Tong v Chief Commissioner of State Revenue [2025] NSWCATAD 105

1. The Applicant jointly owned land in NSW with his wife. That land contained his residence.
2. The Applicant was not an Australian citizen during the relevant land tax year but was a permanent resident. He held a Resident Return Subclass 155 visa. He was not an Australian Citizen at the time.
3. It was not in dispute that the Applicant spent 198 days in Australia during the 2023 calendar year.
4. In February 2024, the Applicant ceased residing on the land in question.
5. On 5 July 2024, the Respondent issued a surcharge land tax assessment to the Applicant for the 2024 land tax year.
6. On 12 July 2024, the Applicant lodged an objection to the assessment of surcharge land tax.
7. On 4 October 2024, the Respondent disallowed the Applicant's objection.

1. Where tax has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) ("Administration Act"), allows rights of objection to a taxpayer dissatisfied with an assessment, including an assessment of the kind made in this matter. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act).
2. A taxpayer who is dissatisfied with the decision made upon the Respondent's determination of an objection, may apply to the Civil and Administrative Tribunal ("Tribunal") for an administrative review under the Administrative Decisions Review Act 1997 (NSW) ("ADR Act") of the decision of the Chief Commissioner of State Revenue.
3. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.
4. The onus of proving his case lies with the Applicant (s 100(3) of the Administration Act).
5. The Tribunal, dealing with the taxpayer's application, may do one or more of the following under s 101 of the Administration Act:

"(a) confirm or revoke the assessment or other decision to which the application relates,

(b) make an assessment or other decision in place of the assessment or other decision to which the application relates,

(c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid,

(d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision,

(e) make any further order as to costs or otherwise as it thinks fit."

1. Surcharge land tax is levied under s 5A of the Land Tax Act 1956 (NSW) ("LTA"). It is levied on certain land owned by a "foreign person". It is tax that is levied in addition to land tax levied under the Land Tax Management Act 1956 (NSW). At the times relevant to the assessment under review, s 5A provided as follows:

"5A Levy of surcharge land tax on residential land owned by foreign persons - 2017 and subsequent land tax years

(1) Land tax is payable under this section in respect of residential land owned by a foreign person (surcharge land tax).

(2) In respect of the taxable value of all the residential land owned by the foreign person at midnight on 31 December in any year (commencing with 2016), surcharge land tax is to be charged, levied, collected and paid under the provisions of the Principal Act and in the manner prescribed under that Act for the period of 12 months commencing on 1 January in the next succeeding year at the rate of -

(a) in the case of all residential land owned by the foreign person at midnight on 31 December 2016 - 0.75% of that taxable value as assessed under the Principal Act, and

(b) in the case of all residential land owned by the foreign person at midnight on 31 December in the years 2017-2021 - 2% of that taxable value as assessed under the Principal Act, and

(c) in the case of all residential land owned by the foreign person at midnight on 31 December in any other year, commencing with 2022 - 4% of that taxable value as assessed under the Principal Act.

(3) Surcharge land tax is payable in addition to any land tax payable in respect of the residential land under the other provisions of this Act, and is so payable even if no land tax is payable under those other provisions".

1. Who is a "foreign person" is defined in s 2A of the LTA. That term has the same meaning as in Chapter 2A of the _Duties Act 199_7 (NSW) ("Duties Act"). The definition of "foreign person" for the purposes of Chapter 2A is set out in s 104J(1) of the Duties Act. It provides as follows:

"foreign person means a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section".

1. Section 4 of the Foreign Acquisitions and Takeovers Act 1975 (Cth) ("FATA"), in the case of an individual, defines a "foreign person" to mean " an individual not ordinarily resident in Australia". The modifications made to that definition under s 104J(1) are not relevant in the present case.
2. Section 5 of the FATA goes on to say when a relevant individual is "ordinarily resident" in Australia. It provides as follows:

"Meaning of ordinarily resident

(1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:

(a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and

(b) at that time:

(i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law; or

(ii) the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law.

(2) Without limiting paragraph (1)(b), an individual's continued presence in Australia is subject to a limitation as to time imposed by law if the individual is an unlawful non - citizen within the meaning of the Migration Act 1958".

1. Surcharge land tax is assessed in respect of the taxable value of all the residential land owned by a foreign person at midnight on 31 December in any year (commencing with 2016). What follows is that whether or not the Applicant was a "foreign person" needs to be tested as at midnight on 31 December 2023. If he had not actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time, he will not be ordinarily resident within the literal meaning of the FATA and therefore a foreign person liable to surcharge land tax. The tax is to be charged, levied, collected and paid for the period of 12 months commencing on 1 January in the next succeeding year, that is, 2024.
2. The Applicant's case is that he was only two days short of the requirement for actually being in Australia during 200 days or more in the 2023 calendar year. He said that in 2023 he had been hospitalised while overseas, delaying his return to Australia. This was the Applicant's reason for not meeting the requirement for actually being in Australia during 200 days or more in 2023. He says that but for his hospitalisation delaying his return to Australia, he would have been in Australia for the required minimum 200-day period. The circumstances of his delayed return to Australia, in the Applicant's submission, were beyond his control.
3. The Applicant says that in these circumstances he should be regarded as having been "ordinarily resident" within the meaning of s 5 of the FATA during 2023 and not a "foreign person" within the meaning of the Duties Act.
4. Section 5 of the FATA sets out two requirements that relevantly need to be satisfied for the Applicant to be ordinarily resident as at midnight on 31 December 2023.

(1) The first is that he must have actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time.

(2) The second is that he must have been in Australia at that time and his continued presence in Australia must not have been subject to any limitation as to time imposed by law.

1. The Respondent accepted and did not dispute that the Applicant satisfied the second of these requirements. In other words, his continued presence in Australia was not subject to a limitation as to time imposed by law, as his visa permitted him to stay in Australia indefinitely. In addition, it was not in dispute that he was in Australia at midnight on 31 December 2023.
2. The Respondent, however, disputed the Applicant's claim that he satisfied the first of the requirements, namely the requirement for actual presence in Australia during 200 days or more in 2023. The Respondent's submission was that falling short of the relevant requirement for actually being in Australia during 200 days or more by two days resulted in a failure to satisfy the first requirement of s 5 of the FATA. The Respondent said that the reason for failure to meet the requirement, in the Applicant's case hospitalisation overseas delaying his return to Australia, was not relevant.
3. The words "has actually been in Australia" require physical presence in Australia (Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238, at [29]). Where the Applicant was not physically present, no regard is to be had to the circumstances and the reasons the Applicant was not in Australia (Barsoum v Chief Commissioner of State Revenue [2020] NSWCATAD 282, at [78]; Chu, at [29]-[30]; Lawrence v Chief Commissioner of State Revenue [2022] NSWCATAD 266, at [38]; Song v Chief Commissioner of State Revenue [2023] NSWCATAD 30, at [80]).
4. The consequence is that even if the Applicant fell short of the requirement for presence in Australia during 200 days or more by only two days, the requirement of s 5 of the FATA for actual presence in Australia for the required number of days will not have been satisfied. There is no discretion allowed to the Respondent or the Tribunal to abridge or waive the requirement for a minimum 200 days presence in Australia (Fleuren v Chief Commissioner of State Revenue [2024] NSWCATAD 177, at [30]).
5. The Applicant says that he has satisfied the minimum requirement for 200 days actual presence in Australia for previous land tax years. I accept his evidence. However, liability for surcharge land tax is assessed on a yearly basis and requires actual presence in Australia for the minimum period specified for each land tax year. Satisfaction of this requirement for previous years does not have a bearing on whether or not the requirement has been satisfied for each subsequent year.
6. The Applicant, therefore, not having satisfied the requirement for actual presence in Australia during 200 days or more in the 2023 calendar year, was not "ordinarily resident" during that year. As a consequence, he was a foreign person liable to surcharge land tax as at midnight on 31 December 2023 for the 2024 land tax year.

1. Exemption is available for surcharge land tax if the "foreign person" liable for surcharge land tax satisfies s 5B of the LTA. Section 5B provides as follows:

"Surcharge land tax - residence requirement applying to principal place of residence exemption

(1) A person is eligible for an exemption from liability to pay surcharge land tax in respect of residential land for a land tax year because the land is the principal place of residence of the person only if -

(a) the person is a permanent resident at midnight on 31 December of the previous year, and

(b) the Chief Commissioner is satisfied that, during the land tax year, the person intends to use and occupy the land as the principal place of residence of the person in accordance with the residence requirement, and

(c) the person lodges a declaration with a land tax return required to be furnished under section 12 of the Principal Act for the land tax year to the effect that the person has that intention.

(2) The person must use and occupy the land as the person's principal place of residence for a continuous period of 200 days in the land tax year. This requirement is referred to as the residence requirement.

(2A) A person does not use and occupy land as the person's principal place of residence during a period of the person's physical absence from Australia.

(2B) The Chief Commissioner may, in exceptional circumstances, waive the requirement in subsection (2A) in relation to a person's brief physical absence from Australia.

(3) If the residence requirement is not complied with by the person, surcharge land tax liability is to be assessed or reassessed as if the person's exemption from liability to pay surcharge land tax for the land tax year had never applied.

(4) The failure of the person to comply with the residence requirement is taken to be a tax default for the purposes of Part 5 of the Taxation Administration Act 1996.

(5) Any interest that is payable on the tax default in accordance with Part 5 of the Taxation Administration Act 1996 accrues on the amount of surcharge land tax assessable to the person for the period commencing on the last day allowed for furnishing the land tax return for the land tax year and ending on the day when the assessment or reassessment referred to in subsection (3) is made".

1. Whether exemption under s 5B is available depends, among other things, on the relevant land being used and occupied by the Applicant as his principal place of residence for a continuous period of 200 days in the relevant land tax year, that is, the 2024 calendar year. The Applicant however ceased residing at the land in February 2024. The Applicant therefore could not have used and occupied the land as his principal place of residence for a continuous period of 200 days in 2024. Consequently, he cannot obtain exemption under section 5B.

1. The Applicant is aggrieved by the assessment under review. He says that he missed satisfying the minimum requirement for actual presence in Australia during 200 days in 2023 by only two days. He further says that the reason for falling short of the requirement was hospitalisation overseas which delayed his return to Australia. He says that in these circumstances, assessing him with surcharge land tax is unfair.
2. Questions of fairness of the outcomes under a taxation law were considered by the High Court in Commissioner of Taxation v Ryan (2001) 201 CLR 109. The High Court said:

"But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any "policy" or "general intention" unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of "fairness" or "justice" do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted."

1. The Tribunal has applied this principle in numerous cases, confirming that there is no discretion to relieve a taxpayer of a tax liability on grounds of unfairness.
2. The Tribunal hears the Applicant on what he says about fairness. However, in the absence of jurisdiction to allow him relief, the Tribunal confirms the assessment under 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.