Perry Properties Pty Ltd v Chief Commissioner of State Revenue  NSWCA 274
|Date of judgement||29 August 2013||Proceeding No.||2012/195917|
Preston CJ of LEC
|Court or Tribunal||NSW Court of Appeal|
|Appealed from||Perry Properties Pty Ltd v Chief Commissioner of State Revenue  NSWADTAP 13|
|Legislation cited||Administrative Decisions Tribunal Act 1997 s 119
Land Tax Management (Amendment) Act 1989 s 3, Sch 1(2)
Land Tax Management (Amendment) Act 1991 s 3, Sch 1(4)
Land Tax Management Act 1956 ss 7, 8, 10Q, 12
Residential Tenancies Act 1987
State Revenue Legislation (Further Amendment) Act 1994 s 4, Sch 2(3)
Taxation Administration Act 1996 s 96
|Catchwords||TAXES AND DUTIES - land tax - interpretation of Land Tax Management Act 1956, s 10Q - land exempted from land tax where used for low cost accommodation and Chief Commissioner satisfied land so used and occupied in accordance with guidelines approved by Treasurer - whether purpose of guidelines to assist Chief Commissioner in being satisfied land used for low cost accommodation or to specify particular low cost accommodation entitled to exemption - latter interpretation correct
STATUTES - by-laws and regulations - interpretation - guidelines approved by Treasurer under Land Tax Management Act 1956, s 10Q - meaning of long-term residency requirement - whether freestanding discretion conferred on Chief Commissioner to grant exemption
|Cases cited||Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory)  HCA 41; 239 CLR 27
Griffiths v The Trustees of the Parliamentary Contributory Superannuation Fund  NSWCA 231
Morton v Union Steamship Co of New Zealand Ltd  HCA 42; 83 CLR 402
Perry Properties Pty Ltd v Chief Commissioner of State Revenue  NSWADTAP 13
Perry Properties Pty Ltd v Chief Commissioner of State Revenue  NSWADT 145
Project Blue Sky Inc v Australian Broadcasting Authority  HCA 28; 194 CLR 355
South Australia v Tanner  HCA 3; 166 CLR 161
Wilkie v Gordian Runoff Ltd  HCA 17; 221 CLR 522
Williams v Melbourne Corporation  HCA 56; 49 CLR 142
Perry Properties Pty Ltd (“the Taxpayer”) appealed against a decision of the Administrative Decisions Tribunal Appeal Panel on 2 April 2012. The Appeal Panel upheld a decision of the Administrative Decisions Tribunal that a boarding house owned and operated by the Taxpayer was not entitled to an exemption from land tax for the 2007 land tax year as low cost accommodation under Treasurer’s Guidelines approved under s.10Q of the Land Tax Management Act 1956 (“the Act”).
The key findings of the Court of Appeal were:
the Treasurer did not act beyond his power in approving the Guidelines;
the Tribunal did not take into account irrelevant considerations by treating the Guidelines as binding rules and giving effect to the “long term resident” requirements;
the Tribunal did not err by applying the Guidelines as if they were binding rules;
the Tribunal did not err in holding that the “long term resident” requirement could only be satisfied by occupation during the calendar year immediately preceding the tax year;
the Chief Commissioner’s discretion under paragraph 3(iii) of the Guidelines could not be exercised if the requirements specified in paragraph 3(ii) were not met during the calendar year immediately preceding the tax year.
The Court of Appeal confirmed the decision of the Appeal Panel
The Taxpayer owned and operated a boarding house in Glebe since 26 January 2006. When the Taxpayer received the land tax assessment for the 2007 tax year, it applied for an exemption under s 10Q of the Land Tax Management Act 1956 on the grounds that the land was used and occupied for low cost accommodation.
This application for exemption was disallowed by the Chief Commissioner on the basis that the land was not being used and occupied for low cost accommodation in accordance with Guidelines approved by the Treasurer and set out in Revenue Ruling LT78 (“the Guidelines”).
The Taxpayer applied for a review by the Administrative Decisions Tribunal, asserting that LT78 should be interpreted such that the requirements of the Guidelines were satisfied. The Tribunal upheld the Chief Commissioner’s decision that the Taxpayer was not entitled to the exemption.
The Taxpayer appealed to the ADT Appeal Panel, which held that the Taxpayer did not satisfy the requirement of paragraph 3(ii) of the Guidelines requiring that “80% of the accommodation that was actually occupied was occupied by long term residents”. The Appeal Panel held that the periods of occupancy to be taken into account when determining whether a resident is a “long term resident”, could not fall outside the calendar year prior to the 2007 tax year, being the period from 1 January 2006 to 31 December 2006. Furthermore, the Appeal Panel decided that the Chief Commissioner did not have discretion under paragraph 3(iii) of the Guidelines to grant an exemption as the discretion specified by that paragraph only applied when the requirement in paragraph 3(ii) had been met but the requirements in paragraph 3(i) had not been met.
The Court determined that the question at the heart of the appeal was whether the Treasurer can approve guidelines under s 10Q (“Low cost accommodation–exemption/reduction”). The Court outlined five questions that the appeal raised:
Whether the Treasurer acted beyond his power in approving the Guidelines
The appellant contended the implied power conferred upon the Treasurer is to be determined by the object and purpose for which it was conferred. Thus, it does not authorise the approval of guidelines that are inconsistent with the purpose of s 10Q.
The appellant argued that the Guidelines were ultra vires because they were inconsistent with the scheme of s 10Q. Specifically:
The Guidelines lay down inflexible requirements which may exclude land which is in fact used for low cost accommodation; and
The Guidelines require the existence of a factor which is irrelevant to whether the land is used for low cost accommodation.
However, the Court held that the expression “so used and occupied” in s 10Q(1)(c) refers to the use and occupation described in s 10Q(1)(a), which requires that the Chief Commissioner be satisfied that the land is used and occupied in accordance with the Guidelines. S 10Q is to be read in this way for other reasons also, namely:
There is no reason for the Chief Commissioner of State Revenue to have to be satisfied of another condition framed in the “subjective” form;
The Chief Commissioner is given no power under the Taxation Administration Act 1996 to approve or vary the guidelines; only the Treasurer can do so;
The terms of s 10Q(2) show that the purpose of approved guidelines is not to provide guidance but rather to describe types or forms of low cost accommodation to which the exemption applies; the legislative history and context suggests that the Guidelines were intended to allow flexibility to identify low cost accommodation to which the exemption applied.
As such, the Court rejected the Taxpayer’s argument that the Treasurer acted beyond his power in approving the Guidelines.
Did the Tribunal err in having regard to any irrelevant considerations?
Since this argument depended on the Taxpayer’s statutory construction issue in question 1, this argument was rejected.
Did the Tribunal err in applying the guidelines as if they were binding rules?
Since this argument also depended on the Taxpayer’s statutory construction issue in question 1, this argument was rejected.
Did the Tribunal err in its construction of the “long term resident” requirement?
Paragraph 3(ii) of the Guidelines requires that at least 80% of the accommodation that was actually occupied was occupied by “long term residents”. The Taxpayer argued that a “long term resident,” by definition requiring a period of occupation of 3 consecutive months or any period totalling 3 months, could qualify by reference to events occurring after 31 December 2006. That is, say for the period from 1 December 2006 to 1 March 2007.
The Court interpreted paragraphs 3(i)(a) and 3(ii)(a) of the Guidelines as referring only to the use and occupation of the land during the calendar year which ends on the relevant taxing date. Thus, the Tribunal did not err in holding that the requirement as to occupation by long term residents could only be satisfied by occupation during periods of at least three months during the 2006 calendar year.
Did the Tribunal err in construing paragraph 3(iii) as providing for the exercise of a discretion only in the event that the requirements in paragraph 3(ii)(a) and (b) were met?
The Court rejected the Taxpayer’s argument that paragraph 3(iii) is freestanding and confers a discretion to be exercised on a case-by-case basis. The court interpreted the provisions in a manner which gave “meaning to every word of the provision” in accordance with Project Blue Sky Inc v Australian Broadcasting Authority  HCA 28. As such, the Appeal Panel was correct to conclude that paragraph 3(iii) did not confer an independent discretion on the Chief Commissioner to allow an exemption.
The Court held that the discretion was not available unless the requirements specified in paragraphs 3(ii) had been met during the 2006 calendar year (that is, at least 80% of the accommodation that was actually occupied was occupied by long term residents; and at least 80% of the accommodation available to boarding-house residents was either occupied or was available for occupation at tariffs within the limits shown in paragraph 3(i)).
Paragraph 3(ii) was not satisfied, and the Taxpayer’s appeal was therefore dismissed, with costs awarded to the Chief Commissioner.