Maclachlan v Chief Commissioner of State Revenue [2025] NSWCATAD 284;

1. Pursuant to s7 of the LTMA, land tax is levied on the taxable value of all land in New South Wales unless it is exempt under the LTMA.
2. Land tax is charged on land owned at midnight on the 31st day of December immediately preceding the year for which the land tax is levied: s8 LTMA.
3. Section 10 (1)(r) LTMA provides:

10 Land exempted from tax

(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

1. The 'principal place of residence exemption' ('PPR Exemption') is established by Part 2 of Schedule 1A to the LTMA. It applies where residential land is used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose.[2]
2. The PPR exemption is set out in the LTMA, Sch 1A, cl 2. During the Tax Years it provided as follows:

2 Principal place of residence exemption

(1) 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, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:

(a) a parcel of residential land, or

(b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots.

(2) 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, or

(b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence.

(3) If the owner of land is entitled to the exemption conferred by this Schedule, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption.

(4) The exemption conferred by this Schedule is referred to as the principal place of residence exemption.

(5) The principal place of residence exemption is subject to the restrictions set out in Part 4.

1. "Residential land" is defined in the LTMA, Sch 1A, cl 3 which, during the Tax Years, provided as follows:

3 Residential land - meaning

(1) In this Schedule, residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes, other than a building or buildings:

(a) comprised of strata lots or residential units, or

(b) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner, or

(c) from any part of which income is derived.

(2) Land does not cease to be used and occupied as provided by subclause (1) by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the buildings are, designed, constructed or adapted.

**Note - **

Clause 4 allows one residential occupancy to be disregarded in applying the principal place of residence exemption. Clause 5 allows the use of land for purposes ancillary to a business conducted at a different place to be disregarded in certain circumstances.

1. Schedule 1A, cl 6 contains the PPR exemption for unoccupied land which during the Tax Years provided:

6 Concession for unoccupied land intended to be owner's principal place of residence

(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.

**Note - **

It is an offence under section 55 of the Taxation Administration Act 1996 to make a statement to a tax officer, or give information to a tax officer, orally or in writing, knowing that it is false or misleading in a material particular.

(2) This clause does not apply unless:

(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and

(b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and

(c) the intended use and occupation of the land is not unlawful.

(3) This clause applies in respect of the assessment of a person's ownership of land only in the period of:

(a) 4 tax years immediately following the year in which the person became owner of the land, or

(b) if, after the person became owner and before the building or other works physically commence, the land is used and occupied for residential purposes by another person - 4 tax years immediately following the tax year in which the other person ceases to use and occupy the land for those purposes.

(4) Without limiting subclause (3)(a):

(a) this clause does not apply in respect of the assessment of a person's ownership of land in a period referred to in subclause (3) (b) unless the Chief Commissioner is satisfied that, by the end of the first of the 4 tax years concerned:

(i) the building or other works will be, or have been, physically commenced, or

(ii) significant steps will be, or have been, taken to enable those works to physically commence, and

(b) if the building or other works are not physically commenced by the end of that tax year (or the Chief Commissioner is not satisfied that, by the end of that tax year, significant steps have been taken to enable those works to physically commence):

(i) the principal place of residence exemption applying by operation of this clause to the land is taken not to have applied to the land in respect of that tax year (unless subclause (3) (a) applied to the assessment in that tax year), and

(ii) land tax liability is to be assessed or reassessed accordingly.

(5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least 6 months.

(6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.

(6A) For the purposes of section 9(3)(c) of the Taxation Administration Act 1996, any reassessment under this clause is authorised to be made more than 5 years after the initial assessment.

(7) This clause does not apply in respect of land owned by a person if:

(a) the person or any member of the person's family (within the meaning of clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 9D or under this Schedule, or

(b) the person owns land outside New South Wales that is the principal place of residence of the person or a member of the person's family (within the meaning of clause 12), or

(c) the land, or the land if combined with any adjoining land of which the person is an owner, is capable of having more than 2 residences or residential units lawfully built on it.

(8) For the purposes of this clause:

unoccupied land means land that is not being used or occupied for any purpose.

1. Pursuant to s 100(3) of the TAA, the Applicant bears the onus of proving his case. That principle has previously been described by the Tribunal as being of "fundamental importance": Byrne v Chief Commissioner of State Revenue.[3] The requisite standard of proof is the balance of probabilities: B & L Linings Pty Limited v Chief Commissioner of State Revenue.[4]
2. There is no onus or obligation on the Chief Commissioner to demonstrate that his assessments are correctly made: Federal Commissioner of Taxation v Dalco;[5] Gauci v Federal Commissioner of Taxation.[6] Instead, the starting point is that there is no entitlement to an exemption or concession: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD).[7]

1. The only issue raised by this application is whether the Applicant is entitled to the benefit of the PPR Exemption afforded by clause 6 of Schedule 1A to the LTMA.

1. The Applicant became the registered proprietor of the Property on or about 28 June 2021.[8]
2. On 30 August 2021, the Property was leased to tenants.[9]
3. On 13 February 2022, the tenants vacated the Property.[10]
4. On 19 April 2023, the Applicant sold the Property.[11]
5. At no time during his ownership of the Property did the Applicant reside there:
   • On 11 June 2021, prior to settlement of his purchase, the Applicant and his immediate family moved to Queensland;[12]
   • On 1 November 2021, the Applicant and his immediate family returned to Sydney but took up residence at a property in Balmain ('first Balmain property') as tenants;[13]
   • When the tenants vacated the Property, the Applicant did not move into it;[14] and
   • On or about 5 June 2023, the Applicant moved from the Balmain property to another property in Balmain ('second Balmain property') coinciding with his purchase of that property.[15]
6. On 30 October 2024, the Respondent issued a Notice of Investigation - Land Tax in respect of the Property.[16]
7. On 11 November 2024, the Applicant lodged a Land Tax Registration Return which indicated that he was the owner of the second Balmain property and claimed an exemption in respect of land tax over that property.[17]

1. On 13 November 2024, the Respondent issued the Assessment in the sum of $19,490.65 ('Land Tax Due').[18] This sum consisted of tax payable in respect of the 2022 Tax Year in the amount of $9,188 and, in respect of the 2023 Tax Year, in the amount of $10,302.65. The Land Tax Due was payable by 13 January 2025, subject to an offer of a discount if paid by before the due date. The Applicant did not at that time pay the Land Tax Due.
2. On 27 February 2025, the Respondent issued a Final Notice - Overdue Land Tax in the sum of $19,782.46.[19] That figure reflected the Land Tax Due plus interest calculated in accordance with the TAA.
3. On 11 March 2025, and before the due date indicated in the Final Notice, the Applicant entered into an instalment arrangement for the payment of the Land Tax Due. The Applicant made an initial payment of $3,898.20 on 31 March 2025 but no payments thereafter. The plan was subsequently revoked on 30 June 2025 due to the tax default.

1. On 10 January 2025, the Applicant lodged an objection under the TAA in respect of his obligation to pay the Land Tax Due ('Objection').[20]
2. On 26 February 2025, the Respondent disallowed the Objection.[21]

1. The material before the Tribunal comprises:
   • A bundle of documents marked 'Documents filed pursuant to section 58 of the Administrative Decision Act 1997' ('s 58 Documents') filed on 23 May 2025
   • Respondent's submissions filed on 17 July 2025 ('RS')
   • Respondent's further submissions filed on 5 September 2025 ('RFS')
   • Applicant's submissions filed on 21 July 2025 ('AS')
   • Applicant's further submissions filed on 28 August 2025 ('AFS')
   • An unpaginated bundle of documents collated by the Applicant and filed on 20 June 2025 ('AB')

1. The Applicant's argument is that the Property was unoccupied due to a 'genuine intent to renovate and occupy it.' The Property was '[r]endered unsafe for habitation with an infant until works were completed.' The renovation works were '[t]he subject of engagement with contractors, architects, and the issuing of a Compliance Development Certificate in June 2022.[22]
2. The Applicant relies on his 'detailed evidence' that the Property was not safe for habitation for a young child due to:[23]
   • aged and unsafe electrical wiring
   • asbestos and mould
   • inadequate bathroom and plumbing
   • trip hazards and general disrepair
3. The Applicant submitted a written 'letter of intent' provided by Diversified Group dated 17 June 2022 which identified asbestos requiring removal in the following locations of the Property:[24]
   • the laundry and the rear shed (in their entirety)
   • internal wall and ceiling linings (confirmed asbestos)
   • external eaves
   • the electrical switchboard
4. The Applicant says that these safety concerns were 'fundamental' to his decision not to immediately move into the Property. The safety of his family, particularly his infant daughter, was 'a paramount consideration'. He contends that 'the law should not penalise such caution.'[25]
5. The Applicant points to the 'extensive timeline of development engagement' as follows:[26]
   • builders and architects engaged within weeks of contract exchange
   • design planning and CDC obtained by June 2022
   • interim rental arrangements due to construction delays
6. The Applicant contends that clause 6(5) allows for loss of exemption only where failure to occupy is without "just cause". His family's inability to move into the Property 'was due to factors outside [their] control' specifically:[27]
   • protracted delays from certifiers and contractors
   • ongoing safety hazards
   • COVID-era constraints
7. The Applicant says that this 'sequence of events' amounts to "just cause" under clause 6(5).[28]
8. The Applicant argues that his circumstances are not comparable to similar cases for reason that the Property was 'acquired with intent to occupy', there were '[r]apid and sustained efforts to prepare for occupation' and 'personal and family safety considerations' as well as '[c]ompliance with planning regulations and delays through not fault of [his own].'[29]
9. The Applicant contends:[30]

[t]he PPR framework exists to protect genuine homeowners, not to compel hazardous conduct. Where objective safety risks exist, purposive interpretation and basic public-health principles require that "occupation" not be read so literally as to incentivise living in an asbestos-affected home with a baby. It is perverse to penalise me for choosing the only responsible path. If the position were that I 'should have' moved an infant into a dwelling with known asbestos (including internal linings and the switchboard) merely to preserve a land-tax outcome, that would be absurd and contrary to public policy. The law avoids absurd results.

1. The Applicant asks that the Tribunal find:[31]
   • that strict physical occupation was not reasonably available due to documented health hazards, and that [his] approach was the only safe and rational course.
   • that the Property be treated in a manner consistent with the PPR exemption's purpose, or that appropriate discretion be exercised to prevent an outcome that punishes risk-averse, child-safe conduct.
2. In conclusion, the Applicant submits:[32]
   • all criteria under Clause 6 of Schedule 1A were satisfied
   • the intent to occupy was genuine and well-documented
   • the barriers to occupation were temporary, reasonable and justified
   • the exemption should be applied
   • the land tax assessments for 2022 and 2023 should be set aside.

1. The Respondent contends that clause 6 extends the PPR Exemption only to unoccupied land only. Between 30 August 2021 and 13 February 2022, the Property was leased to tenants and so was not "unoccupied land" within the meaning of clause 6(8) of Schedule 1A.[33] As the Property was not unoccupied land on 31 December 2021, and was not being used by the Applicant as his PPR from 1 July 2021, the Applicant was liable for land tax in the 2022 Tax Year.[34]
2. The Respondent accepts for the purposes of these proceedings that the Applicant can demonstrate that from 13 February 2022 onwards the Property was unoccupied land because the Applicant intended to carry out building or other works necessary to facilitate his intended use and occupation of the Property as his PPR.[35] Accepting that from 13 February 2022 until the Property was sold by the Applicant on 19 April 2023 the Property was "unoccupied land" within the meaning of clause 6(8) of Schedule 1A, the effect of clause 6(5) is that the Applicant is not entitled to the benefit of the PPR Exemption.[36] However, clause 6(5) provides, without exception, that the PPR Exemption is revoked in circumstances where the Applicant did not in fact actually use or occupy the Property as his PPR.[37]
3. Insofar as the Applicant continues to press for an application of the concession in clause 6 of Schedule 1A to the LTMA in the 2023 Tax Year based on the presence of asbestos in the dwelling on the Property, the Respondent notes:

(a) Clause 6(3) of Schedule 1A provided that the concession would apply to the 4 tax years following the Property becoming unoccupied (but subject to an intention to be occupied as the owner's PPR)

(b) The Property became "unoccupied" within the meaning of clause 6(8) in the 2022 Tax Year on or about 13 February 2022 when the Applicant's tenants vacated it and accordingly the concession would only apply in the 2023, 2024, 2025 and 2026 Tax Years

(c) The effect of clause 6(5) of Schedule 1A is that if land is not actually used or occupied as the owner's PPR in that period, the concession is revoked

(d) The effect of clause 6(6) of Schedule 1A is that that revocation has effect 'ab initio' and a reassessment is required

(e) There is no reference in any part of clause 6 to any variation of the PPR Exemption or concession arising from the particular reason for which an owner does not actually use and occupy land as their PPR

(f) Properly analysed, the reason the Applicant did not use and occupy the Property as his PPR within the time period allowed was not because of the presence of any asbestos but rather because he sold it in the 2023 Tax Year. At the time of sale, the Applicant still had three years in which to resolve the issue of any asbestos whether through targeted removal, a knockdown-rebuild or indeed by leaving it undisturbed in situ if that were an appropriate course.

1. The Respondent submits that the Applicant's reassessed liability for land tax in respect of the Property arises out of an economic decision to pursue the use and occupation of other land without ever having actually used and occupied the Property as his PPR. In that circumstance the PPR Exemption and concession afforded by clause 6 must be revoked.[38]
2. Nothing in the LTMA or the PPR Exemption established by Schedule 1A compels hazardous conduct as submitted by the Applicant in the AFS.[39]
3. While the Respondent says the matter is ultimately not relevant to the disposition of the application, the Respondent submits that the Tribunal would treat the Applicant's position with regard to the presence of asbestos with a high degree of scepticism in any event noting that:[40]

(a) None of the evidence demonstrates the presence of asbestos in a form that would be dangerous to human health. Rather, what is presented in the AFS is evidence that a builder quoted for the safe disposal of asbestos present in a dwelling of a vintage in which the Tribunal might infer asbestos was a regularly used building material

(b) There is no evidence before the Tribunal that such dwellings (or the Property) are, by the fact of containing asbestos-based building material alone, hazardous nor that the asbestos in this particular dwelling posed any particular risk to human health

(c) Relatedly, and of real significance to the credibility of the Applicant's repeated references to concern for matters of human health, the evidence is that the Applicant was entirely content to lease the Property in its existing state, asbestos and all. The Tribunal would not accept the Applicant's concerns as credible in those circumstances.[41]

1. The Applicant has not made any submissions in respect of the remission of interest. This is not a case in which the Applicant, a professional accountant, has taken reasonable care to comply with the tax law and there should be no remission.[42]

1. Clause 6 of Schedule 1A to the LTMA extends the PPR exemption to unoccupied land. Under this provision, an owner of unoccupied land is entitled to claim the land as the owner's principal place of residence if the owner intends to use and occupy the land solely as the owner's principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as the owner's principal place of residence.[43]
2. Clause 6(2) of Schedule 1A provides that the PPR Exemption is not extended by clause 6 unless each and all the following conditions are satisfied:

(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate the owner's intended use and occupation of the land as a principal place of residence, and

(b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and

(c) the intended use and occupation of the land is not unlawful.

1. Clause 6(8) provides that for the purposes of clause 6, "unoccupied land" means land that is not being used or occupied for any purpose. Land which has been leased to tenants is necessarily not unoccupied land.
2. Between 30 August 2021 and 13 February 2022, the Property was leased to tenants. It follows that that it was not "unoccupied land" within the meaning of clause 6(8) of Schedule 1A.
3. As the Property was not "unoccupied land" on 31 December 2021 and was not used by the Applicant as his PPR from 1 July 2021, the Applicant was liable for land tax in the 2022 year.
4. When the tenants vacated the Property on 13 February 2022 until the Property was sold by the Applicant on 19 April 2023, the Property was "unoccupied land" within the meaning of clause 6(8) of Schedule 1A. From 13 February 2022 until its sale, the Property was "unoccupied land" because the Applicant intended to carry out building or other works necessary to facilitate his intended use and occupation of the Property as his PPR.
5. However, clause 6(5) of Schedule 1A provides, without exception, that if the relevant property is not actually used and occupied by a person as the person's PPR on a taxing date, the PPR exemption is revoked if the person fails to actually use and occupy the land as the person's principal place of residence by the end of the period in which the clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least six months. In other words, the owner of land must actually use and occupy their property as their PPR for at least six months commencing within the four tax years immediately following the year in which they became the owner of the property in order to retain the benefit of the PPR Exemption in that period. The operation of the clause was explained in Woods v Chief Commissioner of State Revenue in similar circumstances to those arising in these proceedings:[44]

in this matter there was no dispute that the Applicants failed to actually use and occupy the Mollymook Beach land as their principal place of residence for a period of at least 6 months as required under Clause 6(5). They had on 30 March 2012 instead bought land situated at Milton and the residence on the land became their principal place of residence. The failure to comply with the requirement of Clause 6(5), as submitted by the Chief Commissioner, led to the 'automatic revocation of the exemption' for the relevant land tax years including the 2008 Land tax year.

1. In circumstances where the Applicant did not at any stage use and occupy the Property as his PPR for any period of time, he cannot satisfy clause 6(5) and he is not entitled to the PPR exemption.
2. It follows that the Applicant has not discharged the onus on him to demonstrate that he meets the statutory criteria and was entitled to the PPR exemption in the 2022 and 2023 Tax Years.
3. The Tribunal has no discretion to allow the PPR exemption in circumstances in which the statutory criteria are not met. There is no statutory authority in the LTMA or elsewhere, for the exercise of a discretion on grounds of unfairness or for reason that an applicant had "just cause" to not use and occupy a property as their PPR. This has been confirmed in numerous cases including Valencia v Chief Commissioner of State Revenue,[45] Ebrahimi v Chief Commissioner of State Revenue,[46] and Raissis v Chief Commissioner of State Revenue.[47]
4. Concepts of fairness or lenience are also not relevant to the statutory task the Tribunal is required to undertake on a merits review. In Commissioner of Taxation v Ryan, the High Court explained:[48]

But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any 'policy' or 'general intention' unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of 'fairness' or 'justice' do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted.

1. In the present case, as the Applicant did not use and occupy the Property at any time from the date of purchase in June 2021 until it was sold in April 2023, the PPR exemption in clause 6 of Schedule 1A of the LTMA for the 2022 and 2023 Tax Years does not apply to the Property.
2. Land tax is to be charged on land in accordance with the provisions of the LTMA, except where the legislation provides an exemption. For the reasons given, I have found that no such exemption is provided by clause 6. No other legislative source for an exemption was suggested or relied on by the Applicant. The legislation does not empower the Respondent to exempt land from land tax where land tax would otherwise be leviable, or to reduce the amount of land tax payable. That is so even if, as here, events which excluded the application of exemptions which might otherwise have been available were beyond the control of the taxpayers. It follows that the Tribunal, on review of the Respondent's assessment, does not have power to exempt the land from land tax, or to reduce the amount of land tax payable.
3. It follows that I find that the correct and preferable decision is that the Applicant is not entitled to the PPR exemption in respect of the Property for the 2022 and 2023 Tax Years and that the Assessment should be confirmed.

1. If a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate prescribed by s 22 of the TAA.[49]
2. In circumstances such as the present case, where the Tribunal has found that the Assessment must be confirmed, the Tribunal has no reason to remit the interest which is automatically imposed by operation of the TAA.[50]

1. Clause 6 of Schedule 1A to the LTMA did not apply to exempt the Property from land tax in respect of the 2022 and 2023 Tax Years, and the Tribunal does not have power to exempt the land from land tax or to reduce the amount of tax assessed. It follows that the Assessment must be confirmed.

(1) The Assessment dated 13 November 2024 is confirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

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.

[4] (2008) 74 NSWLR 481; [2008] NSWCA 187 at [87], [104] (Allsop P).

[5] (1990) 168 CLR 614; [1990] HCA 3.

[6] [1975] HCA 54; (1975) 135 CLR 81 at 89 (Mason J).

[7] [2013] NSWADTAP 25 at [36].

[44] [2014] NSWCATAD 151 at [29].

[45] [2017] NSWCATAD 261 at [56], [73]-[76].

[46] [2022] NSWCATAD 303 at [20]- [23].

[47] [2021] NSWCATAD 99 at [36]- [38].

[48] (2000) 201 CLR 109 at 123.