Guimaraes v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2024-03-19

The Applicant's physical presence in Australia

The Applicant's international movement records since early 2012 show that for the past 12 years the Applicant has never been out of the country for more than 95 days at a time. In fact, during the 2017 calendar year (which is the test period for the 2018 land tax year - see [13] above) she was in Australia for 326 days, and during the 2018 calendar year (the test period for the 2019 land tax year) she was in Australia for 350 days.

The Applicant's visa status

At the time of entering into the purchase contract, and also at midnight on 31 December 2017, the Applicant was lawfully in Australia on a Bridging Visa B (subclass 020). That visa, granted on 13 November 2017, remained valid until 9 May 2018, when a new subclass 020 Bridging Visa B was issued, and which was still in effect on 31 December 2018.
Those bridging visas were apparently granted while the Applicant's application for a Partner visa was under consideration. The Applicant eventually obtained a permanent Partner visa (subclass 801) in July 2019. From that time the Applicant became a permanent resident of Australia and, as already noted, she became an Australian citizen in 2022.

The Applicant's case

The Applicant's case was conveniently summarised by the Chief Commissioner (Respondent's Written Submissions, or RWS, at [43]) as follows: 1. She was a permanent resident for income tax purposes in 2017 and 2018 because she was married to an Australian citizen and met the residency status tests under the Income Tax Assessment Act 1997 (Cth). To the extent the definition of foreign person in the LTA is inconsistent with the Commonwealth legislation the Commonwealth legislation prevails. 2. As the Central Coast property is the Applicant's principal place of residence and is exempt from land tax, which is the 'main tax', surcharge land tax should not be charged as surcharge land tax is an additional tax and cannot be charged when there is no main tax liability. 3. The requirement in s 5B of the LTA that a person must hold a permanent visa did not come into effect until 1 July 2019, after the relevant tax years. 4. The definition of foreign person that turns on visa status was imposed by a Revenue Ruling and not the NSW legislation. 5. At the time she purchased the property the Chief Commissioner's information did not clearly state that a person who does not hold a permanent visa is a foreign person. 6. The amount of surcharge land tax is excessive.
During the hearing the Applicant confirmed the accuracy of the Chief Commissioner's summary of her case, adding for completeness her view that she did not meet the 'foreign person' definition in any event.

The Chief Commissioner's position

The Chief Commissioner says that since the Applicant was not an Australian citizen at midnight on the relevant taxing dates, she will be liable to pay SLT unless she can establish she was ordinarily resident in Australia and thus not a foreign person.
There are two tests set by the 'ordinarily resident' definition - the 200-day test and the no-limitation test (as to which see [13] above). While the Applicant met the 200-day test for each land tax year, she failed the no-limitation test because she was on a temporary visa at midnight on each of the relevant taxing dates.
That means she was not 'ordinarily resident' at either relevant time, but instead she was a 'foreign person' and liable to pay SLT under s 5A of the LTA unless an exemption applies.
As far as the exemption under s 5B of the LTA is concerned, the Chief Commissioner accepts the Applicant met the 'residence requirement' (see [16] above) but she was not a permanent resident at either of the relevant taxing dates (see [15] above). The exemption is therefore not available.

Consideration

The Chief Commissioner's position as outlined above is correct. Unless you pass both the 200-day test and the no-limitation test, you will be liable to SLT unless an exemption applies.

The 200-day test

Here, the 200-day test was met for each relevant land tax year (see [20] above).

The no-limitation test

This test is expressed in s 5(1)(b) of the Takeovers Act as requiring the person's continued presence in Australia not to be 'subject to any limitation as to time imposed by law'.
The Applicant's continued presence in Australia was authorised by each of the bridging visas she held at the relevant taxing dates. Bridging visas are temporary visas (s 37 of the Migration Act 1958 (Cth)) and, in the Applicant's case, had been issued while her application for a (permanent) Partner visa was being considered.
In the language of s 30(2) of the Migration Act, the bridging visas fell into the second of the three categories of temporary visas that can be granted: they permitted the Applicant to remain in Australia until a specified event happened - broadly, the approval of her application for a substantive visa, or the resolution of any reviews or appeals if her application was unsuccessful. (The other two categories of temporary visas are those that permit a person to remain in Australia either during a specified period, or while the holder has a specified status.)
It has been held that the holder of any of the three categories of temporary visas is a person whose continued presence in Australia is 'subject to any limitation as to time imposed by law': Li v So [2019] VSC 515. At [96], Croft J stated: Irrespective of the precise event which terminates the holder's right to remain in Australia, all three conditions render the holder subject to a temporal limitation. Such is inherent in the very nature of a 'temporary resident visa'.
The Tribunal has adopted that reasoning in other cases involving SLT or surcharge purchaser duty, including Mohammed v Chief Commissioner of State Revenue [2023] NSWCATAD 38 (Mohammed) and van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283. I respectfully adopt that reasoning as well.
The Applicant did not pass the no-limitation test at midnight on either of the relevant taxing dates. As a result she was liable to SLT, although her liability is reduced to take account of her joint ownership of the property with her husband, who was an Australian citizen and therefore not subject to the surcharge: LTA, s 5A(4)(b).
The next question is whether there is any exemption available.

Exemption under LTA s 5B?

There are two relevant tests for exemption under LTA s 5B. They are: 1. The Applicant must have been a permanent resident at midnight on the relevant taxing date; and 2. The Applicant must have complied with the residence requirement, by using and occupying the land as her principal place of residence for a continuous period of 200 days in the relevant land tax year.
The expression 'permanent resident' is not defined in the LTA or the LTM Act, but it is hard to imagine that it means anything other than a person who has a permanent visa (see s 30 of the Migration Act) and who therefore has permanent residency in Australia. Indeed, a definition of 'permanent resident' that aligns with s 30 of the Migration Act applies to the corresponding 'principal place of residence' exemption in the Duties Act in relation to surcharge purchaser duty, which was introduced at the same time as the SLT and as part of the same broad legislative scheme: see the State Revenue Legislation Amendment (Budget Measures) Act 2016 (NSW). It makes sense that the same meaning should apply to the identical expression in both Acts. See also Mohammed at [50]-[55].
It follows that the Applicant, as the holder of a temporary, rather than a permanent, visa at midnight on each of the relevant taxing dates, was not a permanent resident at either point in time. As a consequence she fails the first relevant test for exemption under s 5B of the LTA: see [38] above.
The exemption from SLT is therefore not available.

Additional observations

For completeness, and in relation to the Applicant's case as summarised in RWS ([23] above): 1. The Applicant's reliance on matters such as the income tax definition of 'residency' is misplaced. The only relevant statutory provisions are those in the LTA and the LTM Act, and those imported from the Duties Act. 2. SLT is payable even if no land tax is payable under the other provisions of the LTA and the LTM Act: LTA, s 5A(3). 3. The requirement under s 5B that a person must be a permanent resident took effect from 1 July 2017, not 2019 as claimed by the Applicant: State Revenue and Other Legislation Amendment (Budget Measures) Act 2017 (NSW), Schedule 2, 2.2 [4]. 4. The definition of 'foreign person' was introduced by legislation, not by a Revenue Ruling: LTA, s 2A, adopting the definition in Chapter 2A of the Duties Act. 5. The Explanatory Notes to the Purchaser/Transferee Declaration completed by the Applicant clearly state the requirement that a person's presence in Australia must not be subject to any limitation as to time. 6. The amount of SLT payable has been correctly calculated, based on the average value of the land as recorded in the Valuer General's register, and reduced by 50% to reflect the Applicant's husband's interest in the property: LTA, s 5A(4)(b).

Conclusion

For the reasons stated, the assessment of SLT is correct.

Order 1. The assessment of surcharge land tax for the 2018 and 2019 land tax years is confirmed.

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: 10 April 2024

State Revenue and Other Legislation Amendment (Budget Measures) Act 2017(NSW)

State Revenue Legislation Amendment (Budget Measures) Act 2016(NSW)

Under the Land Tax Management Act 1956(NSW)

Jurisdiction

This is an application under s 96 of the Taxation Administration Act 1996 (NSW) (TA Act) for an administrative review of an assessment of surcharge land tax. The administrative review is conducted under the Administrative Decisions Review Act 1997 (NSW) (ADR Act).
The Tribunal's task is to decide what the correct and preferable decision is having regard to the material before it: ADR Act, s 63(1). The Applicant has the onus of proving her case: TA Act, s 100(3). That means she must prove all matters necessary for the Tribunal to answer the statutory questions in her favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities.

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