Gogulan v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2023-05-29

Introduction

This is an application to the Tribunal under s 55 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act) for a review of an assessment of land tax for the 2018 to 2022 land tax years issued to the Applicants, Dr and Mrs Gogulan, on 23 August 2022 (Assessment) in respect of property owned by them in Towradgi (Property).
The Applicants claim that they are entitled to an exemption from land tax in respect of the Property under clause 2 of Schedule 1A of the Land Tax Management Act 1956 (NSW) (LTMA) as it was their principal place of residence or under clause 8 of Schedule 1A of the LTMA as it was their former principal place of residence. They also rely on the fact that in January 2018 they had been granted an exemption under clause 6 of Schedule 1A in respect of the Property (clause 6 applies to an intended principal place of residence) which, they say, was confirmed by an officer of the Respondent in 2020 to apply until May 2021 and that no land tax assessments were issued by the Respondent in respect of the Property until the exemption was revoked and the Assessment was issued in 2022. At the hearing of the application the Applicants indicated they did not press their claim in respect of the 2021 land tax year.
The Respondent's case is that the Property is not exempt from land tax as either the Applicants' principal place of residence (pursuant to clause 2 of Schedule 1A of the LTMA), intended principal place of residence (pursuant to clause 6 of Schedule 1A of the LTMA) or former principal place of residence (pursuant to clause 8 of Schedule 1A of the LTMA) in any of the 2018 to 2022 land tax years. The Respondent submits that he was entitled to reassess the Property as liable for land tax in 2022 in circumstances where it was not exempt.
The Applicants objected to the Assessment and the Respondent disallowed that objection by notice dated 9 December 2022.
The Assessment is administratively reviewable by the Tribunal by virtue of s 96 of the Taxation Administration Act 1996 (NSW) (TA Act).

Material before the Tribunal

The Applicants relied upon: 1. Their application and the documents and submissions submitted with the application (Exhibit A1); 2. A bundle of documents filed with the Tribunal on 23 February 2023 (Exhibit A2); 3. Submissions filed on 23 March 2023 which comprised a mixture of evidence and submissions (Exhibit A3); 4. A further bundle of documents filed on 23 March 2023 (Exhibit A4); and 5. Further submissions (also in the nature of evidence and submissions) and documents filed on 5 May 2023 (Exhibit A5).
The Respondent relied upon: 1. Documents filed pursuant to s 58 of the ADR Act on 1 March 2023 (Exhibit R1); 2. Supplementary documents filed pursuant to s 58 of the ADR Act on 21 April 2023 (Exhibit R2); and 3. A Tender Bundle filed on 21 April 2023 (Exhibit R3).
Dr Gogulan was also cross-examined at the hearing.

Land Tax Management Act (LTMA)

Pursuant to s7 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.
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: s8 LTMA.
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 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
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.
Section 3 of the LTMA defines principal place of residence as follows: principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.
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. … (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. (6A) For the purposes of section 9 (3) (c) of the Taxation Administration Act 1996, any reassessment under this clause is authorised to be made more than 5 years after the initial assessment. … (8) For the purposes of this clause - unoccupied land means land that is not being used or occupied for any purpose.
Clause 8 of Schedule 1A of the LTMA provides a concession in respect of former principal places of residence. It provides, relevantly, as follows: 8 Concession for absences from former residence (1) A person is taken, for the purpose of the principal place of residence exemption, to continue to use and occupy land formerly used and occupied by the person as a principal place of residence (a former residence), after the person ceases to so use and occupy the former residence, if the Chief Commissioner is satisfied that - (a) the person used and occupied the former residence as a principal place of residence for a continuous period of at least 6 months, and (b) the person does not own any other land used and occupied by the person as a principal place of residence. (2) The maximum period for which a person may be taken, under this clause, to continue to use and occupy a former residence as a principal place of residence is 6 years starting at the end of the last period (of at least 6 months) during which the former residence was used and occupied by the person as a principal place of residence (not including any period for which the person may be taken, under clause 7 or this clause, to have used and occupied the former residence as a principal place of residence). (3) If the principal place of residence exemption applies to the former residence of a person by operation of this clause, the exemption ceases to have effect if the person is the owner of the former residence at the end of the 6-year period referred to in subclause (2) and fails - (a) to resume actual use and occupation of the residence as a principal place of residence by the end of that period, and (b) to continue that use and occupation for at least 6 months. … (6) This clause applies in respect of the assessment of a person's ownership of land in a tax year only if the Chief Commissioner is satisfied that no income has been derived from the use or occupation of the former residence in the preceding tax year, except as permitted by subclause (7). (7) Income may be derived from the use or occupation of the former residence in a tax year if - (a) the income is derived from a lease, licence or other arrangement under which a person has a right to occupy the former residence and the period for which any such right of occupation is conferred does not exceed a continuous period of 6 months, or a total period of 182 days, in the tax year, or (b) the income is derived from any arrangement under which a person occupies the former residence, but the income is no more than is reasonably required to cover council, water and energy rates and charges and maintenance costs of the owner in respect of the residence. (7A) For the purposes of subclause (7), each overnight stay counts as one day. …
Clause 12 of Schedule 1 of the LTMA provides that for the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family.

TA Act

The TA Act applies in respect of "taxation laws" which are defined in s 4 of the TA Act to include the LTMA.
Section 9 of the TA Act sets out the circumstances in which the Respondent may make a reassessment as follows: 9 Reassessment (1) The Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer. (2) A reassessment of a tax liability is to be made in accordance with the legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time. (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. …
Section 10(1) of the TA Act provides that a person who is liable to pay tax under a taxation law must, before or at the time an assessment of the tax liability is made, fully and truly disclose to the Respondent all the facts and circumstances affecting their tax liability under the relevant taxation law.
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.
Section 100 of the TA Act provides that the Applicants' and Respondent's cases on an application for review are not limited to the grounds of the objection. Section 100(3) provides that the Applicants have the onus of proving their case in an application for review. This requires them to prove all matters necessary for the Tribunal to answer the statutory question in their favour on the balance of probabilities. Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [28] - [31].
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.

The evidence

On 9 November 2015, the Applicants purchased the Property.
During the relevant land tax years they also jointly owned land at West Wollongong and Gwynneville. Mrs Gogulan also owned land at Shell Cove (which has since been sold) and both Applicants together own another property at Towradgi.
The Property was leased to tenants from: 1. 23 November 2015 until 21 April 2017; 2. 28 April 2017 until 23 March 2018; and 3. 30 March 2018 until 2 January 2019.
In January 2017 Mrs Gogulan and the Applicants' children moved from their West Wollongong Property to a rental property at Cherrybrook (Cherrybrook Property).
Mrs Gogulan has never lived at the Property.
Dr Gogulan says that he occupied the Property for a period in 2017. There are some inconsistencies in the various documents before the Tribunal as to exactly when Dr Gogulan says that he occupied the Property in 2017. However, under cross-examination he said that, after his wife moved to the Cherrybrook Property, he stayed in the West Wollongong Property from January 2017 to April 2017 and then moved to the Property in April 2017. He says he then resided in the Property for a period of a few weeks but he then had to move because his job took him to different locations in New South Wales, Queensland and Western Australia. During this few-week period, Dr Gogulan also spent time with his family at the Cherrybrook Property.
On 25 September 2017, Dr Gogulan accepted a position as a Temporary Visiting Medical Officer, Central Coast Local Health District, commencing 23 October 2017 and he was assigned as a Locum General Physician to St John of God Hospital, Bunbury, Western Australia in November 2017.
On 20 November 2017, Wollongong City Council approved the Applicants' development application for the demolition of an outbuilding and the construction of a dual occupancy on the Property.
On 4 January 2018, the Applicants lodged a variation return with the Respondent seeking an exemption from land tax for the Property as their intended principal place of residence pursuant to clause 6 of Schedule 1 of the LTMA. According to the Respondent's Client Notes Report, the Applicants provided the Respondent at that time with the determination of their development application and a development plan for the renovation of the Property.
On 16 January 2018, the Respondent approved the request for the exemption under clause 6 with effect from 22 June 2017. The Respondent issued a land tax assessment notice for the 2018 land tax year showing nil land tax payable in respect of the Property.
That assessment noted that the Property was exempt under clause 6(3)(b) of Schedule 1A to the LTMA as the land was intended to be used as the owner's principal place of residence. It also included the following notes under the heading "Additional Information": At completion of the building works and prior to the expiry of 4 year exemption period you must initially occupy the land as your principal place of residence and continue to do so for a period of at least six months. If you do not meet this residency requirement your exemption will be revoked and your liability to land tax will be assessed commencing from the time of your acquisition of the land.
Between 25 January 2019 and October 2019, construction works were undertaken on the Property by demolishing the outbuilding and constructing a second dwelling on the Property. Construction works were not undertaken in respect of the original dwelling on the Property.
Dr Gogulan says that he also stayed at the Property during the period the construction works were being undertaken. Again, there are a number of inconsistencies in the documents before the Tribunal as to precisely when Dr Gogulan says that he stayed at the Property during this period.
In response to a request for information issued by the Respondent in March 2023, Dr Gogulan stated that he: Lived at [the Property] from 31 December 2018 to 7 October 2019. Also stayed at [the Cherrybrook Property] (rented house) with my family frequently.
A tenant trust ledger report obtained by the Respondent from the real estate agent responsible for leasing the Property on behalf of the Applicants shows that the tenant who leased the Property from 29 March 2018 had a "Vacating Date" of 2 January 2019. In cross-examination Dr Gogulan said that the Applicants had asked that tenant to vacate but the tenant had requested an extension until 31 December 2018, as she could not find alternative accommodation, and they had granted her an extension on compassionate grounds. Dr Gogulan said that he was not sure whether the tenant actually physically vacated the Property on 31 December 2018 or 2 January 2019. However, he conceded that if the tenant did vacate on 2 January 2019 as the ledger suggests, he would not have moved into the Property until after 2 January 2019.
Dr Gogulan also said that when he had stated in his response to the Respondent's request for information that he had "lived" in the Property for the period to 7 October 2019 what he meant was that he had stayed there on a number of days, he had slept there, eaten there and had a "bare minimum" of furniture there as the building construction work was ongoing. He said he was managing the construction works being undertaken on the Property and undertaking landscaping work during this period.
In a letter dated 11 September 2022 to the Respondent Dr Gogulan stated: There was a large amount of time with no occupation of [the Property] given the construction work was carried out and safety issues.
In cross-examination, Dr Gogulan explained that this letter was submitted in response to an assertion by an officer of the Respondent that the Property had been rented throughout 2019. He said that when he stated in his 11 September 2022 letter that there was "no occupation" of the Property, he was indicating that the Property was not occupied by tenants during that time, but he did not mean that there was no occupation by himself during that time. He said the Property could not be rented during the construction period, but that did not prevent him from staying there and supervising the construction works.
During this period Dr Gogulan was also frequently staying with his family at the Cherrybrook Property. He says he was staying at both properties and needed to stay at the Property some nights so that he could attend morning meetings (I assume with the builders).
Dr Gogulan did not live in the Property after the construction works finished in October 2019.
On 16 October 2019, the Applicants entered into a tenancy agreement with tenants for the lease of the original dwelling on the Property for a period of six months. Those tenants continued to rent the original dwelling on the Property until at least 21 April 2023.
On 30 April 2020, Mrs Gogulan lodged a land tax registration form.
The Respondent's Client Notes Report includes an entry by an officer of the Respondent, Ms Erica Martinez, on 9 June 2020 as follows: Contacted the customer [Mrs Gogulan] and she mentioned that she had a tenant there before but since they started renovations that stopped. I requested a copy of a Utility Bill eg Electricity to change the PPR to [the Property]. Email to be sent.
On 15 June 2020, Mrs Gogulan sent an email to the Respondent providing copies of the approved development application and plans. She stated: We started to build the new house End of 2017. We are using this house as our primary residence. My husband is working in Campbelltown Hospital and private work in Wollongong and he stays there often. This is the only house we both claiming as a primary residence. (building before moving in).
The Applicants say that around this time Mrs Gogulan had a conversation with Ms Martinez in which Ms Martinez acknowledged that the Applicants were receiving rent for the original dwelling on the Property and that she confirmed the principal place of residence exemption applied until May 2021. They also say that this communication had been visible on the Revenue NSW on-line portal up until 23 August 2022 (the date the Assessment issued) but is no longer visible.
On 7 August 2020, the Applicants entered into a residential tenancy agreement with a tenant for the lease of the second dwelling on the Property for a period of twelve months. That tenant continued leasing the second dwelling until at least 27 April 2023.
In February 2022 the Applicants purchased another property at Cherrybrook having decided to live in Cherrybrook for longer as their work placements had changed.
On 30 July 2022, the Respondent issued a land tax questionnaire to the Applicant after the four year exemption period under clause 6(5) of Schedule 1A of the LTMA had expired.
On 5 August 2022, the Applicants lodged the completed land tax questionnaire. At part 5 of the questionnaire under the heading "Exemption for principal place of residence (where you live)", the Applicants noted that they claimed the principal place of residence exemption for the Property from 20 January 2017. The date indicated in that questionnaire as the date on which the exemption ceased with respect to the Property is not clear, although it appears to be 20 January 2021. The principal place of residence exemption is claimed in respect of the property the Applicants had recently acquired at Cherrybrook from 16 February 2022.
On 23 August 2022, the Respondent advised the Applicants that there was insufficient evidence that the Property was eligible for the principal place of residence or the intended principal place of residence exemption and that the intended place of residence concession was revoked. The Respondent then proceeded to issue the Assessment.
On 11 September 2022 the Applicants wrote to the Respondent and provided the following material in support of their claim for the principal place of residence exemption for the Property: 1. AGL electricity invoices for the Property for the periods 25 May 2020 to 29 June 2020 and 30 June 2020 to 23 September 2020; 2. The tenancy agreement entered into on 7 August 2020 in respect of the second dwelling on the Property; 3. A notice from AGL dated 29 September 2020 noting that the account for the Property had been closed; 4. A certificate of insurance from Comminsure for the period 26 March 2020 to 26 March 2021 in respect of the second dwelling on the Property; and 5. Various invoices for landscape or gardening supplies issued in June 2020.
In support of their objection against the Assessment, the Applicants also provided to the Respondent the following additional material: 1. Three (undated) photographs of the landscaping work Dr Gogulan was undertaking at the Property; 2. An email dated 21 November 2018 from the tenant who had leased the Property in March 2018 requesting to extend her move out date to 31 December 2018; 3. An Energy Australia Gas Account in respect of the second dwelling on the Property for the period 1 June 2019 to 30 August 2019; 4. A confirmation of Dr Gogulan's electoral enrolment from the Australian Electoral Commission dated 5 October 2022 which shows that the Property was his enrolled address from 17 April 2017 to 26 October 2017 and the Cherrybrook Property has been his enrolled address since then; and 5. A Land Tax Assessment Notice dated 4 March 2021 issued to Mrs Gogulan which identifies the Property as being exempt as the owners' intended principal place of residence.
There are also the following invoices contained within the supplementary s 58 documents and the documents relied upon by the Applicants: 1. A final electricity bill issued by Origin Energy in respect of the original dwelling on the Property for the period 1 October 2019 - 25 October 2019 in the amount of $21.21; 2. AGL electricity invoices for the second dwelling on the Property for the periods: 19 December 2019 to 6 January 2020, 7 January 2020 to 5 April 2020 and for another period (which is illegible on the copy before the Tribunal) in the amount of $0.00; 3. Further gas accounts from Energy Australia for the second dwelling on the Property for the periods 31 August 2019 to 29 November 2019 and 3 March 2020 to 28 May 2020.
In respect of his electoral enrolment, Dr Gogulan says that because he was moving between various locations in NSW, Queensland and Western Australia for work he needed to change his electoral enrolment from the Property to the address of the Cherrybrook Property where his wife and children were living. He also says that because he was living in rental properties in between he did not think it necessary to change his address frequently on the electoral roll.
The Applicants have provided a summary of the rental income received in respect of both dwellings on the Property for each year preceding the relevant land tax years. The amount of rent the Applicants say was received was: $21,120 in 2017, $22,320 in 2018, $4070 in 2019, $32,890 in 2020 and $53,040 in 2021. The Respondent does not accept those amounts are entirely accurate but indicated that he did not consider any differences were significant. The Applicants say that they received reduced rent in the latter part of 2018 and in 2020 and the rent they received in 2019 was only $4070 to cover outgoings (Council rates, water rates, electrical and gardening costs).

Applicants' submissions

The Applicants submit that they considered the Property was their principal place of residence during the relevant years, whether they actually lived in the Property or not, because Dr Gogulan had lived in the Property for a period of time and they had no other principal place of residence. They had other land holdings but those properties were tenanted. The Cherrybrook Property, where Mrs Gogulan and the children lived, was a rental property so the principal place of residence exemption could not be claimed in respect of it.
The Applicants submit that Dr Gogulan's strength of ties and connection was with the Property. He was involved in the planning, design and building process of the second dwelling on the Property and did the landscaping works himself. It had been the Applicants' intention that they would live in the second dwelling.
They further submit that all relevant documentation was provided to the Respondent at the time the exemption was granted in 2018 and again in 2020 when the exemption was reviewed by Ms Martinez. They say that they have been in regular contact, and have initiated most contact, with the Respondent concerning their land tax position. They say there has been no change in the circumstances of their ownership. They say they have been wrongly accused of not disclosing all relevant information, not notifying the Respondent that the Property was a dual occupancy and not notifying that the Property was tenanted during the relevant years. They say that the Respondent did not look back at the documents they had previously provided and requested the same information from them again. Nor, they say, did the Respondent acknowledge the review undertaken by Ms Martinez confirming the exemption was available until May 2021.
They say that if the Property was not entitled to the exemption then an exemption should not have been granted in the first place and should have been revoked in 2020. They say that if the exemption expired in 2021 it was the Respondent's responsibility to assess and issue an assessment in January 2022.
The Applicants complain that the Respondent has not treated them fairly or respectfully. They consider there has been an error or failure on the Respondent's part which the Respondent should acknowledge and apologise for. They say the sudden revocation of the exemption and issue of the Assessment and the Respondent's conduct has caused them considerable emotional distress.
The Applicants further complain that material relevant to the Assessment is no longer available to them on the on-line portal which, they say, places them at a disadvantage.
Further, they submit that if they had been told the exemption was not available in respect of the Property then they would have structured their affairs differently and would have considered building their house on other land that they owned.
In terms of the clause 8 concession, the Applicants say that they were not receiving market rent for all relevant years and, at least for 2019, were receiving rent only sufficient to cover maintenance charges.

Principal Place of Residence Exemption - clause 2 of Schedule 1 of the LTMA

It is clear that, unfortunately, the Applicants have misunderstood the scope of the principal place of residence exemption.
As noted above, the principal place of residence exemption is contained in clause 2 of Schedule 1A of the LTMA. Under that clause land, which is residential land, which is used and occupied by the owner as the principal place of residence of the owner, and for no other purpose, as at the relevant taxing date is exempt from taxation. The relevant taxing date is 31 December of the year preceding the relevant land tax year.
Clause 2(2) provides: (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.
It is not in dispute that the Property was residential land.
Clause 12 of Schedule 1A of the LTMA provides that only one place of residence may be treated as the principal place of residence of all members of the same family.
Mrs Gogulan did not live at the Property at any time. However, as the Applicants were not claiming another property as their principal place of residence, if the Applicants could establish that the Property was Dr Gogulan's principal place of residence, then they may be able to claim the exemption in respect of the Property.

Was the Property Dr Gogulan's Principal Place of Residence

I accept that Dr Gogulan spent some time in the Property over a period of a few weeks in 2017 and during the course of the construction works in 2019.
On his own evidence Dr Gogulan was not using and occupying the Property as at 31 December 2017, 31 December 2019, 31 December 2020 or 31 December 2021.
I also find, on the basis of the tenant trust ledger report, on the balance of probabilities that the tenant who had commenced leasing the Property in March 2018 vacated the Property on 2 January 2019, so that Dr Gogulan also was not using and occupying the Property as at 31 December 2018.
It is clear that, even on the Applicants' case, the Property was not continually used and occupied by Dr Gogluan for residential purposes and for no other purposes from 1 July for a period of six months in the year preceding any of the relevant tax years.
The question, therefore, is whether I can be otherwise satisfied that the Property, although not actually occupied by Dr Gogulan on 31 December in the year preceding any of the relevant tax years, was, nonetheless, used and occupied by him as his principal place of residence in any of the years preceding the relevant tax years.
In Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 at [19] - [23] the Administrative Decisions Tribunal summarised the general principles to be applied in determining a person's principal place of residence as follows: 19 The Act does not provide any technical or legal meaning for the expression "principal place of residence" and accordingly, the expression has its ordinary meaning. A person's place of residence is usually understood as "the place where he eats, drinks and sleeps" (per Ridley J in Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706). The use of the term "principal" in the expression suggests that a person may use and occupy more than one residence but that the exemption is only available for the principal place of residence of the person. 20 In ascertaining whether a particular residence of a person is the principal place of residence of that person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of use and occupation of the residence in each case (per Fryberg J in Dean v Commissioner of Stamp Duties (Qld)(No 2) [1996] 2 Qd R 557 in considering the meaning of the expression "principal place of residence" found in the Stamps Act 1894 (Qld)). 21 The onus to establish one's principal place of residence is usually discharged on the basis of various matters. It is important to note, as observed by the Victorian Civil and Administrative Tribunal in Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 that: "… while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters …One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house… Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases…" 22 Other indicia of matters would include evidence of an applicant's use of the address of the property as the residential address for purposes of his or her mail, driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills. 23 In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 the Appeal Panel of the Tribunal agreed that "to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor occupation for any other reason". The Appeal Panel also held that "the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue". (Also see Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26). (emphasis added)
In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP the Appeal Panel also stated: Fifthly, the short length of a person's residence, while relevant, is not determinative of the issue. This is so since a recipient's occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible."
Dr Gogulan's evidence was that in April 2017 he moved to the Property and spent time at the Property over a period of a few weeks. During this period, he was also spending time with his wife and family at the Cherrybrook Property. He then had to move because his work took him to different locations in New South Wales, Queensland and Western Australia. He enrolled the Property as his address with the Australian Electoral Commission on 17 April 2017 but because he was living elsewhere for his work, he changed his electoral enrolment address to be his wife's address at the Cherrybrook Property from 26 October 2017. He did not move back into the Property until 2019.
The Tribunal has no evidence before it as to how much time Dr Gogulan actually spent at the Property during this period, how many nights he slept there, whether he ate there, the furniture he used there or whether he entertained there. There is no evidence as to utilities usage for the 2017 year. Dr Gogulan's evidence was that during this period he was negotiating with builders and town planners. However, it is not clear whether all or any of those negotiations took place at the Property. There is no other objective evidence as to the extent or quality of Dr Gogulan's use of the Property during this period.
The Property was also tenanted during 2017, other than for the period 21 to 28 April 2017. However there is no evidence as to what arrangements may have been made with the tenants such that Dr Gogulan could also stay at the Property.
The period of Dr Gogulan's occupation was only a matter of a few weeks. While the shortness of the term of occupation is not determinative, there is required to be a "degree of permanence" to the occupation. Here, there clearly was not a degree of permanence. Dr Gogulan's evidence was that he moved to other regions for his work and did not return to the Property until 2019. He had to change his address for enrolment purposes to his wife's address for that reason. The fact that Dr Gogulan may have intended the Property to be his principal place of residence, or even may have considered it to be so, is not sufficient: Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26 at [14].
On the evidence before the Tribunal I cannot be satisfied that Dr Gogulan's occupation of the Property during this short period in 2017 was anything other than transient, temporary or passing.
Similarly there is insufficient evidence before the Tribunal as to the extent and quality of Dr Gogulan's occupation of the Property during the period of the construction works in 2019.
Dr Gogulan said in evidence that he slept and ate there and that he had the "bare minimum" of furniture there during this period. He said that during this time he was overseeing the construction works and undertaking the landscaping for the Property. While the invoices for landscaping materials relate to a different period and the photos Dr Gogulan has supplied are not dated and Dr Gogulan said that during the construction works it was not safe for a tenant to occupy the Property, I am prepared to accept that Dr Gogulan did spend some time during this period at the Property overseeing the construction works and undertaking the landscaping. I agree with the Respondent, however, that spending time at the Property to attend to these matters does not constitute use and occupation of the Property as a principal place of residence.
During this period Dr Gogulan also spent time with his family at the Cherrybrook Property. Again, there is no evidence as to how often Dr Gogulan slept or ate at the Property nor as to whether he spent more time at the Property or with his family at the Cherrybrook Property.
While Dr Gogulan said that the strength of his ties and connection were to the Property as he had planned the building of the second dwelling, overseen the construction and undertaken landscaping, the fact that his wife and family resided at the Cherrybrook Property would suggest a strong tie and connection to that property (albeit a rental property).
Dr Gogulan's enrolment address with the Australian Electoral Commission continued to be his wife's address during this period.
There are two gas bills in evidence over the relevant period. However these relate to the second dwelling and I understood Dr Gogulan's evidence was that during this period he occupied the original dwelling.
There is one electricity bill in respect of the original dwelling for the period 1 October 2019 to 25 October 2019 in the amount of $21.21, evidencing some electricity usage during that period. The other utilities bills in evidence do not relate to the period Dr Gogulan says that he was occupying the Property.
The insurance policy that has been provided relates to the second dwelling and is for the period 26 March 2020 to 26 March 2021. The policy covers $20,000 in contents. However, this does not establish anything about the nature and quality of Dr Gogulan's occupation of the Property during 2019.
While the length of time over which Dr Gogulan spent time at the Property in 2019 was some nine months, there is insufficient evidence before the Tribunal to be satisfied that Dr Gogulan's occupation of the Property over that period had a sufficient degree of permanence so as to constitute it as his principal place of residence during this period: Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99 at [69]; Cecere v Chief Commissioner of State Revenue [2022] NSWCATAD 360 at [70].
The Applicants argued that Raissis, Cecere and the other authorities the Respondent relied on in this regard could be distinguished because in each of those cases the relevant taxpayer owned two or more properties and the question was which of those two properties constituted the taxpayer's principal place of residence. Here, the Applicants argued, there was only one property which they could claim as their principal place of residence because the other properties they owned were tenanted and the Cherrybrook Property, where Dr Gogulan's wife and children lived and he spent time, was a rental property. However, that submission must be rejected. A residence can be a principal place of residence even though the person does not own it and it is a rental property. Chief Commissioner of State Revenue v Mesiti [2003] NSWDATAP 57 at [46].
It is not necessary for me to find that the Cherrybrook Property or any other property was Dr Gogulan's principal place of residence. Rather, the Applicants must establish on the evidence that the Property was Dr Gogulan's principal place of residence. They have failed to satisfy their evidentiary onus in that regard for any of the years preceding the relevant tax years.

Was the Property used for no other purpose

In any event, it is not in dispute that the Property was also leased to tenants during each of the years preceding the relevant land tax years. As such, in all relevant years the Property was used by the Applicants as an investment property and was not used for residential purposes and no other purpose as required by clause 2 of Schedule 1A of the LTMA.

Conclusion

Contrary to the Applicants' understanding, the principal place of exemption does not apply merely because Dr Gogulan spent time at the Property for a period and the Applicants were not claiming (and could not claim) the exemption in respect of another property.
For the reasons given, the principal place of residence exemption contained in clause 2 of Schedule 1 of the LTMA does not apply in respect of the Property for any of the relevant tax years.

Clause 6 exemption: intended principal place of residence

On 16 January 2018 the Respondent approved the Applicant's request for an exemption under clause 6 of Schedule 1 of the LTMA to apply in respect of the Property for a period of four years from 22 June 2017.
The clause 6 exemption applies in respect of "unoccupied land" which is intended to be an owner's principal place of residence. Unoccupied land is defined by clause 6(8) as land that is not being used or occupied for any purpose.
The Property was tenanted during each of the relevant tax years, and so did not in fact comprise unoccupied land for the purposes of clause 6.
In written submissions the Respondent had submitted that at the time the exemption was granted he was unaware that there were to be two dwellings on the Property and that it was tenanted.
The Applicants say that they advised the Respondent at the time of seeking the exemption, and at the time of a review undertaken in 2020 by Ms Martinez, that they proposed that there be a dual occupancy on the Property and that the Property was tenanted.
It is clear from the Respondent's s 58 documents, and the Respondent properly conceded at the hearing, that the Applicants did advise the Respondent of the proposed dual occupancy. However it is not clear that they advised the Respondent that the Property was tenanted either at the time they sought the exemption in 2018 or in 2020 when Mrs Gogulan spoke with Ms Martinez. Ms Martinez's entry in the Respondent's Client Notes report dated 9 June 2020 notes that Mrs Gogulan mentioned that she had a tenant there before but "since they started renovations that stopped". However as at June 2020, the original dwelling on the Property had in fact been relet from 16 October 2019.
The Applicants say that a record of the conversation with Ms Martinez had been available on the Respondent's on-line portal but is no longer available, which places them in a position where they cannot prove the conversation.
I do not find there has been an attempt by the Applicants deliberately to mislead the Respondent in this regard. It is clear that the Applicants were in regular contact with the Respondent about their land tax liability in what appears to have been a genuine attempt to comply with their obligations. However, it is not established on the materials before the Tribunal that the Applicants did advise the Respondent that the Property was tenanted either at the time of the application for the exemption or in 2020.
However, nothing ultimately turns on that issue. Even if the Applicants had advised the Respondent that the Property was tenanted and the Respondent had incorrectly granted the exemption in 2018 and again incorrectly confirmed the exemption in 2020, that does not prevent the Respondent from revoking the exemption when it became apparent in 2022 that it did not apply.
Further, as was made clear to the Applicants in the notes to the assessment showing nil land tax payable which was issued in 2018, the Applicants were required by clause 6(5) of Schedule 1A of the LTMA to establish that prior to the expiry of the four year exemption period, they actually used and occupied the Property as their principal place of residence. Clause 6(5) also requires that they continued to do so for a period of at least 6 months.
However, Dr Gogulan has not lived in the Property since the construction works were completed and, as set out above, the Applicants have not established that he used and occupied the Property as their principal place of residence for a period of at least six months in any relevant year.
If the requirement in clause 6(5) is not satisfied, clause 6(5) operates to revoke the exemption. Clause 6(6) makes it clear that the effect of the revocation is that the principal place of residence exemption is taken not to have applied to the Property in respect of any tax year to which, but for the revocation, it would have been applied and that land tax is to be assessed or reassessed accordingly.
Accordingly, whether or not the exemption had been correctly granted in 2018 (or correctly confirmed in 2020), the fact that the Applicants did not use and occupy the Property as their principal place of residence before the expiry of the 4 year exemption period and continue to do so for a period of six months, meant that the exemption would be revoked by clause 6(5) of Schedule 1A of the LTMA in any event.

Clause 8: former principal place of residence

Clause 8 of Schedule 1A of the LTMA provides a concession for absences from former residences where the owner resumes the use and occupation of the residence as their principal place of residence within six years. For clause 8 to apply the Respondent must be satisfied, amongst other things that: 1. The owner had used and occupied the former residence as a principal place of residence for a continuous period of at least six months (clause 8(1)(a)); and 2. No income was derived from the use or occupation of the former residence in the preceding tax year unless for a period of less than six months or unless the income derived was no more than to cover council, utilities and maintenance costs (clause 8(6) and (7)).
As set out above, the Applicants have not established that the Property was used and occupied as their principal place of residence for a continuous period of at least six months before ceasing to use and occupy it as such. Accordingly, clause 8(1) is not satisfied.
Further, the Property was rented for a period of more than six months in each of the 2017, 2018, 2020 and 2021 years such that clause 8(6) and (7) are also not satisfied in respect of the 2018, 2019, 2021 and 2022 tax years. While the income received in the 2019 year was significantly less, it is not possible for me to find that it was no more than was reasonably required to cover council, utilities and maintenance costs as there is no evidence of what those costs were. In any event, as clause 8(1) is not satisfied, even if clause 8(6) and (7) were satisfied in respect of the 2019 year, the concession is also not available to the Applicants for the 2020 tax year.

The Respondent's power to reassess

The Applicants submit that the Respondent did not issue land tax assessments in respect of the Property at any time between 2018 when the exemption was granted and 2022. They say the revocation of the exemption and the issue of the Assessment has caused them significant distress. They submit that the Respondent should acknowledge he has made an error and apologise to the Applicants in that regard.
I accept that the Assessment clearly has caused the Applicants significant emotional distress. It is clear that the Applicants feel that they have genuinely tried to comply with their obligations and have taken offence at any suggestion that they are at fault.
It has not been established that the Respondent made any error in initially granting the exemption or in confirming it in 2020. However, even if he did, matters such as those are not relevant to the validity of the Assessment. No conduct on the part of the Respondent can operate as an estoppel against him administering the legislation: Federal Commissioner of Taxation v Wade [1951] HCA 66. Further, general considerations of fairness have no application: Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 123; Brataniec v Chief Commissioner of State Revenue [2013] NSWADT 65 at [33].
Liability to tax is created by operation of the LTMA and the Respondent is charged with administering the legislation in accordance with its terms. Any delay in issuing the Assessment is not a basis for challenging it even if that produces a harsh result: Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218, Brataniec.
The Respondent was, in fact, required to reassess the Property to land tax by the operation of clause 6 (6) of Schedule 1A of the LTMA. He was entitled to do so, by virtue of clause 6(6A) of Schedule 1A, more than five years after the initial assessment, although in fact the Assessment was made within the usual five year time period provided by s9(3) of the TA.
There is no general discretion in the LTMA allowing the Respondent, or the Tribunal, to take into account other circumstances which are not the subject of an exemption under the LTMA: Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222 at [27].
While the considerations which the Applicants have raised may have been relevant to a review of any decision by the Respondent to impose penalty or interest in respect of the Assessment, in this case, as I understand it, no penalty or interest has been imposed by the Respondent.

Other matters raised by the Applicants

The Applicants also raised concerns in their submissions and at the hearing about how the Respondent had generated other land tax assessment notices to one or other of the Applicants, that there have been issues identifying the correct correspondence IDs and secondary files relating to the Applicants and complained about the traceability of activities in the Land tax online portal. These are not matters that the Tribunal has any jurisdiction to review in these proceedings.

Conclusion

It follows that I find that the Property is not exempt from land tax pursuant to clause 2, 6 or 8 of Schedule 1A of the LTMA for any of the 2018 to 2022 land tax years. As such, I propose to confirm the Assessment.

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: 21 June 2023

Stamps Act 1894(Qld)

At a glance

Court

Decision date

Source

Judgment (16 paragraphs)

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Legislation Cited (4)

Cases Cited (5)