1. The decision of the Commissioner in relation to, and assessment nos. 76628525 and 13196294 for, the 2013 and 2014 land tax years are confirmed.
2. The decision of the Commissioner in relation to the 2012, 2015 and 2016 land tax years is set aside and assessment nos. 71283914, 13196286 and 13196278 are varied to nil.

1. On 15 May 2018, the Commissioner of State Revenue (Commissioner) referred five applications to the Tribunal at the request of the applicant, Ms Mary Kerruish, under the Taxation Administration Act 1997 (Vic) (TA Act).
2. Ms Kerruish seeks review of the Commissioner's decision[1] to disallow her objection[2] to the Commissioner's assessments of land tax under the Land Tax Act 2005 (Vic) (LT Act) in respect of a property owned by Ms Kerruish at 55 Queen Street, Altona (Relevant Property):-

1. In a Statement of Legal Contentions dated 13 August 2018 (ASLC), Ms Kerruish indicated that she also objected to the assessment the Commissioner had subsequently issued for the 2017 land tax year. However, as explained to Ms Kerruish at the hearing, as there has been no referral of that assessment to the Tribunal, I do not have any jurisdiction to deal with it.
2. In the ASLC, Ms Kerruish also asked for interest on overpayments - in relation to the assessments paid by her - to be awarded. However, again as explained at the hearing, the Tribunal does not have any power to make an award of interest.[3]
3. On a review or appeal of a land tax determination, the taxpayer has the onus of proving his or her case.[4]
4. Ms Kerruish contends that the Relevant Property was her principal place of residence for the relevant land tax years, and so exempt from land tax.[5]
5. She also indicated that, if she were unsuccessful on that point, she wished to rely on section 56 of the LT Act, which provides relief for temporary absences. While section 56 was not raised in Ms Kerruish's objection,[6] it was considered by the Commissioner in making his determination. It is unclear whether it is in fact an additional ground, or should be regarded as forming part of the Ms Kerruish's claim that the Relevant Property is exempt as her principal place of residence. In any event, as no objection was raised by the Commissioner, to the extent necessary I grant leave for this additional ground to be pursued.
6. The Commissioner's main case is that Ms Kerruish has failed to discharge her onus of proof that she resided at the Relevant Property as her principal place of residence, and that her principal place of residence during each of the relevant periods was in fact at a property owned by her daughter Ms Amanda Kerruish (AK) in Tarneit.
7. On 22 October 2018, I heard the applications, including evidence and submissions from Ms Kerruish and the Commissioner. Ms Kerruish called two witnesses - her accountant (Mr James Vamvoukis) and her daughter (AK). The Commissioner did not call any witnesses. At the conclusion of the hearing, I reserved my decision.

The land tax provisions relating to a person's principal place of residence

1. The LT Act imposes land tax in respect of each year on all taxable land in Victoria, with the owner of taxable land being liable to pay land tax.[7]
2. A taxpayer is to be assessed for land tax on the total taxable land of which he or she was the owner on midnight on 31 December immediately preceding that year.[8]
3. Taxable land is defined in the Act to mean all land that is not exempt land.[9]
4. Ms Kerruish relies upon the exemption known as the principal place of residence exemption contained in section 54(1) of the LT Act that, so far as relevant, reads as follows:
   • (1) Subject to this Division, the following land is exempt land -
     • (a) land owned by a natural person that is used and occupied as the principal place of residence of that person;

(2) Subject to section 55, subsection (1)(a) or (b) only applies if the land has been used and occupied as the principal place of residence of the owner or vested beneficiary -

• (a) since 1 July in the year preceding the tax year; ...

1. The LT Act does not define the expression 'principal place of residence'. However, in Chief Commissioner of State Revenue v Ferrington,[10] the New South Wales Administrative Decisions Tribunal Appeal Panel identified a number of common principles in determining a person's principal place of residence, as follows:-

Firstly, the words "principal place of residence" should be given their ordinary meaning in the context in which they appear...

Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling...

Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue...

Fourthly, to occupy a home as his or her place of principal residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose...

Fifthly, the short length of a person's residence, while relevant, is not determinative of the issue...

Sixthly, the reason for a person's departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances... [11]

1. Although that decision was made in the context of the first home owners grant in New South Wales, those principles have also been applied in a number of VCAT decisions concerning the principal place of residence exemption for land tax.[12]
2. Two further relevant principles should be mentioned.
3. First, in considering whether particular land is used or occupied as the principal residence of a person, account must be taken of every place of residence of the person.[13] It follows from that, and the ordinary meaning of the word 'principal', that 'where a taxpayer has access to two or more properties it will be a question of fact and degree to determine if a particular property has been proven to be the principle (sic) place of residence of that taxpayer'.[14]
4. Second, the use of the land must be considered for each particular year in question rather than aggregating its use over all of the years in contention.[15]
5. Section 56 of the LT Act is a saving provision which, in broad terms, allows a taxpayer to maintain the principal place of residence exemption for absences of up to 6 years. So far as relevant, it reads as follows:

(1) For the purposes of this Division, land is taken to be used and occupied as the principal place of residence of a person despite the person's absence from the land if the Commissioner is satisfied -

(b) that the person intends to resume use or occupation of the land as his or her principal place of residence after the absence; and

(c) that, in respect of the period of absence, no other land is exempt land under this Division or under a law of another jurisdiction (whether in or outside Australia) as the principal place of residence of the owner or, in the case of a trustee, as the principal place of residence of a vested beneficiary in relation to the land.

(3) Land will not be taken to be used and occupied as the principal place of residence of a person under this section unless the conditions set out in subsections (4) and (5) are both satisfied.

(4) The condition in this subsection is that the land -

(a) was exempt land under section 54 immediately before the person's absence; or

(i) in the case of an owner - by the owner as his or her principal place of residence for a period of at least 6 consecutive months immediately before the owner's absence; ...

(5) The condition in this subsection is that the owner or trustee has not rented out the land for a period which is 6 months or more, or for periods which total 6 months or more, in the year preceding the tax year.[16]

(6) The maximum period for which land can be taken to be used and occupied as the principal place of residence of a person despite the person's absence from the land under subsection (1) is 6 years from the date of the person's absence.

1. In Ward v Commissioner of State Revenue,[17] Senior Member Davis indicated that his 'researches into the meaning of the word "temporary", would suggest in the context of the relevant legislation to mean "leaving a particular place with the intention of returning".'[18]

Background regarding Ms Kerruish's family and the Relevant Property

1. The background to Ms Kerruish's family and the Relevant Property is set out in a letter she sent to the Commissioner dated 28 August 2016.[19] For the most part, there is no contest as to that background.
2. The Relevant Property was built by Ms Kerruish's parents for their 'extended family to live together which [they] did for a period of time until [her] parents divorced in 1994', following which her mother remained living in the property (in later years, with a friend - Mr Edward Wass).[20]
3. The Relevant Property is a large house on 3 levels comprising:[21]

Bottom floor - Double garage, guest bedroom + ensuite, study, and very large rumpus / dining / kitchen area for family special occasion gatherings and BBQ's.

Middle floor - Main body of house which my husband and I had occupied with the girls with kitchen, living, 3 bedrooms and bathroom.

Top floor - Smaller section with living, 2 bedrooms + bath.

1. Ms Kerruish's father passed away in 2006, and her mother in 2007. In her will, Ms Kerruish's mother bequeathed the Relevant Property (among other properties) to Ms Kerruish.
2. Ms Kerruish initially moved back into the Relevant Property after her mother's passing in October 2007, but then had to vacate because her brother contested their parents' wills. Mr Wass (who had been living with Ms Kerruish's mother at the time of her death) remained in occupation and invited a couple of his friends ('Johnny and Lorraine')[22] to live there with him.
3. In around July 2009, Ms Kerruish was diagnosed with non-Hodgkin's lymphoma_,_ but did not have to commence treatment at that time.
4. It was not until February 2010 that the will dispute was resolved and Ms Kerruish became the owner of the Relevant Property. She moved back to the property in June 2010.
5. In about June 2011, Ms Kerruish's lymphoma had reached a stage where she needed to start treatment, involving 6 months of intensive chemotherapy, followed by another 2 years of maintenance chemotherapy. During this period, she left the Relevant Property to stay with AK and her other daughter (Mrs Hayley Rathbone) in Tarneit. This was so that her daughters could care for her during the treatment.
6. In around November 2011, Mr Wass moved out of the Relevant Property, and Ms Kerruish started charging rent to Johnny and Lorraine.
7. The facts thereafter are the subject of debate, but it is relevant to set out an extract from Ms Kerruish's letter of 28 August 2016:[23]

About JUN 2013 - My maintenance chemo finished also with good results. I felt better, but very weak. I asked Johnny + Lorraine to move out. They had let Queen Street deteriorate badly and the garden [was] ruined while I was sick.

About Oct 2013 - Johnny & Lorraine moved out and I tried to fix the damage, so that I could rent it for a while again. This has been very slow and the house has been empty till now.

Currently - The house is almost liveable again. My daughter and I are planning to both move into Queen Street as soon as the repairs are finished + the house livable (sic) again.

I felt that I have not been well enough to move into Queen St by myself. I would prefer to share it with my daughters.

1. As indicated, AK attended the hearing to give evidence. She confirmed that she was still living in Tarneit.
2. Ms Kerruish's other daughter did not attend the hearing. However, Ms Kerruish filed a letter from Mrs Rathbone dated 4 August 2018.[24] That letter gives Mrs Rathbone's address as a property in Yarraville.
3. In her evidence, Ms Kerruish said that Mrs Rathbone and her husband were now living at the Relevant Property.

1. The statement of legal contentions filed by Ms Kerruish includes some 45 attachments. In the ASLC, she indicates that her 'main arguments are contained in the document labelled: My response statements [Item 44]'.
2. Ms Kerruish contends that there has been a 'huge misunderstanding' arising from her letter of 28 August 2016 and that she only lived with her daughter temporarily while she was sick, and in fact returned to the Relevant Property in late 2011 after her (intensive) chemotherapy.[25] In her response she says:[26]

My home at 55 Queen Street is the only property which I have listed as my PPR.

My car registrations confirm my car resides at my home for the entire period under investigation in Queen Street.

My home and contents insurances insured address for the entire period is Queen Street.

My electricity gas and water bills for the entire period under investigation are at Queen Street.

The electoral offices have me enrolled at Queen Street and except for the places I declared when I was sick and staying with my daughter etc. My account has been surprisingly accurate considering these movements were a long time ago and I was very sick.

Drivers Licence for the entire period is Queen Street.

Her home and contents insurances insured address for the entire period is Tarneit

Her electricity gas and water bills for the entire period under investigation are at Tarneit.

I don't know what other evidence is available to prove one lives in their home.

1. The Commissioner tendered a folder[27] containing some 106 documents in support of the land tax assessments which had been raised.
2. The Commissioner also tendered a redacted water bill from South East Water issued in April 2008,[28] and a print out of an AGL website headed 'Victorian electricity benchmarking' which appears to have been printed on 14 April 2011.[29]
3. Ms O'Gorman (appearing for the Commissioner) submitted that the 28 August 2016 letter from Ms Kerruish was clear that she was then living at AK's property in Tarneit and had not lived at the Relevant Property since June 2011. She said that it was significant that, despite the detail included in the 28 August 2016 letter about her movements over a lengthy period, Ms Kerruish did not make any reference to moving back to the property after June 2011.
4. Ms O'Gorman said there were four key pieces of evidence to suggest that Ms Kerruish was in fact living in Tarneit from June 2011 to December 2015 as follows:
   • 28 August 2016 letter - this was provided soon after the State Revenue Office requested information about when Ms Kerruish 'lived at 55 Queen Street, Altona during the period 31 December 2011 to current as your [principal place of residence]'.[30] It was submitted by Ms O'Gorman that this is the 'best evidence about where the applicant thought she was living'.
   • Incoming passenger card dated 23 June 2014[31] - this listed Ms Kerruish's 'intended address in Australia' on her return from a holiday in Europe as AK's property in Tarneit.
   • Address provided to the Australian Securities and Investments Commission (ASIC) on 11 December 2014[32] - when registering a new company, Seikka Pty Ltd, Ms Kerruish provided the Tarneit address as her address as the sole director, secretary and shareholder of the company.
   • Inconsistency in evidence about renovations - In her oral evidence, Ms Kerruish said that the Relevant Property was being renovated between May and September 2016, while her daughter (AK) gave evidence that it was a period of six months in 2017. Ms O'Gorman suggests that an explanation for the inconsistency is that Ms Kerruish had in fact been living with her daughter since 2011 and so the exact dates of commencing and finishing the renovations were not significant or memorable.
5. Ms O'Gorman also submits that the indirect evidence, such as that relating to usage of utilities, points in the same direction, while the evidence given by Ms Kerruish and AK should be given little weight given certain inconsistencies in the evidence given by Ms Kerruish and the poor recall of her daughter.
6. In relation to section 56 of the LT Act, the Commissioner says Ms Kerruish:
   • only lived at the Relevant Property for a short period from June 2010 to June 2011, which was temporary occupation rather than occupation as her principal place of residence; and
   • rented out the Relevant Property to 'Johnny and Lorraine' between October 2011 to October 2013, which:
     • is a period of more than 6 months during the 6 year period, preventing the application of the saving provision; or
       • if each land tax year needs to be considered separately, is fatal for the 2012, 2013 and 2014 land tax years.
7. In the latter respect, the Commissioner says it does not matter whether Ms Kerruish rented out the whole or part of the property.

1. In my view, subject to consideration of the saving provision in section 56 of the LT Act, Ms Kerruish has failed to discharge the onus of proof to show that, on the balance of probabilities, the Relevant Property was her principal place of residence for the 2012 to 2016 land tax years.
2. There is little doubt that Ms Kerruish subjectively regarded the Relevant Property as her home, having been built by her parents as a multi-generational family home. However, as Ferrington makes clear, to be a principal place of residence, the property must be used and occupied as such.
3. I accept Ms Kerruish's evidence that she lived in the property from June 2010 to June 2011, when she left to live with one or both of her daughters due to the chemotherapy she was then undertaking.
4. However, I do not accept that Ms Kerruish returned to live at the Relevant Property as her principal place of residence at any time from June 2011 to December 2015. In coming to this conclusion I take into account the following matters:
   • The 28 August 2016 letter is consistent with Ms Kerruish not returning to live at the property during that period. I do not find it credible (as Ms Kerruish attempted to suggest) that, when she said the house needed to be made 'liveable' again after 'Johnny and Lorraine' moved out, she meant to refer to the bungalow they occupied. The references to the 'house has been empty till now' and that 'my daughter and I are planning to both move into Queen Street as soon as the repairs are finished and the house livable (sic) again' can only mean the property as a whole.
   • Apart from things like her electoral details and her driver's licence,[33] which remained at the Relevant Property and can probably be explained by oversight due to her illness, there is scant contemporaneous objective evidence to support her suggestion that she moved back to the Relevant Property in late 2011.
   • There is contemporaneous objective evidence - at points through that period - to suggest that she was in fact living in Tarneit with her daughter, including the incoming passenger card of June 2014 and the ASIC information of December 2014.
   • The evidence regarding the utilities usage is not consistent with the usage that would be expected for even a single person residing at the premises. Ms Kerruish attempted to explain that the average usage was brought down due to her frequent holidays to Queensland to visit a friend, as well as overseas. However, there was only limited evidence of interstate visits or holidays abroad.[34]
   • The contradictory accounts (as between Ms Kerruish and AK) as to the time that the renovations to the Relevant Property were being undertaken. When I asked Ms Kerruish whether she had brought a copy of the building contract that might shed some light on the situation, she said that she didn't think it would be necessary.
5. In relation to the application of section 56, the un-contradicted evidence is that Ms Kerruish moved back to the Relevant Property in June 2010. Although a relatively short period, there is nothing to suggest that she would not have continued to live at the property but for the requirement to start chemotherapy in June 2011. In that context, consistent with the principles discussed in Ferrington, I find that she was living at the Relevant Property as her principal place of residence immediately prior to June 2011.
6. I also accept Ms Kerruish's evidence that she always intended to resume occupation of the Relevant Property. The evidence supports her continuing to regard it as her home and, despite some ambivalence on the part of AK, to move back in with her daughters once she had recovered from her illness, had repaired the damage left by 'Johnny and Lorraine' and otherwise brought the property up to modern standards (eg. plastering over exposed internal brickwork).
7. As such, her absence can be seen as 'temporary' in the sense used in the provision and explained by Senior Member Davis in Ward.
8. In relation to renting, Ms Kerruish's evidence is that she did not charge any rent to Mr Wass, or his friends, while Mr Wass stayed in the Relevant Property. However, that changed in November 2011, when Mr Wass moved out and Ms Kerruish started charging rent to 'Johnny and Lorraine'. This continued until October 2013. This is consistent with the rental property schedules from Ms Kerruish's income tax returns for the years ended 30 June 2013 and 30 June 2014[35] which show she received rental income of $13,000 and $4,000 respectively (although, curiously, both schedules suggest the property was rented for the full financial year). In the year ended 30 June 2015,[36] she only disclosed rent of $720. This suggests that the Relevant Property was not rented for any considerable period (although, again, in the tax return she represented that it was rented for 52 weeks).
9. I accept the contention of the Commissioner that section 56 of the LT Act only requires consideration of whether the land has been rented, not whether it is the whole or part of the premises. This is consistent with the evident purpose of the provision to deny a person the principal place of residence exemption during a temporary absence if the person chooses to turn the property into an income producing asset.
10. However, I do not accept the contention that the principal place of residence exemption is denied if the property is rented out for 6 months or more at any time during the period of absence. In my view, it is clear that the provision applicable from the 2013 land tax year requires the position to be assessed on an annual basis, by reference to events in the full calendar year preceding the tax year. This approach is also consistent with the general requirement - as explained in Ward - to consider the principal place of residence exemption annually. Although the provision applicable for the 2012 land tax year was more ambiguous in referring to renting the land 'for a period of 6 consecutive months or more in a particular year', as land tax is imposed for a given land tax year based on the state of facts as at 31 December of the preceding year, it seems to me that there is no real difference in the test for the 2012 land tax year.
11. Having regard to the (un-challenged) facts set out in paragraph [50], it is clear that Ms Kerruish is not entitled to the benefit of section 56 of the LT Act to satisfy the principal place of residence exemption in relation to:
    • the 2013 land tax year, as she rented out the property for the full period from 1 January 2012 to 31 December 2012; and
    • the 2014 land tax year, as she rented out the property for the period from January to October 2013, being a period of more than 6 months.
12. It is also equally clear that she did not rent out the property for any significant period from 1 January 2014 onwards. As the relevant periods are all within 6 years of the commencement of her absence from the Relevant Property (in June 2011), she is entitled to the benefit of section 56 of the LT Act to satisfy the principal place of residence exemption in relation to the 2015 and 2016 land tax years.
13. That leaves the 2012 land tax year. In relation to that year, she only started charging rent from November 2011 so that, if a property is only considered to be 'rented out' where rent is charged, this would be a period of less than 6 months and so Ms Kerruish would also be entitled to the benefit of section 56 of the LT Act for that year.
14. I have not been referred to, nor able to find, any decision on this point. There is no additional guidance in the explanatory memorandum to the State Taxation and Other Acts Amendment Bill 2012, which introduced subsection 56(5).
15. As the legislature has chosen to refer to the property being 'rented', I consider that there must be at least some consideration received for the use of the property in order for it to be regarded as being 'rented out'.[37] As this was not the case in respect of the Relevant Property for 6 months or more during the period from 1 January to 31 December 2011, it follows that Ms Kerruish is entitled to the benefit of section 56 of the LT Act to satisfy the principal place of residence exemption for the 2012 land tax year.
16. Based on the above, I confirm the land tax assessments issued to Ms Kerruish for the 2013 and 2014 land tax years, but vary the land tax assessments for the 2012, 2015 and 2016 land tax years to nil.

[3] Interest may be payable under the Taxation (Interest on Overpayments) Act 1986 (Vic).

[4] TA Act s 110. The standard of proof is the balance of probabilities: Rainn Pty Ltd v Commissioner of Land Tax [2016] VCAT 402 [8].

[6] A taxpayer is limited to the grounds of objection, without leave of the Tribunal: TA Act s 109.

[10] [2004] NSWADTAP 41; (2004) 57 ATR 170.

[11] Ibid para [42] (references omitted).

[12] See, for example, Ward v Commissioner of State Revenue [2016] VCAT 1307.

[14] Luxon v Commissioner of State Revenue [2016] VCAT 1466 [55].

[15] Ward v Commissioner of State Revenue [2016] VCAT 1307 [33].

[16] This version of section 56(5) of the LT Act applies to the 2013 to 2016 land tax years. For the 2012 land tax year, the equivalent provision provided that the section does not apply to a temporary absence 'if the owner or trustee rents the land for a period of 6 consecutive months or more in a particular year' (former s 56(3)(b)).

[17] [2016] VCAT 1307.

[18] Ibid [41], citing Hafza v Director-General of Social Security (1985) 68 ALR 674 at [682-683].

[19] Exhibit R1 - documents lodged with the Tribunal pursuant to Clause 89(1) of Part 19 of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 (T Documents)) at tab 47.

[22] Based on information filed by the Commissioner, this may be Mr John McGeary and Ms Lorraine Lyttle: T Documents T97 and T98.

[26] Exhibit A1, attachment 44 (references to other documents omitted).

[35] Exhibit A1, attachments 22 and 23.

[37] Some limited support for this view comes from the decision of the ACT Civil and Administrative Tribunal in Zimmerman v Commissioner for ACT Revenue [2018] ACAT 93 where it was held that voluntary payments made by the land owner's son did not amount to rent for the purpose of the ACT land tax legislation.