Kafes v Commissioner of State Revenue [2022] NSWCATAD 385
Background
At all relevant times the Applicant had an interest in seven properties in New South Wales (the Properties), including a property owned by a partnership in which the Applicant had a 33% interest.
The Chief Commissioner issued Land Tax Notices of Assessment to the Applicant for the 2017, 2018 and 2019 tax year which included 5 Properties assessed for land tax and 1 exempt Property (no. 410) which is the Applicant’s principal place of residence (PPR). The partnership interest was not assessed.
For the 2020 land tax year the Chief Commissioner issued a Land Tax Notice of Assessment to the Applicant, which assessed 4 properties and treated 2 properties (nos. 410 and 412) as exempt from land tax as the Applicant’s PPR. The 2 exempt properties were adjacent to each other and had the same lot and DP numbers, but were separately valued on the Register of Values maintained by the Valuer General.
On 26 April 2021, the Chief Commissioner issued a letter requiring the Applicant to submit a questionnaire concerning his landholdings. In the Applicant’s completed questionnaire, he claimed the PPR exemption for the 2 properties with the same lot and DP numbers (Nos. 410 and 412).
On 19 May 2021, the Chief Commissioner issued a Land Tax Notice of Assessment to the Applicant for the 2017 to 2021 land tax years (“Assessment) in which:
- the Applicant was reassessed for each of the 2017 to 2020 land tax years to include 33% of the taxable value of an additional Property (no. 241), owned by a partnership in which the Applicant had a 33% interest;
- the Applicant was reassessed for the 2020 land tax year to include Property no. 412 which had been exempted when the initial 2020 assessment was issued;
- the Applicant was assessed for the 2021 land tax year in respect of 6 properties that were liable, including Property no. 412 and Property no. 241, and Property no. 410 exempted as the Applicant’s PPR;
- all interest chargeable on unpaid land tax for the 2018, 2019 and 2020 land tax years was remitted.
The Applicant objected to these assessments, and the Chief Commissioner disallowed the objection.
On 21 January 20221 the Applicant lodged an application with the Tribunal seeking a review of the Chief Commissioner’s Decisions.
The Statutory Framework
Under the Land Tax Management Act 1956 (“LTMA”) land tax is imposed on a landowner and calculated on the aggregate taxable value of all land owned by that landowner other than land which is exempt.
Section 10(1)(r) of the LTMA provides:
- land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A.”
Section 99(1) of the Taxation Administration Act 1996 (“TAA”) provides:
“An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner’s determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period.”
Issues
The Applicant’s review application was lodged several days late, but the Tribunal granted an extension of time without objection by the Chief Commissioner.
The issues reviewed by the Tribunal were:
- Whether the Applicant was liable for land tax on his interest in Property no. 241, (the parcel of land owned by a partnership in which the Applicant held a 33% interest) even though the taxable land value of that parcel was below the threshold;
- Whether the Properties 410 and 412 are exempt from land tax as the Applicant’s PPR;
- Whether the Chief Commissioner’s conduct in issuing several inconsistent and successive Land Tax Assessment Notices should entitle the Applicant to a measure of relief from the land tax for which he was ultimately assessed.
Submissions
In relation to issue 1, the Applicant contended that no land tax should be payable for Property 241 due to the low value of his interest in the Property.
In relation to issue 2 above, the Applicant contended that Property 410 and Property 412 are on the same title and accordingly should both receive the exemption from land tax under section 10(1)(r) and Schedule 1A of the LTMA as the Applicant’s PPR.
In relation to issue 3 above, the Applicant contended that it was unfair for the Chief Commissioner to issue several inconsistent successive notices of assessment and he should be entitled to a measure of relief from the land tax to which he was ultimately assessed under the Decision.
Chief Commissioner's submissions
In relation to issue 1, the Chief Commissioner contended that the partnership interest was land in NSW, no exemption applied, the Applicant is a registered proprietor of the land along with the other partners. The fact that the taxable value of the parcel was below the threshold does not affect the Applicant’s liability under the LTMA. The Chief Commissioner noted that the Applicant did not disclose his ownership interest in Property 241, and there is no restriction on reassessment in accordance with section 9 of the TAA when information disclosed by a taxpayer is inaccurate.
In relation to issue 2 above, the Chief Commissioner noted that under Clause 2 of Schedule 1A of the LTMA a taxpayer can have only one PPR and the parcel of land which comprises Property 410 is the Applicant’s PPR. It necessarily follows that the distinct parcel of land which comprises Property 412 cannot also be the Applicant’s PPR, despite it being on the same title as Property 410.
In relation to issue 3 above, the Chief Commissioner submitted that under section 9 of the TAA he is authorised to “... make one or more reassessments of a tax liability of a taxpayer”, subject to the restriction contained in section 9(3), that he “.... cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability ..”. The reassessments are in compliance with these provisions.
The Chief Commissioner noted that a delay in issuing assessments or reassessments is not a basis to challenge them, and notions of unfairness or special circumstances are irrelevant when considering the validity of assessments.
Decision
The Tribunal agreed with the Chief Commissioner’s submissions. It accepted that the Applicant may have found the process of assessment and reassessment confusing and frustrating, but noted that the Chief Commissioner had waived all interest for late payment of land tax in relation to Property 241 and Property 412.
The Tribunal concluded that the Chief Commissioner’s decision was the correct and preferable one and that the Applicant had not demonstrated to the standard required that the decision is incorrect.
Orders
- The date for lodging the Applicant’s Application for administrative review in this matter be extended to 21 January 2022.
- The Decision under review is confirmed.
Link to decision