Bennett v Commissioner of State Revenue [2022] NSWCATAD 324
Background
The Assessment was issued in respect of land owned by the Applicant in Tempe, NSW, comprising two adjoining lots known as No. 36 and No. 38 (collectively, the “Properties”). The Chief Commissioner accepted that the Applicant was entitled to the principal place of residence (PPR) exemption for lot 36. The Applicant claimed the PPR exemption in respect of No. 36 and 38 on the basis that the Properties together form a parcel of residential land used and occupied by her as her principal place of residence, and that the two lots are the site of a single residence.
Alternatively, the Applicant claimed that she is entitled to a concession on the taxable value of the land at No. 38 under clause 10B of Schedule 1A of the LTMA.
The Statutory Framework
The PPR exemption and related concessions and restrictions are set out in Schedule 1A of the LTMA.
The key clauses of Schedule 1A that are relevant to this review are:
- Clause 2(1) - Principal place of residence exemption;
- Clause 3 – meaning of “residential land”;
- Clause 4 - concession for land on which there is one other residential occupancy;
- Clause 10B - concession for multiple-occupancy land;
- Clause 13 - application of the PPR exemption to a parcel of residential land comprised of two or more lots.
Applicant's submissions
The Applicant contended that she used both Properties together as her principal place of residence. She submitted that the adjoining lots were the site of a single residence due to the construction of an annex that created one interconnected building so that there were no longer separate buildings on the separate lots.
The Applicant contended that while part of No. 38 was leased to tenants in the relevant tax years, in each case the tenancy was an excluded residential occupancy as defined in clause 4(1), and did not exclude the PPR exemption from applying. The Applicant argued that the effect of clause 13(1)(c) was that the presence of an additional residential occupancy would not deny, of itself, the existence of a single site of a residence.
The Applicant accepted at the hearing that if the Tribunal finds that there are separate buildings erected on No. 36 and No. 38, the lots will not be the site of a single residence for the purposes of clause 13(1)(c) because in all relevant tax years No. 38 was in fact separately occupied (and capable of being used for separate occupation) by tenants.
The Applicant argued that it was not necessary for her to establish that there was internal access between No. 36 and No. 38 in order to satisfy the Tribunal that they were not separate buildings. She pointed to the different test found in clause 14 of Schedule 1A relating to the application of the principal place of residence exemption to residences comprised of two or more strata lots which provides:
“For the purposes of this clause, 2 or more strata lots are not to be regarded as comprising a single residence unless there is internal access between all the strata lots (other than any ancillary lot), such as internal connecting doors or internal staircases.”
The Applicant submitted that the absence of those, or similar, words in clause 13 suggests that no internal access requirement should be read into clause 13.
In the alternative, the Applicant submitted that if she is not entitled to the principal place of residence exemption in respect of the Properties, she should be entitled to a concession under clause 10B of Schedule 1A of the LTMA because.
- Clause 10B provides for a concession to apply where “land” owned by a person is the site of a “flat” that is used and occupied by the owner as a principal place of residence and there is also situated on the land one or more other flats that are used, or adapted for use, as a separate occupation to that of the owner (not being an excluded residential occupancy that may be disregarded under clause 4).
- If clause 10B applies, s. 9C of the LTMA operates to reduce the taxable value of the land in respect of the proportion of the land occupied by the owner’s flat.
The Applicant submitted that “land” for the purpose of clause 10B includes land comprising two adjoining lots.
Chief Commissioner's submissions
The Chief Commissioner submitted that the question of whether the buildings are separate buildings may be informed by the fact that each of the lots is capable of separate occupation.
In respect of the Applicant’s alternative case, the Chief Commissioner contended that “land” for the purposes of clause 10B does not encompass land comprising two adjoining lots.
Decision
The Tribunal identified the key question to be whether there were separate buildings erected on No. 36 and No. 38: at [49]; and that question should be determined at the relevant taxing date; at [50].
The Tribunal determined that the Applicant’s evidence relating to the physical structure of the annex during the relevant tax years was not sufficient to discharge her burden of proving that there were not separate structures capable of separate occupation on the 2 lots: at [56].
Even if the Tribunal were to accept the Applicant’s evidence as to the construction of the annex, it did not accept that the annex transformed what was essentially two separate houses into a single building. The annex served as an accessway with locked doors between two separate buildings. This was reinforced by the fact that when tenanted, the occupants of No. 38 could not access No. 36 and vice versa: [61].
The Tribunal concluded that there were, during the relevant tax years, separate buildings erected on No. 36 and No. 38 which were separately occupied or capable of being used for separate occupation such that, by reason of clause 13(2)(b), the two properties were not the site of a single residence: at [67].
The Tribunal considered that clause 13(2)(b) operates to prevent the principal place of residence exemption applying to multiple lots in any case where there are separate buildings on separate lots which are separately occupied or capable of being used for separate occupation: at [74].
Therefore, it was not necessary for the Tribunal to determine whether the Applicant used the Properties together as her principal place of residence nor whether the occupation of No. 38 by tenants was an excluded residential occupancy for the purpose of clause 4(1): [77].
The Tribunal held there was no basis for the Applicant to be granted a concession under clause 10B. It considered that on any view, those parts of the land on No. 38 to which the Applicant had exclusive access (that is, the backyard, shed and verandah) and in respect of which she was seeking to proportionally reduce the taxable value pursuant to s. 9C of the LTMA, could not be regarded as falling within the definition of “flat”: at [87] – [93].
The Tribunal concluded that the correct and preferable decision is that land tax should be assessed in respect of the Applicant’s land at No. 38 for each of the 2017 to 2021 land tax years: at [94].
Orders
(1) The decision under review is affirmed
Link to the decision