Tang v Chief Commissioner of State Revenue

The Applicants' submissions and evidence

1. The Applicants say that: 1. They were registered as the proprietors of the Land on 10 July 2018. 2. On or about that date, the House became Mr Tang's principal place of residence, while Mrs Tang continued to reside at another address because she was caring for a disabled family member there. 3. The House remained Mr Tang's principal place of residence until 12 June 2020, when he vacated it and started to live elsewhere. The reason for this move was that shortly before that date he learnt of a death which had occurred in the House and became convinced that certain noises which he heard there at night were explicable by the House being haunted. 4. The Applicants then decided to demolish the House and replace it with a new residence, presumably in order to deprive the unwelcome spirit of its home. In pursuance of this plan, on 9 December 2020 the Applicants entered into a contract with Allworth Constructions Pty Limited for the construction of a new residence on the Land (the Contract).
2. In support of the proposition that Mr Tang lived at the Land from on or about 10 July 2018 until 12 June 2020, the Applicants provided the following: 1. A copy of a receipt for $80.00 dated 7 July 2018 purportedly issued to Mr Tang for charges paid by him to a removalist who moved a bed, table, chair and shelf to the House; 2. A certificate of insurance issued by NRMA Insurance for the period from 6 July 2018 to 6 July 2019, evidencing building insurance for an amount of $308,000 obtained by the Applicants in respect of the improvements on the Land; 3. Three statements from Sydney Water relating to water supply at the Land, each addressed to the Applicants; one is dated 4 December 2018, and covers water usage at the Land from 9 July 2018 until 8 October 2018; the second is dated 7 January 2019 and covers water usage from 8 October 2018 to 7 January 2019; and the third is dated 8 April 2020 and covers water usage from 9 January 2020 to 8 April 2020; 4. A notice of valuation for the Land issued by the Valuer-General to the Applicants and valuing the Land as at 1 July 2019; and 5. A rates instalment notice for the Land issued by Fairfield City Council to the Applicants, covering the rates instalment due on 31 May 2021.
3. In support of the proposition that the Land is unoccupied, but is intended to be used and occupied by them as their principal place of residence, the Applicants provided a photocopy of several pages of the Contract, namely: 1. A cover page; 2. Schedule 1, which specifies the contract price ($549,776), the deposit ($6,000), the owners (who are the Applicants), the builder, the land where the building work is to be performed (which is the Land) and the building period for the work; and 3. A signature page, on which there are signatures which appear to be those of the Applicants, as owners of the Land, and a director and secretary of Allworth Constructions Pty Limited, as builder.
4. In response to the Respondent's submissions (which are summarised below but are to the general effect that there was little evidence of the usual incidents of residential occupancy to corroborate the Applicants' claims), the Applicants say that: 1. Mr Tang resided in the House in a way which was informed by the straitened circumstances of his childhood in post-revolutionary Cambodia. 2. He did not use mains electricity, but rather relied for light on a LED torch. 3. He did not use mains gas for cooking, but rather used bottled gas. He cooked little, generally using preserved foods or food cooked elsewhere. 4. He used little mains water. He conserved rainwater and used mains water only to top this up when it ran low. He used bottled water for drinking. He did not use the toilet installed in the House, preferring either to visit public facilities in a nearby park or to use a receptacle for nocturnal urination, the contents of which he emptied onto the Land each morning. 5. He adopted this self-denying regime "[b]ecause I am on low income and making ends meet", to quote his submission to the Respondent dated 26 June 2021.

The Respondent's submissions and evidence

1. The Respondent said that: 1. The onus of proof rested on the Applicants, and they had failed to demonstrate that either: 1. Mr Tang had resided on the Land during the relevant tax years, or 2. If he had, any such residency was of sufficient length, nature or degree to amount to use or occupation of the Land as his principal place of residence; 1. At all material times Mrs Tang lived at, and Mr Tang's electoral address was, an address other than the Land; the Respondent provided searches of the electoral rolls to this effect; 2. Objective factors such as his electoral address (which was not the Land), utilities usage (which was either not demonstrated or, in the case of water use, negligible), insurance coverage (which was for the building on the Land only, not contents, thus suggesting that the House was unfurnished and unoccupied) are not consistent with the Land being his principal place of residence; 3. Rates notices and the Notice of Valuation themselves say nothing about whether the Land was or was not Mr Tang's principal place of residence; 4. The statements made by Mr Tang as to his and his wife's intentions concerning the use of the Land are inconsistent and insufficient to demonstrate his use of it as a permanent place of residence; 5. The Applicants have not demonstrated a sufficient nature or degree of permanent occupation of the Land to show that it was Mr Tang's permanent place of residence; there is little evidence to suggest that it was furnished or habitable in any but the most rudimentary way or that he undertook there any significant activities of daily living; and 6. The evidence does not convince that Mr Tang spent anything other than, at most, brief periods of time at the Land.
2. As far as the concession under clause 6 of Schedule 1A to the LTM Act is concerned, the Respondent said that: 1. The Applicants had failed to demonstrate that it applied in relation to the two tax years under consideration. 2. First, if as they claim the Land was occupied by Mr Tang as a principal place of residence, it could not be unoccupied as Clause 6 requires. 3. Secondly, even if not occupied as a principal place of residence, the Land's occupation even for limited purposes such as maintenance or in a more circumscribed way than is required for it to be a principal place of residence still takes it outside the scope of the exemption in clause 6. 4. Thirdly, apart from several pages of the Contract, the Applicants have provided no evidence of any steps taken which are consistent with the construction on the Land of a new residence for the Applicants. There was no evidence as to the demolition of any existing improvements, the commencement of any construction works or, indeed, the obtaining of any council approvals for the construction of the proposed residence.

Reasoning: principal place of residence exemption

1. There was no dispute that the Land is residential land for purposes of that exemption, within the meaning of clause 3 of Schedule 1A to the LTM Act.
2. Since the Land was not occupied by an Applicant until at the earliest 6 July 2018 (as the Applicants accept in Mr Tang's written submissions of 29 July 2021), it follows from clause 2(2) of Schedule 1A to the LTM Act that for the 2019 tax year the Land cannot be exempt under the principal place of residence exemption unless the Respondent is satisfied that during that tax year the Land was used as an Applicant's principal place of residence.
3. In the case of the 2020 tax year, there are alternative tests potentially applicable under clause 2(2), being either that: 1. the Land, and no other land, was continuously used and occupied by the person for residential purposes and for no other purposes since 1 July 2019; or 2. the Respondent is satisfied that during that tax year the Land was used as an Applicant's principal place of residence.
4. In reality, these tests all require investigation of a common set of factual issues, which the Tribunal's predecessor tribunal identified in Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160, at [19] to [23]: [19] The Act does not provide any technical or legal meaning for the expression "principal place of residence" and accordingly, the expression has its ordinary meaning. A person's place of residence is usually understood as "the place where he eats, drinks and sleeps" (per Ridley J in Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706). The use of the term "principal" in the expression suggests that a person may use and occupy more than one residence but that the exemption is only available for the principal place of residence of the person. [20] In ascertaining whether a particular residence of a person is the principal place of residence of that person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of use and occupation of the residence in each case (per Fryberg J in Dean v Commissioner of Stamp Duties (Qld)(No 2) [1996] 2 Qd R 557 in considering the meaning of the expression "principal place of residence" found in the Stamps Act 1894 (Qld)). [21] The onus to establish one's principal place of residence is usually discharged on the basis of various matters. It is important to note, as observed by the Victorian Civil and Administrative Tribunal in Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 that: "… 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…" [22] Other indicia of matters would include evidence of an applicant's use of the address of the property as the residential address for purposes of his or her mail, driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills. [23] In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 the Appeal Panel of the Tribunal agreed that "to occupy a home as his or her principal place of residence a person's 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 occupation for any other reason". The Appeal Panel also held that "the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue". (Also see Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26).
5. Applying this approach, the first step is to ask where did the Applicants eat, drink and sleep during the relevant period? 1. There is no dispute that Mrs Tang did not eat, sleep or drink (at least with any frequency or regularity) on the Land, because her duties in caring for a disabled family member demanded her presence elsewhere. 2. Mr Tang, however, asserts that, at least until 6 June 2020, his nights were spent at the House, where he often ate preserved food or food cooked elsewhere, he cooked using a bottled gas burner and he drank bottled water from the supermarket rather than consume the reticulated water available at the House. The only corroboration for this is: 1. The receipt of 6 July 2018, which he says indicates that he had some basic furniture moved to the House, including a bed; and 2. The various water accounts. 1. The receipt purportedly relating to removalist's charges is not particularly compelling evidence, for two reasons: 1. The receipt does not disclose the identity of the removalist and appears to be a pre-printed receipt document of the kind that can be purchased at stationers. There is nothing on its face to give it any authority or credibility. 2. The receipt refers only to the removal of a bed, table, chair and shelf. Even allowing for Mr Tang's willingness to do without creature comforts, this appears to be remarkably little domestic equipment to support an extended residence on the Land. One might expect a few more basic domestic goods - bedding, crockery, cutlery and cooking utensils, for example - to be necessary, even for the ascetic lifestyle which Mr Tang claims to have adopted. 1. The water accounts certainly indicate that little reticulated water was consumed at the house during the relevant tax years. This is not inconsistent with Mr Tang's having consumed bottled water and eschewed the convenience of indoor plumbing while living there. Equally, however, it is entirely consistent with at least one other plausible explanation, namely that nobody genuinely resided in the House for any extended period.
6. The next step is to consider the extent and quality of the use and occupation of the Land. Mr Tang says that he occupied the House, but with minimal recourse to such conveniences of modern urban life as running water, indoor flushing toilets, reticulated gas and mains electricity. He lived modestly and frugally he said, cooking (if at all) with a burner powered by bottled gas, collecting rainwater, drinking bottled water and using a LED battery powered torch for light. He says that he did so because of his limited financial resources, and that the physical hardships and inconvenience were not a concern to him since he had been brought up in post-revolutionary Cambodia where such a lifestyle was the norm. This account of matters raises rather more questions than it answers: 1. There is no corroborative evidence for any of this, other than the modest water bills. There are no receipts for bottled gas, or for the batteries which lit the House at night, or for the purchase of bottled water at all, let alone in the quantities which Mr Tang's account suggests he would have consumed. The modesty of the water bills, as is noted above, can equally support other (and less helpful, for the Applicants) conclusions. 2. There is an inconsistency between, on the one hand, Mr Tang's claim that he lived in this way because of serious financial worries and, on the other, the objective evidence concerning his and his wife's financial position. This is that: 1. In 2018, Mr and Mrs Tang bought the Land for a consideration of $945,000; this is the amount specified in Transfer AN484879S under which the Land was transferred to them; 2. The Land was, as at 12 July 2021 (being the date of a title search for the Land obtained by the Respondents), unencumbered; and 3. On 9 December 2020, the Applicants felt sufficiently confident in their financial position to enter onto the Contract, which committed them to expenditure of $549,776 to build a new residence on the Land. This suggests that the Applicants' financial position was not so dire as to require Mr Tang to live in the house without electricity, running water, gas or flushing toilets. Nor is the inference, that he consumed bottled rather than tap water for reasons of economy, at all plausible, in view of the price differential to the latter's detriment between reticulated and bottled water. 1. Mr Tang says that, rather than use the flushing toilet in the House for his bodily needs, he chose to make use of variously: 1. A toilet block in a nearby park, or 2. Nocturnal receptacles which he emptied daily onto the Land, in order to deal with bodily waste. Whatever may have been the deprivations of Mr Tang's youth, mains sewerage connections have for over 45 years been a normal and welcome part of daily life in the western suburbs of Sydney, prompting the late Premier Wran to observe that: 'It was said of Caesar Augustus that he found Rome brick and left it marble. It will be said of Gough Whitlam that he found the outer suburbs of Sydney, Melbourne and Brisbane unsewered and left them fully flushed.' Mr Tang's claim that for nearly 2 years he resided in the House while voluntarily subjecting himself to the indignity and inconvenience of not using Mr Whitlam's legacy to Canley Heights is inherently implausible. Nor is it corroborated. In support of their claim, the Applicants might have provided evidence from the House's neighbours of Mr Tang regularly heading off to the public conveniences in the nearby park for his daily ablutions, or of him emptying the preceding night's vessels on the Land each morning. There was, however, no such evidence. 1. In summary, Mr Tang's account of the quality and extent of his use and occupation of the Land is so implausible that it does little, if anything, to discharge the onus of proof on the Applicants. It is, moreover, entirely uncorroborated.
7. The next step is to look to other indicia: 1. Neither the Certificate of Valuation nor the council rates notices for the Land demonstrate that it was used by either Applicant as his or her principal place of residence during either tax year. These documents may well demonstrate their ownership of the Land, but they say nothing about the Applicants' use or occupation of the Land. 2. Electoral roll searches made by the Respondent indicate that, as at 22 March 2021, neither Applicant's address for electoral purposes was at the Land. As Yen-Cheng Chuang v Chief Commissioner of State Revenue suggests, this is a relevant consideration. 3. No other evidence from official sources (such as Mr Tang's driver's licence, or his tax returns) was provided in order to corroborate his claim. 4. That Mrs Tang did not move to the House so as to continue to care for a disabled relation is not inherently implausible. There was, however, no explanation provided as to why Mr Tang did not also live in the same residence as his wife while she fulfilled her caring mission.
8. The last step is to ascertain the degree of permanence of Mr Tang's occupation of the House. Here again, apart from his own assertions (which, for the reasons noted above, are less than fully convincing) there is no evidence from any source supportive of his use of the house as a principal place of residence.
9. The Applicants have not, therefore, satisfied the Tribunal that during the relevant tax years the Land was used by Mr Tang as his principal place of residence.

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

1. The concession under clause 6 of Schedule 1A only applies to unoccupied land. This, according to clause 6(8) of that schedule, ".. land that is not being used or occupied for any purpose".
2. Assuming that Mr Tang ceased, as he claims, to reside on the Land only on 12 June 2020, the Land could not have been unoccupied land either on 31 December 2018 or at any time during the 2019 tax year, or as at 31 December 2019, which is the date as at which the liability of the Land to taxation in the 2020 was determined. It could not, therefore, have attracted the benefit of this exemption.
3. If, however, one does not accept the Applicants' claims as to Mr Tang's occupation of the Land as his principal place of residence, it does not then follow that the concession under clause 6 was applicable for either the 2019 or 2020 tax years.
4. The Applicants state, in paragraph 9 of their submissions dated 29 July 2021, that "The Applicant stopped living at the Property from 13 June 20 onwards, after discovering the death inside the Property, and considered to rebuild the Property to enable the family to live together instead". That is to say, any decision to construct a new residence on the Land was according to the Applicants themselves made on or after 13 June 2020. What follows from this is that: 1. Neither on 31 December 2018 nor 31 December 2019 was there any intention on the part of the Applicants to construct a new residence on the Land; and 2. Accordingly, on neither of those dates could clause 6 have applied to enliven the concession under that clause for the Land in either of the 2019 or 2020 tax years.
5. This conclusion is: 1. consistent with the Contract itself, which was only entered into on 9 December 2020; and 2. not challenged by any evidence indicative of building or other works having been commenced.
6. The Applicants have, therefore, failed to discharge the onus of proof on them in relation to the concession under clause 6 of Schedule 1A. This is not, however, to say that the concession may not be available in relation to tax years later than the 2020 tax year. That is a matter to be determined by reference to circumstances at the time.

General request for concession

1. In their submissions of 29 July 2021, the Applicants ask the Tribunal "... to consider the Applicants' case on the compassionate and humanitarian grounds, as the Respondent appear to be refusing to accept the Applicants' evidence and circumstances a benefit of the doubt, in the light of the evidence and circumstances already provided".
2. The Tribunal notes this request. Its obligation under section 63 of the Administrative Decisions Review Act 1997 "is to decide what the correct and preferable decision is having regard to the material then before it". The Applicants have not provided evidence sufficient to discharge the onus of proof imposed on them under section 100 of the Taxation Administration Act 1996 and accordingly, whatever compassionate or humanitarian claims the Applicants may seek to raise, the Tribunal has no alternative but to dismiss the application and to affirm the assessments under review.

Orders 1. The Tribunal affirms the assessments the subject of the review.

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: 21 September 2021