was approved as from March 2021 (the date the tenant vacated the Property).
10. On 7 January 2022 the Respondent issued the Assessment.
11. On 2 March 2022 the Applicant lodged an objection to the Assessment and that objection was disallowed by the Respondent by notice dated 14 June 2022.
12. The Applicant lodged the application for review with the Tribunal on 24 March 2023. In the application the Applicant stated: Applicant was notified of the objection in July 2022. Applicant tried to appeal to Revenue NSW after he received the objection, this took about 2-3 months for preparing documents and including Christmas and new year holiday. After applicant received a respond (sic) from Revenue NSW which mentioned he must submit to NCAT for review, applicant immediately start preparing this lodgement.
13. In submissions dated 3 August 2023 in support of an order extending time to lodge the application, the Applicant's representative stated: The Applicant's mother became gravely ill in middle 2022 and required medical support and care from her son (the Applicant) where she became completely dependent on him following her disability and he had to provide her with assistance in hygiene matters and food and administration of her medication. During that period, the Applicant gave up all his work priorities to dedicate that time to care for his mother. It was only when the Applicant approached this firm in late February 2023, when we were able to assist him in lodging the review of decision application with NCAT which was lodged on 24 March 2023.
14. No supporting evidence was provided in respect of those matters.

Should the Tribunal make an order extending the time for lodgement of the Application?

1. The Respondent does not oppose an order extending time for lodgement of the Application. Nonetheless I must be satisfied that an extension of time should be granted.
2. The relevant principles in respect of the Tribunal's discretion under s 41 of the NCAT Act were set out in Dauod v Chief Commissioner of State Revenue [2015] NSWCATAD 53 at [13] - [17] as follows (internal citations omitted): 13. Section 41 of the Civil and Administrative Tribunal Act 2013 (NCATA) provides that the Tribunal may by application extend the period of time for the doing of anything under any legislation in respect of which the Tribunal had jurisdiction despite anything to the contrary under that legislation. Such an application may be made even though the relevant period of time has expired. 14.Accordingly, the discretion to extend time is broad and unfettered. However, it must be exercised judicially and having regard to s 36 of the Act and the need "to facilitate the just, quick and cheap resolution of the real issue in the proceedings". 15. The grant of an extension of time is not automatic. The discretion to extend time is given for the sole purpose of enabling the Tribunal to do justice between the parties. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time. It is also necessary to consider the prospects of the Applicants succeeding in their application. In order to justify the Tribunal extending the time, there must be some material upon which the Tribunal can exercise its discretion. 16.Time limits are set to promote the orderly and efficient conduct of proceedings in the Tribunal, to provide certainty for the parties to proceedings, and to achieve finality in litigation. For these reasons, time limits should generally be strictly enforced unless the interests of justice require that the extension be granted. 17. As set out in Jackson v Land and Housing Corporation at [22] albeit in the context of an Appeal, the relevant considerations in deciding whether to grant an extension of time include: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the Applicant; (2) The discretion is to be exercised in the light of the fact that the Respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The Applicant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the Respondent (to the appeal); and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the Applicant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable.
3. In this case, the delay is considerable, the application being lodged some six months outside the statutory period. The Applicant has proffered an explanation for that delay albeit unsupported by evidence. However, even if I were to accept that explanation and notwithstanding the Respondent does not assert he has suffered any prejudice by the delay, I do not think strict compliance with the rules would work any injustice for the Applicant in the circumstances of this case. That is because, for the reasons which follow, the Applicant would have no prospect of succeeding on his application even if I were to make an order extending time for the application to be lodged.

Clause 2 of Schedule 1A of the LTMA

1. In order to satisfy the principal place of residence exemption in clause 2 of Schedule 1A of the LTMA, the Applicant must establish that the Property was residential land that was used and occupied by the Applicant at the relevant taxing date, that is 31 December 2020, as his principal place of residence and for no other purpose.
2. It is not in dispute that the Property was residential land.
3. However, on 31 December 2020 the Property was occupied by a tenant under a residential tenancy agreement and the Applicant concedes that he did not move into the Property until March 2021.
4. The Applicant says that he did not offer the Property for rent (it was purchased subject to an existing tenancy). He says that the Property was not an investment property but was purchased as his intended place of principal residence. However, he says he was prevented from evicting the tenant until at least February 2021 as a result of a regulation brought in by the Government to afford relief to tenants during the covid pandemic, such that it was not open to him lawfully to evict the tenant.
5. It is not clear on the material before the Tribunal whether the regulation relied on by the Applicant, the Residential Tenancies (Covid -19 Pandemic Emergency Response) Amendment Regulation 2021 (NSW) (Regulation), in fact applied in respect of the tenant's circumstances. However, even if the Regulation did apply and even if it did have the effect that the Applicant could not lawfully evict the tenant prior to 31 December 2020, that is not relevant to the satisfaction of the criteria of use and occupation for the purposes of the exemption. I accept that the tenant refused to vacate and did not vacate until March 2021. That is, similarly, not relevant. The fact that the Applicant intended to use the Property as his principal place of residence is not sufficient. There must be actual use and occupation: Ghali v Chief Commissioner of State Revenue (2013) 85 NSWLR 378. Here, there was not. The Applicant did not use and occupy the Property as his principal place of residence as at 31 December 2020. As such the exemption in clause 2 of Schedule 1A of the LTMA was not satisfied in respect of the 2021 land tax year.

Clause 6 of Schedule 1A of the LTMA

1. Nor can the Applicant rely upon the concession in clause 6 of Schedule 1A of the LTMA in respect of the 2021 land tax year.
2. Under clause 6 of Schedule 1 of the LTMA an owner of unoccupied land who intends to use and occupy the land solely as his principal place of residence can, in the circumstances provided under that clause, be taken to use and occupy the land as his principal place of residence.
3. However, unoccupied land is defined as meaning land that is not being used or occupied for any purpose. As at the relevant taxing date, 31 December 2020, the Property was being used and occupied by the tenant for residential purposes. As such the Property was not unoccupied land and the clause can have no application.
4. The Applicant argues that the requirement that the Property be unoccupied could not be satisfied because of the application of the Regulation. Again, it is not clear to me that that is the case. However, again, even if that were so, that is not relevant to the satisfaction of the criteria.

Fairness

1. The Respondent and the Tribunal must administer the legislation in accordance with its terms. Neither the Respondent nor the Tribunal has any ability to exercise a discretion to allow the principal place of residence exemption to apply where the statutory criteria are not met, even if those criteria cannot be met by reason of matters beyond the control of the Applicant.
2. The High Court in Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 123 stated: "But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any 'policy' or 'general intention' unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of 'fairness' or 'justice' do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted."
3. There is no statutory authority in the LTMA or elsewhere for the exercise of a discretion on the grounds of unfairness: Findlay v Chief Commissioner of State Revenue [2023] NSWCATAD 80 at [31] and the cases referred to therein; Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222; Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261.

Conclusion

1. It follows that, even if an order granting an extension of time to lodge the application were made, the Applicant's application would fail.
2. Accordingly, I do not propose to make such an order. As such, the proceedings should be dismissed.

Orders 1. The Applicant's application for administrative review is dismissed. 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 2023