In a decision handed down on Tuesday 28.4.2015, the NSW Civil and Administrative Tribunal dealt with a preliminary matter concerning whether the principal place of residence (PPR) concessions under clauses 6 (unoccupied land concession) and 7 (change to PPR concession) of Sch 1A of the Land Tax Management Act 1956 (NSW) could apply to exempt more than one property owned by a single taxpayer or joint taxpayers.
The chronology was as follows.
- The new property was purchased on 15 January 2007 (the transfer registered on 21 February 2007).
- The couple (the taxpayers) had sold their former property on 13 December 2012 (the transfer was registered on 27 March 2013).
- The couple entered into an agreement with a builder to construct a new residence on the new property (the council occupation certificate was issued on 10 April 2013).
- The Commissioner issued an assessment for the 2013 land tax year which exempted the new property but taxed the former property on the basis that the PPR concession under clause 7 did not apply to the former property [allowing the PPR exemption to apply to both the ‘former residence’ and the ‘new residence’ for a limited period] as the new property was not acquired within 6 months preceding the relevant tax date (ie 31 December 2012) as required by clause 7(2)(b).
In relation to clause 7, the Tribunal said there was no other evidence to establish that the taxpayers were anything other than the registered proprietors in fee simple of the new property from no later than 21 February 2007. On this basis, the Tribunal concluded the taxpayers did not become the owners of the new property within the 6 month period before the relevant [31/12/12] taxing date [under cl 7(2)(b) – see below]. Accordingly, it said clause 7 did not apply and that the application could not proceed in so far as it relied on clause 7. There were still various issues concerning clause 6.
The Tribunal said the application should proceed to a hearing on that basis, unless the taxpayers would prefer to withdraw the application and accept the existing assessment (which granted them the PPR concession in relation to the new property).
(Perumal Chief Comr of State Revenue (Respondent) [2015] NSWCATAD 85, NSW Civil and Administrative Tribunal, Walker SM, 28 April 2015.)
[LTN 79, 28/4/15]
Principal Place of Residence – Schedule 1A, cl 6 & 7 (unoccupied land & change of residence)
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 his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her 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 his or her 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 clause 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 his or her 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 clause 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 the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 4 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner’s intended use and occupation of the land are physically commenced on the land.
(5) If the principal place of residence exemption applies by operation of this clause 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 clause 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 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.
(7) This clause 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 clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 9D or under this Schedule, or
(b) the person owns land outside New South Wales that is the principal place of residence of the person or a member of the person’s family (within the meaning of clause 12), or
(c) the land, or the land if combined with any adjoining land of which the person is an owner, is capable of having more than 2 residences or residential units lawfully built on it.
(8) For the purposes of this clause:
“unoccupied land” means land that is not being used or occupied for any purpose.
7 Concession for change [in] principal place of residence
(1) If the Chief Commissioner is satisfied that, on a taxing date (“the relevant taxing date” ):
(a) a person is the owner of land (“the former residence” ) that was the principal place of residence of the person on the relevant taxing date or was the principal place of residence of the person on the preceding taxing date, and
(b) the person is the owner of other land (“the new residence” ) that is being or is intended to be used and occupied by the person as his or her principal place of residence,
both the former residence and the new residence are taken, for the purpose of the principal place of residence exemption, to be used and occupied by the person as the person’s principal place of residence on the relevant taxing date.
(2) This clause applies in respect of land owned by a person only if the Chief Commissioner is satisfied that:
(a) the former residence has not been used or occupied except as the person’s principal place of residence, and no income has been derived from the use or occupation of the residence, since the preceding 1 July, except:
(i) income derived from an excluded residential occupancy (within the meaning of clause 4), or
(ii) income derived under a lease or licence entered into by the purchaser under a contract for the sale of the former residence for a period pending completion of the sale, and
(b) the person became the owner of the new residence within the period of 6 months before the relevant taxing date [31/12/12], and
(c) since the person became owner of the new residence the new residence has not been used or occupied except:
(i) as the person’s principal place of residence, or
(ii) by a tenant under a lease entered into by the previous owner.
(3) The principal place of residence exemption cannot be claimed for both a former residence and a new residence under this clause for more than one taxing date.
(3A) A principal place of residence exemption that applies, by operation of this clause, to land not actually used and occupied by a person at the relevant taxing date is revoked if the person is not actually using and occupying the new residence as his or her principal place of residence by the next taxing date immediately following the relevant taxing date.
(4) The effect of the revocation is that the principal place of residence exemption is taken not to have applied in respect of the tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.