(FURTHER WRITTEN SUBMISSIONS RECEIVED 2 MARCH 2005 AND 10 MARCH 2005)

Taxation - Land tax - Exemption - Private residential property - Whether lots were established and used as an integrated area - Whether taxpayer's intention relevant - Whether physical changes to property during a financial year can affect exemption status during that year - Words and phrases: "established", "integrated area"

Interpretation Act 1984 (WA) s 19(1)(a)

Land Tax Assessment Act 1976 (WA) s 5, cl 9(aa)(iii)

Land Tax Assessment Act 2002 (WA) s 3, s 4, s 5, s 17, s 21, Glossary cl 1, cl 2(3) and cl 2(4)

State Administrative Tribunal Act 2004 (WA) s 17(1), s 17(3) and s 27(1)

Taxation Administration Act 2003 (WA) s 3, s 37, s 40 and s 43

BHP Billiton Petroleum Pty Ltd v Chief Executive Officer of Customs [2003] FCAFC 61; (2003) 129 FCR 31

Commissioner of State Taxation v Purcell (Pidgeon J, No 1029 of 1995, 8 August 1995, unreported)

Purcell v Commissioner of State Taxation (1995) 13 SR (WA) 66

Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; [1977] VR 342 at 353; [1977] VicRp 42; (1976) 10 ALR 441 at 455

MR D R PARRY (SENIOR MEMBER),

MR P McNAB (MEMBER):

REASONS FOR DECISION

1 These proceedings concern two appeals brought by a taxpayer, Ms J M Bestall ("the applicant"), pursuant to s 40 of the Taxation Administration Act 2003 ("Taxation Act"), against the disallowance by the Commissioner of State Revenue ("the respondent") of objections to assessments of liability for land tax. The assessments to which the applicant has objected were issued on 23 October 2003 and 16 September 2004, and relate to the 2003/2004 and 2004/2005 financial years, respectively. In each appeal, the applicant objects to the assessment insofar as it states that land tax is payable by her in relation to each of Lots 1 - 5 in Survey Strata Plan 43049 ("Lots 1 - 5"). The applicant objects to this aspect of the assessments on the basis that Lots 1 - 5 form part of her "private residential property" within the meaning of s 21 of and cl 2(4) of the Glossary to the Land Tax Assessment Act 2002 ("Land Tax Assessment Act") and is therefore exempt from land tax.

2 Section 43 of the Taxation Act provides that when the State Administrative Tribunal is dealing with a matter brought before it under that Act relating to an assessment under the Land Tax Assessment Act, the Tribunal is to be constituted by, or include, its President or a Deputy President, or a senior member, as defined in s 3(1) of the State Administrative Tribunal Act 2004 ("Tribunal Act"), who is a legal practitioner as defined in that sub-section. In accordance with s 43 of the Taxation Act, for the purpose of hearing and determining these proceedings, the Tribunal was constituted by a panel comprising a senior member and an ordinary member.

3 On 1 September 2000, the applicant purchased the property which was then Lot 101 on Diagram 74215, known as 427 Riverton Drive East, Shelley, and the whole of the land comprised in certificate of title volume 1815 folio 571 ("Lot 101"). Lot 101 had a width of approximately 25 metres and a depth of approximately 130 metres. The applicant's husband, Mr John Bestall, who represented the applicant at the hearing by leave granted in accordance with s 39(1)(e) of the Tribunal Act, and who gave evidence on her behalf, stated that at the time the applicant purchased Lot 101, the front or eastern third of the property had been improved by the erection of a two-storey dwelling house, ancillary structures and landscaped garden, whereas the rear or western two-thirds of the property was a "vacant chunk of land" comprising scrub. The rear two-thirds of Lot 101 was physically separated from the developed front third by a fence across the width of the land. Notwithstanding this physical severance of Lot 101 into developed and undeveloped portions, it had historically been regarded by the respondent as a single private residential property, and thus as exempt from land tax.

4 Immediately to the south of Lot 101 was a property with almost identical dimensions and orientation to it, which was Lot 100 on Diagram 74215, known as 429 Riverton Drive East, Shelley, and the whole of the land comprised in certificate of title volume 1815 folio 570 ("Lot 100"). Lot 100 was owned by J N and N Simpson, who used the whole of that property as their primary residence. Similarly to Lot 101, Lot 100 had erected on it a two-storey dwelling house and ancillary structures on the front or eastern third of the land.

5 The applicant and the owners of Lot 100 agreed to consolidate their properties, to each retain most of the front or eastern third of their former, respective property as a Torrens title allotment, and to develop the rear or western two-thirds of the consolidated property and a central driveway between the two existing dwelling houses as a survey strata title estate, comprising 10 survey strata lots ranging in area from 361 square metres to 378 square metres and common property in the form of the central driveway from Riverton Drive East to each strata lot.

6 Having obtained subdivision approval, the applicant and the owners of Lot 100 spent about $120,000 each on clearing the survey strata land, erecting common fencing around it, providing utility services to each strata lot, building, paving and kerbing the central driveway, installing some landscaping along the edges of the driveway, and erecting a masonry pillar on each side of the driveway at the street frontage of the strata common property containing letterboxes for each of the 10 strata lots. On 13 March 2003, the consolidation and re-subdivision of Lot 100 and Lot 101 was registered by the Department of Land Administration in the form of Deposited Plan 34392. Lot 11 in Deposited Plan 34392 comprises most of the formerly developed area of Lot 101 and has an area of 1,101 square metres. Lot 12 in Deposited Plan 34392 comprises approximately the front or eastern third of Lot 100 and has an area of 1,047 square metres. Lot 13 in Deposited Plan 34392 comprised the rear two-thirds of the consolidated property and an access strip 4 - 5 metres in width between Lot 11 and Lot 12 to Riverton Drive East.

7 On the same day as the registration of Deposited Plan 34392, the Department of Land Administration registered Survey Strata Plan 43049 in relation to the land formerly comprised in Lot 13 on Deposited Plan 34392. The name of the strata scheme on the registered instrument is "Bestall Mews". Certificates of title in relation to Lots 1 - 5 were issued to the applicant. Certificates of title in relation to Lots 6 - 10 in Survey Strata Plan 43049 ("Lots 6 - 10") were issued to J N and N Simpson. J N and N Simpson sold Lots 6 - 10 to Shelley Investments (WA) Pty Ltd on 23 April 2003. The applicant has retained ownership of Lots 1 - 5 in addition to Lot 11. As noted above, Lot 11 comprises most of the formerly developed part of Lot 101. In particular, the rear or western boundary of Lot 11 is approximately 4 - 5 metres to the east of the fence line which separated the developed part of Lot 101 from the undeveloped part. In addition, a 2.0-2.5 metre strip along what was the southern side of the formerly developed portion of Lot 101 now forms half of the central driveway to the strata scheme from Riverton Drive East.

8 The applicant contends that the reason why she carried out the strata subdivision was:

"due to the fact that the council was considering lowering the densities in the area. So to protect the value and the development potential, we divided the land into 6 separate lots and at all times have used them for personal use."

9 The applicant's motivation for carrying out the strata subdivision is not in dispute.

10 Section 5 of the Land Tax Assessment Act provides that land tax is payable for each financial year for all land in the State except land that is exempt under s 17. Section 17 provides that land is exempt from land tax for an assessment year if the Commissioner grants an exemption for the assessment year under s 20 or if it is exempt for the assessment year under another provision of Pt 3 of the Act.

11 The respondent has not granted an exemption for any of the assessment years in question under s 20 of the Land Tax Assessment Act. Section 21 of the Act, which is contained in Pt 3, provides, in part, as follows:

"21. Private residential property owned by individuals

(1) Private residential property (except property held in trust) is exempt for an assessment year if, at midnight on 30 June in the financial year before the assessment year, it is owned -

(a) by an individual who uses it as his or her primary residence; ..."

12 Section 4 of the Land Tax Assessment Act provides that the Glossary at the end of the Act "define[s] or affect[s] the meaning of some of the words and expressions used in this Act, and also affect[s] the operation of other provisions". Relevantly, cl 1 of the Glossary to the Land Tax Assessment Act contains the following definitions:

"'lot' has the meaning given in clause 2; ...

'parcel' means two or more lots of land that are treated as a single property under clause 2;

'primary residence', in relation to an individual, means the individual's sole or principal place of residence;

'private residence' means a building or part of a building that was occupied or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals [with relevantly immaterial exceptions] ...

'private residential property' means -

(a) a lot of land on which there is a private residence;

(b) a parcel of land on which there is a private residence constructed so that part of the residence stands on each of the lots of land that constitute the parcel;

(d) for the purposes of s 24 and s 28 -

a lot of land on which a private residence is being or has been constructed;".

13 Clause 2 of the Glossary to the Land Tax Assessment Act provides, in part, as follows:

(1) A reference to a lot of land is a reference to a defined portion of land -

(a) that is depicted on a plan or diagram publicly exhibited in the office of the Department of Land Administration, or deposited in the Department within the meaning of the Transfer of Land Act 1893 or the Registry of Deeds and for which a separate ... certificate of title has been or can be issued, registered or depicted on a subdivisional plan or diagram, whether so exhibited or deposited or not; and

(b) that is approved by the Town Planning Board or the Western Australian Planning Commission ...

(2) A reference to a lot of land includes a reference to the whole of any land that is the subject of -

(c) a certificate of title registered under the Transfer of Land Act 1893; [or] ...

(3) If two or more lots of land in the same ownership have common boundaries, the Commissioner may treat the lots as a single property for valuation and assessment if it is appropriate to do so.

(4) However, for the purpose of determining the use of a lot or parcel of private residential property, two or more lots of land are not to be treated as a single private residential property unless the Commissioner is satisfied that the lot or lots on which the private residence is constructed and each other lot are established, and used by the individuals who reside there, as one integrated area that constitutes the place of residence." (Emphasis added.)

14 Section 3 of the Land Tax Assessment Act and s 3 of the Taxation Act each provide that the two Acts are to be read together as if they formed a single Act. Section 34 of the Taxation Act confers on a taxpayer the right to object to an assessment. Section 37 provides, in part, as follows:

(1) The Commissioner must consider and determine an objection, having regard to -

(a) the grounds set out in the objection and any other relevant material submitted by the taxpayer;

(b) any other information obtained by the Commissioner that is relevant to considering the objection, whether the information was obtained before or after the objection was lodged.

(2) The onus of establishing that an assessment or decision to which an objection relates is invalid or incorrect lies on the taxpayer. ..."

15 Section 40 of the Taxation Act provides that a person who is dissatisfied with the respondent's decision on an objection may apply to the Tribunal for a review of the decision.

16 In accordance with s 17(1) of the Tribunal Act, the present proceedings fall within the Tribunal's "review" jurisdiction. In accordance with s 17(3) of the Tribunal Act, the decisions of the respondent to disallow the applicant's objections are each a "reviewable decision" for the purposes of the Tribunal Act. Section 27(1) of the Tribunal Act provides that "the review of a reviewable decision is to be by way of a hearing de novo". Section 29(1) of the Tribunal Act provides that:

"The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decision-maker in making the reviewable decision."

17 The applicant's case is usefully summarised in the following paragraph from her witness statement (which was also Mr Bestall's statement):

"We therefore feel that the residential exemption should apply for our house and land that is attached and used for our sole private use. It is fully fenced with a permanent tennis court with two solid posts. Our children use the yard for their recreation needs. Our children have a netball hoop, a swing-set and a trampoline that are all used for personal use and located in our backyard. We spent $3,500 late 2004 returfing the yard with seeds for the tennis court. ...

It is appropriate in our case as we owned the property previously as one lot and now own the six properties that are fenced and used 100% for family use a [sic] previously used. The main difference is that we have them more user-friendly for our children. ...

We have spent $3,500 upgrading it from its previous residential exempt status to improve and better it for the use of our family. ...

We still use the land 100% for family purposes. We actually use the land in [a] better - integrated manner than before we spent the $3,500 upgrade to the backyard." (Original emphasis.)

18 In his oral submissions, Mr Bestall also argued that, because the applicant at all relevant times had in mind and was in the process of improving Lots 1 - 5 for the purposes of use as a backyard to the Bestalls' dwelling house on Lot 11, the Tribunal should review the respondent's decisions in light of the current physical characteristics of the land.

19 Although, for reasons which we discuss below, the current physical characteristics of Lots 1 - 5 would not alter our conclusion as to whether the property is relevantly exempt from land tax, we reject the applicant's submission that it is open to the Tribunal to take such a retrospective approach. Although the present proceedings are to be heard de novo, and consequently the Tribunal is able to consider evidence and submissions which were not before the respondent when it made the decisions which are now under review, the critical question in these proceedings is whether Lots 1 - 5 were exempt from land tax as at the relevant date for each assessment. While physical changes might alter the result as to whether land is exempt in taxation years after the changes are implemented, they cannot, in our opinion, have the retrospective effect contended for by the applicant, even in review proceedings before the Tribunal.

20 The respondent's case is premised on identifying and responding to two "questions" or "principles" which it seeks to derive from an unreported decision of the Supreme Court of Western Australia in Commissioner of State Taxation v Purcell (Pidgeon J, No 1029 of 1995, 8 August 1995, unreported). The respondent submitted that the legislation considered in Commissioner of State Taxation v Purcell is "similar" and "equivalent" to the provisions in question before us. The respondent submitted that:

"The proper questions to be asked in cases such as the present are:

(a) what was the intention of the Appellant in respect of the use and dedication that they put the land [sic]; and

(b) to what degree were the structures (other than the dwelling) placed on the land (Commissioner of State Taxation v Purcell at 11)."

21 The respondent then sought to answer these questions in light of the evidence.

22 We reject the respondent's submission. We can derive no assistance in the present case from Commissioner of State Taxation v Purcell. That case was an appeal to the Supreme Court from a decision of the Land Valuation Tribunal; see Purcell v Commissioner of State Taxation (1995) 13 SR (WA) 66. Such an appeal was restricted to a question of law. Pidgeon J held that the grounds of appeal did not raise a question of law, and dismissed the appeal. It is apparent from his Honour's decision at p 6, and from the decision of the Land Valuation Tribunal at 68, that the question of fact in issue before the Tribunal concerned the application of the now repealed and replaced Land Tax Assessment Act 1976. In particular, the question in issue was whether an allotment of land adjacent to an allotment on which the appellants before the Tribunal had their dwelling house was exempt from land tax because it formed part of a "parcel of land", within the meaning of that Act, with the allotment on which the dwelling house was erected. The term "parcel" was relevantly defined in s 5 of the Act in question to mean "two or more lots of land in the same ownership which have common boundaries, and which, for good and sufficient reason, may be deemed by the Commissioner to be a single property for valuation and assessment under this Act". (Emphasis added.)

23 Although the words "good and sufficient reason" might have raised similar considerations to the word "appropriate" in cl 2(3) of the Glossary to the Land Tax Assessment Act, it is, nevertheless, a different formulation. More fundamentally, although at the date of the decision in Commissioner of State Taxation v Purcell, the Land Tax Assessment Act 1976 contained a similar provision to cl 2(4) of the Glossary to the current Land Tax Assessment Act, namely cl 9(aa)(iii), that provision had not been enacted as at the date of the taxation assessment in question. Consequently, that provision was not considered by the Land Valuation Tribunal or on appeal. As we discuss below, the present proceedings are fundamentally concerned with the proper interpretation and application of cl 2(4) of the Glossary.

24 Furthermore, although we accept that the degree of permanence of physical structures and other characteristics of land is relevant to the determination of whether lots in question "are established .... as one integrated area" within the meaning of cl 2(4) of the Glossary to the Land Tax Assessment Act, we do not accept that the "questions" or "principles" identified by the respondent properly arise as such under the legislation in question. Rather, the relevant questions that the respondent, and the Tribunal on review, are required to address are set out in the words used by the Parliament in the enactment in question. It is unhelpful and indeed distracting from the task at hand to add a gloss on the provisions of the statute.

25 Before we come to identify and address the questions posed by the legislation, we need to add a further, explicit response to the assumption which underlies the respondent's first "question" or "principle", namely that a taxpayer's intention is relevant in determining whether land in question is exempt. The respondent submitted that "an intention to obtain a land tax exemption, in combination with other surrounding circumstances of a case, could strengthen a conclusion that the land was not being used as one integrated area". It also submitted that, if the surrounding circumstances suggest that the land is not being used as one integrated area, "then the stronger the intention of the taxpayer doing acts in relation to the land in order to obtain a land tax exemption ... the stronger the conclusion can be reached that the land is not being used as one integrated area".

26 Mr Bestall openly conceded that he and the applicant had a number of reasons for undertaking the modifications to Lots 1 - 5, including a desire not to have to pay land tax. However, in our opinion, on the proper construction of s 21 of the Land Tax Assessment Act and cl 2(3) and cl 2(4) of the Glossary to that Act, a question as to the taxpayer's intention in carrying out modifications to land does not arise, whether to strengthen an objective conclusion or otherwise, and would only serve to distract the respondent and the Tribunal from the two objective determinations required by the statute.

Interpretation and Application of the Statute

27 This case fundamentally turns on the proper interpretation and application of cl 2(4) of the Glossary to the Land Tax Assessment Act. It is to be noted that this provision, and in particular the words "and each other lot" extend the circumstances in which a residential property may be exempt from land tax beyond the circumstances contemplated by s 21 of the Act. As we have noted above, s 21 of the Act provides relevantly that "private residential property ... is exempt from an assessment year if, at midnight on 30 June in the financial year before the assessment year, it was owned ... by an individual who uses it as his or her primary residence". The term "private residential property" as defined in the Glossary does not include the present circumstances. In particular, the term "private residential property" is defined, by the use of the word "means", exhaustively (see Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; [1977] VR 342 at 353; [1977] VicRp 42; (1976) 10 ALR 441 at 455), such that the "private residence" must be constructed, at least in part, on each "lot" forming part of the "parcel of land", which is not the case here. However, the use of the words "and each other lot" in cl 2(4) of the Glossary has the effect of extending exemption status to a lot which does not contain any part of a private residence where the pre-conditions set out in that sub-clause are satisfied.

28 On the proper construction of cl 2(3) and cl 2(4) of the Glossary, in order for the discretion under cl 2(3) to treat the lots in question as a single, private residential property to be enlivened, the respondent or the Tribunal must be satisfied by the taxpayer of the following two preconditions:

(i) "that the lot or lots on which the private residence is constructed and each other lot are established ... as one integrated area that constitutes the place of residence"; and

(ii) "that the lot or lots on which the private residence is constructed and each other lot are ... used by the individuals who reside there, as one integrated area that constitutes the place of residence".

29 The critical words in the two pre-conditions identified above are "established", "used" and "integrated". These are each non-technical English words and are to be given their natural and ordinary meanings. According to the following Australian dictionaries, the relevant meaning of these words is as follows:

"established" - (verb)

"to set up on a firm or permanent basis; institute; found: to establish a government, a business, a university, etc." (The Macquarie Dictionary Revised Third Edition p 643)

"set up or consolidate (a business, system, etc.) on a permanent basis" (The Australian Oxford Dictionary p 445)

"used" - (verb)

"to avail oneself of; apply to one's own purposes: use the front room for a conference" (The Macquarie Dictionary Third Revised Edition p 2068)

"cause to act or serve for a purpose; bring into service; avail oneself of (rarely uses the car; use your discretion)" (The Australian Oxford Dictionary p 1475)

"integrated" - (adjective)

"of or relating to a ... whole; harmonious" (The Macquarie Dictionary Third Revised Edition p 983)

"whole; complete" (The Australian Oxford Dictionary p 682).

30 The dictionary definitions set out above suggest that the requirement that the lots in question "are established" as one integrated area necessitates a degree of permanence. The definitions also suggest that the concept of an "integrated area" involves all of the lots in question constituting a "whole" that can be characterised as a place of residence. The ordinary meaning of the words conveyed by the text of the statute is confirmed by reference to the Explanatory Memorandum to the Bill which became the Act; see Interpretation Act 1984 s 19(1)(a). The Explanatory Memorandum states at p 47 that:

"Residential usage of the vacant lot may comprise a common boundary fence, a tennis court or swimming pool, or some other structure that evidences that the lot is being used as an integral part of the residence of the owner."

31 The two pre-conditions identified above each involve questions of fact and degree; cf BHP Billiton Petroleum Pty Ltd v Chief Executive Officer of Customs [2003] FCAFC 61; (2003) 129 FCR 31 at 39. These questions of fact are to be determined entirely objectively. We will now proceed to consider the facts of each appeal in light of the applicable provisions.

32 On 19 November 2003, officers of the respondent, including Mr Jonathon Raven, inspected the property in question. Mr Raven gave evidence in the proceedings and was not cross-examined. The inspection report which was annexure "B" to his evidence includes the following:

"Mrs Bestall's primary residence is located on lot 11 P34392 being 427 Riverton Drive, Shelley. She owns the adjoining lots at the back of her property. The Survey Strata for these lots 1-5 Survey Strata Plan 43049 was created on 13 February 2003.

Lot 11 P3492 was separated by a fence from the rest of the strata lots at the time of inspection. The strata lots are vacant land. There is a driveway to access all the lots, and power, water, sewerage for each of the lots. There is a letterbox at the entrance of the property for each lot."

33 The applicant did not contest this evidence. Indeed, Mr Bestall conceded that as at 19 November 2003, and certainly as at 1 July 2003, the lot on which the applicant's "private residence" is constructed was physically separated by a fence from Lots 1 - 5 and that Lots 1 - 5 were vacant land which had been developed as strata lots. There is, therefore, little question that, as at 1 July 2003, Lots 1 - 5 were neither established nor used by the applicant or her family as part of "one integrated area that constitutes the place of residence". Consequently, the applicant's appeal in relation to the 2003/2004 land tax assessment must be dismissed.

34 On 7 July 2004, officers of the respondent, including Mr Raven, again inspected the property in question. Mr Raven took a series of 11 photographs. The applicant accepts that the photographs accurately show the physical characteristics of the land as at 7 July 2004 and, indeed, as at 1 July 2004. The photographs show that the central driveway forming part of the common property of the strata plan was constructed, paved, landscaped and kerbed. There was a wire mesh fence constructed across the driveway at the prolongation of the western boundary of Lot 11. Mr Bestall indicated that his family had constructed this fence. The fence physically prevented ready access to the balance of the strata title land. The whole of the strata title land, including the strata lots owned by the applicant and strata lots owned by Shelley Investments (WA) Pty Ltd, were commonly fenced and, on the western end of the strata title land, the fence was erected atop what appears to be a small, common retaining wall which stretched across the full width of the strata title land adjacent to the western boundary of Lots 1 and 10 in the strata scheme. The surface of each of the strata lots 1 - 10 was sand. The driveway, which is common property in the strata plan, was completed in a uniform fashion with uniform kerbing fronting each of Lots 1 - 10. The only landscaping on the strata title land Lots 1 - 10 was in the form of four identical pots, two on the lots owned by the applicant and two on the opposite lots owned by Shelley Investments (WA) Pty Ltd.

35 On the common property driveway, almost touching the kerb immediately adjacent to Lot 5 in the strata plan, was a netball hoop on a pole which does not appear to have been fixed to the ground. The only structures erected on any part of Lots 1 - 5 (other than the common boundary fencing and retaining walls, driveway kerbing and utility services), were two posts (which on the applicant's evidence were concreted into the ground) which supported a tennis net between them. However, no tennis court had actually been marked on the ground. Moreover, it was Mr Raven's uncontested evidence that "the ground [in the vicinity of the tennis court] seemed uneven". The photographs also show that the area around the tennis court net was the same sand as formed the remainder of the surface of each of Lots 1 - 10 in the strata scheme.

36 The photographs also show that two other items had been placed on parts of Lots 1 - 5. A trampoline, which does not appear to have been fixed to the ground, was placed on Lot 1, the furthest strata lot from the applicant's dwelling house. A swing-set had been placed on Lot 5.

37 The photographs show that approximately half of the common boundary between Lot 11 and Lot 1 in the strata plan was occupied by a large metal shed structure which was erected on Lot 11. This shed physically divided the applicant's lot containing the dwelling house from the strata title land as though it were a fence approximately 2 metres in height. The fence, which up to at least November 2003 had stood on the remainder of the common boundary between Lot 11 and Lot 1 in the strata scheme had been removed. However, the boundary between Lot 11 and Lot 1 in the strata scheme was marked by a small retaining wall and by a strip of landscaping containing six shrubs on the western end of Lot 11. Nevertheless, there was a small section along the southernmost part of the common boundary between Lot 11 and Lot 1 in the strata plan where there was no shed and no landscaping between the two lots, and plainly one could gain access from Lot 11 to Lot 1 in the strata plan simply by stepping over the small retaining wall along the common boundary.

38 We are not satisfied that the lot on which the applicant's residence is constructed and Lots 1 - 5 were "established" as "one integrated area" that constituted the applicant's place of residence as at 1 July 2004. We have arrived at this conclusion for several reasons. First, the items which had been erected or placed by the applicant on Lots 1 - 5 or the common property adjacent to Lots 1 - 5 following the completion of the subdivision works and prior to 1 July 2004, namely two posts supporting a tennis net, a moveable trampoline, swing-set and netball hoop, lack a sufficient degree of permanence in order to have established Lots 1 - 5 as part of an integrated area constituting a place of residence. The trampoline, swing-set and netball hoop could be readily removed. The tennis net posts could be removed without significant effort.

39 Secondly, the six lots in question were not commonly fenced or otherwise physically designated as a common, and indeed, integrated area. Rather, as a result of the removal of part of the fence along the common boundary between Lot 11 and Lot 5 in the strata scheme and the placement of the wire mesh fence across the common driveway of the strata scheme, the lot containing the applicant's residence was commonly fenced with not only her lots in the strata scheme, but also the five lots not owned by her and about half of the common property of the strata scheme.

40 Thirdly, the appearance and physical characteristics of Lots 1 - 5, on the one hand, and of Lot 11, on the other, were entirely different. Lot 11 had erected upon it a substantial two-storey dwelling house and a large shed and had well-established gardens with lawn, shrubs and paved pathways in both the front and back gardens providing access between facilities. In significant contrast, Lots 1 - 5 were covered in sand, had no landscaping even in an infant state (other than the two pots), and had no pathways or other marked physical connections between the items which had been erected or placed on the land, even though these items were a considerable distance from one another.

41 Fourthly, although, as we noted above, physical access from Lot 11 to Lots 1 - 5 was possible along the southern part of the common boundary between Lot 11 and the closest strata lot, for the overwhelming majority of the common boundary, it was either impossible, because of the large shed which occupied the northern half of the common boundary, or at least inconvenient, because of the need to step through a strip of shrubs. Even at the small southernmost section of the common boundary, where there was no shed or shrubs to impede access, access to the strata land necessitated stepping over a small timber retaining wall. Moreover, to have reached this access point, a resident of Lot 11 would have had to leave the paved path which provides access to facilities within Lot 11 and proceed across the lawn to the retaining wall from which point on, as noted above, there was no path either constructed or marked to provide access to the items which had been erected or placed on the strata land. Consequently, we are certainly not satisfied that the six lots in question were established as an integrated area.

42 Rather, the photographic evidence shows quite clearly that, notwithstanding the items which had been erected or placed by the applicant, Lots 1 - 5 were established as one integrated area with the rest of the strata plan land. In this regard, Lots 1 - 5 were not physically separated in any way from the rest of the strata land, were commonly fenced with the rest of the strata lots, were served by a common driveway (even though a wire fence had been erected by the applicant severing that driveway), had a similar appearance, and had identical services and facilities provided in terms of letterboxes and utility services.

43 Furthermore, although we accept the applicant's evidence that her three children, aged seven, nine and eleven, used Lots 1 - 5 in an informal way for recreation, for reasons discussed above, the six lots in question were not an "integrated" area, and consequently such use as occurred was not "as one integrated area that constitutes the place of residence". Rather, to the extent to which Lots 1 - 5 were used, it appears that they were used as a quite distinctly different area, not as part of a whole that constitutes the place of residence.

44 In the second half of 2004, the applicant installed about 20 sprinklers on Lots 1 - 5 and seeded this area. A recent photograph which formed part of the applicant's evidence shows that the reticulation and seeding has resulted in a significant "greening" in the appearance of Lots 1 - 5.

45 Section 21 of the Land Tax Assessment Act specifically provides that for a private residential property to be exempt for an assessment year, it must be owned by specified persons "at midnight on 30 June in the financial year before the assessment year". Consistently with s 4 of the Act, which provides that the Glossary may "affect the operation of other provisions" of the Act, cl 2(4) of the Glossary affects the operation of s 21 by permitting the respondent to treat two or more lots of land as a "single private residential property" if the two pre-conditions referred to above are satisfied. In our opinion, although cl 2(4) of the Glossary does not expressly impose the same temporal requirement as specified in s 21, on the proper construction of the Act, reading the provisions together, the point in time in relation to which an assessment must be made as to whether the lots in question are established, and used by the individuals who reside there, as one integrated area that constitutes the place of residence, is the point in time specified in s 21. We do not, therefore, consider that, even in review proceedings before the Tribunal, physical characteristics which came into being after midnight on 30 June in the financial year before the assessment year in question can be taken into account in determining whether an objection as to the assessment should be allowed in relation to that year. Our conclusion is consistent with the Explanatory Memorandum to the Bill which states at p 48 that:

"Where the vacant lot is not actually used by the owner as an integrated part of the residence at 30 June (eg he or she may intend to develop a tennis court or add a swimming pool in the future), the lot will be subject to land tax." (Emphasis added.)

46 However, if we are wrong in relation to the interpretation of the statute in this respect, we note that we are not satisfied, even taking into account all of the improvements which have been made to Lots 1 - 5 to date, that the six lots in question are established, and used by the applicant's family, as one integrated area that constitutes the place of residence. In particular, the physical characteristics of Lots 1 - 5 and Lot 11 are still not such that we could conclude that all of these lots are "set up on a firm or permanent basis" (to use The Macquarie Dictionary definition of "established") as one integrated or whole area that constitutes the place of residence. In this regard, the 20 sprinklers and the pipes and facilities which service them do not have a sufficient degree of permanence to satisfy the requirement that the lots be established as an integrated whole. Furthermore, on the applicant's own evidence, she pays for the water usage on five separate accounts, one for each of the strata lots. The watering to maintain the green appearance of Lots 1 - 5 is not integrated with the watering of Lot 11. Although Lots 1 - 5 are now covered in grass, as is most of the rear garden of Lot 11, our reasons for concluding that the six allotments do not satisfy the statutory pre-conditions in cl 2(4) of the Glossary as at 1 July 2004 remain substantially apposite today.

47 Finally, we note that in correspondence with the applicant and her husband, officers of the respondent said, or at least assumed, that, if the applicant had undertaken physical modifications to Lots 1 - 5 on or after 1 July and prior to 30 June in a financial year, the respondent could reassess whether the land was exempt from land tax during that financial year after the modifications were undertaken. We accept the considered submission made on behalf of the respondent that the respondent does not have power to reassess exemption for a financial year on the basis of physical works undertaken during the financial year.

48 We have not been satisfied that Lot 11, on which is constructed the applicant's private residence, and Lots 1 - 5, are established, and used by the applicant's family, as one integrated area that constitutes the place of residence, as at 1 July 2003, 1 July 2004, or, insofar as it is relevant, today's date. In consequence, cl 2(4) of the Glossary to the Land Tax Assessment Act has the effect that the six lots in question cannot be treated as a single private residential property for valuation and assessment purposes. Although Lot 11 is exempt from land tax as a private residential property, the other five contiguous lots owned by the applicant are not exempt.

49 The applicant undertook substantial earth and physical works so as to construct a residential survey strata subdivision on Lots 1 - 5. By carrying out and completing those works, the applicant established Lots 1 - 5 as an integrated area with the remaining strata lots and the common property in the strata scheme.

50 Although the construction and completion of the survey strata subdivision does not mean that the applicant could not have subsequently undertaken sufficient physical and landscaping works that established Lots 1 - 5 in the strata scheme and Lot 11 as an integrated area, she has not, in our opinion, done so.

51 In consequence of these findings, the orders of the Tribunal are -

(1) The applications for review brought pursuant to s 40 of the Taxation Administration Act 2003 of the disallowance by the respondent of the applicant's objections to the assessments of liability for land tax for the 2003/2004 and 2004/2005 financial years are dismissed.

I certify that this and the preceding twenty pages comprise the reasons for decision of the Tribunal.

______________________________