Perumal v Chief Commissioner of State Revenue  NSWCATAD 85
|Date of judgement||28 April 2015||Proceeding No.||1410694|
|Judge(s)||Senior Member Walker|
|Court or Tribunal||Administrative and Equal Opportunity Division of New South Wales Civil and Administrative Tribunal|
|Legislation cited||Land Tax Management Act 1956|
|Catchwords||LAND TAX – principal place of residence concessions – applicability|
|Cases cited||Aston and Chief Commissioner of State Revenue  NSWADT 148
Summerville and Chief Commissioner of State Revenue  NSWADT 159
The proceedings concern the applicability of the principal place of residence (“PPR”) exemption from land tax in respect of two properties at 10 Frederick Street, Killara (“the former property”) and 15 Ryrie Street, Mosman (“the Mosman property”).
The former property
On 12 August 1988, the taxpayers purchased the former property and on 13 December 2012, they entered into a contract to sell it. The sale of the former property completed on 15 February 2013 and the transfer was registered on 27 March 2013.
The Mosman property
The taxpayers purchased the Mosman property on 15 January 2007. The transfer was registered on 21 February 2007 and the property was tenanted until late July 2011.
On 11 April 2012, the taxpayers entered into a contract with Wales Built Pty Ltd to build a new residence on the Mosman property.
Assessments and Objections
On 16 January 2013, the Chief Commissioner issued a Land Tax Assessment Notice for the 2013 tax year to the taxpayers. The PPR exemption was applied to the former property and the Mosman property was assessed for land tax in the amount of $16,484.00.
Around 21 February 2013, the taxpayers sent a letter to the Chief Commissioner which stated that the Mosman property had been used and occupied as their PPR from 22 December 2012 and the former property was sold on 13 December 2012.
The Chief Commissioner applied the concession for a change in an owner’s PPR (cl.7, Schedule 1A Land Tax Management Act 1956 (“the Act”)) to exempt both the Mosman property and the former property and on 29 July 2013, issued a reassessment of $nil.
On 8 August 2014, the Chief Commissioner issued a further reassessment for the relevant tax year in the amount of $3,455.35. That assessment exempted the Mosman property and taxed the former property on the basis that cl.7, Schedule 1A of the Act was not applicable because the former property was not acquired within 6 months of the relevant taxing date (31 December 2012).
The taxpayers’ objection to the reassessment of 8 August 2014 was disallowed and they sought a review in the Tribunal.
Preliminary matter – proper construction of the Act
At a directions hearing on 10 March 2015 it was decided that a special hearing would be held to decide a preliminary point of law concerning the proper construction of the Land Tax Management Act 1956 (LTM Act).Decision
The Tribunal rejected the preferred position of the taxpayers, that cl.6 and cl.7 applied to exempt both properties, but agreed that whichever property was used and occupied as the taxpayers PPR on the taxing date was entitled to exemption under clause 2.
Clause 7 of Schedule 1A – Concession for change to PPR
At paragraph 19 and 20, the Tribunal noted that cl. 7 creates a PPR concession for an additional property where an owner of land intends to sell an existing PPR and has become the owner of a newly acquired property that is being, or is intended to be, used and occupied by the person, as his or her PPR, provided all the conditions in clause 7 are met. The conditions include the requirement that “the person became the owner of the new property within the period of 6 months before the relevant taxing date” (cl.7(2)(b)).
The taxpayers submitted that they became the owners of the Mosman property when the builder, Wales Built Pty Ltd, transferred possession to them on 22 December 2012 after receiving payment for construction of a house. The Tribunal did not accept this submission as the building contract describes the taxpayers as the “owner” and did not “suggest that any legal or equitable title is intended to be transferred to the builder or that it will be transferred back to the taxpayers on receipt of payment.”
As the taxpayers were the registered proprietors of the Mosman property from 21 February 2007, they did not become the owners of that property within the period of 6 months before the relevant taxing date and therefore, cl 7 could not apply.
Clause 6 of Schedule 1A – Concession for unoccupied land intended to be Owner’s PPR
In order to be entitled to the benefit of cl.6 for the Mosman property as unoccupied land intended to be their PPR, the taxpayers would need to establish that they had acquired the land within 6 months prior to the taxing date, and did not own and occupy the former property at the relevant taxing date.
The Tribunal decided that the intended PPR concession in cl.6 did not apply because the Mosman property was not acquired within 6 months prior to the taxing date (31 December 2012).
Clause 2 of Schedule 1A – PPR exemption
The Tribunal noted that if the application proceeded to a hearing, the Tribunal would need to consider whether the Mosman property or the former property was the taxpayers’ PPR at the relevant taxing date.
Application dismissed in part; to proceed to hearing in part.