Raissis v Chief Commissioner of State Revenue

The issue in the proceedings

1. The issue the Tribunal is required to determine in these proceedings is whether, in respect of the 2021 land tax year, the Second Applicant satisfied the principal place of residence exemption in respect of the Randwick Property.

Land Tax Management Act

1. Pursuant to s.7 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 thirty-first day of December immediately preceding the year for which the land tax is levied: s.8 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, 10G 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,
4. The principal place of residence exemption and related concessions are set out in Schedule 1A of the LTMA. Clause 2 of Schedule 1A of the LTMA provides, relevantly, 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 Applicants confirmed at the hearing that they relied on cl 2 of Sch 1A and did not seek to rely upon any of the other concessions contained in Schedule 1A.
6. Section 3 of the LTMA defines principal place of residence as follows: principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

TA Act

1. The TA Act applies in respect of "taxation laws" which are defined in s 4 of the TA Act to include the LTMA.
2. As previously mentioned, s 96 of the TA Act provides that a taxpayer may apply to the Tribunal for an administrative review of a decision of the Respondent that has been the subject of an objection.
3. Section 100 of the TA Act provides that the Applicant's and Respondent's cases on an application for review are not limited to the grounds of the objection. Section 100(3) provides that the Applicant has the onus of proving the Applicant's case in an application for review.
4. Section 101 of the TA Act sets out the powers of the Tribunal in dealing with an application for review and provides that the Tribunal may, amongst other things, confirm or revoke the assessment or other decision to which the application relates, make an assessment or other decision in place of the assessment or decision to which the application relates or remit the matter to the Respondent for determination in accordance with its finding or decision.

Material Before the Tribunal

1. The Applicants relied on the Application filed 17 September 2021, a statement of the Second Applicant, Mr Emanuel Raissis dated 8 November 2021, submissions lodged with the Tribunal on 12 November 2021 and two bundles of documents lodged with the Tribunal on 12 November 2021 (Exhibit A1) and on 17 February 2021 (Exhibit A2).
2. The Respondent relied on the documents lodged with the Tribunal under s 58 of the ADR Act on 13 October 2021 (Exhibit R4), a tender bundle lodged on 14 December 2021 (Exhibit R3) and submissions dated 14 December 2021.
3. Mr Emanuel Raissis was cross examined at the hearing and both the Applicants and the Respondent made further oral submissions at the hearing of the application.

The evidence

1. Mr Emanuel Raissis' evidence was limited to a one page statement in which he stated: I, Emanuel Raissis, self-employed, builder, state: 1. I resided at [the Randwick Property] between 2/7/2020 - 2/11/2020. 2. I did not reside in the granny flat, but at the rear of the main residence. 3. A fence separated the granny flat and the main residence. 4. I moved from [the Paddington Property]. This property was leased on the 1st September 2020
2. The Applicants also took the Tribunal to a number of documents in Exhibits A1 and A2, including tenancy agreements, bank statements, photographs, hand drawn site plans, emails and text messages which I accept support the following findings of fact: 1. When the Randwick Property was purchased by the Applicants there was one building on the property (primary residence). 2. The Applicants at some point prior to 9 May 2016 converted the primary residence into two separate units, one at the rear of the property being "Unit 1" and one at the front of the property being "Unit 2". The Applicants also constructed a separate granny flat on the property which was separately rented out for a period of time. That granny flat was demolished in late 2020 as evidenced in the aerial photographs in the Respondent's s 58 documents but the demolition of the granny flat did not affect the habitability of the primary residence. 3. The Paddington Property was leased to tenants for the period 1 September 2020 to 31 August 2021. 4. Both Unit 1 and Unit 2 of the Randwick Property were leased out from time to time. Unit 1 was leased out between 9 May 2016 to 9 May 2017 and again between 22 June 2019 and 22 June 2020. Unit 2 was leased to a Mr McLaughlin on 21 September 2019 and he stayed on in that unit after his tenancy agreement had expired until some time in January 2021. 5. The primary residence had not been demolished as at 31 December 2020. (I note that it appears from aerial photographs in the Respondent's s 58 documents that the primary residence had been demolished by 24 January 2021.) 6. Mr Emanuel Raissis changed his address on the electoral roll to become the address of the Randwick Property on 24 July 2020 and changed his address with Roads and Maritime Services to become the address of the Randwick Property on 22 July 2020.
3. Under cross-examination Mr Raissis' evidence was that after Mr McLaughlin's tenancy agreement ended, Mr McLaughlin stayed on as a tenant in the premises until 2021. He confirmed that Mr McLaughlin was merely a tenant of the Randwick Property and had no other rights or privileges in respect of the property.
4. Mr Raissis' evidence was not otherwise challenged and I accept it.

The parties' submissions

1. The Applicants submit that the principal place of residence exemption should apply because, even though the period of his occupation was relatively short, the Tribunal should be satisfied that Mr Raissis' occupation of the premises was not of a transient or temporary nature.
2. The Respondent submits that: 1. In order for cl 2(2)(b) of Sch 1A of the LTMA to apply, it is necessary for the Tribunal to be satisfied that Emanuel Raissis used and occupied the Randwick Property as his principal place of residence at midnight on 31 December 2020 and that because Mr Raissis' evidence is that he ceased to reside at the Randwick Property on 2 November 2020, it could not be so satisfied; 2. If that is not accepted and if the Tribunal accepts that Mr Raissis resided at the Randwick Property for the period 2 July 2020 to 2 November 2020, the Tribunal cannot be satisfied on the evidence that his occupation had the requisite degree of permanence to satisfy the principal place of residence test; and 3. The residency of the tenant, Mr McLaughlin, at the Randwick Property until January 2021 cannot enliven the principal place of residence exemption.

Consideration

1. Section 100(3) of the TA Act makes it clear that in reviews of this nature by the Tribunal the Applicants have the onus of proving their case. This requires them to prove all matters necessary for the Tribunal to answer the statutory question in their favour on the balance of probabilities. Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [28] - [31]; Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99.
2. The Respondent submits and I agree that the Applicants cannot rely upon clause 2(2)(a) of Sch 1A LTMA. That clause requires that the relevant land has been continuously used and occupied by the owner for residential purposes since 1 July in the year preceding the relevant land tax year. As Mr Raissis' evidence is that he commenced residing at the Randwick Property on 2 July 2020, he clearly does not satisfy the requirements of that clause.
3. Accordingly, the issue to be determined by this Tribunal is whether the Applicants can rely on clause 2(2)(b), that is whether the Tribunal is satisfied that the Randwick Property was used and occupied by Emanuel Raissis as his principal place of residence.

Time at which the availability of the principal place of residence exemption is to be determined

1. In Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP 50 the Appeal Panel of the New South Wales Administrative Decisions Tribunal considered whether a taxpayer could make good the principal place of residence exemption under the previous s 3(3)(b) of the LTMA which is in substantially identical terms to what is now clause 2(2)(b) of Sch 1A to the LTMA. In that case the taxpayer had leased the relevant property to a tenant for a short period of time, which period included 31 December of the year preceding the relevant tax year, such that the property was not capable of being occupied by the taxpayer on that date.
2. The Appeal Panel stated: 6 Section 10(1)(r) of the Act confers an exemption from tax on land which, among other things, is used and occupied as the principal place of residence of the owner and for no other purpose. … 8 It is implicit in the scheme of the Act that the point in time at which the issue of whether or not land is exempt from taxation is to be determined, is the moment in time at which land tax can be charged under Section 8 of the Act, namely, midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. … 12 Given the scheme of the Act aforementioned, it is implicit in Section (3)(3)(b) that the time at which the Chief Commissioner must be satisfied that the land is used and occupied by the owner as the owner's principal place of residence must be as at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. 26 … Section 3(3)(b) of the Act does not confer a true discretion on the Chief Commissioner. If the evidence of the factual circumstances supports that a particular parcel of land or a flat is used and occupied by a person as the person's principal place of residence (as defined in Section 3(1) of the Act) as at midnight on 31 December in a particular year, the Chief Commissioner must be "satisfied" of that fact. If the factual circumstances do not support that a particular parcel of land or a flat is used and occupied by a person as the person's principal place of residence as at midnight on 31 December in a particular year, the Chief Commissioner cannot be "satisfied" of that fact. (emphasis added)
3. In Miljus v Chief Commissioner of State Revenue [2020] NSWCATAD 302, in considering an exemption under clause 2(2)(b) of Sch 1 of the LTMA, the Tribunal stated at [13]: 13 Aldridge is also authority for the propositions that: (1) it is implicit in the scheme of the LTM Act that the point of time at which the availability of the PPR exemption is to be determined is the moment in time at which land tax can be charged under the Act, namely midnight on 31 December of the year immediately preceding the year for which the land tax is levied (i.e. the relevant tax year); and (2) in order for paragraph (b) of subclause (2) to be attracted, the Commissioner must be satisfied that the land is used and occupied by the person as the person's principal place of residence at that same point of time: midnight on 31 December of the year immediately preceding the relevant tax year: see Aldridge at [12], [22], [26].
4. In Uechtritz v Chief Commissioner of State Revenue [2013] NSWADT 111, in setting out the applicable principles for the exemption, the Tribunal stated at [46]: 46. The inquiry does not focus solely on the situation on 31 December. As Gzell J. pointed out in Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867 at [4]: "It extends to a consideration of its use during a reasonable period preceding and following the relevant date...." In that case, his Honour thought that six months before and after 31 December would be a reasonable period in the circumstances of that case.
5. Although it was not expressly articulated in submissions, I understood the Applicants to rely on this statement to support an argument that it was not necessary for Mr Raissis to satisfy the principal place of residence exemption as at 31 December 2020 provided that he had otherwise satisfied it for a period of time in the same calendar year. However, that decision and the Leda decision it refers to are authority for the proposition that, in determining whether the test for the relevant exemption is met as at 31 December of the year preceding the relevant tax year, regard should be had to the position in the period before and after that date. Neither of those decisions are authority for the proposition that if a taxpayer satisfies the principal place of residence test for a period before 31 December of the year preceding the relevant tax year, but does not satisfy that test at midnight on that date, the exemption can apply. In Uechtritz, the Tribunal confirmed this was the case at [44] as follows: 44. It is thus necessary for the applicant to establish that he used and occupied Byron Bay as his principal place of residence as at midnight on 31 December 2010.
6. I agree with the Respondent that it is clear from the authorities that it is necessary for the Second Applicant to establish that the Randwick Property was his principal place of residence as at midnight on 31 December 2020. As Mr Raissis' evidence is that he resided at the Randwick Property between 2 July 2020 and 2 November 2020, he was not residing at the Randwick Property at that time and so the Tribunal cannot be satisfied the Randwick Property was his principal place of residence.

Principal place of residence exemption

1. As such, there is no need for me to consider whether the principal place of residence exemption could otherwise have been satisfied.
2. However, if I had to determine that question, I would find that Mr Raissis also did not otherwise qualify for the exemption.
3. The authorities relating to the principal place of residence exemption are comprehensively summarised in the decision of this Tribunal in previous proceedings between the same parties to these proceedings which considered whether that exemption applied for a different tax year in respect of the Paddington Property: Raissis at [47] - [65].
4. At [47] the Tribunal set out the general principles emerging from Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 and other authorities as follows: 47 In Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 ("Yen-Cheng"), at [19] to [23], the Tribunal provided a useful summary of the considerations applicable to determining a person's principal place of residence, as follows: (1) The LTM Act does not provide any technical or legal meaning for the expression "principal place of residence", so the expression has its ordinary meaning. (2) In ascertaining whether a particular residence of a person is the principal place of residence of the person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of the use and occupation of the residence in each case: Dean v Commissioner of Stamp Duties (Qld) (No 2) [1996] 2 Qd R 557 per Fryberg J. (3) Older cases appear to accept that one formulation of a place of residence is "the place where [the person] eats, drinks and sleeps". (See, for example, Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699, at 706.) However, the Victorian Civil and Administrative Tribunal, in Ziino v Commissioner of State Revenue [2004] VCAT 1707 ("Ziino"), added a note of caution in the following terms: "…. while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters… One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house... Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases...". (4) Other indications of a principal place of residence include evidence of the taxpayer's use of the address of the property as the residential address for purposes of his or her mail, and whether that is the address shown on his or her driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills.
5. Further, at [60] the Tribunal summarised the tests suggested by the Appeal Panel in Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41, a decision relied upon by the Applicants in these proceedings, as follows: 60 In its reasons for decision, the Appeal Panel suggested important tests for determining a taxpayer's "principal place of residence" and the degree of permanence required in order to satisfy that concept. The tests were these: (1) The phrase "principal place of residence" should be given its ordinary meaning in the context in which the phrase appears. (2) Consideration as to whether a person has been residing at 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. (3) The intention of the person concerned, gauged objectively, is relevant but not determinative of the issue. (4) In order for there to be a finding that a particular person occupied a property as their principal place of residence their 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. (5) The duration of a person's residence is relevant but not determinative of the issue. A particular person's occupation of a home, while short, may have the requisite degree of permanence to it, but as the Appeal Panel put it at [42]: "But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or other passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence." (6) Significantly, the Appeal Panel noted that it is the nature of the occupation which provides the element of permanence. The fact that a period of actual occupation is short will in practice make it harder for the taxpayer to demonstrate that the occupation was as his or her principal place of residence, but it will not make such a conclusion impossible. (7) The reasons for a person's departure from the property must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances. In Bates the Tribunal thought that whether non-residence at the property resulted from matters entirely out of the control of the person was a factor to be considered. But in Ferrington, the Appeal Panel, whilst noting that "that is undoubtedly correct", cautioned that it should not be read as stipulating a requirement that the reasons for departure must be completely out of the relevant person's control.
6. While I accept, on the basis of his unchallenged evidence, that Mr Emanuel Raissis resided in the Randwick Property during the period 2 July to 2 November 2020, the question is not whether he merely resided there, but whether he resided there as his principal place of residence. A person may reside at more than one place, but only one of those places can be their principal place of residence for the relevant tax year: Uechtritz at [44]; Black v Chief Commissioner of State Revenue [2011] NSWADT 66 at [81].
7. I accept the Applicant's submission that the mere fact that the period of time Mr Raissis resided at the Randwick Property is not determinative and that a person can occupy a property for a relatively short period of time as their principal place of residence. Ferrington is clear authority for that proposition.
8. However, I do not consider that the Applicants have established on the evidence that his residency had the requisite degree of permanence to it to establish that it was his principal place of residence for the period 2 July 2020 to 2 November 2020. It is the quality and nature of the occupation which determines that element of permanence and there is insufficient evidence before the Tribunal to be satisfied as to the quality or nature of Mr Raissis' occupation of the Randwick Property during that period.
9. The Applicants have established that it was not possible for Mr Emanuel Raissis to reside during that period of time at the Paddington Property as it was leased to tenants. However, the Applicants were also the owners of the Bondi Property and there was no evidence as to whether Mr Raissis also resided at the Bondi property for any or all of the same period of time.
10. There is no evidence as to the number of nights that Mr Raissis slept at the Randwick Property. While there are photos of the kitchen and bathroom in Unit 1, there is no evidence as to the furniture he may have moved into and used at the property (including a bed). There is no evidence as to whether Mr Raissis ate at the property (other than a reference in the objection to having consumed one meal at a local McDonald's restaurant during that period) whether he entertained anyone at the property or his use of any utilities at the property.
11. Mr Raissis has not explained whether he had always intended to move out of the property after a period of four months, where he moved to when he vacated the property and why he moved when he did, given that the demolition of the primary residence did not occur until sometime after Mr McLaughlin vacated Unit 2 in January 2021.
12. While he did change his details on the electoral roll and with RMS in July, there is no evidence as to whether the Randwick Property was generally used by Mr Raissis as his postal address. As the Tribunal said in Raissis at [69] merely changing the electoral roll and address details with RMS does not substantiate residence (or the nature of that residence) by any person.
13. The Applicants were asked at the hearing whether they proposed to lead any further evidence as to the nature of Mr Raissis' residence at the Randwick Property and they indicated they did not wish to do so because they wished to maintain privacy as to Mr Raissis' personal affairs.
14. The Applicants' evidence has addressed one of the reasons given in the objection decision for disallowing the objection (that is they have demonstrated that the building works which began between August and September 2020 did not affect the habitability of the primary residence). However, the question before the Tribunal is not whether there was an error made in the objection decision, but rather what is the correct and preferable decision as to whether land tax should be assessed. The Applicants have not given the Tribunal sufficient evidence to be satisfied that the principal place of residence exemption should apply.

The relevance of Mr McLaughlin's residency of unit 2 until January 2021

1. The Respondent understood the Applicants to be arguing that Mr McLaughlin's tenancy supported a conclusion that he, Mr McLaughlin, used the Randwick Property as his principal place of residence until sometime in January 2021 and, therefore, at midnight on 31 December 2020, which of itself enlivened the principal place of residence exemption.
2. I did not understand that to be the Applicants' contention. I understood the Applicants to rely on Mr McLaughlin's tenancy simply to establish that the primary residence had not been demolished until sometime after he vacated in 2021.
3. If I am wrong about that, then I agree with the Respondent's submission that under cl 2(1) of Sch 1A of the LTMA, the exemption is available in respect of land used and occupied by the "owner" as the principal place of residence of the owner of the land. "Owner" is defined in s 3 LTMA as: Owner includes - (a) in relation to land, every person who jointly or severally, whether at law or in equity - (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, (b) (Repealed) (c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and (d) a person who, by virtue of this Act, is deemed to be the owner.
4. It is clear from the current and historical title searches of the Randwick Property which were contained in the Respondent's tender bundle that the owners of the Randwick Property were the Applicants and Ms Raissis, and not Mr McLaughlin. Mr McLaughlin was, at the relevant time, a tenant who, Mr Raissis conceded in cross-examination, enjoyed no other rights or privileges in respect of the property. As such even if the Randwick Property was Mr McLauglin's principal place of residence that does not enliven the exemption.

Conclusion

1. It follows that, on the basis of the materials before the Tribunal, I find the correct and preferable decision is that land tax should be assessed in respect of the Randwick Property for the 2021 land tax year.

Orders 1. The decision under review is affirmed.

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: 09 May 2022