These reasons for decision concern an Application for Administrative Review filed by the Applicant under section 96 of the Taxation Administration Act 1996 (TAA). The Application requests that the Tribunal review a decision made by the Respondent (who is also referred to as the Chief Commissioner) by issuing on 19 May 2021 to the Applicant an assessment for land tax for the 2017 to 2021 land tax years in respect of certain properties located in southern Sydney and the south coast of New South Wales in which the Applicant has an interest (the Decision).
References to:
1. the Section 58 Documents are to the volume of documents filed with the Tribunal under section 58 of the Administrative Decisions Review Act 1997 (ADRA) on 14 February 2022 in matter number 2022/00018275, and reference to a particular numbered tab or page of the Section 58 Documents is to the document identified under that tab number or at that page number in the Section 58 Documents; and
2. the Supplementary Tender Documents are to the documents comprised in the Respondent's Supplementary Tender Bundle filed with the Tribunal on 11 May 2022, and reference to a particular numbered page of the Supplementary Tender Documents is to the document identified at that page number in the Supplementary Tender Documents.
This review is conducted under the TAA. Several points should be made at the outset:
1. Section 96 provides for a taxpayer to seek the review of the Chief Commissioner's initial decision if dissatisfied with the outcome of an objection against that decision. In this case, the Applicant appears to express its review application as being in relation to the disallowance of its objection, rather than the original decision, since the Grounds for Application in the Applicant's Administrative review application form dated 10 January 2022 state relevantly that "I believe that the review has not been fairly made ...". . Since the Respondent has not pressed any objection on this point, and in any event the parties have addressed their arguments to the initial decision, nothing appears to turn on this distinction.
2. Importantly, the provisions of section 100 of the TAA apply. Notably:
1. Sub-section 100(2) of that Act provides that neither the Applicant nor the Respondent are limited in the present application to the grounds of the objection; and
2. sub-section 100(3) of that Act provides that the Applicant "… has the onus of proving the applicant's case in an application for review", an onus which is discharged by reference to the ordinary civil standard: B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481.
1. The significance of sub-section 100(3) is that the Respondent's decision must stand unless the Applicant can demonstrate, on the balance of probabilities, the deficiencies in it which the Applicant alleges. A differently constituted tribunal's reasons in Levitch Design Associates Pty Ltd atf Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215, at [27], outline a method of approach to this exercise, and these reasons respectfully adopt the methodology which they propose.
Section 63(1) of the ADRA requires the Tribunal "to decide what the correct and preferable decision is having regard to the material then before it", and section 63(2) provides that the Tribunal "… may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision".
The parties have provided evidence and submissions, to which (along with counsels' respective oral submissions) the Tribunal has had regard. These are referred to below as relevant.
[2]
Background
There is no dispute that:
1. At all relevant times the Applicant had an interest in seven properties in New South Wales (the Properties), of which one was located on the South Coast and the other six are located in the St George area of Sydney;
2. The Properties are land for purposes of the Land Tax Management Act 1956 (the LTMA); and
3. Land tax was properly assessed in relation to three of the St George properties and the South Coast property.
Rather, the controversy goes to three issues:
1. Whether the low value of the Applicant's interest in certain land at 241 Kingsgrove Road, Kingsgrove (Property 241) is such that no land tax should be assessed by reference to that interest.
2. Whether the properties owned by the Applicant and located at 410 and 412 Kingsgrove Rd, Kingsgrove (respectively, Property 410 and Property 412) are exempt from land tax as the Applicant's principal place of residence.
3. Whether the Respondent's conduct in issuing several inconsistent successive notices of assessment should entitle the Applicant to a measure of relief from the land tax to which he was ultimately assessed under the Decision.
The relevant statutory provisions are set out below when these reasons turn to consider each issue.
On 10 February 2017, the Respondent issued a land tax notice of assessment to the Applicant for the 2017 land tax year. This included each of the Properties other than Property 241 and treated Property 410 only as exempt from land tax as the Applicant's principal place of residence [1] .
On 17 January 2018, the Respondent issued a land tax notice of assessment to the Applicant for the 2018 land tax year. Consistently with the 2017 Notice of Assessment, this included each of the Properties other than Property 241 and treated Property 410 only as exempt from land tax as the Applicant's principal place of residence [2] .
The same pattern applied for the 2019 land tax year, when the Respondent issued a land tax notice of assessment to the Applicant for that land tax year which included each of the Properties other than Property 241 and treated Property 410 only as exempt from land tax as the Applicant's principal place of residence [3] .
The pattern changed in the 2020 land tax year, when the Respondent again issued a land tax notice of assessment to the Applicant on 7 February 2020, in which:
1. He did not include Property 241; and
2. He treated both Property 410 and Property 412 as exempt from land tax as the Applicant's principal place of residence [4] .
On 26 April 2021, the Respondent issued to the Applicant a letter, under which he indicated that he was investigating the Applicant's liability to land tax and required the Applicant to complete and submit a questionnaire concerning his landholdings [5] .
On 9 May 2021 the Applicant completed the questionnaire, which the Respondent received on 13 May 2022. In it, the Applicant declared his ownership of Property 410 and Property 412 and claimed a principal place of residence exemption for Property 410.
On 19 May 2021, the Respondent issued a notice of assessment to the Applicant for the 2017 to 20921 land tax years (the Assessment) in which:
1. He assessed the Applicant as liable for land tax by reference to each of the Properties other than Property 410, Property 412 and Property 241 for the 2021 land tax year;
2. He accepted that Property 410 was exempt from land tax for the 2021 land tax year because it was the Applicant's principal place of residence;
3. He reassessed the Applicant as liable to land tax for the 2020 land tax year by reference to Property 412;
4. He assessed the Applicant as liable to land tax for the 2021 land tax year by reference to Property 412;
5. He reassessed the Applicant for each of the 2017 to 2020 land tax years as liable to land tax by reference to his interest in Property 241;
6. He assessed the Applicant for the 2021 land tax year as liable to land tax by reference to his interest in Property 241; and
7. He remitted all interest chargeable on unpaid land tax for the 2018, 2019 and 2020 land tax years [6] .
The Applicant objected to these assessments, and on 1 November 2021 the Respondent disallowed this objection.
On 21 January 2021 the Applicant lodged with the Tribunal his application seeking a review of the Respondent's Decision.
[3]
A preliminary issue
Section 99(1) of the TAA provides as follows:
An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period.
The Application for administrative review was clearly lodged more than 60 days after 1 November 2021. This period would have expired on 31 December 2021, but the Tribunal's relevant registries were closed between 4:30pm on Friday 24 December 2021 and 9:00am on Monday 10 January 2022 [7] .
Section 41 of the Civil and Administrative Tribunal Act 2013 provides as follows:
The Tribunal may, of its own motion or on application by any person, extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction despite anything to the contrary under that legislation.
Since:
1. The Applicant was unable to lodge his Application for administrative review for seven days before, and ten days after, 31 December 2021;
2. He did so within 11 days after the reopening of the registries; and
3. The Respondent has made no objection to the late filing of the Application, and indeed has proceeded on the basis that the Application has been properly filed,
the Tribunal has decided to order under section 41 of the Civil and Administrative Tribunal Act 2013 that the date for lodging the Applicant's Application for administrative review in this matter be extended to 21 January 2022.
These reasons now turn to the three issues outlined above.
[4]
The first issue: Whether the low value of the Applicant's interest in Property 241 is such that no land tax should be assessed by reference to that interest
There is no controversy that:
1. Property 241 is land in New South Wales;
2. It is thus potentially subject to land tax;
3. No applicable exemption from land tax applies in relation to Property 241;
4. The Applicant is a registered proprietor of Property 241, along with three other family members, Ms C, Ms D and Ms M Kafes [8] ;
5. Property 241 is held by them in partnership [9] ;
6. The Applicant's interest in the partnership is a 33% interest [10] ; and
7. The partners together submitted land tax returns under the partnership's own Client ID number with the Respondent, which assessed the partners' liability to land tax as nil, because the value of Property 241 was below the applicable threshold value for land tax [11] .
Section 3 of the LTMA provides relevantly as follows:
Owner includes -
(a) in relation to land, every person who jointly or severally, whether at law or in equity -
(i) is entitled to the land for any estate of freehold in possession, or
Since the Applicant is a registered proprietor of Property 241, he is an "owner" of Property 241 within the meaning of that section.
Section 7 of the LTMA imposes land tax on the taxable value of land in New South Wales:
Land tax at such rates as may be fixed by any Act is to be levied and paid on the taxable value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act).
Section 9(1) of the LTMA provides as follows:
Land tax is payable by the owner of land on the taxable value of all the land owned by that owner which is not exempt from taxation under this Act.
The consequence is that land tax is imposed on a landowner and calculated, on the aggregate taxable value of all land owned by that landowner other than land which is exempted under the LTMA from land tax.
Other provisions of section 9 set out in more detail the process to be undertaken to ascertain the taxable value:
1. Section 9(2) provides that the ".. taxable value of that land is the total sum of the average value of each parcel of that land", which clearly requires the aggregation of all the landowner's landholdings in New South Wales (other than land which is exempt from land tax) to determine the total land value by reference to which the landowner's liability to land tax is calculated; and
2. Sections 9(3) to (5) (inclusive) set out the mechanism for determining the average value of each parcel of land comprised in the landowner's taxable landholdings; the detail of this mechanism is not immediately relevant.
Section 3AL(1) of the Land Tax Act 1956 (the LTA) levies land tax for all land tax years after 31 December 2008:
(1) In respect of the taxable value of all the land owned by any person at midnight on 31 December in any year (commencing with 2008) there is to be charged, levied, collected and paid under the provisions of the Principal Act and in the manner prescribed under that Act, land tax for the period of 12 months commencing on 1 January in the next succeeding year and at the applicable rate
Section 3AL(2)(a) of the LTA provides relevantly that the "applicable rate" is to be determined by reference to Part 1 of Schedule 13 to the LTA, which is as follows:
Taxable value assessed under Principal Act Rate of land tax payable
is not more than the tax threshold Nil
is more than the tax threshold but not more than the premium rate threshold $100 plus 1.6 per cent of the amount by which the taxable value exceeds the tax threshold
[5]
The "tax threshold" is defined in section 2A of the LTA by reference to an amount from time to time determined in accordance with section 62TB of the LTMA.
The effect of this approach is that the value threshold is applied, not by removing from the scope of land tax holdings of real property of which the individual value is below the threshold, but rather by calculating land tax at a rate of 0% on landholdings whose aggregate value does not exceed the land tax threshold for the land tax year concerned.
The Applicant's arguments in relation to the imposition of land tax by reference to Property 241 are thus misconceived:
1. First, the landholdings of a taxpayer on the value of which land tax is levied are every parcel of land owned by the taxpayer in New South Wales other than exempt land, whether or not the value of a particular parcel comprised in the landholdings is itself lower than the threshold; and
2. Secondly, the threshold is given effect to by applying a zero rate of tax, but only if the aggregate value of all parcels of land owned by the taxpayer in New South Wales (excluding exempt land) equals or is lower than the threshold value; if that aggregate value exceeds the threshold amount, land tax is levied in relation to the landholdings at the standard (and, if applicable, premium) land tax rates.
The first issue must therefore be determined contrary to the Applicant's arguments.
[6]
The second issue: Whether Property 410 and Property 412 are exempt from land tax as the Applicant's principal place of residence
Section 10(1) of the LTMA provides relevantly as follows:
(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.
Schedule 1A of the LTMA sets out an elaborate set of provisions for determining whether particular land owned by a taxpayer qualifies for exemption as the taxpayer's principal place of residence:
1. Clause 2(1) provides relevantly that:
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.
1. Clause 2(2) provides relevantly that:
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.
There is no dispute that Property 410 is exempt from land tax under section 10(1)(r) and Schedule 1A of the LTMA as the Applicant's principal place of residence.
The Applicant, however, says that:
1. Property 410 and Property 412 are on the same title; this is uncontroversial, and is clear from the evidence [12] ; and
2. Accordingly, they should both enjoy exemption from land tax under section 10(1)(r) and Schedule 1A of the LTMA as the Applicant's principal place of residence.
The Respondent takes a different view:
1. He refers initially to section 9 of the LTMA, which provides relevantly as follows:
(1) Land tax is payable by the owner of land on the taxable value of all the land owned by that owner which is not exempt from taxation under this Act.
(2) The taxable value of that land is the total sum of the average value of each parcel of that land.
(3) The average value of a parcel of land is to be calculated, as provided for by section 9AA, on the basis of the land value of the land.
(4) The land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year.
1. He then refers to section 3 of the LTMA, which defines "Register" as follows:
Register means the Register of Land Values kept under section 14CC of the Valuation of Land Act 1916.
1. He concludes from this that parcels of land are identified for purposes of calculating land tax by reference not to their title particulars under the Real Property Act 1900 but rather to their respective registration identities in the Register of Land Values, which are not necessarily congruent with their title particulars.
2. He then looks to the entries for Property 410 and Property 412 in the Register of Land Values, which were provided in the Supplementary Tender Documents, at pages 3 and 1 respectively. These, he says, demonstrate that Property 410 and Property 412 are different parcels of land for purposes of determining their respective taxable values under section 9 of the LTMA. The Tribunal notes here that those entries describes Property 410 and Property 412 as each being "PT 1/78915", being the lot and plan number which corresponds to their collective title reference under the Real Property Act 1900. The letters "PT" are a commonly used abbreviation in New South Wales land law for the word "part".
3. Finally, he says, since:
1. under Clause 2 of Schedule 1A of the LTMA a taxpayer can have only one principal place of residence; and
2. the parcel of land which comprises Property 410 is the Applicant's principal place of residence,
it necessarily follows that the distinct parcel of land which comprises Property 412 cannot also be the Applicant's principal place of residence, despite it being on the same title as Property 410.
The Tribunal agrees with this analysis. It is consistent with the applicable statutory provisions, and the evidence [13] as to the respective statuses of Property 410 and Property 412 in the Register of Land Values.
Accordingly, in the Tribunal's assessment, the second issue must also be determined contrary to the Applicant's arguments.
[7]
The third issue: Whether the Respondent's conduct in issuing several inconsistent successive notices of assessment should entitle the Applicant to a measure of relief from the land tax to which he was ultimately assessed under the Decision
The Applicant raises in his Application for administrative review two broad arguments, that:
1. "Revenue NSW knew all along that this property [viz Property 412] wasn't his main residence (it is adjacent to [Property 410] which is the main residence). The land owner, Mr Kafes has been paying land tax on [Property 412] since 2009 ....It does not seem fair to issue a nil land tax assessment notice for 2020 and then turn around and issue an amended land tax assessment which includes this property, and a share of another property ([Property 241]). The inclusion of [Property 241] has not been due to new information received by you. Therefore Revenue NSW have made an error, simple. It isn't fair that the landowner is subjected to constant confusion with this property [Property 412]".
2. "The Client [identification details omitted] which is a family partnership, should be assessed in its own right as a partnership. The land owned being [Property 241] was under the threshold for 2021 ... He feels this is unjust that he is constantly paying land tax. He already pays annual land tax under the partnership [identification details omitted]. He has [paid assessments for this Client ID to date".
The Respondent replies as follows:
1. The Respondent is authorised under section 9(1) of the TAA to " ... make one or more reassessments of a tax liability of a taxpayer", subject to the restriction contained in section 9(3), that he ".... cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability ..". The reassessments are in compliance with these provisions.
2. The Applicant did not disclose in his completed Land Tax Questionnaire dated 9 May 2021 his ownership of Property 241. The Respondent is entitled to rely on the information disclosed to him but when he discovers that information provided is inaccurate, there is no restriction on his ability to issue a reassessment in accordance with section 9 of the TAA.
3. The Applicant's liability to land tax arises under the LTMA, not at the discretion of the Respondent. Hence, any delay in issuing assessments or reassessments is not a basis to challenge an assessment or reassessment.
4. Notions of unfairness or special circumstances are irrelevant when considering the validity of assessments. The Respondent's duty is to administer the legislation which falls within its functions, and unless that legislation provides for such notions to be applied in its administration, the Respondent has no relevant discretion [14] .
The Tribunal agrees with the Respondent's submissions, and notes that:
1. They address sufficiently the first set of arguments made by the Applicant.
2. The second broad argument made, to the extent not addressed by those submissions, is adequately dealt with by the Tribunal's findings in relation to Property 241. That the family partnership may have lodged land tax returns is, for the reasons outlined above, irrelevant to the Applicant's own liability for land tax in relation to Property 241.
The Tribunal accepts that the Applicant may have found the process of assessment and reassessment confusing and frustrating. However, the Respondent has waived all interest to which it was entitled for late payment of land tax in relation to Property 241 and Property 412, totalling $1,732.02.
[8]
Conclusion
The Tribunal does not consider that the Applicant has demonstrated to the standard required that the Decision is incorrect, and consequently it must conclude that the Decision is the correct and preferable one.
[9]
Orders
The Tribunal makes the following order:
1. The date for lodging the Applicant's Application for administrative review in this matter be extended to 21 January 2022
2. The Decision under review is confirmed.
Applicant's statement attached to email dated 29 March 2022 from Ms Liz Doulkeridis.
Section 58 Documents Tab 9(a).
Section 58 Documents, Tabs 1(f), (g) and (h).
Supplementary Tender Documents
Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222.
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: 01 December 2022