Oei v Commissioner of State Revenue (Review and Regulation) [2025] VCAT 1062

The assessments of the applicant to land tax for the 2018 to 2022 land tax years made on or about 18 May 2022 are set aside and remitted to the respondent for reassessment in accordance with these reasons, to remit the penalty tax to a rate of 20% and to refund any excess penalty tax paid.

1. In this proceeding, Ms Oei seeks review of land tax assessments ('Assessments') made by the Commissioner of State Revenue ('Commissioner') in May 2022 imposing land tax and penalties for the 2018 to 2022 land tax years in respect of a flat she owns in Batten Street, Glen Waverley ('Relevant Property').
2. For the reasons which follow, the land tax which has been imposed is correct. However, I have determined that the penalty tax should be remitted to 20% of the relevant land tax. As such, I have set aside the Assessments and remitted them to the Commissioner to reassess in accordance with these reasons and to refund the difference to Ms Oei (as she has already paid the Assessments).

1. Ms Oei is an Indonesian citizen who came to Australia in 2000 or 2001 to study and stayed on after her study was completed.
2. On 14 July 2003, Ms Oei was granted a 'Subclass 880' visa which permitted her to 'remain in Australia indefinitely' and allowed 'multiple travel' but did not permit her to 'arrive after 14 Jul 08'.[1]
3. In 2005, Ms Oei purchased the Relevant Property.[2] She lived at the property with her husband, who is a Hong Kong citizen or permanent resident and an Australian citizen.
4. In August 2008, Ms Oei and her husband travelled to Hong Kong. While she intended to return to Australia in May 2009 (and had a return flight booked), she and her husband changed their plans and decided to stay on after she became pregnant with their first child in around February 2009.
5. After that child was born, Ms Oei and her husband continued to live in Hong Kong until November 2022, residing at a property made available by her husband's parents (on a rent-free basis). During that period, Ms Oei's husband worked in his family's business and the couple had two more children. Ms Oei confirmed that each of the children were Hong Kong citizens (or permanent residents) by birth and have obtained Australian citizenship through their father.[3]
6. Ms Oei gave evidence that she applied for, and was granted, a subclass 155 visa (known as a 'resident return visa') in 2008, which was valid until 2013. Material available on the website of the Department of Home Affairs (to which I drew the parties attention during the hearing) suggests that a permanent resident 'may need to apply for and be granted a Resident Return visa (subclass 155 or subclass 157)' if, among other things, the 'travel facility on [their] permanent visa has expired or will expire while [they] are outside Australia' ('DHA Guidance').[4]
7. In any event, Ms Oei only returned to Australia on one occasion in the 14-year period between 2008 and 2022. That was for a period of just over a week in late August 2019.[5] Ms Oei confirmed that she entered Australia on a visitor visa on that occasion and stayed at a friend's home.
8. From 2008 to 2016, the Relevant Property was left vacant and was maintained by one of Ms Oei's friends. However, it has been leased to third party tenants (through a property agent) since July 2016 (save for short periods of vacancy between tenancies). Ms Oei's evidence is that she made the decision to rent the property after the birth of her second child, although this was only 'temporarily' as she still intended to return to Australia in the future.[6]

1. Under sections 7, 8 and 10 of the Land Tax Act 2005 (Vic) ('LT Act'), land tax is imposed on the owner of Victorian taxable land (being all land that is not 'exempt land') in respect of each year. The land tax for a given land tax year is assessed based on the value of all taxable land of which a person is the owner 'at midnight on 31 December immediately preceding that tax year'.[7] For example, for the 2018 land tax year, land tax is imposed by reference to the value of land owned on 31 December 2017.
2. The exemptions from land tax are set out in Part 4 of the LT Act and include land which is used as a natural person's principal place of residence (and extends to situations where a person is temporarily absent from their principal place of residence).[8] One of the grounds of Ms Oei's objection to the Assessments was that the Relevant Property remained her principal place of residence in the relevant land tax years. However, at the hearing, she confirmed that she no longer pursued that argument.
3. Land tax is imposed on the unencumbered value of the relevant land at 5 different rates as set out in Schedule 1 to the LT Act.[9] Part 4 of that schedule provides for 'absentee owner land tax surcharge' (or 'AOS') rates which are significantly higher than those applied to other owners. That part (and associated definitional changes) first came into operation from the 2016 land tax year (although the surcharge rates have increased over time).[10]
4. The LT Act defines an 'absentee owner' as an absentee person who is an owner of land.[11] An absentee person can be a natural person (known as a natural person absentee), a corporation or trust. A natural person absentee is defined to mean:

a natural person who is not an Australian citizen or resident and -

(a) who does not ordinarily reside in Australia; and

(b) who -

(i) was absent from Australia on 31 December in the year immediately preceding the tax year; or

(ii) in the year immediately preceding the tax year, was absent from Australia for a period of at least 6 months or for periods that when added together equal a period of at least 6 months;

1. The phrase 'Australian citizen or resident' is also defined to include an Australian citizen[12] or 'the holder of a permanent visa within the meaning of section 30(1) of the Migration Act 1958 of the Commonwealth ['Cth Migration Act']'.[13]
2. To enable the Commissioner to identify absentee owners, the reforms that were introduced from 2016 included an obligation for a person 'who is an absentee owner on 31 December ... [to] lodge a written notice with the Commissioner before 15 January in the following year' in the specified form ('AOS Notification').[14]
3. Under section 29(1A) of the Taxation Administration Act 1997 (Vic) ('TA Act'), if a 'notification default' occurs, the relevant taxpayer is liable to pay penalty tax. The notification defaults identified in the definition of that phrase[15] include a failure to provide an AOS Notification.
4. The default rate of penalty tax in respect of a notification default is 25% of the tax the taxpayer would have been assessed as liable to pay had the notification default not occurred.[16] However, it can be reduced (or increased) in various circumstances to reflect the culpability of the taxpayer.
5. For example, if a taxpayer makes voluntary disclosure after being notified of the commencement of an investigation by the Commissioner (and before it is completed), they are entitled to a 20% discount, bringing the rate of penalty tax down to 20%.[17]
6. The Commissioner has a discretion not to impose any penalty tax where he is satisfied that the taxpayer 'took reasonable care to comply with the taxation law'.[18] In addition, he has a discretion 'in such circumstances as [he] considers appropriate' to 'remit penalty tax by any amount'.[19]

1. As a result of Ms Oei's (appropriate) abandonment of her contention that the Relevant Property was her principal place of residence (see [12]), it was 'taxable land' and subject to land tax given Ms Oei owned the property at 31 December 2017 and each subsequent year in issue. It follows that, even if she was not subject to the AOS rate, Ms Oei would still be liable to land tax in each year, and to penalty tax for a tax default.
2. However, the quantum of land tax would be significantly lower if land tax were imposed at the general rates (in Part 1 of Schedule 1 to the LT Act) rather than the AOS rate. For example, based on the taxable value used in the 2018 land tax assessment, the general land tax would be $180, as compared to $5,555 at the AOS rate.
3. The AOS rate applies if Ms Oei is a natural person absentee, with three limbs to the test under the relevant definition.

1. Ms Oei has never been an Australian citizen. In answer to a question from me, Ms Oei explained that, although she obtained Australian citizenship for her own children, she did not apply for citizenship herself because she is not permitted to hold dual citizenship under Indonesian law and needs to be able to return to visit and, now or in the future, to look after her parents.
2. While Ms Oei held the Subclass 880 visa, she was the holder of a permanent visa within the meaning of section 30(1) of the Cth Migration Act. That is because the relevant definition applies to a visa 'to remain in Australia (whether also a visa to travel to and enter Australia) ... known as a permanent visa, to remain indefinitely'. As noted (at [4]), the Subclass 880 visa expressly allowed Ms Oei to remain in Australia indefinitely.
3. Section 82 of the Cth Migration Act deals with 'when visas cease to be in effect'. Among other things, it provides that a visa:
   • to travel to and enter Australia (whether also a visa to remain in Australia) 'during a particular period or until a particular date ceases to be in effect if the holder leaves Australia after that period or date';[20]
   • to 'remain in, but not re-enter, Australia that is granted to a non-citizen in Australia ceases to be in effect if the holder leaves Australia';[21] and
   • that is a 'substantive visa held by a non-citizen ceases to be in effect if another substantive visa ... for the non-citizen comes into effect'.[22] A substantive visa is defined in section 5 as any visa other than a bridging visa, a criminal justice visa or an enforcement visa.
4. The terms of Ms Oei's Subclass 880 visa permitted her to remain in Australia indefinitely but did not allow her to return to Australia if she left after July 2008. As noted at [6], Ms Oei left Australia in August 2008. However, it did not mean that, if she could return (e.g. on a resident return visa), that she would not be permitted to remain in Australia thereafter. As indicated in the DHA Guidance, under the heading 'Consequences of entering without a valid travel facility', a person's 'permanent resident status will only be reinstated if [their] application for a Resident Return visa is granted'. Further, if an application for a resident return visa is refused, the guidance indicates a person 'may have to apply for a [new] permanent visa', such as a 'former resident visa'.
5. By the time that Ms Oei left Australia in August 2008, her Subclass 880 visa permitted her to remain in, but not re-enter, Australia. It follows that it ceased to have effect when she left Australia. While it may have been possible for her permanent resident status to be reinstated if she had returned to Australia while she held a resident return visa, she did not do so. That she entered Australia on a visitor visa when she visited in August 2019 is consistent with her not being a permanent resident at that point in time.
6. For these reasons, I find that Ms Oei was not an Australian citizen or resident within the definition of that phrase in the LT Act on 31 December 2017 (for the 2018 land tax year) or on 31 December in each subsequent year to 2021 (for the 2022 land tax year).

Was Ms Oei in Australia on 31 December 2017 or subsequently? No

1. On Ms Oei's own evidence, she:
   • Left Australia for Hong Kong in August 2008.
   • Returned to Australia for a week in August 2019.
   • Returned to Australia permanently in November 2022.
2. It follows that she was absent from Australia on 31 December in each of the relevant years (i.e. 2017 to 2021) satisfying the requirements of paragraph (b)(i) of the definition of natural person absentee.
3. As paragraph (b)(i) of the definition is satisfied, it is unnecessary to form a view on the alternative test in paragraph (b)(ii), although the facts are also consistent with that test being satisfied.

Did Ms Oei ordinarily reside in Australia on 31 December 2017 or subsequently? No

1. The LT Act does not include any definition of the phrase 'ordinarily resides'.
2. In the Commissioner's written submissions, it is suggested that the 'ordinary meaning' of the phrase is that a person resides 'where they "lived" or where they keep house and do business' based on an income tax case.[23] Reference is also made to the decision of Wilcox J in Hafza v Director-General of Social Security ('Hafza') that as '[a] general concept residence includes two elements: physical presence in a particular place and the intention to treat that place as home'.[24]
3. In his closing submissions on behalf of the Commissioner, Mr Healer of Counsel highlighted the decision of Davies and Steward JJ in Harding v Federal Commissioner of Taxation ('Harding'),[25] a relatively recent decision on residency in an income tax context. In that decision, references were made to the observations of Viscount Cave LC in Levene v Inland Revenue Commissioners ('Levene') that:[26]

... the word "reside" is a familiar English word and is defined in the Oxford English Dictionary as meaning "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place." ... In most cases there is no difficulty in determining where a man has his settled or usual abode, and if that is ascertained he is not the less resident there because from time to time he leaves it for the purpose of business or pleasure.

1. In discussing Mr Harding's submissions, Davies and Steward JJ also quoted from Wilcox J's decision in Hafza, highlighting his observation that:[27]

But, where the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

1. Davies and Steward JJ went on to discuss the primary judge's observations as to the 'role of physical presence and of intention in a determination of residence',[28] including the commentary that:

The determination of whether or not a person has the intention to treat a particular place as their home will involve a consideration of numerous factors. Certainly, the evidence of the taxpayer as to their intention at the relevant time will be significant as would be any contemporaneous statement made by a taxpayer as the location of their residency. However, the objective manifestation of a person's intention is often a more accurate indicator of their state of mind at a particular time in the past than is an assertion about that alleged prior intent. A person's present belief about what their intention may have been in the past will necessarily be affected by their sub-conscious and the context in which they called upon to identify that past intention. That is especially so when, at the relevant time, the person did not then consider what their then intention may have been.

1. Davies and Steward JJ observed that the relevant 'passages disclose ... no error of law and are plainly correct'.
2. The meaning of the phrase 'ordinarily resides' does not appear to have been considered by VCAT in the context of land tax or state taxes more generally. However, that phrase has been considered by the Queensland Civil and Administrative Tribunal in the context of the equivalent foreign owner provisions in that jurisdiction, in Rowan v Commissioner of State Revenue ('Rowan').[29] After referring to the case law (including the cases discussed above), Member Poteri found that the meaning of ordinarily resides:[30]

(a) is a term that should be given its ordinary and natural meaning;

(b) connotes residence in a place with some degree of continuity and apart from accidental or temporary absences;

(c) means residence that is not casual and uncertain but that the person held to reside so in the ordinary course of life;

(d) refers to a man's abode in a particular place or country which he has adopted voluntarily and for a settled purpose/s as part of the regular order of his life for the time being, whether short or long duration;

(e) is a question of fact and degree, which involves a consideration of past events;

(f) is more objective and less subjective than domicile or the concept of real home; and

(g) does not include intention as an important factor in determining the question of ordinary residence.

1. Save for the last point, I agree with the observations of Member Poteri as to the meaning of ordinarily resides. However, in my view, intention is an important consideration in assessing where a person ordinarily resides. Of course, as with the assessment of a person's principal place of residence,[31] that intention is to be 'gauged objectively' and, while relevant, is not determinative. Further, as indicated in Hafza, if there is no physical presence in the place claimed to be the person's residence, a question arises as to any change of intention.
2. Mr Healer submitted in closing that the Tribunal ought have 'no difficulty' in finding that Ms Oei did not dwell permanently or for a considerable period of time in Australia given that, 'apart from one week in 2019, she was not present in Australia for any of the calendar years'. He pointed to the following matters:
   • At the first liability date (i.e. 31 December 2017), Ms Oei had not been in Australia for around nine years, as compared to having been in Australia for around seven years in mid-2008.
   • Ms Oei gave birth to three children outside Australia and those children were Hong Kong citizens or permanent residents by birth.
   • From mid-2016, the Relevant Property was 'not maintained as even a vacant place of residence', rather it was converted to an 'income producing asset' managed by a real estate agent.
   • Assuming that Ms Oei had an intention to return when she departed Australia in August 2008, that intention had 'manifestly changed' by 31 December 2017.
   • Ms Oei had 'relatively minimal' continuing associations with Australia. In this regard, she had only provided evidence of a 'legacy superannuation account', an Australian bank account used for the receipt of rental income (and for which she provided a Hong Kong address), and 'essentially dormant' frequent flyer and local library memberships.
   • Ms Oei had no family in Australia.
3. By contrast, Mr Healer suggested, Ms Oei had significant connections with Hong Kong in that:
   • She physically resided there, with her husband and three children, in a home or dwelling provided by her husband's family.
   • Her husband's family also lived in Hong Kong.
   • Her husband worked in the family business.
4. For her part, Ms Oei pointed to guidance on the State Revenue Office website concerning absentee individuals which indicates:[32]

If you ordinarily reside in Australia, you are not an absentee individual. To decide where you ordinarily reside, there must be an element of permanence about where you live when compared to somewhere you might casually or intermittently stay.

This does not mean you have to be physically present in Australia on 31 December.

1. Ms Oei relied on the following matters to support her contention that she was ordinarily resident in Australia despite living in Hong Kong:[33]
   • She studied and worked in Australia for more than five years, and obtained her permanent resident visa in 2003 (which she claims to have held for 10 years),[34] before becoming 'temporarily absent'.
   • Her family members (i.e. her husband and children) are Australian citizens and she still had friends in Australia.
   • She kept her property (i.e. the Relevant Property), bank account, superannuation and insurance in Australia.
   • She remained a member of Monash public library and maintained affiliate memberships with Velocity and Fly Buys.
2. Further, Ms Oei observed that she 'actively managed the [Relevant] property with the help of [a] property manager'.[35]
3. Lastly, Ms Oei submitted that the main purpose of renting out the Relevant Property from 2016 was 'to have someone to look after it and to help the community with housing'.[36] She also noted that the 'monetary value of it' (i.e. the rental income derived) was not enough to cover the land tax at the absentee owner surcharge, the penalty and interest.[37] She suggested that payment of the tax had 'created hardship' for her, especially as she had only 'just arrived back with [her] school age kids' when the Assessments were sent to her.
4. In her reply submissions, Ms Oei maintained that 'she regards Australia as her home although she wasn't physically present in Australia'.[38]
5. While I accept that Ms Oei resided in Australia while she studied and worked and, despite moving to Hong Kong for an extended period, has always (subjectively) intended to return, I find that she was not ordinarily resident in Australia between 2017 and 2021.
6. While Ms Oei's departure from Australia in August 2008 may have been 'temporary' at the time (given she had a return flight arranged for May 2009), it is objectively apparent that her intention changed following the birth of her first two children. The objective manifestation of that change in intention includes:
   • Establishing a home with her husband and children at a property in Hong Kong made available by her husband's family.
   • Renting out the Relevant Property from mid-2016.
   • Ms Oei's (candid) evidence that, while she had thought she might return to the property when the family moved back to Australia, she recognised it was not large enough for a family of five.
   • That, while living in Hong Kong, she maintained her citizenship of Indonesia and had limited ties that she maintained with Australia.

Conclusion as to liability to land tax at the AOS rate

1. It follows from the above, and I find, that:
   • Ms Oei was a natural person absentee and an absentee owner on 31 December 2017 (for the 2018 land tax year) and on 31 December in each subsequent year to 2021 (for the 2019 to 2022 land tax years).
   • The Commissioner correctly imposed land tax for the 2018 to 2022 land tax years at the AOS rate.

1. Ms Oei did not provide the Commissioner with the AOS Notification, as required under section 104B of the LT Act. Accordingly, subject to any operation of section 30(3) of the TA Act, or the favourable exercise of the remission discretion in section 35, penalty tax was correctly imposed at a rate not exceeding 25%.
2. Section 30(3) of the TA Act provides for the penalty tax to be reduced to nil if a taxpayer has taken reasonable care. However, there is no suggestion that Ms Oei approached the State Revenue Office for guidance or obtained any advice as to her land tax obligations, despite continuing to engage an accountant to prepare her Australian tax returns. In those circumstances, I am not satisfied that she took reasonable care to comply with her land tax obligations.
3. In relation to the remission discretion, in her reply submissions, Ms Oei notes that the Relevant Property had been her primary residence since she bought it and, as such, she had not been exposed to any land tax.[39] Further, she observes that 'by the time she leased it, she was ... overseas' and was not aware of the need to have 'self-notified the property to the State Revenue Office'.[40]
4. In addition, Ms Oei's evidence is that, despite being emailed to the correct email address, she did not receive the Commissioner's correspondence notifying her of his investigation[41] or the investigation outcome and Assessments.[42] As such, she 'could not respond to it'.[43]
5. Rather, the 'first time' that Ms Oei heard about her exposure to land tax at the AOS rate was in 2023.[44]
6. In closing, Mr Healer submitted that these matters were 'neutral' factors when considering the remission of the penalty tax. Further, the possibility that, if Ms Oei had been aware of the investigation when it commenced, she may have made a voluntary disclosure and obtained a 20% discount on her penalty tax was 'not a useful hypothetical or counterfactual' in circumstances where she had not, in fact, co-operated with the Commissioner.
7. Mr Healer also contended that, while Ms Oei may not have been aware of the introduction of the AOS surcharge given she waws overseas at the time, her ignorance of the law was not relevant in circumstances where she owned land in Victoria and had taken steps to engage a property manager to look after the property and an accountant to prepare her tax returns.
8. In my view, it is appropriate to provide a small remission of the penalty tax to the rate (20%) that applies where voluntary disclosure is made following the commencement of an investigation by the Commissioner.
9. In this regard, I accept Ms Oei's unchallenged evidence that she was not aware of the Commissioner's investigation of her land tax compliance prior to 2023, well after its completion. Effectively, she has been denied the opportunity available to taxpayers to reduce their exposure to penalty tax, no doubt in part because she was living in Hong Kong at the relevant time.
10. However, I do not consider any further reduction is warranted in circumstances where she has accepted that the Relevant Property was not her principal place of residence for the relevant land tax years and, as such, she should have been aware of her obligation to pay at least some land tax (as is the case for every owner of land in Victoria).

1. For the above reasons, I will set aside the Assessments and remit them to the Commissioner for reassessment of the penalty tax in accordance with these reasons and to refund any excess penalty tax paid.

[1] Copy of visa in Ms Oei's passport: Tribunal Book ('TB'), 105.

[2] Although Ms Oei gave evidence that her husband funded the purchase of the Relevant Property, she did not seek to contend that he was the beneficial owner of the property (e.g. under a constructive trust).

[3] Citizenship certificates: TB, 174-176.

[4] Department of Home Affairs, 'Permanent resident - Overseas travel as a permanent resident' (last updated: 6 February 2025), available at https://immi.homeaffairs.gov.au/visas/permanent-resident/overseas-travel.

[5] Department of Home Affairs 'Movement Details': TB, 104.

[6] Statement of Witness of Ms Oei dated 28 October 2025 ('Oei WS') [5].

[7] Land Tax Act 2005 (Vic) ('LT Act'), s 36(1).

[12] Within the meaning of the Australian Citizenship Act 2007 (Cth).

[13] The last category of Australian citizen or resident, which is not presently relevant, includes certain New Zealand citizens.

[15] Taxation Administration Act 1997 (Vic) ('TA Act'), s 3.

[20] Cth Migration Act, s 82(6).

[21] Cth Migration Act, s 82(8).

[22] Cth Migration Act, s 82(2).

[23] Commissioner's Statement of Legal Contentions dated 20 January 2025 ('CLSC') [38] (citing Commissioner of Taxation v Miller [1946] HCA 23; (1946) 73 CLR 93, 99-101 (Latham CJ)).

[24] Ibid [39] (quoting (1985) 6 FCR 444, 449).

[25] [2019] FCAFC 29; [2019] 269 FCR 311.

[26] Ibid [32] (citing Levene [1928] UKHL 1; [1928] AC 217, 222).

[27] Ibid [60] (citing Hafza (1985) 6 FCR 444, 450 (emphasis added in Hafza)).

[28] Ibid [61] (referencing Harding v Commissioner of Taxation [2018] FCA 837 [43] (Derrington J)).

[29] [2019] QCAT 151.

[31] Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41; (2004) 57 ATR 170 [42].

[32] Available at https://www.sro.vic.gov.au/owning-property/land-tax/absentee-owner-surcharge/absentee-individuals (last modified: 17 October 2025).

[33] Ms Oei's Statement of Legal Contention ('ASLC') [1.1]-[1.5].

[34] This appears to be the combined period of time she was covered by the Subclass 880 visa and the resident return visa.

[37] In the Applicant Response dated 10 March 2025 ('AR') [3], Ms Oei observed that the net income generated between 2017 and 2022 was $24,301, while the total tax and penalty was $52,215.

[41] Email dated 7 March 2022: TB. 114.

[44] Email from a senior customer service officer at the State Revenue Office to Ms Oei dated 16 May 2023, attaching a copy of the email and investigation outcome of 18 May 2022: TB, 125.