Nishaharan v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2025-01-28

Introduction

In 2022 the Applicants purchased a property in Strathfield. They intended to demolish the dilapidated building on the block and build a new residence that would become their family home.
At the time, they were living with their two children in a property they owned in Ermington. They put the Ermington property on the market but couldn't immediately attract a buyer; ultimately they were able to sell it in April 2024. In the meantime the Applicants continued to live in the Ermington property.
For the 2023 and 2024 land tax years the Chief Commissioner treated the Ermington property as exempt from tax, as the Applicants' principal place of residence. But he assessed the Applicants to land tax payable in respect of the Strathfield property for both tax years.
The Applicants objected to the land tax assessments. Before the objections were determined the Applicants conceded the assessment for 2023 was correct but they continued to press the objection with respect to the 2024 year. The objection was disallowed, and the Applicants have now applied to the Tribunal for a review of the assessment.
In summary, the Applicants say the Strathfield property is the one that should be exempt from land tax. This is the property they regard as their long-term home. The Ermington property, on the other hand, was only a temporary home that they always intended to leave once they had purchased in Strathfield. If the Chief Commissioner were to accept Strathfield as exempt, then the Applicants' liability would be significantly reduced, perhaps to zero, because the value of the Ermington property (which would then be the taxable property) is much less than the one in Strathfield.
I have decided the land tax assessment for the 2024 year is correct. These are my reasons for reaching that conclusion.

Jurisdiction

This is an application under s 96 of the Taxation Administration Act 1996 (NSW) (TA Act) for an administrative review of a land tax assessment. The administrative review is conducted under the Administrative Decisions Review Act 1997 (NSW) (ADR Act).
The Tribunal's task is to decide what the correct and preferable decision is having regard to the material before it: ADR Act, s 63(1). The Applicants have the onus of proving their case: TA Act, s 100(3). That means they must prove all matters necessary for the Tribunal to answer the statutory questions in their favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities.

The issue

The ultimate issue is whether the Strathfield property, rather than the Ermington property, is exempt from land tax, as the Applicants' principal place of residence, for the 2024 land tax year. If it is, then the current land tax assessment will be wrong. But if the Ermington property is the exempt property, and the Strathfield property is not exempt, the assessment will have to be confirmed.

The land tax legislation

Land is exempt from land tax under the principal place of residence exemption in Schedule 1A to the Land Tax Management Act 1956 (NSW) (LTM Act): s 10(1)(r).

Clause 2

Clause 2 in the Schedule provides that a parcel of residential land that is '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 land tax.

Clause 6

Clause 6 in the Schedule provides a concession for unoccupied land that is intended to be the owner's principal place of residence. If the concession applies, then the owner is taken to be using and occupying the unoccupied land as their principal place of residence.
But subclause 6(7) says the concession for unoccupied land can't apply if the person, or any member of the person's family, is 'entitled to have his or her actual use and occupation of other land taken into account under […] this Schedule'.

Clause 7

Clause 7 in the Schedule provides a further concession when an owner changes their principal place of residence. In specified but restricted circumstances, the exemption can apply to two different parcels of land when the owner still owns an earlier residence that was their principal place of residence but has purchased a new one that is or is intended to be their principal place of residence. But the new residence has to be actually used and occupied as the person's principal place of residence by the next taxing date (in other words, within the next year), and the concession can only apply for one land tax year.

Clause 12

Under clause 12 in the Schedule, only one place of residence can be treated as the principal place of residence of all members of the same family. If members of a family own more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family, as the principal place of residence of all members of the family.

Is the Strathfield property exempt from land tax for the 2024 land tax year?

Clause 2

For clause 2 to apply to exempt the Strathfield property, the property would have to have been residential land used and occupied by the Applicants as their principal place of residence, and for no other purpose, at the taxing date of 31 December 2023.
Clearly, the Strathfield property does not answer that description. The Applicants were certainly not using and occupying the property as their principal place of residence. Their evidence, which I accept, is that the building on the property when they bought it was uninhabitable. They could not, and did not, use and occupy the Strathfield property at all as at 31 December 2023. The Applicants remained living in the Ermington property until April 2024, when they ultimately sold it. There is no doubt that the Ermington property is the one they used and occupied as their principal, in fact only, place of residence during the relevant period - which includes the taxing date of 31 December 2023.
Clause 2 doesn't apply to make the Strathfield property the Applicants' principal place of residence at 31 December 2023..

Clause 6

Despite the Applicants' expressed intention to use and occupy the Strathfield property solely as their principal place of residence, subclause 6(7) is against them.
The issue in subclause 6(7) is whether the Applicants are 'entitled to have [their] actual use and occupation of other land taken into account under […] this Schedule'.
The Chief Commissioner submits this is precisely the type of circumstance that applies here: the Applicants are entitled to have their actual use and occupation of other land - the Ermington property - taken into account under Schedule 1A. The Ermington property is the property the Applicants were using and occupying, and they were using and occupying it as their principal place of residence. Those facts bring the Ermington property within clause 2, and as a result the Applicants are 'entitled' to have that use and occupation taken into account.
The Applicants, in response, say their occupation of the Ermington property was driven by necessity, not entitlement. They tried to sell the property, but it took longer than they would have liked. In their written submissions they stated: The decision to occupy the Ermington property was not an entitlement but a consequence of the circumstances we faced. We remained in the property with the full intention to vacate as soon as the property was sold, as it was actively marketed by the same estate agent.
With respect, that submission misses the point. The question is not whether their occupation of the Ermington property was or wasn't undertaken as a matter of entitlement, but whether they were entitled to have their use and occupation of that property taken into account for the purposes of Schedule 1A. The answer to that question is undoubtedly yes.
It is not to the point that the Applicants don't want the exemption to apply to the Ermington property. The reality is that they have no choice. Either the words of clause 2 apply to the Ermington property or they don't. If they do apply, neither the taxpayer nor the Chief Commissioner can pretend (or determine) that they don't.
An Appeal Panel of the former Administrative Decisions Tribunal considered a similar scenario in Chief Commissioner of State Revenue v White & Anor [2008] NSWADTAP 27. There, the taxpayers continued living in their Coogee property while they renovated their newly acquired (and more valuable) property in Point Piper. They claimed to be entitled to elect to treat the Point Piper property as their principal place of residence even though they weren't living there but had continued to reside in Coogee.
The Appeal Panel stated at [44]: Putting the clauses of Schedule 1A into context, the situation is this. Clause 2 provides an exemption for the Coogee property only. Sub-clause 6(1) provides a concession so that the Point Piper property could be considered as a principal place of residence. However, sub-clause 6(7) excludes the Point Piper property from eligibility for the concession by reason of the entitlement of the respondents [the taxpayers] to have their actual use and occupation of the Coogee property taken into account for the principal place of residence exemption. On that analysis, there is only one entitlement, in relation to the Coogee property, for the principal place of residence exemption …
That analysis is correct. Applying the analysis to the Applicants' circumstances, the Ermington property is the equivalent of the Whites' Coogee property, and the Strathfield property is the equivalent of the Whites' Point Piper property. The Applicants seek to distinguish their circumstances from those in the case of the Whites on the basis that the Applicants, unlike the Whites, were trying to sell their property whereas that doesn't seem to have been the case with the Whites. But that difference doesn't have any effect because, whether the Ermington property was on the market or not, the Applicants were still living in it.
The clause 2 exemption applies to the Ermington property. As a result, the operation of clause 6 is excluded by subclause 6(7).

Clause 7

The evident purpose of clause 7 is to grant a concession where a taxpayer has bought a new residence but hasn't been able to complete the sale of a former residence by the taxing date. In general terms the concession applies where: 1. the former residence was the owner's principal place of residence on the relevant taxing date or the preceding taxing date; 2. the new residence was acquired within the period of 6 months before the relevant taxing date; and 3. the new residence is being or is intended to be used and occupied by the person as his or her principal place of residence.
Importantly, the concession is revoked if the new residence isn't actually used and occupied as the owner's principal place of residence by the following taxing date.
In the Applicants' case, paragraph (b) above is not satisfied, since the Strathfield property was purchased in September 2022, which is more than 6 months before the taxing date of 31 December 2023. Furthermore, since a new residence had not been constructed by 31 December 2024, the Applicants were unable to use and occupy the property as their principal place of residence by that date.
The concession in clause 7 is not available for the Strathfield property.

Clause 12

When different members of a family use and occupy more than one property as their principal place of residence, clause 12 permits them to elect to treat one of those properties as the principal place of residence of all of them. In this way the family cannot get the exemption for more than one property in total.
Clause 12 can't apply to the Applicants as the various members of the family only owned one property that they used and occupied as their principal place of residence - the Ermington property. The election contemplated by clause 12 isn't available.

Overall conclusion

The Strathfield property was not the Applicants' actual principal place of residence for the 2024 land tax year, and none of the potential concessions apply. As a result the land tax assessment for that year is correct.

Fairness

The Applicants asked that their case be viewed with some leniency, since, as it was put by the husband during the hearing: Had the circumstances been a little different the bill for land tax would have been zero.
It is not uncommon for taxpayers to suggest to the Tribunal that the law is unfair or has operated in an unfair way against them. But fairness has no role to play in the consideration of legislative provisions that are clear and unambiguous. The Tribunal can do no more than analyse the facts and apply the law to those facts.
It has been said many times that the Tribunal has no power to override the legislation or to reduce or waive an amount of tax that is properly payable. Nor is there a general discretion in the LTM Act allowing the Chief Commissioner, or the Tribunal on review, to take into account other special circumstances in a taxpayer's case. As to these various matters, see for example Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Ebrahimi v Chief Commissioner of State Revenue [2022] NSWCATAD 303; Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222; Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67. I endorse those various statements.

Order 1. The assessment of land tax for the 2024 land tax year is confirmed.

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: 05 February 2025

At a glance

Court

Decision date

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (2)