A taxpayer has been unsuccessful before the WA State Administrative Tribunal in a matter concerning the construction of s14 of the Land Tax Assessment Act 2002 (WA).
- In 2007, the taxpayer and her husband (now deceased) acquired a 16 hectare property which included 2 houses.
- Land tax was payable until May 2015 when the taxpayer informed the Commissioner that it then became her primary residence.
- She was also in the process of subdividing the property into 2 lots.
- Lot 98 comprised 12 hectares and included her residence.
- Lot 99 comprised 4 hectares and was vacant land.
- The Commissioner for the 2015-16 assessment year exempted the property from land tax under the primary residence exemption.
- The Commissioner then reassessed the property under s14 of the Land Tax Assessment Act.
Section 14 provides, relevantly, that when a property previously exempt from land tax as the taxpayer’s residence is subdivided, land tax on the value of the “taxable portion” of that property is payable for each of the 5 financial years reckoned retrospectively from and including the financial year in which the land is subdivided.
The applicant considered that she was being assessed for land tax on Lot 99, which she said did not exist on 30 June 2015.
- Therefore in her submission she should not be assessed until the following year.
- During the 2015-16 assessment year, the year in which the subdivision took place, she said that the primary residence exemption should continue to apply.
The Tribunal considered that s14 should be given its literal grammatical meaning and, when applied to the facts of this case, found that the Commissioner’s decision was correct. The Tribunal concluded that it was not Lot 99, which was assessed for land tax but the “taxable portion” of the whole property, being an amount of land equal to what became Lot 99.
The Tribunal agreed that land tax was payable only for the 2015-16 assessment year, because during the previous assessment years full land tax had already been levied and paid on the property and no exemption applied.
(Rapp and Comr of State Revenue [2016] WASAT 123, WA State Administrative Tribunal, Sharp DP, 14 October 2016.)
[Austlii report of decision – summary] [LTN 200, 17/10/16]
Land Tax Assessment Act – s14. Newly subdivided private residential property
(1) Land tax is payable in accordance with this section when private residential property is subdivided if
(a) the property was exempt or partially exempt from land tax under Part 3 Division 2 for any of the 5 financial years reckoned retrospectively from and including the financial year in which the land was subdivided; and
(b) the area of the property is greater than 2.0234 hectares; and
(c) the subdivision was not carried out only for the purpose of defining an area of land to be taken or resumed under an enactment relating to the compulsory acquisition of land.
(2) Land tax is payable by the subdividing owner of the property on the value of the taxable portion of the property (calculated under subsections (5) and (6)) for each of the 5 financial years reckoned retrospectively from and including the financial year in which the land is subdivided.
(3) The amount of land tax payable for each of those 5 financial years is assessed, at the rate applicable for that year under the Land Tax Act 2002, as if the taxable portion of the property were the only land of the subdividing owner on which land tax was payable for that year.
(4) However, if land tax has already been levied on any part of the taxable portion of the property under another provision of this Act for any of those 5 financial years, then
(a) if a partial exemption did not apply to that part of the taxable portion for the year under Part 3 Division 2 no land tax is payable under subsection (2) on that part for that year; or
(b) if a partial exemption applied to that part of the taxable portion, or an interest in it, for that year under Part 3 Division 2 land tax is payable for that year under subsection (2) on the part of the property to which the partial exemption applied.
(5) The taxable portion of the property is the portion that remains after subtracting from the whole area of the property the greater of the following areas
(a) the area of the lot or parcel or portion of land on which the private residence was situated at the time of the subdivision;
(b) 2.0234 hectares.
(6) For the purposes of subsection (2), the value of the taxable portion of the property for a financial year is
(a) if the financial year is 2008/09 or earlier the amount that bears to the unimproved value of the whole of the property at midnight on 30 June immediately before the financial year the same proportion as the area of the taxable portion bears to the whole area of the property; or
(b) in any other financial year the amount that bears to the taxable value of the whole of the property for the financial year the same proportion as the area of the taxable portion bears to the whole area of the property.
(7) Nothing in this section affects the liability of any person to pay land tax on the taxable portion of the property for any financial year after that in which the land is subdivided.
(8) Despite section 17(4) of the Taxation Administration Act 2003, the Commissioner must make any reassessment necessary to give effect to this section.