On Monday Mon 23.5.2016, the Appeal Panel of the NSW Civil and Administrative Tribunal dismissed a taxpayer’s appeal against an earlier decision which had denied him the concession for unoccupied land intended to be the owner’s principal place of residence (PPR) (contained in clause 6 of Sch 1A of the Land Tax Management Act 1956 (NSW)).
The taxpayer had moved out of his home located in Randwick, NSW, to allow it to be rebuilt. In doing so, he experienced significant delays. He moved into another property, which he had inherited, located in Panania, NSW. The Commissioner decided the Panania property was the taxpayer’s PPR and denied the land tax exemption for the Randwick property. The decision relating to the 2013 tax year was subsequently confirmed by the NSW Civil and Administrative Tribunal and the Appeal Panel of the Tribunal.
The present matter concerned the 2014 land tax year. The taxpayer lived in the Panania property from September 2012 to the weekend of 14/15 December 2013. From that weekend, the taxpayer claimed he lived at his friend’s house in Arncliffe, NSW, pending completion of the works at Randwick and that therefore the exemption would apply to his Randwick property. He continued to use the Panania property principally for storage and stayed there “occasionally”. In Theophilas v Chief Comr of State Revenue [2015] NSWCATCD 121, the Tribunal was not satisfied that the Panania property was not the taxpayer’s PPR in respect of the 2014 tax year and therefore denied the taxpayer’ claim.
The Appeal Panel dismissed the taxpayer’s appeal. Among other things, it held the Tribunal’s conclusion was “not plainly unjust, or so unreasonable as to suggest that it failed properly to exercise its discretion”.
(Theophilas v Chief Comr of State Revenue [2016] NSWCATAP 111, NSW Civil and Administrative Tribunal, Appeal Panel, O’Connor ADCJ, Deutsch SM, 23 May 2016.)
Catchwords from the Appeal Panel reasons
STATE REVENUE – Land tax – principal place of residence exemption – concession in relation to unoccupied land intended to be the owner’s principal place of residence after completion of building works – concession not applicable if owner in the meantime uses and occupies other land owned by him as principal place of residence – Tribunal held [as] correct the Commissioner’s assessment of other land as exempt and not the unoccupied land – Appeal by owner – questions of law – the Tribunal’s characterisation of the issue before it – application of taxpayer’s onus – construction of ‘principal place of residence’, ‘use’ and ‘occupation’ – whether in light of undisputed facts Tribunal’s finding manifestly unreasonable – appeal dismissed. Land Tax Management Act 1996, s 3(1), s 10(1)(r); Sch 1A, cl 2(2)(a), cl 6(7)(a), cl 6(3)(b).
Relevant provisions from the Land Tax Management Act 1956 (NSW)
Schedule 1A Principal place of residence exemption
Part 1 – Preliminary
1 Definitions
(1) In this Schedule:
“principal place of residence exemption” –see clause 2.
“residential land” –see clause 3…
“taxing date” –means midnight on the thirty-first day of December.
Part 2 – Principal place of residence exemption
2 Principal place of residence exemption
(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:
(a) a parcel of residential land, or
…
(2) Land is not used and occupied as the principal place of residence of a person unless:
(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or
(b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence.
(3)…
(4) The exemption conferred by this clause is referred to as the “principal place of residence exemption”.
(5) The principal place of residence exemption is subject to the restrictions set out in Part 4.
3 Residential land–meaning
(1) In this Schedule, “residential land” means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes…
Part 3 – Concessions in application of principal place of residence exemption
4….
5….
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. 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.
(4) (Repealed)
(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 principal place of residence 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…
8 Concession for absences from former residence
(1) If the Chief Commissioner is satisfied that:
(a) a person is the owner of land (“the former residence”) that has been used and occupied by the person as his or her principal place of residence for a continuous period of at least 6 months, and
(b) the person uses and occupies other land (whether or not in New South Wales), that is not owned by the person, as his or her principal place of residence,
the person is taken, for the purpose of the principal place of residence exemption, to continue to use and occupy the former residence as his or her principal place of residence.
(2) The maximum period for which a person may be taken, under this clause, to continue to use and occupy a former residence as a principal place of residence is 6 years starting at the end of the last period (of at least 6 months) during which the former residence was used and occupied by the person as a principal place of residence (not including any period for which the person may be taken, under clause 7 or this clause, to have used and occupied the former residence as a principal place of residence).
(3) If the principal place of residence exemption applies to the former residence of a person by operation of this clause, the exemption ceases to have effect if the person is the owner of the former residence at the end of the 6-year period referred to in subclause (2) and fails:
(a) to resume actual use and occupation of the residence as a principal place of residence by the end of that period, and
(b) to continue that use and occupation for at least 6 months.
(3A) The principal place of residence exemption also ceases to have effect if the land ceases to be capable of being used and occupied as a residence and remains incapable of being so used and occupied for a period exceeding 4 years.
(4)…
(5)…
(6) This clause applies in respect of the assessment of a person’s ownership of land in a tax year only if the Chief Commissioner is satisfied that no income has been derived from the use or occupation of the former residence in the preceding tax year, except as permitted by subclause (7).
(7)…
(7A)…
(8) This clause is subject to clause 12 (which limits members of a family to one principal place of residence exemption).
(9)…
9…
Part 4 – Restrictions
11…
12 Only one principal place of residence for all members of same family
(1) For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family.
(2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year.
(3) Such an election is to be made, by or on behalf of the members of the family, in writing and must be lodged with the Chief Commissioner within the period for the lodging of objections under section 89 of the Taxation Administration Act 1996.
(4) An election may be made, in respect of a tax year, by the end of the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability) for that tax year.
(5) If an election is not made, the Chief Commissioner is to treat the residence that has the highest land value for land tax purposes as the principal place of residence of all members of the family.
(6) For the purposes of this clause, a “family” consists of the following:
(a) a person and his or her spouse (if any),
(b) any dependent child or dependent step-child of the person and his or her spouse (or of either of them) who ordinarily resides with the person or his or her spouse.
(10) Nothing in this clause prevents more than one residence from being treated as the principal place of residence of members of a family under clause 7 (Concession for sale of former principal place of residence).