The Appeal Panel of the NSW Administrative Decisions Tribunal has held that a trust deed amendment which “mirrored” the relevant statutory language contained in s 3A(3B) of the Land Tax Management Act 1956 (NSW) did not have the effect of converting a special trust to a fixed trust.
The matter concerned a property unit trust which held the subject land which in turn was owned by the taxpayer as trustee of the trust. The majority of the units of the trust were held by a family trust. In December 2010, a clause of the property unit trust deed was amended to closely mirror the text of s 3A(3B). The Commissioner issued a land tax assessment in respect of the 2011 land tax year on the basis that the property unit trust was considered to be a special trust. The taxpayer essentially argued the amendment was sufficient to regard the trust as a fixed trust, and therefore it was entitled to the benefit of the tax-free threshold for land tax purposes.
At first instance, the NSW Administrative Decisions Tribunal concluded the trust should be assessed as a fixed trust for the relevant land tax year. It held “a deed which mirrors the statute is sufficient to achieve the result sought”. It added that to “hold otherwise would require a technical approach which would not constitute the correct and preferable decision”.
The Appeal Panel held the Tribunal had erred in its approach. It identified various clauses within the trust deed which were inconsistent with the concept of “present entitlement” to which the relevant criteria in s 3A(3B) referred to. In this regard, the Appeal Panel said it was “incumbent on the Tribunal to explain how it reconciled its adoption of a purposive approach which sought to give effect to the intention of the parties, relying only on [the amended clause], with the apparently inconsistent terms elsewhere in the trust deed.”
The Appeal Panel also noted the introductory words “notwithstanding any other provision of this Deed” in the amended clause which was argued by the taxpayer to override all other inconsistent terms. The Appeal Panel said “neither those directly affected by the instrument’s terms nor decision makers such as the [Commissioner] should be left to speculate on which terms stand or fall as a consequence of the words ‘notwithstanding any other provision’ of the instrument”. In conclusion, the Appeal Panel allowed the Commissioner’s appeal.
(Chief Comr of State Revenue v Sayden Pty Ltd ATF Griffin Property Unit Trust (RD) [2012] NSWADTAP 14, NSW Administrative Decisions Tribunal, Appeal Panel, O’Connor P, Hole JM, Bennett NJM, 2 May 2012.)
[LTN 95, 19/5]