Theophilas v Chief Commissioner of State Revenue [2017] NSWCATAD 89

Date of judgement 24 May 2017 Proceeding No. 2014/00382470
Judge(s) R Hamilton SC
Court or Tribunal New South Wales Civil and Administrative Tribunal
Legislation cited Land Tax Management Act 1956

Taxation Administration Act 1996
Catchwords Revenue Law - land tax; principal place of residence exemption - concession for unoccupied land intended to be the owner’s principal place of residence - concession for absences from former residence - discretion to treat land as principal place of residence - only one principal place of residence for all members of the same family
Cases cited Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11

Paspaley v Chief Commissioner of State Revenue [2008] NSWCA 184

Spiros Theophilas v Chief Commissioner of State Revenue [2014] NSWCATAD 100; [2015] NSWCATAP 39; [2015] NSWCATCD 121; [2016] NSWCATAP 111

Background

The Taxpayer sought a review of the land tax assessment for the 2015 tax year of a Randwick property acquired in 1992 and used as his principal place of residence (PPR) until 2011. In July 2011, the Taxpayer entered into a contract to demolish the residence and construct a new residence on the Randwick property.

Immediately before the demolition of the Randwick property in September 2011, the Taxpayer moved to a property at Panania, which he had inherited [“the Panania property”]. However, in November 2011, the builder went into liquidation and construction of the new residence at Randwick ceased.

In December 2013 the Taxpayer moved out of the Panania property to a property in Arncliffe, not owned by him.

The issue of the operation of the PPR exemption to the Randwick property in 2013 and 2014 land tax years had been previously considered by the Tribunal and the Appeal Panel[1]. In these cases the Tribunal dealt with the evidence concerning the Taxpayer’s use of the Panania property and found on the evidence that the Panania property remained the Taxpayer’s PPR during the 2013 and the 2014 land tax years.

Taxpayer’s submissions

The Taxpayer relied principally on cll. 6 (unoccupied land intended to be owner’s principal place of residence) and clause 8 (Concession for absences from former residence) of Sch 1A LTMA to advance his claim for PPR exemption to his Randwick property. The Taxpayer also argued that the Chief Commissioner should have accepted that the Randwick property was his PPR under Clause 2, and he should be able to nominate that property as his PPR under clause 12.

Decision

The Tribunal considered in relation to the 2015 land tax year, that the evidence established there was no significant change to the Taxpayer’s utilisation of the Panania property.

Accordingly, the Tribunal found that, for the purposes of the 2015 land tax year, the Panania property was still the PPR of the Taxpayer. This had several significant implications for the Taxpayer’s arguments.

Clause 6 – Concession for unoccupied land intended to be an owner’s PPR

The Taxpayer argued that his Randwick property should be exempt by virtue of cl. 6 of Sch 1A as it was unoccupied land intended to his PPR.

The Tribunal held that cl. 6(7)(a) of Sch 1A operated to deny the exemption applying to the Randwick property in the 2015 land tax year because the Taxpayer used and occupied his Panania property as his PPR. A such use entitled to him to a PPR exemption for the Panania property under cl. 2 of Sch 1A, the Taxpayer was not entitled to a PPR exemption for the Randwick property.

Clause 8 – Concession for absences from former residence

The Taxpayer further submitted that he was entitled to a PPR exemption for the Randwick property under cl.8 of Sch 1A which grants a PPR exemption to a person’s former PPR after it ceases to be so in certain circumstances. The Tribunal held that the exemption could only apply if the Chief Commissioner was satisfied that the person did not own any other land used and occupied by the person as a PPR (cl.8(1)(a) of Sch 1A).

Having found on the facts that the Panania property was used and occupied as the Taxpayer’s PPR for the 2015 land tax year (and thus Panania was exempt as the Taxpayer’s PPR) the Tribunal held that this concession was not available for the Randwick property.

Clause 2 – Principal place of residence exemption

The Taxpayer alternatively argued that under cl. 2(2)(a) of Sch 1A the Chief Commissioner should have been satisfied that the Randwick property was used and occupied by him as his PPR. The Tribunal accepted the Chief Commissioner’s argument which pointed to the fatal flaw in that argument.

Land to be exempt as the PPR of the owner must be a “parcel of residential land” (cl.2(1)(a) of Sch 1A) or a strata lot or lots.

To qualify as “residential land” there must be a building or buildings designed, constructed or adapted for residential purposes on the land which is or are used and occupied for residential purposes (cl. 3(1)). The Tribunal held that clearly this was not possible for land (such as the Randwick property) on which the house had been demolished or is, at best, partly built.

Clause 12 – Only one principal place of residence for all members of the same family

The Taxpayer also sought to rely on cl.12 of Sch 1A to argue in the alternative that, assuming Panania was still his PPR for the 2015 land tax year, he was a ‘family of one’ who had more than one PPR. Because he had not made an election as to which was his PPR the Chief Commissioner was required to treat the residence that had the highest land value (Randwick) as the PPR of the family of one.

The Tribunal held that the contextual indicators in the legislation were against such an interpretation. Although the definition of “family” in cl.12(6) of Sch 1A covered situations where there was no spouse, and also where there were no dependent children, references to “all members of the same family” pointed strongly to the need to have at least two persons to constitute a family. The decision of the Court of Appeal in CCSR v& Paspaley [2008] NSWCA 184 confirmed this to be the correct interpretation.

Orders

The decision under review was affirmed.

Link to decision

Theophilas v Chief Commissioner of State Revenue [2017] NSWCATAD 89

Footnotes

  1. ^ Spiros Theophilas v Chief Commissioner of State Revenue [2014] NSWCATAD 100 (Theophilas No 1);[2015] NSWCATAP 39 (Theophilas No 2); [2015] NSWCATCD 121 (Theophilas No 3); [2015] NSWCATAP 111 (Theophilas No 4).
Last updated: 5 July 2017