Land Tax Act 2004 as at 30 June 2018

1. Definitions for pt 2

rent means valuable consideration for which a tenant is liable under a tenancy agreement in relation to the tenancy or a period of the tenancy.

_(a) means an agreement under which a person grants to someone else for value a right of occupation of a parcel of land for use as a residence - _

(i) whether the right of occupation is exclusive or not; and

(ii) whether the agreement is express or implied; and

(iii) whether the agreement is in writing, is oral, or is partly in writing and partly oral; but

(b) does not include an agreement giving a right of occupation only as a boarder or lodger. [emphasis added]

tenant means a person with a right of occupation under a tenancy agreement.

(1) Land tax at the appropriate rate is imposed for a quarter on each parcel of rateable land that is -

(a) rented residential land [emphasis added]

1. Commissioner to be told if residential land rented

_(1) This section applies in relation to a parcel of land that - _

_(2) A relevant person must tell the commissioner, in writing - _

Note 2 It is an offence to fail to notify the commissioner under this section (see Taxation Administration Act 1999, s 67 (2)).

Note 3 It is also an offence to knowingly avoid paying, or disclosing a liability to pay, part or all of an amount of tax (see Taxation Administration Act 1999, s 65 (1)).

_(3) The relevant person must tell the commissioner the information mentioned in subsection (2) not later than 30 days after - _

(a) if there is a change of ownership of the parcel - the day the ownership changes; or

(b) in any other case - the day the rental begins.

Current version of the Land Tax Act 2004

(1) Land tax at the appropriate rate is imposed for a quarter on each parcel of rateable land that is residential land.

(2) However, land tax is not imposed on a parcel of land that is exempt under section 10 or section 11.

(1) This section applies if a parcel of land is, on the 1st day of a quarter, occupied as the principal place of residence of 1 or more owners of the parcel of land.

19A Interest and penalty tax payable on land tax if no disclosure

(a) land tax is imposed on a parcel of rateable land; and

(b) the owner of the parcel of land fails to comply with section 14 (Commissioner to be told of change in circumstances).

(2) The owner is liable to pay interest on the amount of land tax from the end of 30 days after the 1st day of the 1st quarter for which the tax is imposed.

(3) Interest on the amount of land tax is worked out

(4) The Taxation Administration Act, division 5.2 (Penalty tax) applies to the owner of the parcel of land as if -

(a) the owner's failure to comply with section 14 were a tax default; and

(b) a reference to interest under division 5.1 were a reference to interest under this section; and

(c) a reference to the amount of tax unpaid were a reference to the amount of land tax payable.

Current provisions of the Taxation Administration Act 1999

1. Penalty tax in relation to certain tax defaults

(1) If a tax default happens, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.

(1) The amount of penalty tax payable in relation to a tax default is 25% of the amount of tax unpaid, subject to this division.

_(2) The commissioner may increase the amount of penalty tax payable in relation to a tax default to 50% of the amount of tax unpaid if the commissioner is satisfied that the tax default - _

_(a) was caused wholly or partly by the taxpayer (or a person acting on behalf of the taxpayer) - _

(ii) delaying the provision of information required for the assessment of tax; or

(iii) providing information required under a tax law that is incorrect, incomplete or misleading; or

(b) is the taxpayer's second or subsequent tax default in relation to a tax liability, or in relation to a similar or related tax liability.

(3) Subsection (2) applies to a tax default in the same way whether the tax default happened before or after the subsection commenced.

The taxpayer in relation to whom a reviewable decision is made may apply to the ACAT for review of the decision.

(1) This section applies if the tribunal reviews a decision by an entity.

(2) The tribunal may exercise any function given by an Act to the entity for making the decision.

Note A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations (see Legislation Act, s 104).

(ii) remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal.

1. Effect of orders for administrative review

(1) This section applies if the tribunal makes an order under section 68 (3) in relation to a decision.

(a) is taken to be the decision of the decision-maker; and

(b) takes effect from the day the tribunal makes the order, unless the tribunal orders otherwise.

1. The reviewable decision before the Tribunal is a decision of the respondent dated 25 September 2020 made pursuant to section 104 of the Taxation Administration Act 1999 (TA Act), in which the respondent disallowed the applicant's objection to land tax, penalty tax and interest for the property. It relates to the periods from Quarter 2, 2013 to Quarter 4 2017-2018 inclusive, namely the period beginning 1 October 2013 and ending 30 June 2018.

1. The hearing was conducted by Webex, but the applicant could not use that application so was patched in by phone with the help of Ms Collins from the ACT Revenue Office. I noted the materials that the Tribunal had and it was agreed that was all that was relied on. In order to provide certainty, I gave them exhibit numbers as follows:

(a) The application and accompanying documents (A1).

(b) The submission by the applicant received on 16 February 2021 and accompanying documents (A2).

(c) The reply by the applicant received 23 March 2021 (A3).

(d) A supplementary witness statement of the applicant (A4).

(f) Supplementary T documents received 24 February 2021 (R2).

(g) Respondent's submissions with accompanying documents (R3).

1. In addition to the documentary evidence, there was cross examination of the applicant. I indicated during the hearing that having listened to the applicant and her evidence, I had no reservations about her honesty. She volunteered information that might be adverse to her case and displayed no evidence of artifice. I had inferred from the decisions appealed from that there may be a degree of scepticism about what she might say, but to the extent that it is relevant I accept her evidence and her explanations as far as they go.
2. The applicant explained how she had sold a home in Narrabundah and bought the property, a three bedroom unit in 2003. She provided photos of the housewarming and from day one had a person renting the ensuite bedroom. She had a job nearby and walked to work. She ceased working at that job in 2006, went overseas and later on return, travelled a lot and was away from the unit a lot. She described it saying "I have spent much of my adult life away from my PPR [principal place of residence]". A lot of her material was directed at showing she had never moved out and still lived there from time to time. She explained that her father's painting has always hung in the main room. In oral evidence she explained that she kept her valuables and other belongings there in the main room and in the middle bedroom. She had no room reserved for her and would use whichever was not being "rented". On occasion all three rooms are rented out. She freely admits to spending long periods of time away in Sydney or other places. She says she has no pattern about where she stays and her accommodation can include lounges of friends or short-term rents. She has no other place of her own. She did once have some investment units but sold them due to recent financial issues caused by a scam, as she puts it. She did not provide any details about the scam and thought it wasn't the business of her cross examiner. This might be relevant if it was used as an excuse for non-payment of land tax to reduce any penalty, but not much turns on it here. She produced some recent examples of the agreements she gets her occupants to sign. They are only recent and she does not now have access to any used during the relevant period. She says they were the same. Below is one such agreement:

Occupant Room Rental Agreement - [the property].

The Occupant agrees to rent the ensuite room beginning 15 July 2019 weekly for 290 per week, plus bills amount for heating, gas, water and electricity of $20 per week. Rent plus bills amount is to be paid weekly by automatic transfer into the owner's account beginning 7 days after start date. Rent must always be in credit by a minimum of 4 weeks. Initial payment signifies uptake and acceptance of the terms and conditions of this agreement which will continue to be in force until cancelled, varied or replaced by the owner until 10 January 2020. New terms 2019 onwards, the Occupant agrees not to attempt to seek payment or compensation for alternative accommodation in the case of unforeseen problems with the accommodation including flooding, storm and tempest, natural disasters etc - in these type of cases the rental agreement is automatically considered cancelled and the Occupant agrees to seek accommodation elsewhere immediately. The Occupant agrees to keep shared areas clean and tidy, to contribute to cleaning and dusting of shared areas, using the vacuum, mop, broom and other cleaning equipment in an agreed roster with other Occupants and to feel generally free to enjoy shared spaces and to follow all notices posted in the apartment. The Occupant agrees to treat notices/letters addressed to the Resident as being for the owner. These notices/letters come from strata office/s. The owner needs to communicate with the strata offices in order to maintain access, bicycles, basement parking and other issues - this can't be managed by Occupants. Key and fob replacement must be negotiated direct with owner. The Occupant agrees not to attempt to move bookcases, plants or other furniture, to take care with owner's things and agrees not to display drying washing or other personal items in such a way that they are visible from the carpark (strata rule). Bills amounts may increase if heating and air con are left on when you go out or if hot taps are left dripping. The Occupant agrees to be thoughtful and friendly with other renters when any issues arise such as noise late at night, clutter or other sharing considerations. The Occupant will be charged for cleaning, carpet cleaning, any stain removal or repair/replacement of items where necessary, including keys. The Occupant is advised to email photographs to the owner as record of the property condition on beginning a rental period. An amount of $500 is to be paid along with this rental for the purpose of paying for cleaning or repairs if needed throughout the rental period or at its end. Any unused balance will be returned to the Occupant after exit. If Occupants help to keep their rooms and shared areas clean and tidy and leave areas in a clean undamaged state on exit, the full cleaning and key amount will be returned. Spare keys: the magnetic fob costs$100 and the other keys under $40 to replace. A replacement front door key is available at the apartment for emergencies. The black magnetic fob keys will be cancelled and reissued if lost at a cost of $100.

Amount to be paid before a rental start date: 5 weeks rent and bills amount: $1000, cleaning and key deposit: $500

1. Although I tried to explain to Ms Hall that the decision was not determined by what was the principal place of residence, but by whether the other occupants were lodgers or boarders, she did not really make any direct submissions that addressed that point.
2. I accept that the unit is seen by Ms Hall as her home and there are indications that point to this being the case. There are other reasons why this could be important, such as where does she vote or what is her domicile. It may be arguable that for some specified quarters she was occupying the premises. The Commissioner obtained a lot of objective material that reinforced the notion that, for some periods at least, she could not have been living there. The tax information provided to the Commissioner of Taxation showed her residential address as in Coogee. Ms Hall disputed this, and explained that the wrong address box was filled in, and she used that address where her friend and his partner lived as it was more secure. She did still get rate notices and the like at the Canberra unit. Her bank records revealed a lot of money described as rent being received during the relevant period from many different people. The statements also had different addresses from time to time. They also showed regular spending on day-to-day items in Sydney and other places outside Canberra.
3. The occupancy agreements do not expressly grant exclusive possession but indicate a serious attempt to formalise the occupancy and the obligations, including the payment of 'rent'. They illustrate the autonomous nature of the arrangement such that the need for ongoing day to day discussion is obviated. Evidence of the state of the rooms is to be done by email. Payment is to be made by bank transfer. There is no language that seeks to exclude the occupants' rights such as might be anticipated if the occupant was merely a lodger or boarder, and they were certainly completely consistent with the occupancy being a tenancy as defined.

1. The applicant submitted that the address in question was always her principal place of residence. She did not make any submissions that I could determine about whether the occupants were lodgers or boarders.
2. The respondent submitted that the unit was not her principal place of residence and that the occupants were not lodgers or boarders. They submitted that the onus was on the applicant to prove otherwise.

1. On the state of the evidence I cannot conclude that during any of the relevant quarters the applicant was occupying the premises as her principal place of residence. I accept that in her own mind the applicant sees the unit as such but on her own admission she was not occupying the unit for most of the time. Not only that, she had no room set aside for her and at times rented out all the rooms. In the future it may be possible to show she was occupying the unit in a particular quarter but, as the onus is on her, she would have to have meticulous records establishing this. She would be well advised to get some legal advice about her future plans. For previous periods, the onus she might bear if it were relevant has not been met. The significance of the use of the word 'occupy' in the current section 11A is explained by Senior Member Spender in Watson v Commissioner for ACT Revenue.[1] The legislature had two purposes in mind and one was not to let premises remain vacant. Whilst vacancy was not a problem here, it explains that the place must be more than a spiritual home, it also has to be occupied by the owner. The fact that there is no competing principal place is not determinative.

1. As can be seen from the definition of 'rented', the arrangements here would amount to the premises being rented unless the occupants are boarders or lodgers. This phrase is repeated in other similar legislation and appears to stem from earlier times when Airbnb did not exist and owners were happy to change the bedlinen and do the cooking for a number of guests. Then, there was a clear distinction as the common law test of exclusive possession as a hallmark of a tenancy would have applied (unlike here). A current example might be a bed and breakfast business. Such arrangements tend to be temporary.
2. The respondent's representative, Ms Besemeres, has helpfully provided cases that analyse the phrase. I have come to the firm opinion that the occupants paying rent are not lodgers or boarders but will briefly refer to the cases.
3. In Noble v Centacare[2] Crispin J at [25]-[31] looked at the expression in the Residential Tenancies Act 1997, saying:
   1. The common law is replete with cases concerning the circumstances in which an occupier will be held to be a boarder or lodger and I will mention but a few of the judicial pronouncements on this question.
   2. In Torrissi v Oliver [1951] VicLawRp 54; [1951] VLR 380 at 385, Coppel AJ said:

I doubt whether any guiding principle can be discovered from the cases more specific than this: that a tenancy of a room or rooms in a dwelling house will be shown to exist where the occupier has not only the sole right to occupy the room or rooms but has the right to exclude the landlord therefrom. This is sometimes expressed by saying that if the landlord retains control of the rooms in question the occupier is a lodger and not a tenant. [emphasis added][3]

1. In Noblett and Mansfield v Manley [1952] SASR 155 at 158 Mayo J expressed the concept in somewhat different terms, explaining that:

The primary and usual meaning of "lodger", as so defined, is "one who resides as an inmate in another person's house, paying a certain sum periodically for the accommodation", or "one who occupies an hired room in another person's house"... A "boarder" is "one who... has his food, or food and lodging, at the house of another for compensation, one who lives in a boarding house, or with a family as one of its members, at a fixed rate; one who has food at another's table or meals and lodgings in his house for pay, or compensation of any kind.

In ordinary circumstances with both lodger and boarder legal possession remains in the person who provides room or rooms, or meals. He retains possession and control over rooms and means of ingress and egress, but grants license to guests who pay, or give consideration for the privilege.

1. In the subsequent case of Street v Mountford [1985] UKHL 4; [1985] 2 All ER 289 at 293, Lord Templeton said that:

An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own...

If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant. [emphasis added]

1. In Lewis v Bell [1985] 1 NSWLR 731 at 735, Mahoney JA added the concise explanation that:

In deciding... whether what has been granted is the right to exclusive possession, the Court, in the process of construction, has in practice looked inter alia to two things: the nature of the rights which, in terms, have been granted; and the intention of the parties.

1. In Bruton v London and Quadrant Housing Trust [1999] UKHL 26; [2000] 1 AC 406 the House of Lords considered a somewhat unusual case in which a housing trust had been granted a licence by a local authority to use a number of properties for the provision of temporary accommodation for homeless persons. The trust undertook to ensure that no occupier was given security of tenure without the Authority's consent. Mr. Bruton had signed an agreement with the trust for the occupation of a flat in one of the properties on a "weekly licence". Lord Hoffman with whom the majority of the House of Lords agreed, said at 414:

(Counsel for the trust) submitted that there were "special circumstances" in this case which enabled one to construe the agreement as a licence despite the presence of all the characteristics identified in Street v Mountford [1985] UKHL 4; [1985] AC 809. These circumstances were that the trust was a responsible landlord performing socially valuable functions, it had agreed with the Council not to grant tenancies, Mr Bruton had agreed that he was not to have a tenancy and the Trust had no estate out of which it could grant one.

In my opinion, none of these circumstances can make an agreement to grant exclusive possession something other than a tenancy . . .

1. Whilst his Lordship did not refer to the High Court's decision in Radaich v Smith & Anor [1959] HCA 45; (1959) 101 CLR 209, this approach seems to have reflected the principles acknowledged in the judgment of Windeyer J:

Whether when one man is allowed to enter upon the land of another pursuant to a contract he does so as licensee or as tenant must, it has been said, "be in the last resort a question of intention" ...But intention to do what? - Not to give the transaction one label rather than another. - Not to escape the legal consequences of one relationship by professing that it is another. Whether the transaction creates a lease or a licence depends upon intention, only in the sense that it depends upon the nature of the right which the parties intend the person entering upon the land shall have in relation to the land.

1. As can be seen, these cases need to be understood without there being a need for exclusive possession.
2. In Wiser v Havelock Housing Association Inc,[4] Burns J had to consider the same issue in respect of Havelock House. He said at [26]:
   1. It is difficult to reconcile the provisions of s 6A(3)(a) and s 6E(1)(b) of the RTA based upon the common law test for determining whether an occupant is a tenant, or a boarder or a lodger. Section 6E(1)(b) provides that a boarder or lodger is not a tenant occupying premises under a residential tenancy agreement. At common law, the test to distinguish a tenant from a boarder or lodger was exclusive possession, but s 6A(3)(a) provides that an agreement may be a residential tenancy agreement even if the right to occupy is not exclusive. The cases to which I have referred, and to which Crispin J referred in Noble v Centacare, also speak of boarders and lodgers receiving services such as the provision of meals or the cleaning of rooms, but these are frequently referred to in the cases as relevant to the issue of exclusive possession. There is, in any event, no suggestion in these cases that the provision of services, or their absence, was itself determinative of the issue. [emphasis added]
3. In Narelle Wickham & ACT Revenue Office,__[5] the Tribunal Member did not think there was a tenancy but it depended on the particular facts. The owner provided services on a daily basis such as breakfast, linen and toiletries. The owner could not be excluded from the rooms and the stays were short term, similar to a bed and breakfast.
4. Here the stays were for long periods in some cases and the occupants had their own keys. The owner was not often there, and when she was she didn't provide any services to the occupants, who were self-sufficient. Nothing is said expressly in the agreements about the owner being able to enter the rooms let, without permission, but the nature of the arrangement was such that privacy would mandate that permission would be required at least when the occupant was home. In any event, the owner was often absent for long periods and the whole place was at times rented out to others. The owner could enter the unit if she returned but may not have a bed. I infer she wouldn't come back unless there was a room available for her.
5. In submissions, the respondent summarised the situation well when it is said that the relationship was necessarily hands off. There were no hallmarks of continued control or possession by the owner.
6. What is evident from the cases[6] is that there has to be some ongoing form of control by the owner over the occupant. Here, the way the occupation was arranged left the occupants to their own devices and the owner did not have any continued role by way of providing services or ongoing access to the rooms let. She certainly did not appear to ever try to do so and her admitted lengthy absences and the fact that on occasion all the rooms were let, is inconsistent with a boarder, lodger relationship.
7. Having said this, it would be useful for the Legislature to spell out in a more definite manner what is meant by reference to outdated and undefined expressions such as lodger or boarder.

1. The rate of 50% was imposed. It is evident from the T documents that there was no response to requests for information, or even the assessment itself, until the time for objection had elapsed. To make the assessment, the Commissioner had to obtain evidence from third parties such as service providers, the owner's bank and the Tax Office.
2. The applicant said she didn't respond quickly as she thought it was just a rates notice. There is evidence provided by the Commissioner that the owner was often in arrears of rates as well. The applicant also said that she was short of money due to the scam she mentioned and put off dealing with it as she didn't have the money.
3. She must have known, or at least ought to have known, of the existence of land tax as she had previously had other investment properties.[7] She had not provided any evidence of seeking advice or concerning herself at all in respect of a potential liability for the land tax. She said in her submission, but not in evidence, that she had rung the Revenue Office at some stage and was told that she would not have to pay such tax. Clearly the full circumstances that she was in were not explained, and this is inadequate. She provided as part of her initial submission, a letter from the Revenue Office which clearly has assumed a state of affairs that did not apply here.
4. The authorities referred to in the submissions of the respondent on remitting part of the penalty from 50% to 25% make it clear that the onus is on the applicant to take responsible steps to be aware of her obligations and inform the Revenue Office of her situation accurately. The policy behind the imposition of the penalty is to impose on the taxpayer the obligation to know what the correct situation is and ignorance is no excuse. The TA Act spells out when the imposition of 50% may be made, and that is clearly the case here.
5. I can see no grounds for remitting the penalty. As is submitted, the Tribunal has no jurisdiction to review the imposition of interest.
6. For these reasons, I dismiss the application and confirm the decision under review.

[1] [2020] ACAT 46

[2] [2003] ACTSC 37

[3] As here exclusive possession is not a requirement that is not now determinative but the control element seems to apply.

[4] [2014] ACTSC 138

[5] [2010] ACAT 80

[6] See too Ellis, Linda v City Women's Hostel [1997] NSWRT 258 and the definitions in dictionaries such as the Cambridge English dictionary

[7] In NSW but they have similar land tax provisions