41The applicant acknowledges that the onus lies upon him to prove his case on the balance (preponderance) of probabilities by reason of s 100(3) of the TA Act: B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, [87], [104]; (2008) 74 NSWLR 481 (the relevant passages are not reproduced in the NSWLR report). As Brennan J stated in FCT v Dalco (1990) 168 CLR 614 at 624, unless the applicant shows by evidence that the assessment is incorrect, it will prevail. Further, the Chief Commissioner "is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment" (ibid.).
42An applicant "must prove all matters necessary to enable a tribunal to answer the statutory question in its favour", and "must establish all the facts on which it relies to claim the exemption": Cornish Investments Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 25, [36] - [37].
43At the same time, as Gibbs J said in McCormack v FCT (1979) 143 CLR 284, 302 the taxpayer's evidence is not to be regarded as prima facie unacceptable and "must of course be considered on its merits, in the circumstances of the case, without any preconception, favourable or unfavourable".
44Many of the material facts are not disputed. It is agreed that the applicant owned both the Randwick and the Panania properties on the relevant tax date, 31 December 2012. The applicant purchased Randwick in 1992 and acquired Panania by inheritance in 2007. He moved out of Randwick in September 2011 to permit demolition and reconstruction on the site. But work ceased in November 2011 when the contractor went into liquidation, after completing only the demolition and some site works. Construction has still not resumed. From September 2011 to mid-December 2013, the applicant occupied his property at Panania, and since mid-December 2013 has been living at Arncliffe in a property he does not own. Both Randwick and Panania are residential land. Randwick has been unoccupied since September 2011 and the residence at Panania is currently only used for storage.
45The applicant's case for the proposition that Randwick rather than Panania was his PPR as at 31 December 2012 for the purposes of the 2013 tax year rests on clause 6 of schedule 1A. By reason of clause 12, only one place of residence may be treated as his PPR. In order to satisfy clause 6, the applicant must establish by evidence that he intended to use and occupy the land solely as his PPR.
46The applicant gave evidence that he acquired Randwick with a view to making it into a residence where his aged parents could live close to him so that he could take care of them. He decided to demolish and rebuild with a new arrangement having wheelchair access. The redevelopment would also incidentally increase the value of the property. It was his intention to live there as his principal place of residence. He entered into a construction contract and moved out to Panania, but work ceased for the reasons given above and could not resume until the insurance claim was paid and new arrangements were made for construction.
47That account of his intention is plausible and uncontradicted by other evidence or challenged in cross-examination. I therefore find that the applicant has discharged the burden of proving the intention required by clause 6(1).
48The applicant must then bring himself within clause 6(2). In Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8, Verick JM stressed that all three of the requirements in cl 6(2) must be satisfied (at [43] - [44]) in order for an owner to qualify for the concession. First, the owner must show that he or she intends to carry out, or is carrying out, building or other works necessary to facilitate his or her use and occupation of the vacant land as his or her PPR. I find that the evidence, including the admitted facts and the applicant's unchallenged oral testimony concerning demolition, site work and the preparation for resumed construction, establish that the applicant comes within cl 6(2)(a).
49The second requirement is that, work having physically commenced, no income has been derived from the use and occupation of the land since that commencement. The applicant gave evidence to that effect and there is no evidence to the contrary, nor any other reason to reject his testimony on the point. The applicant thus meets the requirements of cl 6(2)(b).
50The third requirement is that the intended use and occupation of the land is not unlawful. As the evidence provides no reason to think that the intended use is unlawful, cl 6(2)(c) is also satisfied.
51Next, the applicants must satisfy cl 6(3), relevantly subclause (b). It is not disputed that the relevant taxing date fell less than four years after work commenced in 2011 and that the applicant's niece occupied the land for residential purposes for about seven years after the applicant became its owner. The requirements of cl 6(3)(b) are thus also met.
52The concession in cl 8 for absences from a former PPR applies only if the other land used and occupied by the taxpayer as his or her PPR is not owned by the taxpayer: cl 8(1)(b). As the applicant is the owner of the Panania property, that concession is irrelevant in this case.
53The crucial provision is cl 6(7), which excludes the unoccupied land concession from application if the owner "is entitled to have his or her actual use and occupation of other land taken into account under ... this Schedule". As Verick JM explained in Aronstan, the provision "simply denies the concession...if the person seeking the concession owns another residence within or outside New South Wales, which is on the relevant taxing date being used and occupied as the principal place of residence of the person. The subclause also prevents an owner of land, if the land or in combination of any adjoining land is capable of being developed, to have either two residences or residential units" (at [49]).
54The applicant's position is that he never intended Panania to be his PPR. The definition of "principal place of residence" in s 3(1) is, however, an objective one. That phrase occurs in a number of revenue and public finance contexts in Australia and is consistently so construed. In Deane v Commissioner of Stamp Duties (Qld) [1996] 2 Qd R 557, Fryberg J, when considering the meaning of "principal place of residence" in a stamp duty context held that the issue should be determined on an objective basis and concluded that "intention could be taken into account as a factor in the assessment. It seems to me that the intention is relevant, but not dominant..." (at [35]). Again, in Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26 the tribunal when interpreting the first home buyer legislation held that the subjective intention of a person did not bring an applicant within the eligibility criteria if the person did not in fact reside on the property as his or her PPR.
55Aronstan adopted that formulation for cl 6(7) purposes, adding that, "It is necessary that the original subjective intention of a person does in fact come to fruition for the original subjective intention to be accepted. The original intention, in any case, does not play a dominant role in the final determination of a person's principal place of residence" (at [39]). On facts comparable with those of this case, the applicants' claim for a cl 6 exemption failed because cl 6(7) applied to treat the applicants' "temporary" residence as their PPR.
56A search of the Roads and Maritime Services database conducted on 22 November 2013 (exhibit R1, pp 41 - 42) showed that the applicant's residential address was changed to the Panania property from 15 February 2012 and remained there at least until the date of the search. The taxing date falls between 15 February 2012 and 22 November 2013.
57A search of the Electoral Roll Commission database on 22 November 2013 (exhibit R1, p 43) records the applicant residing at the Randwick address from 22 April 1993 to 8 July 2012. On 8 July 2012, his registered address was changed to the Panania property and remained there at least until the date of the search, 22 November 2013. Again, the taxing date falls between 8 July 2012 and 22 November 2013. In the ordinary course of things, his move to use and occupation of the Panania premises is likely to have occurred some time before 8 July 2012 as, indeed, his own evidence affirmed.
58The Telstra telephone bill issued on 7 September 2013 for the period 4 June 2013 to 3 September 2013 (exhibit R1, p 40) is addressed to the applicant at the Panania property address. The envelope bearing a redirection service sticker from Randwick to Panania shows that the applicant had paid for redirection services until 24 April 2014. All the above evidence points to Panania being used and occupied by the applicant as his PPR at the taxing date.
59An important piece of documentary evidence is the print notes of a telephone conversation between the applicant and an OSR officer on 26 September 2013. The note records that the applicant -
"Called re NOA 2013, advs ppty at Panania has been their PPR for past 18 mths, he is looking after elderly & sick parents. He did a knockdown-rebuild for Randwick, entered into a contract with building company Cosmopolitan, following month building co went broke, Randwick ppty is still vacant land, only just started employment 3 day/week after being unemployed after injury, had to move to Panania for these reasons" (exhibit R1, p 33).
60The note then continues with a summary of some advice which the officer, no doubt wishing to be helpful, gave to the applicant. It also notes that the officer set up a six-month interest-free instalment plan for the applicant, advising him that interest would be remitted as long as all instalments were paid on time. The plan, an objection fact sheet and an application form were emailed to him, with confirmation to be sent by postal mail.
61On behalf of the applicant Mr McMillan submitted that the respondent was placing too much weight on such a "weak straw" which had little probative value. He argued that the applicant denied making any such admission and pointed out that no other evidence from the officer had been forthcoming. The note was incomplete as some words from the conversation were omitted, as the note failed to mention that Cosmopolitan went into liquidation after "only a very short time" of building.
62In oral evidence, however, Mr Theophilas said only that he could not recall whether the phrase "principal place of residence" was used in the course of the conversation. The note is admissible and relevant in these proceedings whether or not the maker is called to give oral evidence or swears an affidavit. The words that the applicant says were omitted are inconsequential and in any case their gist is implied by the passage "following month co went broke". Further, it does not appear that the applicant made any reference to any plans for resuming construction at Randwick. Finally, the applicant's apparent acceptance of an instalment plan for paying the outstanding assessment debt suggests that he had no immediate objection to the proposition that he was liable to land tax in respect of Randwick. As regards the contents of the conversation generally, Ms Tasich's contemporaneous written note is more likely to constitute a reliable record of the exchange than the applicant's unaided recollection. For that reason, and also for the reasons given below, her version of the conversation is to be preferred.
63 Whether or not the applicant, or for that matter the officer, actually used the specific term "principal place of residence" in the course of the conversation, that document strongly points to Panania, where he had actually been living since September 2011, being the applicant's PPR at the relevant time. It should also be noted that construction at Randwick has still not resumed, over a year after the applicant received payment in full under his insurance policy.
64In support of his contention that Randwick remained his PPR for the 2013 land tax year, the applicant relied on his own evidence, which he said was corroborated by the reservation of his Randwick telephone number on the Telstra bill. In her detailed written submissions on behalf of the respondent, Ms Sethi pointed out that in his objection letter of 17 November 2013 (exhibit R1, pp 18-20), the applicant asserted that he moved out of Randwick to allow for demolition in September 2012, whereas the builder went into liquidation in November 2011. In light of that evidence, the applicant's assertions "should be treated with extreme caution". Mr McMillan countered that the incorrect date was obviously a typographical error that had been corrected in the applicant's affidavit of 29 April 2014.
65It is notable, however, that in the objection letter the incorrect 2012 date is given five times in three different contexts, even though the correct 2011 date is given for the contract with Cosmopolitan. Further, the error would have worked in the applicant's favour, tending to strengthen his argument that his move to Panania was purely temporary. Moreover, in the applicant's telephone call of 26 September 2013 to OSR, the applicant stated that he had been living at Panania (perhaps as his permanent place of residence) for 18 months, which would place the date of the move out of Randwick in approximately March 2012. While the possibility of typographical errors remains, it does rather appear that the applicant can be a little careless in his assertions and that some degree of caution in accepting them is warranted.
66The applicant submitted that the respondent was relying on an excessively narrow interpretation of cl 6(7). Clause 6 (and perhaps cl 6(7) itself) was a beneficial provision and should receive a liberal interpretation as the courts had done in Kidston Mines and Penrith Rugby League Club.
67The former dealt with and income tax concession designed to provide incentives for goldmining, while the latter was intended to relieve clubs and other community groups from the burden of land tax on land occupied by them. Clause 6 can be viewed as seeking to encourage housebuilding, and for that reason as meriting beneficent interpretation, but cl 6(7) is plainly intended to limit the scope of the unoccupied land exemption in the manner explained by Verick JM in Aronstan. Isolating the words "this Schedule" in cl 6(7) from their context and purpose, as Mr McMillan's ingenious argument sought to do, provides no warrant for circumventing the plain intention of the provision.
68As was stated above, there is no reason to doubt the applicant's evidence that he intended ultimately to reside at the reconstructed Randwick premises as his PPR. But, as Fryberg J established in Deane v Commissioner of Stamp Duties [1996] 2 Qd R 557, the question is to be determined on an objective basis. Intention is relevant and can be taken into account, but it is not a dominant consideration. The objective factors taken into account in that case were "The evidence regarding the applicants' mail, their usage of electricity, the electoral roll, the time which they spent at [the respective residences], the number of nights slept at each place, all combine to found a proper inference...." ([1994] 2 Qd R 557, 567).
69In this case the objective factors, including mailing address, the address on the Telstra bill and the RMS and Electoral Roll Commission records all point to Panania as the applicant's PPR at the relevant time. Further, there is no evidence that the applicant spent any nights at all away from Panania, whether at Randwick (which was impossible) or at any other premises.
70The applicant's expressed intention to retain Randwick as his PPR is relevant, but not a dominant factor. In addition, as was made clear in Aronstan, the intent must "come to fruition". What constitutes fruition for these purposes has yet to be extensively explored in the cases, other than Aronstan itself, where insufficient physical occupation defeated the applicants' claim for exemption. Fruition could mean that the applicant should occupy the premises before the expiration of six months after the taxing date, or should at least commence or resume construction before then, or it could mean any one of a number of dates before the hearing. But on no view could a cessation of construction and a lack of occupation for 2½ years, including over a year after payment of the insurance claim, as in the present instance, be viewed as a case of an intention that has come to fruition.
71The applicant submits that it was only circumstances beyond his control that prevented him from moving out of Panania and back to Randwick. He does not argue that those circumstances activate any discretionary power in the Chief Commissioner or the tribunal (as would have been the case in certain conditions under the repealed cl 6(4)), but says that they fully explain his continued occupation of Panania.
72The fact remains, however, that his intention to occupy Randwick as his PPR did not come to fruition by the taxing date or during the six months before and after it, and that still remains the case. That factors beyond his control were responsible does not lead to the result that the applicant is not entitled to have his actual use and occupation of Panania taken into account under schedule 1A. The objective factors referred to above compel the conclusion that Panania was his principal place of residence at the relevant time, and I so find.
73In conclusion, the applicant is entitled to have his use and occupation of the Panania property as at the taxing date taken into account under schedule 1A, within the meaning of cl 6(7)(a) and consequently the unoccupied land concession provided by cl 6(1) does not apply to the Randwick property in the present case.
74The 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
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Decision last updated: 16 July 2014