The Victorian Supreme Court has granted the Commissioner of State Revenue (Vic) leave to appeal an earlier decision which had set aside his determination that a vendor of land (the first taxpayer) was liable for land tax in respect of the 2009 land tax year. In allowing the appeal, the Court overturned the earlier decision and held the first taxpayer was liable for the land tax as assessed for the 2009 year.

The matter concerned a 2009 land tax assessment issued to the first taxpayer (a property developer). The matter was brought before the Victorian Civil and Administrative Tribunal in Oakbee Pty Ltd v Comr of State Revenue (Taxation) [2012] VCAT 1984 (handed down on 28 May 2012) which found against the Commissioner. The issue before the Tribunal was whether the purchasers of the land had taken possession of it as at 31 December 2008. The first taxpayer contended that the 2 relevant properties were sold and possession was given to the purchasers before 31 December 2008. It argued the purchasers took possession of the land on the days that their contracts were signed and the initial deposit payments were made. It further contended the Commissioner should exercise his discretion under s 16(3) of the Land Tax Act 2005 (Vic) and determine it was not the owner of each property for the 2009 land tax year.

The Court noted the facts heard by the Tribunal concerning the 2 properties. This included that both blocks of land were sold in November 2008. The deposits were payable by instalments (ie an initial $500 then followed by the balance) and totalled approximately 5% of the land’s purchase price. The purchasers of the first block of land (the second and third parties joined to the first taxpayer in the matter) paid the balance of their deposit by 12 December 2008 and settlement occurred on 29 January 2009. The purchasers of the second block of land defaulted on payment of the balance of the deposit due on 8 December 2008. No rescission notice was ever served on the purchasers and the land was subsequently sold to different purchasers in late 2009.

The Commissioner contended the Tribunal had misconstrued s 16. It was submitted that s 16(1) contains 2 requirements in paras (a) and (b) (ie that (a) the purchasers took possession of the land and (b) at least 15% of the purchase money had been paid) and that s 16(3) provides a possible alternative to para (b) if 15% of the purchase money had not been paid. The Commissioner contended the Tribunal had erred by reading s 16(3) in isolation from the remainder of the section – that is, it should be been read than even when s 16(3) was applicable, s 16(1)(a) had to be satisfied. The Court accepted the Commissioner’s submission and agreed that in circumstances where s 16(3) applies, it is still necessary for s 16(1)(a) to be satisfied.

(Comr of State Revenue v Oakbee Pty Ltd & Ors [2013] VSC 672, Victorian Supreme Court, Ginnane J, 11 December 2013.)

[LTN 245, 18/12/13]


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