On 25 January 2022, the South Australian Supreme Court decided that purpose-built student accommodation facility was not used predominantly for residential purposes and therefore qualified for a stamp duty exemption. The Court used the GST case of Marana Holdings, to interpret ‘residential’ and ‘reside’ having some permanence or long-term nature.
The facts were these.
- In September 2019 Perpetual purchased a 17-level purpose-built student accommodation facility (“the facility”) in Adelaide.
- The lease and all business agreements in respect of the facility were assigned by the sale agreement to a company operating under the Atira brand..
- The evidence showed that:
- in 2018, 63% of students stayed for 26 weeks (or one semester) or fewer.
- The average length of stay was 175 days or 25 weeks and the median stay was 150 days or 21 weeks.
- In 2019, 49% of students stayed for 26 weeks or fewer.
- The average length of stay was 206.77 days (29 weeks) and the median stay was 184 days (26 weeks).
- The only non-student occupants of the facility were tourists.
Perpetual contended that the transfer of the facility was exempt under s 105A of the Stamp Duties Act 1923 (SA) (“the Act“) on the basis that the facility was not used predominantly for residential purposes
The South Australian Supreme Court
- adopted the meaning of the terms “residence” and “residential” as distilled by the Full Federal Court in a GST case (Marana Holdings Pty Ltd v FCT [2004] FCAFC 307) and concluded that “residence”, “reside” and “residential” imply a permanent or long-term commitment to living in a particular place.
- The evidence in this case clearly showed that the majority of occupants did not envisage living at the facility for an extended period of time. Accordingly, the facility was not used predominantly for residential purposes and thus the transfer was exempt under s105A.
Section 105A(6) provides for exemption from land transfer duty on ‘qualifying land’ – which is broad in nature. It is all land other than land used for residential purposes’ and for ‘primary production purposes’ (though the definition of each, allows regulations to be made, restoring the exemption from duty.
The judgment says:
The relevant legislation
2. This appeal calls into question the interpretation and operation of s 105A of the Stamp Duties Act 1923 (SA) (“the Act”), in respect of liability to stamp duty, and s 72(8), in respect of liability to the foreign ownership surcharge. Section 72(8) and s 105A(2) are in the same terms, and set out what, in this context, is to be regarded as land used for residential purposes. Section 105A provides:
105A—Abolition of duty on designated real property transfers
(1) In this section—
qualifying land means land that is being used for any purpose other than—
(a) land that is taken to be used for residential purposes in accordance with subsection (2)(a), other than land of a classification excluded by the regulations; or
(b) land that is taken to be used for primary production in accordance with subsection (2)(b), other than land of a classification excluded by the regulations.
(2) For the purposes of the definition of qualifying land—
(a) land will be taken to be used for residential purposes if—
(i) the Commissioner, after taking into account information provided by the Valuer‑General, determines that it is being predominantly used for that purpose; or
(ii) …
(Perpetual Corporate Trust Ltd v Commissioner of State Revenue [2022] SASC 7, South Australian Supreme Court, Bochner J, 25 January 2022.)
[Tax Month – February 2022 – Previous 2022] 19.2.22 [LTN 20, 2/2/22]