The Supreme Court of Victoria has held that land owned the University of Melbourne, and used to provide student accommodation, was exempt from land tax under an ‘charitable exemption’, despite the fact that the accommodation was provided by a ‘for profit’ student accommodation specialist, which leased the land for 38 years, paying a peppercorn rent, in return for building the student accomodation facility.
See below for further details.
The facts were these. The University of Melbourne owned land situated at 108-128 Leicester Street, Carlton and at shop 108-128 Leicester Street, Carlton (the Land). The University leased this Land to a builder operator: Campus Living, for a term of 38 years (commencing on 7 April 2016). The lease was for a ‘peppercorn’ rent of $1 per annum, which allowed the Builder/Operator, to design and construct a Student Village, on the land, comprising 648 beds with ancillary retail services, landscaping and other public use facilities. Campus Living was a global specialist student living provider, and the 38 year concession allowed it to operate the Villiage and receive the rentals, to earn a profit, before transferring the Land back to the University. Under the Project Deed, the Village was to be used ‘for … the provision of student accommodation together with the provision of accommodation for other persons in accordance with the Project Deed’.
The issue in this case was whether the land should be exempt from land tax, in whole or in part, pursuant to s74(1)(a) of the Land Tax Act 2005 (Vic). That section provides an exemption if “the land is used by a charitable institution exclusively for charitable purposes”.
- The University is a charitable institution, but Campus Living is not.
- It was accepted that the provision of student accommodation, by the University, to students is a charitable purpose.
The Court rejected the Commissioner of State Revenue’s contention that the exemption did not apply as the land was used by Campus Living to operate a commercial student accommodation facility.
- In the Court’s view, the land was used exclusively for the University’s purposes, even though the University was only providing the student accommodation indirectly.
- The exemption also applied to a café operated on part of the land, as the use of the land was ancillary to the main charitable purpose of providing student accommodation.
Catchwords
LAND TAX — Applicability of charitable use exemption pursuant to s 74(1)(a) of the Land Tax Act 2005 (Vic) — Land leased by a charitable institution to a non-charitable lessee —Whether the provision of student accommodation by a third party commercial operator lessee under a lease from a charitable institution lessor can be a use by the charitable institution itself — Whether the provision of student accommodation by a third party commercial operator under a lease from a charitable institution lessor can be a use by a charitable institution lessor exclusively for charitable purposes — Whether the charitable use exemption can apply where relevant land is used by multiple users — Whether exclusivity of use relates to active physical use of the land or to the purposes of the charitable institution — Ryde Municipal Council v Macquarie University (1978) 138 CLR 633 — Chief Commissioner of State Revenue v Metricon (Qld) Pty Ltd [2017] NSWCA 11; (2017) 105 ATR 11 — R vSandhurst and Northern District Trustees Executors and Agency Co Ltd [1915] ArgusLawRp 107; [1915] VLR 682—Salvation Army (Victoria) Property Trust v City of Richmond [1955] VicLawRp 86; (1956) 1 VLR 250.
WORDS AND PHRASES — Meaning of ‘use’ under s 74(1)(a) of the Land Tax Act 2005 (Vic) — Meaning of ‘exclusively’ under s 74(1)(a) of the Land Tax Act 2005 (Vic).
(University of Melbourne v Comr of State Revenue [2021] VSC 156, Victorian Supreme Court, Osborne J, 1 April 2021.)