The NSW Civil and Administrative Tribunal has found that a land owner was not exempt from land tax, as his principal place of residence’ under Schedule 1A of the Land Tax Management Act 1956 (NSW – more particularly, under s6, which gives exemption for ‘unoccupied land intended to be the owner’s principal place of residence’.
The applicant purchased the land in November 2013 and commenced works in preparation for converting the dwelling on the land into 2 separate residences.
- Because of unexpected delays, in February 2014 he leased the land to tenants who remained the occupiers of the land as at 31 December 2014 and 2015.
- The applicant moved back onto the land in May 2017 and it seems that construction of a second dwelling on the land was completed in November 2017.
- He then advertised 2 properties for rental.
- The applicant was assessed for land tax for the 2014, 2015 and 2016 tax years under s 7 of the Land Tax Management Act 1956 (NSW).
The 3 key issues for the NSW Civil and Administrative Tribunal were:
- whether the applicant intended to solely use the land as his principal place of residence – the Tribunal ruled against the applicant because of steps taken to establish a secondary dwelling (which the applicant failed to show was “an excluded residential occupancy”);
- whether the applicant derived any income from the land – the Tribunal ruled that income has its ordinary meaning and therefore the rent the applicant received was income. The Tribunal rejected the applicant’s argument that he derived no income because his expenses were at least equal to the rental received; and
- whether the land was unoccupied – the Tribunal ruled that land which is leased and generates rental income cannot be regarded as unoccupied.
The Tribunal therefore upheld the land tax assessments.
(Carberry v Chief Comr of State Revenue [2018] NSWCATAD 157, Civil and Administrative Tribunal New South Wales, File No: 2017/00141443, Ludlow SM, 24 July 2018.)
[LTN 145, 31/7/18; Tax Month – July 2018]
Comprehension questions (answers available)
- Did the taxpayer avoid land tax under the ‘principal place of residence’ provisions?
- Does the particular exemption require that the taxpayer have their principal place of residence on that land?
- Did the taxpayer meet the requirement that no income has been earned from the land since works commenced on the land?
- Did the taxpayer meet another requirement, that the land be unoccupied, because of works to construct a dwelling for his principal residence?
