Stewart v Chief Commissioner of State Revenue

Texts Cited: None

Category: Principal judgment

Parties: Tanya Stewart and David Henderson (Applicants)
Chief Commissioner of State Revenue (Respondent)

Representation: Counsel:
Adrian Maroya (Applicants)
Ermelinda Kovacs (Respondent)
Solicitors:
Peter Kilmurray Lawyers (Applicants)
Crown Solicitor (Respondent)

File Number(s): 2025/00303874

Publication restriction: None

REASONS FOR DECISION

Introduction

1. This is an application for review (‘Review Application’) by Dr Tanya Stewart (‘First Applicant’) and Dr David Henderson (‘Second Applicant’) under s 55 of the Administrative Decisions Review Act 1997 (NSW) (‘ADR Act)’ for a review pursuant to section 96 of the Taxation Administration Act 1996 (NSW) (‘TAA’) of the Chief Commissioner of State Revenue’s (‘Respondent’) notice issued to the Applicant on 25 February 2025, (‘Decision’) which levied land tax under the Land Tax Management Act 1956 (NSW) (‘LTMA’) in respect of a property owned by the Applicants as joint tenants in Merewether in New South Wales (‘Merewether Property’) for the 2023, 2024 and 2025 land tax years (‘Tax Years’).

2. The Applicants claim they are entitled to an exemption from land tax in respect of the Merewether Property under clause 2 of Schedule 1A of the LTMA as they always intended to use and occupy the Merewether Property as their principal place of residence following the completion of the construction of a new dwelling on the property.

3. The Respondent’s position is that the Merewether Property is not exempt from land tax as the Applicants’ intended principal place of residence pursuant to clause 6 of Schedule 1A of the LTMA in any of the Tax Years. The Respondent submits that he was entitled to assess the Merewether Property as liable for land tax in the Tax Years in circumstances where it was not exempt.

Legislative scheme

Land tax charged

4. Section 7 of the LTMA provides that land tax is to be levied and paid on the taxable value of all land in New South Wales (NSW) which is owned by taxpayers unless the land is exempt from taxation under the Act.

Land tax on taxable value of land

Land tax at such rates as may be fixed by any Act is to be levied and paid on the taxable value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act).

5. Section 8 of the LTMA provides that land tax is charged on land owned at midnight on 31 December immediately preceding the year for which land tax is levied.

6. Section 10(1)(r) of the LTMA provides that land is exempt from taxation under the principal place of residence exemption (‘PPR exemption’) as provided for by Schedule 1A of the Act:

(1) Except where otherwise expressly provided in this Act the following land shall... 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.

Principal place of residence exemption

7. At all relevant times, s 3(1) of the LTMA relevantly defined “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.

8. Schedule 1A to the LTMA identifies when the PPR exemption to land tax applies. The PPR exemption is contained in Part 2, and is conferred by clause 2 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

(a) 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 and 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.

Concessions in application of PPR exemption

9. Part 3 of Schedule 1A (clauses 4-10B) provide for specified ‘concessions’. These deal with various residential circumstances that fall outside the primary area of application of the PPR exemption. [1]

10. Part 3 of Schedule 1A relevantly contains clause 6, which grants a concession extending the operation of the PPR exemption to land that is presently unoccupied, but is intended by the owner to be occupied in due course solely as the owner’s principal place of residence:

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 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.

Note. …

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

11. Clause 6 is a deeming provision in that if it applies, the land is taken to be the principal place of residence of the owner who is entitled to the PPR exemption.

12. The phrase ‘unoccupied land’ is defined in clause 6(8) of Schedule 1A to mean, for the purpose of the clause is ‘land that is not being used or occupied for any purpose’.

13. Clause 6(4)-(7) of Schedule 1A sets out the circumstances in which the concession ceases to apply and/or is revoked, and makes provision for the re-assessment of land tax for those land tax years when the exemption had been applied as follows:

(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 the person’s principal place of residence on a taxing date, that 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 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) ….

(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 the person’s or member’s 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.

…

Restrictions in application of PPR exemption

14. Part 4 of Schedule 1A is headed “Restrictions” and relevantly contains clause 12. Clause 12 provides that only one principal place of residence may be treated as the principal place of residence of all members of the same family:

12 Only one principal place of residence for all members of the same family

1. For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family.

2. If members of a family own (whether jointly or separately) 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 in respect of a tax year.

3. Such an election is to be made, by or on behalf of the members of the family, in writing and must be lodged with the Chief Commissioner within the period for the lodging of objections under section 89 of the Taxation Administration Act 1996.

4. An election may be made, in respect of a tax year, by the end of the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability) for that tax year.

5. If an election is not made, the Chief Commissioner is to treat the residence that has the highest land value for land tax purposes as the principal place of residence of all members of the family.

6. Sub-clause 12(6) defines ‘family’ for the purposes of clause 12:

(6) For the purposes of this clause, a family consists of the following -

(a) a person and the person’s spouse (if any),

(b) any dependent child or dependent step-child of the person and the person’s spouse (or of either of them) who ordinarily resides with the person or the person’s spouse.

16. Clause 12(7) defines who is a ‘spouse’:

(7) A person is the spouse of another person if -

(a) they are legally married, or

(b) the person is the de facto partner of the other person.

Joint owners

17. Section 27 of the LTMA makes provision for how joint owners of land, other than those whose interests are exempt from taxation under the Act, are to be assessed and liable for land tax. The phrase ‘joint owners’ is defined section 3(1) of the LTMA to mean ‘persons who own land jointly or in common, whether as partners or otherwise, …’. Clause 1(2) of Schedule 1A provides that, for the purposes of the Schedule, a reference to ‘the owner of land’ includes, if there are joint owners, any one or more of those owners.

18. The effect of clause 2(1) and (3) of Schedule 1A of the LTMA is that where one (or more) joint owner of a property uses and occupies that property as that owner’s principal place of residence, all other joint owners may gain the benefit of the exemption with regard to their respective interests in the jointly owned property, even though they may use and occupy another residential property as their principal place of residence.

Onus of proof

19. Pursuant to s 100(3) of the TAA, the Applicants bears the onus of proving their case. This has previously been described by the Tribunal as being of “fundamental importance”: Byrne v Chief Commissioner of State Revenue. [2] The requisite standard of proof is the balance of probabilities: B & L Linings Pty Limited v Chief Commissioner of State Revenue. [3]

20. There is no onus or obligation on the Respondent to demonstrate that his assessments are correctly made: Federal Commissioner of Taxation v Dalco; [4] Gauci v Federal Commissioner of Taxation. [5] 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). [6]

Jurisdiction and role of the Tribunal

21. There is no dispute that the Decision is an administratively reviewable decision of the Respondent over which the Tribunal has jurisdiction: Civil and Administrative Tribunal Act 2013 (NSW) (‘NCAT Act’) section 30; TA Act section 96; and ADR Act sections 7, 9 and 55(1).

22. The role of the Tribunal on administrative review is to decide the correct and preferable decision, having regard to any relevant factual material before it and any applicable law: ADR Act section 63(1).

23. Section 101(1) of the TA Act sets out the powers of the Tribunal in determining an application for review made under section 96 of that Act, which include, to confirm or revoke the assessment or other decision to which the application relates, and to remit the matter to the Respondent for determination in accordance with the Tribunal’s findings or decision.

24. Section 101(2) of the TA Act provides that nothing in section 101(1) limits the powers of the Tribunal in Division 3 of Part 3 of Chapter 3 of the ADR Act and section 60 of that Act.

Issue for determination

25. The issue for determination is whether the Applicants have discharged their onus under s 100(3) of the TAA of proving that the Merewether Property which they own as joint tenants, is exempt from taxation under the LTMA in each of the Tax Years pursuant to clause 6 of Schedule 1A to the LTMA.

Background

26. The First Applicant and the Second Applicant are legally married. [7]

27. Since 3 April 2009, the Second Applicant has been the owner of a property in Coffs Harbour (‘Coffs Harbour Property’). [8]

28. Since 22 January 2013, the Applicants have been the owners (as joint tenants) of the Merewether Property. [9]

29. The Merewether Property was rented from February 2020 until May 2023. [10]

30. Between February 2020 and 1 October 2025, the Applicants lived at the Coffs Harbour Property. [11]

31. On 27 July 2022, the Development Application for the Merewether Property was approved by the City of Newcastle Council. [12]

32. Following the end of the rental agreement, the house on the Merewether Property remained vacant until it was demolished in August 2023 to enable construction of a new dwelling. [13]

33. In August 2023, building work commenced for the new dwelling. [14]

34. In her Affidavit affirmed on 1 October 2025, the First Applicant stated: [15]

Completion of the construction of the house on the [Merewether Property] is expected to take place on 15 December 2025, and it is my intention that my family will move-in on or about this date, and that it will be our principal place of residence.

I say that [the Merewether Property] should be regarded as mine and [the Second Applicant’s] principal place of residence. From July 2022, when the development application was approved by Newcastle City Council, we regarded [the Coffs Harbour Property] as a secondary dwelling, or temporary accommodation, during the period of construction of the new dwelling at [the Merewether Property].

35. On 13 February 2025, the Respondent issued a Notice of Investigation - Land Tax in respect of the Merewether Property. [16]

36. In the Decision, the Respondent assessed the land tax payable in relation to the Merewether Property for the Tax Years as $155,729.30. [17]

37. On 23 April 2025, the Applicants lodged an objection under the TAA in respect of their obligation to pay the land tax assessed in the Decision (‘Objection’). [18]

38. On 12 June 2025, the Respondent disallowed the Objection. [19] The basis upon which the Objection was disallowed was as follows: [20]

(a) that the Applicants are precluded from claiming the clause 6 concession on the basis that the concession for an intended principal place of residence cannot apply if the owner, or any member of the owner’s family, is entitled to claim the PPR exemption for another residence;

(b) on 7 March 2025, the Respondent received a “disclosure” from the First Applicant, indicating that she and the Second Applicant commenced occupying the Coffs Harbour Property as their principal place of residence during 2024, whilst the construction of the new dwelling at the Merewether Property continued;

(c) this was found by the Respondent to have been a “contravention of the prohibition under sub clause 6(7)(a)”, with the consequence that the clause 6 concession was revoked for the Tax Years.

Materials before the Tribunal

39. The material before the Tribunal comprises:

40. A bundle of documents filed by the Respondent pursuant to section 58 of the ADR Act on 17 March 2025 (‘R1’);

41. Respondent’s submissions filed on 5 November 2025 (‘RS1’);

42. Respondent’s supplementary submissions filed on 20 March 2026 (‘RS2’);

43. Affidavit of the First Applicant affirmed 1 October 2025 (‘A1’);

44. Applicant’s submissions filed on 8 October 2025 (‘AS1’);

45. Applicant’s submissions in reply filed on 5 December 2025 (‘AS2’);

46. Applicant’s supplementary submissions filed on 21 April 2026 (‘AS3’).

Tribunal hearing

40. At the hearing of the Review Application on 9 March 2026, no witnesses gave evidence. Counsel made oral submissions on the issues for determination by the Tribunal.

41. At the end of the hearing, the Tribunal invited the parties to file and serve supplementary written submissions.

Submissions

Applicants

42. The label “principal place of residence” is not “properly capable of attribution” to the Coffs Harbour Property. [21] A range of factors, including intention and other considerations, must be considered in a “common sense assessment taking into account a number of varying and even conflicting circumstances.” [22]

43. In relation to sub-clause 6(7)(a) of Schedule 1A, “it is not clear what work the words ‘or under this Schedule’ have to do; the Schedule itself does not specify the precise ambit of operation of that phrase.” [23] It is unclear from the Assessment “how the practical necessity for the Applicants to live in the Coffs Harbour property” while their intended permanent place of residence at the Merewether Property was being built “is a matter that was capable of neutralising the beneficial effect of the concession in clause 6. [24] If this is so, “no owner of land in the Applicants’ situation would be entitled to the concession stipulated in clause 6 of Schedule 1A.” [25] The “corollary of that interpretation” is that “every owner wishing to avail themselves of the exception would be obliged to rent a property if they had no other available means of accommodation during the period of construction of an intended principal place of residence.” [26] While this may often happen, it “is not the outcome clearly contemplated by Schedule 1A - nor should it be concluded that that is what Parliament intended.” [27]

44. The Respondent places “heavy reliance” upon the “clear-legislative purpose” said to be found in the Explanatory Note for the insertion in 1991 of section 10T of the LTMA, this section being the predecessor provision of clause 6 of Schedule 1A to the LTMA. This reliance is not in conformity with limitations on the use of legislative history as applied in Australia. [28]

45. The Tribunal “should focus upon the primacy of the Applicants’ intention as the key to the proper interpretation of clause 6”. [29] The fact that the Second Applicant has owned the Coffs Harbour Property since April 2009 “is not a matter which should be taken as capable of derogating from the primacy of the Applicants’ intention to use and occupy the Merewether Property solely as [their] future principal place of residence, for the purposes of sub-clauses 6(1) and (2).” [30] The concession in clause 6 is “in the nature of a beneficial provision, which should be construed so as to give the fullest relief which the fair meaning of the beneficial provision’s language will allow.” [31]

46. Nothing in the definition of “principal place of residence” in s 3(1) of the LTMA excludes an intended principal place of residence. The statutory text is plain and unambiguous, and does not exclude intended principal places of residence. [32] The Respondent’s submissions do not have regard “to the proper effect of the deeming provision” in clause 6. [33] A deeming provision operates so that, when the circumstances specified in the deeming provision are satisfied, the deeming provision requires a court or other body to proceed on the deemed basis when applying the law, notwithstanding what might be called the true facts. [34] That is the position here, and distinctions between “actual” and “intended” principal places of residence “are arid, because they derogate from the effect of the legal fiction pre-supposed by clause 6.” [35] The absence of any qualification to the definition in s 3(1) lends considerable support to the Applicants’ argument that an intended principal place of residence is within the purview of the definition. [36] Sub-clause 2(2) of Schedule 1A is broad enough to capture an intended principal place of residence and, more particularly, cl 2(2)(b) does not expressly exclude that possibility. [37]

47. The Tribunal should conclude that the Applicants are entitled to the benefit of the concession in clause 6 of Schedule 1A. [38] The objective and subjective elements of clause 6 are amply made out on the evidence before the Tribunal, and the exception in sub-clause 6(7) does not apply. [39]

48. There is nothing in Schedule 1A to suggest that the effect of the deeming provision in cl 6 does not apply throughout Schedule 1A. No such limitation can be discerned from the text. Restrictions are dealt with in Part 4 of Schedule 1A and there is no relevant exclusion. The contrary appears to be the case, for example cl 12(10), which provides that “[n]othing in this clause prevents more than one residence from being treated as the principal place of residence of members of a family under clause 7 (Concession for change to principal place of residence)”. [40] If it were intended to qualify the effect of the deeming provision in cl 6, then a mechanism like that in sub-cl 12(10) might have been expected to be included, and it was not. [41]

49. The Respondent has not been able to explain how it is that the Applicants have either (a) not elected, by seeking to avail themselves of the intended PPR exemption, to treat the Merewether Property as their principal place of residence; or alternatively (b) under sub-clause 12(5), why the Respondent has not treated “the residence that has the highest land value for land tax purposes as the principal place of residence of all members of that family”. [42] The Merewether Property was exempt from taxation at all relevant times pursuant to cl 12(5) of Schedule 1A of the LTMA.

Respondent

50. The Applicants have not discharged their onus of proving that clause 6 of Schedule 1A applies. [43]

51. It is clear from the text of clause 6(7)(a) that the concession in clause 6 does not apply in respect of the Merewether Property, if the Second Applicant (as the owner of the Coffs Harbour Property) or the First Applicant (as a member of the Second Applicant’s family (cl 12(6)-(7) of Schedule 1A) is entitled to have their actual (as opposed to intended) use and occupation of the Coffs Harbour Property taken into account “under this Schedule”. [44] The “Schedule” is plainly Schedule 1A which is relevantly headed “Principal place of residence exemption”. Actual use and occupation of land is taken into account under Schedule 1A in clause 2. [45] The Applicants have not shown that the Second Applicant is not entitled to have his actual use and occupation of the Coffs Harbour Property taken into account under clause 2 of Schedule 1A. [46]

52. This construction is entirely consistent with the clear legislative purpose evidenced in the Explanatory Note for the Land Tax Management Amendment Act 1991 (NSW) which inserted former section 10T of the LTMA, being the predecessor provision of clause 6 of Schedule 1A. [47] The Parliament did not intend for a taxpayer to claim the exemption under former section 10T if the taxpayer was “already entitled to the principal place of residence exemption” for other land. [48]

53. The Tribunal would not overlook the actual statutory text of clauses 2, 6 and 12 of Schedule 1A. It would not focus on the asserted “primacy” of the relevant intention of the landowner. [49] The statutory text in clause 6(7)(a) of Schedule 1A is clear. Even if all the requisite criteria in clause 6 are met - including as to “intention”, clause 6 does not apply if the owner of the land, or a member of their family, is entitled to have their actual use and occupation of other land taken into account under Schedule 1A. [50]

54. The statutory text in s 3(1) of the LTMA which defines “principal place of residence” is plain. The “principal place of residence” of a person is defined to mean the one place of residence, that is the principal place of residence, of the person. That definition must be read alongside cl 2(2) of Schedule 1A. It is clear that the definition of “principal place of residence” in s 3(1) of the LTMA, as supported by cl 2(2) of Schedule 1A, is directed at identifying one place of residence actually used and occupied by the person continuously since 1 July in the year preceding the relevant tax year, or, alternatively, a place of residence for the person that the Respondent is satisfied is in fact used and occupied by the person as the person’s place of residence. It is clearly not directed to an intended principal place of residence. [51] It is difficult to envisage circumstances in which the Respondent may be satisfied that an intended place of residence is in fact “used and occupied by the person as the person’s principal place of residence”. However, and in any event, the Respondent was not so satisfied in connection with the Merewether Property at any relevant time. Nor do the Applicants contend otherwise. [52]

55. The Applicants’ argument that the definition of “principal place of residence” in s 3(1) of the LTMA excludes an intended principal place of residence should be rejected. [53]

56. The reference to “the residence” in cl 12(5) of Schedule 1A is a reference to a relevant residence that came within cl 12(2). That is, a “residence used and occupied by any of them as a principal place of residence”: cl 12(2). It follows that the pre-condition for cl 12(5) has not been satisfied, as the parties agree that the Merewether Property was not a place of residence of the Applicants that was actually used or occupied at any relevant time. The Merewether Property was unoccupied at all relevant times. [54]

57. Accordingly, to the extent that the Applicants claim that the Merewether Property was exempt from taxation at all relevant times pursuant to cl 12(5) of Schedule 1A of the LTMA, this should be rejected by the Tribunal. [55]

Consideration

58. The issue for determination is whether the Applicants have established that the requirements of clause 6 of Schedule 1A were met in the Tax Years in relation to the Merewether Property. If this is not established, the PPR exemption in clause 2 of Schedule 1A will not apply to the Merewether Property.

Findings of fact

59. The key facts are agreed between the parties and are accepted by the Tribunal, specifically that:

(a) the Applicants have been the owners (as joint tenants) of the Merewether Property since January 2013; (b) during the period between February 2020 and May 2023, the Applicants leased out the Merewether Property; (c) in August 2023, building or other works commenced on the Merewether Property; (d) during the period between May 2023 and 1 October 2025, the Merewether Property was unoccupied land because the Applicants were carrying out building or other works necessary to facilitate their intended use and occupation of the land as a principal place of residence; (e) during the period between February 2020 and 1 October 2025, the Applicants continuously used and occupied the Coffs Harbour Property for residential purposes.

2003 Amendment Act

60. Schedule 1A of the LTMA was introduced by the State Legislation Further Amendment Act 2003 (‘Amendment Act’). The Amendment Act was assented to on 27 November 2003 and became effective on the 1 January 2004. It repealed the former section 10T and modified and introduced the current version of the PPR exemption in cl 2 of Schedule 1A.

61. The Explanatory Note for the State Revenue Legislation Further Amendment Bill 2003 states in the Overview section that one of its objects is:

(d) to amend the Land Tax Management Act 1956 to re-enact and revise the principal place of residence exemption and for other purposes.

62. The Explanatory Note in its substantive discussion of the PPR exemption relevantly stated:

Principal place of residence

Schedule 4[5] and [11] repeal and replace the exemption granted under the Act for a person’s principal place of residence. In particular, changes are made which:

…

(b) remove certain restrictions for the current exemption for land on which a new family residence is being built or an existing residence is being refurbished

…

(e) allow each family, including dependents under 18, a concession for only one property, except when buying a new principal residence and selling their existing residence.

63. The Second Reading speech of 14 November 2003, which introduced the Amendment Bill stated at [6]: [56]

The bill amends the Land Tax Management Act 1956 provisions relating to land tax concession for an owner’s principal place of residence. The amendments will allow an owner to claim the concession for two residences where the owner has bought a new residence and has not been able to complete the sale by the taxing date. The bill will also remove certain restrictions on the current exemption on the land where a new family residence is being built or an existing one is being refurbished provided the owner takes up residence in the completed house within two years and remains in residence for at least 6 months ...

64. In White & a**nor v Chief Commissioner of State Revenue (‘White’), [57] Judicial Member Greenwood noted at [22]:

The policy behind the amendments therefore indicated here is an intention by the legislature to recognise transition, of moving between places of residence and an indication that persons who are tax payers are not unfairly penalised during the period of transition and time associated with the transition. The legislation also sets conditions in order to avoid abuse.

65. Greenwood J further observed at [45]: [58]

The language of the legislation and the desire to provide for situations of transitional changes for those moving home, purchasing, selling and building homes and those going through familial reconstructions appear from the speech form the basis of the revising of underlying policy.

Clauses 6 (1) and (2) of Schedule 1A

66. Clause 6 of Schedule 1A, on which the Applicants rely, extends the PPR exemption in cl 2 to “unoccupied land” which is defined in cl 6(8) to mean “land that is not being used or occupied for any purpose”. In Vatner v Chief Commissioner of State Revenue (‘Vatner’)**, [59] referring to the decision of the primary judge, the Court of Appeal explained at [27]:

… the purpose of cl 6 “is to extend the exemption in cl 2(1) to land which is unoccupied … and consequently would not satisfy the key requirement of cl 2(1) which is that the land be used and occupied by the owner as his or her principal place of residence on the relevant taxing date”. Pursuant to cl 6(1), an owner of unoccupied land is entitled to claim “the land” (being the “unoccupied 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”, cl 6(1) provides that “the owner is taken, for the purpose of the [PPR exemption], to use and occupy the unoccupied land as the owner’s principal place of residence”.

67. Clause 6(1) of Schedule 1A is a deeming provision “to facilitate the transition process intended, considered and enacted by the legislature to allow taxpayers to change their principal residences over time as a fair and practical policy to avoid being penalised.” [60] As explained by Greenwood J in White:

By the deeming, the Act “creates a fictitious factual situation”: see Loizos v Carlton and United Breweries Ltd at page 32, line 40. The Act proceeds on “a hypothesis different from the actual fact”: see Union Fidelity Trustee Company Ltd v Federal Commissioner of Taxation (1969) 199 CLR 177 at 187 per Kitto J. in the context of an “as if” provision.

68. If the requirements of cl 6(1) and (2) are met, the Applicants are taken and are deemed to “use and occupy the unoccupied land as [their] principal place of residence” for all and not merely some of, the purposes of the PPR exemption as part of the transitional procedure contemplated by the legislation. [61]

69. Based on the agreed facts, including in relation to the Applicants’ intentions in relation to the Merewether Property, I find that sub-clauses 6(1) and (2) are satisfied and, subject to clause 6(7) (considered below) entitle the Appellants to have the Merewether property treated as land to which the PPR exemption may apply.

Clause 6(7)(a) of Schedule 1A

70. The intention of Parliament “to provide for the transition process of one principal place of residence to another is further specified and protected from abuse” by sub-clause 6(7) of Schedule 1A. [62] This excludes from the scope of the concession in clause 6 any land owned by a person that falls into one of three specified categories. Relevantly, sub-clause 6(7)(a) provides:

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 the person’s or member’s actual use and occupation of other land taken into account under section 9C or 9D or under this Schedule …

71. In Kolln v Chief Commissioner of State Revenue (RD) (‘Kolln’), [63] the Appeal Panel observed that the term “entitled” as it is used in sub-clause 6(7)(a), “is, perhaps, an unusual word to describe a disabling circumstance.” [64] The Panel continued: [65]

It is used in the sense of describing an attribute, characteristic or circumstance. In this case the appellant is a person who possesses the attribute or characteristic of having land with which he (sic) has a relationship of actual use and occupation.

Once that characteristic exists, he (sic) is excluded by virtue of sub-cl (7) from claiming the prima facie entitlement given to him (sic) by the earlier sub-clauses.

72. In Kol**ln, the Appeal Panel endorsed the Tribunal’s reliance on its previous decision in Aronstan v Chief Commissioner of State Revenue (‘Aronstan’). [66] In Aronstan at [50]-[51], the Tribunal referenced subsection 10T(3)(a), the predecessor of subclause 6(7)(a) prior to the insertion of Schedule 1A by the Amendment Act, at [50]-[51] as follows:

In the present matter, the Chief Commissioner has denied the concession on grounds that subclause 6(7), in particular paragraph (a), applies to the applicants. The predecessor of subclause 6(7)(a) was subsection 10T(3)(a) which provided as follows:

the person or any joint owner of the land is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 10(1)(r).

The effect of the proviso in s 10T(3)(a) was considered by the Tribunal in Wilks v Chief Commissioner of State Revenue [2002] NSWADT 248 where Judicial Member Block held at paragraph 19 as follows:

... The concession under section 10T was available only where the Applicant was not entitled to an exemption for another property under section 10(1)(r) and the plain fact is that he was so entitled in respect of the McMahons Property in relation to the relevant year. This is so having regard also to section 3(3)(a) of the Act and the fact that property had been “continuously used and occupied ... for residential purposes” since the preceding 1 July. The McMahons Property may at that time and from the Applicant’s subjective point of view have been owned by him on a temporary basis in the sense that he intended to sell it at a convenient time thereafter but that is not the point. The plain fact is that once the McMahons Property qualified for the section 10(1)(r) exemption in relation to the relevant year (and it clearly did) then and in respect of the Castlecrag Property the section 10T concession was not available.

73. In Aronstan, Judicial Member Verick observed that the test considered in Wilks v Chief Commissioner of State Revenue (‘Wilks’) [67] is similar to the current test found in subclause 6(7)(a) of Schedule 1A, and the provisions of subclause 6(7)(a) “apply in the same manner”: [68]

If, an owner has another residence which is his or her principal place of residence in the relevant year for purposes of Schedule 1A, then the concession under clause 6 is not available to that owner. Judicial Member Block’s observations would thus equally apply to the operation of subclause 6(7)(a). The language of the subclause is clear and the concession is simply denied to an owner who is in occupation of another property, which for purposes of Schedule 1A is his or her principal place of residence on the relevant taxing date.

As observed by Judicial Member Block in Wilks it does not matter that, from an owner’s subjective point of view the occupation of a particular residence is on a temporary basis after the purchase of another property, which is intended to be the future principal place of residence. The fact that a property has been continuously used and occupied and is regarded as the principal place of residence will only cease to be the principal place of residence of a person when he or she ceases to continuously use and occupy the property.

74. In Theophilas v Chief Commissioner of State Revenue, (‘Theophilas 2013’) [69] the Appeal Panel comprehensively addressed the issue of the scope of the operation of cl 6(7)(a) of Schedule 1A and its interpretation. The Panel stated at [47]-[51] as follows:

The language of clause 6(7) is cumbersome, but the Appeal Panel is satisfied that the appellant’s construction is correct. The clause 6 concession is denied in the event the landowner uses and occupies another residence he owns, as his principal place of residence. It is not sufficient to deny the exemption if the land owner merely resides at other premises he owns. This is consistent with ss 8 and 9 of the Land Tax Management Act that together provide that land tax is levied on the taxable value of all land that is not exempt, owned at midnight on the 31st of December of the year preceding the tax year. In order to determine the relevant taxable value, it is necessary to determine whether any exemptions actually (not possibly might) apply, at the taxing date.

Furthermore, the reference in clause 6(7)(a) to a person being “entitled” to have his occupation of other land “taken into account” is a product of the reference in clause 6(7)(a) to s 9C and s 9D of the Land Tax Management Act. …

This supports the construction advanced by the appellant that the other land must be the principal place of residence of the owner, either as a result of the operation of s 3 and clause 2 of Schedule 1A, or as a result of a deeming provision in Schedule 1A, in order to activate clause 6(7) and disentitle an owner to the unoccupied land tax exemption. It is not enough if the other land is merely a contender for the principal place of residence exemption, rather, it must be the principal place of residence.

75. In its later decision in Theophilas v Chief Commissioner of State Revenue, [70] the Appeal Panel cited with approval the above quoted paragraphs from its decision in Theophilas 2013. [71] The Appeal Panel summarised the “proper interpretation” of cl 6(7)(a) as follows: [72]

Accordingly, if there is an owned property still occupied as the taxpayer’s PPR, then cl 6(7) operates, and the availability of the concession is denied. The result is that the land to which the owner intends to return in due course and occupy it as his or her PPR does not attract the exemption. The actual PPR attracts the exemption.

76. In Smith v Chief Commissioner of State Revenue, [73] the Tribunal made the following important and relevant observation in its consideration of cl 6(7) of Schedule 1A: [74]

There is no legislative facility or discretion available to reassign the location of the principal place of residence to minimise the land tax assessable, in isolation of the facts of the situation.

77. In accordance with these authorities, I find that the Respondent was entitled to deny the Applicants under subclause 6(7)(a) the concession otherwise available under clause 6. Once subclause 6(7)(a) was “enlivened”, clause 6 did not apply to the Merewether Property.

78. The Tribunal recognises the principles of construction applicable to the interpretation of tax legislation, including the principle that a concession or exemption “should not be construed narrowly”: Penrith Rugby League Club Ltd v Commissioner of Land Tax. [75] Such provisions should, if necessary, be given a “benevolent construction”: Kidston Goldmines Ltd v Commissioner of Taxation. [76] However, in the case of the concession in clause 6 of Schedule 1A the statutory language is clear, and the proper interpretation of cl 6(7)(a) has been pronounced by the Appeal Panel.

Clause 12 of Schedule 1A

79. The Applicants contend that clause 12 confers a right of election where two properties are owned, and that that right of election can operate in default of an election so as to confer the PPR exemption on the higher value property.

80. The Second Reading Speech to the Amendment Bill recognised that clause 12 of Schedule 1A was introduced “to restrict tax minimisation practices of transfers between family members.” [77] In Arons**tan, Judicial Member Verick observed: [78]

Clause 12 [was] inserted as an anti-avoidance provision to prevent a family from obtaining more than one principal place of residence exemption from land tax.

The provision is designed to apply where a family uses or occupies more than one place of residence as their principal place of residence. This could arise in a number of situations ... In the absence of clause 12, both properties would be entitled to the principal place of residence. In fairness to other owners of land in New South Wales, this clause restricts the exemption to only one residence for a family. Under this clause, the family is allowed to nominate by way of an election one property as their principal place of residence for purposes of the exemption under the LTM Act.

Clause 12 is not a provision that enables an owner of two or more residences to nominate one of the residences for purposes of the principal place of residence exemption. The residence that is used and occupied by a person, as his or her principal place of residence has to be determined by an objective test having regard to all the facts and surrounding circumstances. A person can have only one residence as his or her principal place of residence. It is only in the case of a family that two or more residences may qualify as the principal place of residence of the family members when taken into account as a group. As indicated above, clause 12 confines the exemption to only one property in such cases.

81. Judicial Member Verick noted at [58] that in White, Greenwood J correctly accepted: [79]

This clause was included as evidenced by the second reading speech to restrict tax minimisation practices of transfers between family members and that is not the situation in this case and both the applicants are married and cohabitate as the one family and jointly own both [properties].

82. Judicial Member Verick concluded: [80]

Clause 12 … has a special role. The clause has been inserted in Schedule 1A to restrict the exemption to one property for each family subject to, of course, establishing that the family uses and occupies more than one residence as their principal place of residence.

83. The Applicants’ factual circumstances do not meet the criteria for clause 12. Clause 12 applies where different members of the same family each own, use and occupy separate (“more than one”) residence as their respective principal place of residence. The Applicants are members of the same family and did not use and occupy more than one residence (different residences) as their respective principal place of residence for the Tax Years. As a married couple living together, the Applicants occupied the Coffs Harbour Property as their principal place of residence for the relevant Tax Years. In these circumstances, clause 12 has no application and it was not available to the Applicants to nominate the Merewether Property as their principal place of residence on the relevant taxing dates. Clause 12 has a “special role” to restrict the clause 6 concession to one residence where members of a family have more than one principal place of residence. As the Applicants did not have more than one residence that they used and occupied, the Merewether Property being unoccupied at all relevant times, clause 12 has no application to their factual circumstances.

Conclusion

84. The Applicants were not entitled to the clause 6 concession for the Merewether Property for reason that, pursuant to the application of sub-clause 6(7)(a), the Second Applicant owned another property, the Coffs Harbour Property, which was being used and occupied as the Applicants’ principal place of residence on the relevant taxing dates. The Applicants could not seek to nominate the Merewether Property as their principal place of residence under clause 12, as it did not apply to their factual situation as at the relevant taxing dates because the Merewether Property was unoccupied at all relevant times.

Decision

85. Having regard to the above findings and based on the evidence before the Tribunal, the Applicants have not satisfied me on the balance of probabilities that the Coffs Harbour Property was not their principal place of residence in respect of the Tax Years. Accordingly, the concession in clause 6 of Schedule 1A of the LTMA for unoccupied land intended to be the Applicant’s principal place of residence does not apply, and the Merewether property was not exempt from land tax for the Tax Years.

86. The decision under review is confirmed under s 101(1)(a) of the Taxation Administration Act 1996 (NSW).

**********

Endnotes

De Marco v Chief Commissioner of State Revenue (2013) 83 NSWLR 445; [2013] NSWCA 86 at [25] (McColl JA), [94] (Gzell J).

[2023] NSWCATAD 234 at [15].

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

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

(1975) 135 CLR 81 at 89 (Mason J).

[2013] NSWADTAP 25 at [36].

A1 [3].

A1 [4].

A1 [5].

A1 [7].

A1 [15], [19].

A1 [6].

A1 [8].

A1 [9].

A1 [10]-[11].

R1, 9-10.

R1, 11.

R1, 44-45.

R1, 110-112

R1, 111.

AS1 [23].

AS1 [26] citing Re Hood [2004] ACL Rep 395 Vic 5; [2004] VSC 328, Hollingworth J at [36]-[38]; and Re Parzatka [1992] AATA 268; (1992) 28 ALD 386.

AS1 [32].

AS1 [33].

AS1 [34].

AS1 [34].

AS1 [35].

AS2 [4]-[5] citing Re Bolton; Ex parte Beane (1987) 162 CLR 514, 518. Herzfeld and Prince, Interpretation (3rd edn) [8.250]; and Gageler J in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 271 CLR 495, [72].

AS1 [36].

AS1 [37].

AS2 [10] citing R v Kearney; Ex parte Jurlama (1984) 158 CLR 426, 433 (per Gibbs CJ; Brennan, Deane and Dawson JJ agreeing).

AS3 [4].

AS3 [5].

AS3 [6] citing Commissioner for Railways v Bain (1965) 112 CLR 246 at 273 (Windeyer J); Maroney v The Queen (2003) 216 CLR 31 at [11] (Gleeson CJ, McHugh, Callinan and Heydon JJ); Herzfeld and Prince, Interpretation (3rd edn) [3.130].

AS3 [8] referring to RS2 [11]-[12].

AS3 [9].

AS3 [15].

AS1 [38].

AS1 [39]; AS2 [14].

AS3 [11].

AS3 [12].

AS3 [21].

RS1 [24].

RS1 [28].

RS1 [29].

RS1 [27].

RS1 [30].

RS1, [8], [32].

Referring to AS1 [36] - [37].

RS [33].

RS2 [11].

RS2 [17].

RS2 [14].

RS2 [23].

RS2 [26].

Cited in White & anor v Chief Commissioner of State Revenue [2007] NSWADT 241 (‘White’) at [21].

[2007] NSWADT 241.

at [45].

[2025] NSWCA 55.

White at [35].

White at [37].

White at [28].

[2011] NSWADTAP 58.

at [17].

at [17].

[2008] NSWADT 8.

[2002] NSWADT 248.

Aronstan at [52]-[53].

[2015] NSWCATAP 39.

[2016] NSWCATAP 111.

At [47]

At [48].

[2005] NSWADT 170.

At [13].

[1983] 2 NSWLR 616 at 622 per Hunt J.

(1991) 30 FCR 77 at [13] per Hill J; White at [43].

Cited in White at [34].

At [55].

White at [34].

Aronstan at [59].

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