The NSW Court of Appeal has restored a decision at first instance, which had concluded that the taxpayer as trustee of a property trust, was liable for land tax with respect to the 2011 land tax year, as a fixed trust, and therefore was entitled to the benefit of the tax threshold.
The matter concerned a property unit trust, which held the subject land that 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) of the Land Tax Management Act 1956 (NSW). 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 in Sayden Pty Limited v Chief Comr of State Revenue [2011] NSWADT 288 concluded the trust should be assessed as a fixed trust for the relevant land tax year.
However, the Appeal Panel of the NSW Administrative Decisions Tribunal allowed the Commissioner’s appeal and held that a trust deed amendment, which “mirrored” the relevant statutory language contained in s 3A(3B) did not have the effect of converting a special trust to a fixed trust.
The Court of Appeal did not accept the Appeal Panel’s approach to the interpretation of the deed and held it had erred in concluding that the deed did not satisfy the criteria.
(Sayden Pty Ltd v Chief Comr of State Revenue [2013] NSWCA 111, NSW Court of Appeal, Meagher JA, Tobias AJA, Gzell J, 10 May 2013.)
[LTN 90, 14/5/13]