Wang v Chief Commissioner of State Revenue

Key Facts

1. On 20 July 2018, the Property was purchased in the sole name of the Applicant, Jun Jie Wang.
2. The Property, being located on a corner block, could be identified by either a "Keats Rd" address, or a "Dryden Rd" address.
3. The Applicant did not move into the Property when it was purchased, because it was always intended to demolish the existing house.
4. A Development Application was lodged with the Council and approved on 14 August 2019 (R3, p 51). The approval was for the construction of a "new dwelling" on the Property.
5. On 18 September 2019, the Applicant signed a building contract for the construction of a new house on the Property (R1,p1-4).

Transfer of a 30% interest

1. On 27 April 2020, the Property was transferred into the name of the Applicant and Ping Wang as tenants in common as to 30% ownership to Ping Wang and 70% to the Applicant.

Completion of the house

1. An occupancy certificate was issued by the Council on 25 January 2022.

The Property is sold

1. The Property was sold to a third party with contracts exchanged on 6 September 2022 and settlement occurring on 18 October 2022. The settlement sheet and transfer deed were produced.

Who lived in the Property?

1. The Applicant never lived in the Property. At all relevant times, he remained living at another property owned by him and his wife in Bruce Rd, Killara (the Killara property), with his wife and children.
2. The Respondent has accepted that Ping Wang did live in the Property, and that it was his principal place of residence for a period of at least 6 months prior to the sale of the Property in 2022. Although the 2021 land tax year is noted to below (relating to communications with the Respondent), the 2021 and 2022 land tax years (and assessments) are not relevant to these proceedings.

The background to these proceedings

1. According to the Respondent's "Client Notes Report" for the Applicant's Client ID 96790397 (CNR) (R1, pp 84-85), there was a telephone call between the Respondent and "Mr Wang" on 24 March 2006, in respect of another property, which said (my emphasis): Telephone conversation with Mr Wang confirmed the property at George St was rented from Dec 2005. He is living at [x] Sydney Nth Willoughby. PPR claim for 2005 needs to be proven and he will send docs. RESUB 14/04/2006.
2. According to a "Land Tax Summary" (R5, p36), the Respondent processed a land tax exemption for a claim for "Strata Lot - Principal Place of Residence", Legislation "Sch 1A Clause 2(1)(b)" in respect of the Killara property with an effective date of 3 December 2014. The Client ID was 132931821 and the Client Name shown on that was "J Lan & JJ Wang" (R5, p36).
3. On 9 October 2019, the Respondent wrote to the Applicant (Client ID 96790397) advising of a potential liability to land tax in respect of the Property. The letter was addressed to [x] Sydney St, North Willoughby NSW 2068 (Nth Willoughby address). The Property was identified as the "Keats Road" address with Property ID ("PID") 699473. The letter said, inter alia: You have received this letter as our records indicate that you own land which may have a land tax liability. We have listed the land details over the page and it is important you review this information. What you need to do If all the details in this letter are correct, you do not need to do anything An assessment will issue automatically in 16 days. If any of the following apply, you will need to login to Land Tax online at www.revenue.nsw.gov.au with your Client ID and Correspondent ID to update your records: • your contact details are incorrect • you wish to claim an exemption • land information is not correct as at 31 December …
4. The following Land Tax Assessment Notices were issued by the Respondent, each addressed to the Applicant at the Nth Willoughby address under Client ID 96790397: 1. On 28 October 2019, for the 2019 land tax year (R1, p 7): 1. The Property was identified as the "Keats Road" address; 2. The Supporting Information detailed an assessed amount of $4,932.00; and 3. The first "due date" for payment, according to the notice, was 9 December 2019. 1. On 22 January 2020, for the 2020 land tax year (R1, p 15): 1. Although the cover of the Notice said it was for the 2020 land tax year, the Supporting Information (at R1, p 18) included calculations for both the 2019 and 2020 land tax years, comprising "this assessment" of $4,878.65 for the 2020 land tax year, and $4,983.97 ($4,932.00 plus interest of $51.97) for the 2019 land tax year. 2. The first "due date" for payment, according to the notice, was 2 March 2020.
5. Further notices were issued by the Respondent, each addressed to the Applicant at the Nth Willoughby address under Client ID 96790397: 1. for the 2019 land tax year: 1. a "payment overdue" notice dated 19 December 2019 (R1, p 11), advising an amount of $4,932.00 was payable by a "due date" of 2 January 2020; 2. a "legal notice" dated 3 January 2020 (R1, p 13) advising an amount of $4,959.89 (i.e. now including interest) was payable by a "due date" of 17 January 2020; 1. for the 2019 and 2020 land tax years: 1. a "payment overdue" notice dated 12 March 2020 (R1, p 19), advising a total amount of $9,921.62 was payable by a "due date" of 26 March 2020; 2. a "legal notice" dated 27 March 2020 (R1, p 21) advising an amount of $9,968.26 was payable by a "due date" of 10 April 2020.

The 2021 land tax year (not in dispute in these proceedings)

1. On 13 September 2021, the Respondent wrote to the Applicant and his father (JJ & P Wang) in respect of the 2021 land tax year. Their "Client ID" was 158060111 (R4, p5). The letter said the Property "may have a land tax liability". It was addressed to them at [x] Mungarra Ave, St Ives NSW 2075.
2. On 27 September 2021, Ping Wang added a postal address, updated "client DOB" and verified his email address and phone number for the Client ID in the name of "JJ & P Wang" (CRN at R5, p37).
3. On 17 October 2021, Ping Wang submitted a "Land Tax Variation Form" (R4, p 13) in respect of the joint ownership by "JJ & P Wang", client number 15806011, claiming a "principal place of residence exemption" in respect of the Property. He also "updated client DOB", "Land Tax contacts" and "client DOB", although details were not in evidence (R5, p37). This gave rise to a "nil" Land Tax Assessment Notice for the Property for the 2021 land tax year; it issued on 16 November 2021, listed the Property as exempt, and was addressed to "JJ & P Wang" at the address of the Property. (R3, p.2).

Events in 2023

1. In 2023, the Respondent's CNR for the Applicant's Client ID recorded, inter alia: 1. On 15 April 2023 Attempted OB [outbound] call to [Applicant] on [xxx 386] - Unsuccessful - Left voice to text message to call LTCC back. Attempted OB call to 'Ping Wang' on [xxx 683] Unsuccessful attempt to contact the Applicant on 15 April 2023, Unable to locate any contact info to contact the [land owner] - the land has been sold - unable to run ED search to locate a current mailing address - will run s 72 searches to locate contact info. 1. On 30 August 2023: S72 raised to big 4 banks. - Awaiting response. 1. On 1 September 2023: S72 response from WESTPAC … Westpac Address: xx HUDSON AVENUE WILOUGHBY NSW 2068… 4 x active accounts 2 x active accounts - One with enough funds to cover LT ST GEORGE Address: [x] BRUCE AVE KILLARA New South Wales 2071. Mobile [xxx 386] Email: [xxx].wang@hotmail.com - Please note, all bank accounts are in joint names… 1. On 3 November 2023: Attempted OB call to [Applicant]… Successful - Adv of o/s LT and what year it was for - Adv have been attempting contact but previous attempts were unsuccessful. He advised me to put the request in writing via email and confirmed xxx is the correct email - Adv will issue a notice via email and he will have 14 days for payment. 1. And also on 3 Nov 2023: [Applicant] has updated client DOB on 03-Nov-2023
2. On 3 November 2023, the Respondent issued a legal notice by email to the Applicant in respect of the 2019 and 2021 land tax years (R1, p 33). The email said: Good Afternoon, Thank you for your time today. As per our discussion, please find attached legal notice in relation to the abovementioned land tax account. The amount outstanding as at 06-NOV-2023 is $12,065.79. This amount is inclusive of interest which continues to accrue daily until paid in full. Please contact us on the number below to discuss the account further and arrange payment….
3. On 7 November 2023 (R1, p44), Ping Wang emailed the Respondent querying the joint assessment issued for the 2021 land tax year when a clearance certificate had previously issued. As noted above, that year is not in dispute.
4. On 8 November 2023 (R1, p42), Ping Wang emailed the Respondent saying (errors in original): Hi Team, I refer land tax applied to year 2019 and 2020, during theses period the property is in the principal place of residence. However, Jun Jie Wang no available to evident utility bills, because property under construction, the builder take over the property. Attached herewith 4 pages building contract and final OC show construction commented 8 September 2019, and completion on 25/01/2022. Best regards Ping Wang
5. The reply emailed to Ping Wang on 9 November 2023 (R1, p42) said: Good morning , Jun Jie Wang will need to submit a variation request for an exemption if it was their principal place of residence. Evidence will be required to prove they lived there such as utility bills in that name or a home and contents insurance policies. In order to apply for an exemption, they will need to log into their service NSW account….
6. On 14 December 2023 (R1, p46), the Respondent emailed Ping Wang saying: Hello Ping, Thank you for your email. As per information available to us, [Property] was not being used in accordance with a Principal Place of Residence exemption during 2018 and 2019. A clear certificate does not always mean that land tax was not payable. This means that the certificate indicating that there is no charge on the land does not remove the vendors land tax liability. The vendor is still required to pay any outstanding land tax, even after settlement. The assessments issued are correct and payable. The assessments are correct and payable. If you believe the assessments are incorrect and not in accordance with the legislation, please lodge an objection.
7. Also on 14 December 2023 (R1, p47), the Respondent emailed: Dear Ping I refer to your land tax objection. Under section 89 of the Taxation Administration Act 1996 (TAA) an objection must be lodged within 60 days of the date of the assessment. As the assessments to which you are objecting were issued on 28 October 2019 and 22 January 2020, your objection is out of time and therefore invalid. Should you wish to request an extension of time to lodge an objection you will need to state fully and in detail the circumstances concerning and the reasons for the failure to lodge the objection within the 60 day period. See section 90 of the TAA.
8. On 19 December 2023 (R1, p47), Ping Wang emailed the Respondent (Subject: Re: Land Tax Client ID 96790397 & 158060111) saying (my emphasis): Dear Sir/Madam I refer your email on 14 Dec2023, I wish to explain that I never receive land tax Notice Assessments. I attached all land tax assessments, that show different land address and different client ID, my question are: There are only 1 land which is 1 Dryden Rd, North Turramurra NSW 2074, why have 2 land tax assessments ? I also wish to explain reason to delay lodge objection: 1 I purchased property on 20 July 2018 as the principal residence, 2 I proceeded knockdown and rebuild, that mail address was [x] Mungarra Ave St Ives NSW 2075, I never receive notice of land tax assessment 3 Attached solicitor settlement letter showing I become as owner 4 Attached Council DA tracking and DA determination that showing I never receive mail in this address. Please investigation this land tax debit matter, I wish to resolve this matter via objection lodgement, Best regards Ping Wang Phone [x]
9. The Objection was determined on 28 March 2024; the notice was addressed to the Applicant at the Killara address (R1, p77). The Objection was disallowed. It accepted lodgment of the objection out of time. It said (inter alia): Non-receipt of Land Tax Notices: We understand your statement regarding not receiving the notice of land tax assessment. However, it's essential to emphasize that timely updates of contact information are crucial for facilitating effective communication and ensuring compliance with statutory obligations. It's the taxpayer's responsibility to inform our office of any changes to their address. Our records show that the address was not changed until 3 November 2023, hence it's important to ensure that contact details are kept up to date to avoid such discrepancies in the future. … We appreciate your concerns regarding the issuance of two land tax assessments for [the Property], as well as the inconsistencies in land addresses and client IDs. Regarding the inconsistences in land addresses, it's important to clarify that the property is situated on a corner block between Keats Road and Dryden Road. Therefore, it can be identified as both… Furthermore, in relation to the different client IDs, please note the following: On July 20, 2018, Jun Jie Wang acquired [the Property], resulting in the creation of client ID: 96790397. Subsequently, on April 27, 2020, Jun Jie Wang and Ping Wang jointly acquired the same property, leading to the creation of a new client ID: 158060111. Therefore, two different client IDs were created, one for single ownership and the other for joint ownership. We hope this clarification addresses your concerns…

Evidence of Ping Wang

1. Ping Wang gave evidence at the hearing on affirmation before the Tribunal, via a Mandarin interpreter. Prior to this date, there was no evidence filed by the Applicant by way of affidavit, statutory declaration, or otherwise, although the submissions and accompanying documents contained facts which were before the Tribunal.
2. Ping Wang confirmed that he was the father of the Applicant. He said that he had prepared the written submissions (which were in English versions only), and the other materials filed with the Tribunal.
3. He told the Tribunal that his son (the Applicant) was unfortunately not able to attend because he was "scheduled the whole week in important meetings". But he said that his son was aware of the proceedings and hearing and happy for him to be representing him. He said "since his purchase, I always doing project management, talking to Council".
4. Ping Wang retired this year. He said "I did everything from purchase to the end"
5. He was referred to the 20 July 2018 settlement sheet, which was in the name of "Wang, Wang & Wang" as purchasers. He said it was in three names because "intention to purchase and rebuild; hoped dual occupancy for family". He said he and his wife had sold a property in Willoughby before 2018, and were renting at Bobbin Head. He said he paid part (about $1m) for the purchase of the Property "because I had sold Willoughby". When asked why the property was transferred solely into the name of the Applicant he said "Me and wife could not get finance; conveyancer said to settle only [in his son's name]".
6. He said his son (the Applicant) "applied for the mortgage and contributed it but no capital of his own other than paying stamp duty". He said he was a mortgage broker, and arranged the mortgage for his son. He said "plan was to knock down and rebuild", and that "the Council said no to dual occupancy, so a single dwelling DA [was applied for]".
7. Regarding the 30% transfer to him in April 2020, he said "[Applicant] is not funded up, [his wife] is pregnant. I say I will put my name on and get a construction loan from Adelaide Bank". He said the loan was in both their names.
8. His testimony was, as noted by the Respondent, somewhat inconsistent. He said that the Applicant never lived in the Property. He later said the Applicant and his wife did move into the Property and lived there "for a little while". There was some confusion regarding the dates.
9. He said he could not recall exactly when his son (the Applicant) lived at the Property. He said that he thought it was when his son's wife was pregnant, and having some problems. So they moved in with he and his wife for a while so they could help look after them.

Evidence of the Applicant

1. Due to the above inconsistencies, Counsel for the Respondent contacted the Applicant by phone in the break, at the request of the Tribunal.
2. The Applicant was contacted to attend the hearing by phone. The Applicant was sworn in, and confirmed his name as Jun Jie Wang. He also uses the name "Derek". He did not require an interpreter.
3. In short, his evidence was clear. He said he is married. He and his wife have two children, a girl and a boy. He told the Tribunal that he never moved into the Property, and never lived there. Nor have his wife and children.
4. Rather, he and his wife (and, subsequently, their children - a girl born in 2019 and a boy born in 2020) lived together at the Killara property. It was an apartment. He said they had lived there for "around 10 years". This is consistent with the transfer for the Killara property, which showed that it had been purchased by the Applicant and his wife as joint tenants, with the transfer registered in 2014 (R3, p 1); it is also consistent with the claim for a principal place of residence exemption (R3, pp4-5; also see above at paragraph [5]).
5. He confirmed that rates notices, bills and other documents were sent to his Killara address. He lived at the Killara property before the (Dryden Rd) Property was purchased, and he still lives there. He never moved out, or lived anywhere else. His drivers licence had the Killara address at all relevant times.
6. When asked if he ever intended to live in the Property, he said "No". He also said "No, because it was always going to be demolished."

Observations on the 2018 settlement sheet for the Property

1. The 2018 contract for purchase of the Property wasn't' in evidence. But documents at R1 pp72-73 suggest the contract showed the purchasers as Ping Wang, Jiajuan Wang and the Applicant (Jun Jie Wang).
2. I am satisfied that Ping Wang and Jiajuan Wang transferred their interests to the Applicant prior to settlement on 20 July 2018. This appears from descriptions on a 17 July 2018 invoice from a Chatswood law firm (before settlement on 20 July 2018) (R1, p 73). The invoice was addressed to "Mr Jun Jie Wang", was titled "Re: Wang Purchase from Smith; Ppty: [x] Dryden Road, North Turramurra", and included the following description: To our cost acting for you in preparing Statutory Declaration & S18(3) Duties Act for the Transfer from Ping Wang & Jiajuan Wang to Jun Jie Wang.
3. This description contains a reference to the "no double duty" provision in the Duties Act 1997 (NSW) where dutiable property may be exempt from double duty where "the transfer is not made in conformity with the agreement for sale". There are two persons in the description who could also potentially be referred to as "JJ Wang".
4. Although the settlement adjustment sheet for the Property dated 20 July 2018 (R1, p 72) stated "Wang, Wang & Wang purchase from Smith", I assume this was prepared by the vendor, and not the purchaser/s.
5. I therefore am satisfied that the transfer in 2018 was to the Applicant only, and that Ping Wang was not an "owner" as at 31 December 2018 or 31 December 2019 (or at any time during the relevant land tax years).

Jurisdiction, Onus of Proof and the Tribunal's role

1. The Applicant objected to the assessments, which included interest. The objections were disallowed. The Applicant filed his application to the Tribunal within time.
2. The Tribunal therefore has administrative review jurisdiction to hear and determine this application: s 96 of the TA Act, s 30 of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) and s 9 of the ADR Act. It is the decision that has been the subject of an objection (here, the assessments and the decisions not to remit interest), not the decision on the objection, which is the subject of the review: see Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28]; Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 at [10].
3. The Tribunal "stands in the shoes" of the Respondent in conducting a merits review. The Tribunal's task is to decide what the correct and preferable decision is having regard to the material before it, including any relevant factual material and any applicable written or unwritten law: ADR Act, s 63.
4. Importantly, the Applicant has the onus of proving his case: TA Act, s 100(3). That means he must prove all matters necessary for the Tribunal to answer the statutory questions in his favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities.
5. The Tribunal may (among other things) confirm or revoke the assessment or other decision to which the application relates or make a decision in place of the reviewable decision and make orders as to costs or otherwise as it thinks fit, s 101(1) of the TA Act.

Relevant provisions of the LTM Act

1. Land owned in New South Wales is "taxable land" unless it is exempt.
2. The taxing dates for the purposes of the land tax assessments under review are 31 December 2018 and 31 December 2019, pursuant to s 8 of the LTM Act: Land tax shall be charged on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied.
3. Land Tax is payable on all land owned in NSW by a person on 31 December unless an exemption applies to the land. Section 7 of the LTM Act provides: 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).
4. The relevant legislation regarding the principal place of residence exemption is found in s 10(1)(r) and Sch 1A of the LTM Act. It is set out below as in force as at 31 December 2018 and 31 December 2019: Section 10 10 Land exempted from tax (1) Except where otherwise expressly provided in this Act, the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act: … (r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A … SCHEDULE 1A PRINCIPAL PLACE OF RESIDENCE EXEMPTION 1 Definitions (1) In this Schedule - principal place of residence exemption - see cl 2. residential land - see cl 3. … taxing date - means midnight on the thirty-first day of December. (2) For the purposes of this Schedule, a reference to the owner of land includes, if there are joint owners, any one or more of those joint owners. … 2 Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is - (a) a parcel of residential land, or (b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots. (2) Land is not used and occupied as the principal place of residence of a person unless - (a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence. (3) If the owner of land is entitled to the exemption conferred by this Schedule, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption. (4) The exemption conferred by this Schedule is referred to as the principal place of residence exemption. (5) The principal place of residence exemption is subject to the restrictions set out in Part 4. …. 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 - It is an offence under section 55 of the Taxation Administration Act 1996 to make a statement to a tax officer, or give information to a tax officer, orally or in writing, knowing that it is false or misleading in a material particular. (2) This cl 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) the intended use and occupation of the land is not unlawful. (3) This cl applies in respect of the assessment of a person's ownership of land only in the period of - (a) 4 tax years immediately following the year in which the person became owner of the land, or (b) if, after the person became owner and before the building or other works physically commence, the land is used and occupied for residential purposes by another person - 4 tax years immediately following the tax year in which the other person ceases to use and occupy the land for those purposes. (4) Without limiting subcl (3)(a) - (a) this cl does not apply in respect of the assessment of a person's ownership of land in a period referred to in subcl (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 cl to the land is taken not to have applied to the land in respect of that tax year (unless subcl (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 cl to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this cl 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) For the purposes of section 9(3)(c) of the Taxation Administration Act 1996, any reassessment under this cl is authorised to be made more than 5 years after the initial assessment. (7) This cl 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 cl 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 …. (8) For the purposes of this cl - unoccupied land means land that is not being used or occupied for any purpose. … Part 4 Restrictions 12 Only one principal place of residence for all members of 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) For the purposes of this cl, a family consists of the following - (a) a person and his or her spouse (if any), (b) any dependent child or dependent step-child of the person and his or her spouse (or of either of them) who ordinarily resides with the person or his or her 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. …. (10) Nothing in this cl prevents more than one residence from being treated as the principal place of residence of members of a family under cl 7 (Concession for change to principal place of residence).

Application of the law to the facts

1. As land tax is an annual tax, the circumstances of the Applicant must be assessed as at 31 December 2018 (for the 2019 land tax year), and 31 December 2019 (for the 2020 land tax year). At those times: 1. the Applicant was the only (sole) owner of the Property; 2. the Property was residential land, and unoccupied land; 3. the Applicant also owned, jointly with his wife, the Killara property; 4. the Killara property was the actual principal place of residence of the Applicant, and of his wife; 5. an exemption was claimed for the Killara property for those land tax years under "cl 2(1)(b)" of Sch 1A; 6. the Applicant did not live at the Property, and he therefore did not use and occupy it as his principal place of residence.

Clause 2 - does it apply on its own terms?

1. The Applicant was the owner as at the relevant dates. But he never actually lived at the Property. It could not be, as a matter of fact, his principal place of residence at either of the two relevant dates. He also used and occupied "other land" (the Killara property) as his principal place of residence from 1 July - 31 December 2018 and 2019 for the purpose of s 2(2)(a). This is supported by his exemption claim for that other property. There is no basis upon which the Chief Commissioner (or here, the Tribunal) could be satisfied that the land is used and occupied by the person as the person's principal place of residence under cl 2(2)(b).
2. Accordingly, cl 2 was not satisfied on its own terms. However, another provision may deem it to apply.
3. There are two provisions in Sch 1A which are relevant to whether the deeming can apply: 1. cl 6 - which may allow unoccupied land to be deemed to be an owner's principal place of residence; and 2. cl 12 - which may restrict the operation of cl 6.

Does cl 6 of Sch 1A apply?

1. Clause 6 of Sch 1A allows a concession for "unoccupied" land on which an owner is constructing, or intends to construct, a house which they intend to occupy as their principal place of residence.
2. Clause 6 is not a "freestanding" exemption. The second sentence of cl 6(1) indicates that cl 6 is intended to provide a deeming of use and occupation of the unoccupied land which then feeds into cl 2(1) by causing the requirement in the chapeau of cl 2(1) (that the land must be "used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose") to be satisfied: see Richmond J in Vatner v Chief Commissioner of State Revenue [2024] NSWSC 769 (Vatner) at [81].
3. Absent this deeming, the principal place of residence exemption in cl 2 could not apply because the land was not being actually used and occupied by the Applicant as his principal place of residence at the relevant times.
4. So here, the Applicant has bought land on which a building was to be demolished to allow for construction of a new house. The requirements were satisfied in that: 1. building or other works had physically commenced by the end of the first year in the concession period; and 2. no income was earned from the land once the building work had commenced.
5. The Applicant cannot rely on the exemption in cl 6.
6. First, the concession is denied by cl 6(7)(a) which relevantly provides that cl 6 "does not apply in respect of land owned by [the Applicant] if [the Applicant] or any member of the person's family is entitled to have his or her actual use and occupation of other land taken into account under .,.. this Schedule [1A]". This was the position as at 31 December 2018, and 31 December 2019 when the Applicant was the only owner of the land, and the Killara property was claimed as a principal place of residence.
7. Second, there is no evidence to conclude that the Applicant intended to live in the Property as his principal place of residence, which is a prerequisite to the operation of cl 6. The necessary intention as to the use and occupation of "the land" owned at the taxing date for the relevant land tax year (here, 31 December 2018 and 2019), as confirmed by Vatner at [533].
8. Third, even that intention existed, it never converted into actuality: the only "owner" for the land tax years the subject of these assessments never moved in. That is "the person" to which s cl(5) must refer. The clear effect of cll. 6(5) and 6(6) is that any exemption claimed by reference to that intention is revoked and is taken not to have applied in respect of any year to which, but for the revocation, it would have applied.
9. The Applicant submitted that Ping Wang's use and occupation of the Property as his principal place of residence (during the later period in which Ping Wang held a 30% interest) resulted in the exemption in cl 6 applying to the Applicant for the 2019 and 2020 land tax years.
10. The definition section of the LTM Act at s. 3(1) relevantly provides: "Owner" includes-- (a) in relation to land, every person who jointly or severally, whether at law or in equity-- (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, And "Joint owners" means persons who own land jointly or in common, whether as partners or otherwise, and includes persons who have a life or greater interest in shares of the income from the land and persons who by virtue of this Act are deemed to be joint owners.
11. And, as noted above, cl 2(3) in Sch 1A provides: If the owner of land is entitled to the exemption conferred by this Schedule, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption.
12. It is this sub clause that is reflected in Revenue Ruling LT082v5 (operative at the relevant time): After the building works have been completed, at least one of the owners must use and occupy the building as his or her principal place of residence before the end of the four year period referred to above, and must continue to so use and occupy the building for at least six months. Failure to meet this requirement will result in the concession being revoked for each year for which it had been allowed and the land will be reassessed for land tax for all those years. The concession for an intended principal place of residence cannot apply if the owner, or any member of the owner's family (as defined in clause 12) is entitled to claim the PPR exemption for another residence.
13. I agree with the Respondent's submissions that the circumstances of Ping Wang are not relevant to the Applicant's assessment to land tax for the 2019 and 2020 land tax years.
14. The Applicant was the only owner as at 31 December 2018, and as at 31 December 2019.
15. And it follows that the intention of that owner must convert into the actuality of the Property becoming his principal place of residence.

What is the effect of cl 12?

1. The conclusion above, that the exemption is not available under cl 6, is further reinforced by the limitation in cl 12.
2. By its terms, cl 12(1) clearly states that 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. A family is defined in cl 12(6)(a) to comprise the members of the immediate family. In this case, the "family" consisted of the Applicant, his wife and his children.
3. Clause 12 does not restrict the ability to claim two principal places of residence if the different concession in cl 7 applies for a change in a principal place of residence. Clause 12(10) provides that "nothing 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." There is no such carve-out for clause 6.
4. So the Property cannot be exempt from land tax in the 2019 or 2020 land tax year. Because the Killara property was (and was claimed as) the principal place of residence of the Applicant (the sole owner) and his wife. This outcome is consistent with the decision of the Administrative Decisions Tribunal Appeal Panel in Chief Commissioner of State Revenue v White and anor. [2008] NSWADTAP 27; in that case, the Appeal Panel (comprising Deputy President Needham SC, Judicial Member Handley and Non-Judicial Member Bennet) held that the proposed principal place of residence (Point Piper), even if deemed to be a principal place of residence by cl 6, could not be exempt from tax when another actual principal place of residence (Coogee) was also owned by family members. They said: 33 Clause 12, in clear terms, refers to the principal place of residence exemption rather than the 6(1) concession. While the 6(1) concession is part of the greater picture, the principal place of residence exemption is set out in cl 2. Accordingly, unless necessity points to a wider reading, cl 12 must be read as limiting the operation of the principal place of residence exemption to, as the heading explains, "only one … for all members of the same family". 34 It is not in contest that the Whites are a "family" for both cl 12 and for the purposes of sub-cl 6(7) where that definition is referred to. 35 Read on its own, sub-cl 12(1) does not assist the respondents if one accepts, as we do, that the principal place of residence exemption applies to properties actually used and occupied as a principal place of residence. The sub-cl, read with sub-cl 12(2), places an onus on persons who are within the definition of "family" and who actually use and occupy more than one principal place of residence for whatever reason, to elect which of them should be considered as such for the purpose of the payment of land tax. It is in relation to this cl, and this cl alone, that an election is able to be made. But does cl 12 interrelate with cl 6 in these circumstances to allow the respondents to make an election to treat the Point Piper property as the exempt property? 36 In our view it does not, for two reasons. Firstly, sub-cl 6(7) excludes the operation of the concession by reason of the entitlement of the respondents to claim an exemption for the Coogee property. Secondly, cl 12 refers in terms to multiple residences "used and occupied … as a principal place of residence". Point Piper was not, at the relevant taxing date, used and occupied as a principal place of residence. 37 It was argued that cl 6 had the effect of "deeming" Point Piper to be a principal place of residence. Indeed, but for sub-cl 6(7), sub-cl 6(1) would have that effect, as property which is relevantly unoccupied (see sub-cl 6(2)) is "taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence". However, the clear terms of sub-cl 6(7) cannot be ignored or read down, and so there was only one relevant principal place of residence owned by the respondents at the relevant taxing date. … 44 Putting the clauses of Schedule 1A into context, the situation is this. Clause 2 provides an exemption for the Coogee [actual PPR] property only. Subclause 6(1) provides a concession so that the Point Piper property [intended PPR] could be considered as a principal place of residence. However, sub-clause 6(7) excludes the Point Piper property from eligibility for the concession by reason of the entitlement of the respondents to have their actual use and occupation of the Coogee property taken into account for the principal place of residence exemption. On that analysis, there is only one entitlement, in relation to the Coogee property, for the principal place of residence exemption, and so sub-clause 12(2) cannot apply, because it refers to more than one residence being used and occupied by members of a family. As sub-clause 12(2) is the only part of Schedule 1A which entitles persons to make an election, the conditions precedent for the making of the election have not been fulfilled.
5. As noted by the Respondent, and on the undisputed facts of this matter, the Applicant's wife also, at all relevant times, used and occupied the Killara property as her principal place of residence. Thus, the exclusion under cl 12 applied, as set out in LT082v5: The concession for an intended principal place of residence cannot apply if the owner, or any member of the owner's family (as defined in clause 12) is entitled to claim the principal place of residence exemption for another residence.

Conclusion

1. The Killara property was the Applicant's principal place of residence. He could not, therefore, claim the exemption under cl 6 of Sch 1A for the 2020 or 2021 land tax years by reason of cl 6(7) and cl 12 of Sch 1A.
2. As a result the Property is not "taken to be" used and occupied as his principal place of residence for either the 2020 or 2021 land tax years under cl 6. The exemption under s 10(1)(r) of the LTM Act does not apply, and the Applicant is liable for land tax as assessed.

Interest

1. Interest was imposed under s 21 of the TA Act, calculated on a daily basis. The interest rate is the sum of the market rate component, and the premium component: TA Act, s 22(1).
2. Section 25 of the TA Act provides for the remission of interest. On 1 February 2024, s 25 was amended to provide as follows: 25 Remission of interest (1) The Chief Commissioner may remit interest. (2) The Chief Commissioner may issue guidelines setting out how interest must be remitted under this division. (3) If guidelines are issued, interest must be remitted only in accordance with the guidelines. (4) The imposition or remission of penalty tax is not relevant to the imposition or remission of interest. Prior to that amendment, s 25 provided: 25 Remission of interest The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount.
3. There are no guidelines issued under the revised s 25, but I have had regard to the Respondent's CPN 024: Interest and penalty tax guidelines. These guidelines focus on circumstances outside the control of a taxpayer, and the concept of reasonable care, but the discretion to remit interest is - as noted below - unfettered.

Market rate of interest

1. The market rate component of interest compensates the Respondent for not having the benefit of the tax payment from the time it was due, and could rarely, if ever, be waived; otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. See Golden Age & Hannas the Rocks v Chief Commissioner of State Revenue [2024] NSWSC 249 (Golden Age) at [101], Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 (Incise Technologies) and the Commissioner's Practice note CPN 024.
2. Having regard to the facts set out above, there are no circumstances to justify remission of the market rate component.

Premium component of interest

1. Remission of the "premium component" of interest was considered by Richmond J in Golden Age who said at [102]: 102 In my view it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion. I do not accept the Commissioner's submission that it is a penalty at the 'low end' of the scale. Depending upon the period of the delay in payment, the penalty arising from the premium component can be very significant as it was in the present case (being 24% of the duty assessed on the premium).
2. In Incise Technologies, the Appeal Panel identified four cumulative criteria which are relevant to the exercise of the discretion to remit under s 25: 1. All principal tax that is owing and not in dispute has been fully paid; 2. There has been cooperation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments; 3. Such cooperation has occurred prior to any investigation being commenced by the Commissioner or, at the very least, within a reasonable time after the request for information had been made by the Commissioner; and 4. There has been no wilful default by the taxpayer in not paying tax on time.
3. That the four criteria are not exhaustive has been confirmed in subsequent cases, e.g. Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [179] and Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 at [105]-[106].
4. In this case, the Applicant submits that the Respondent had the incorrect address (Nth Willoughby), which led to a delay in the issue of the assessments, and that interest should be remitted as a result. (No penalties were imposed.) It was noted that the Respondent had all of the relevant information from the drivers licence of the Applicant.
5. In this case, the assessments issued to the last address advised by the Applicant. The Respondent only identified the Applicant's correct address following the issue of s72 notices to the Applicant's financial institutions which revealed a variety of different addresses from which the Killara address was identified as the correct one. Unfortunately, the provision of details to one NSW government agency (eg. the RTA) does not automatically mean they are updated with the Respondent. The Applicant's address in Killara was never advised in respect of his land tax liability.
6. I accept there was no wilful default by the Applicant, and that the variety of assessments and client IDs and addresses caused some confusion to the Applicant. I accept that he did not originally receive the Notices. On the other hand, some confusion regarding names, initials and changing details is likely to have also occurred. In the circumstances, the Respondent did not see fit, for whatever reason, to impose penalties. That is a good thing. But that is not relevant to my consideration of whether or not to exercise a discretion to remit interest (s 25(4)).
7. Having regard to the authorities and to the Commissioner's Guidance in his ruling, I am not satisfied that reasonable care was taken or that the events that occurred give rise to any circumstances (special or otherwise) that warrant the exercise of the discretion in s 25 of the TAA to remit the premium component of interest.

Orders

1. I make the following orders: 1. The assessments under review are confirmed. 2. The decisions by the Respondent to not remit interest in respect of those assessments are confirmed.

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            I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar 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: 13 January 2025