Raissis v Chief Commissioner of State Revenue [2022] NSWCATAD 146
Background
The Applicants owned a Randwick Property for which their claim for the principal place of residence (PPR) exemption had been rejected by the Chief Commissioner. The Applicants also owned other properties in Bondi (“the Bondi Property”) and Paddington (“the Paddington Property”). The Paddington Property was leased to tenants from 1 September 2020 to 31 August 2021.
The Applicants’ objection to the Assessment, contended that the Randwick Property should be exempt from land tax as Emanuel Raissis had used the Randwick Property as his PPR in the 2021 Tax Year.
The Chief Commissioner disallowed the Applicants’ objection on the basis that there was no evidence *that Emanuel had left his former PPR at Paddington to use and occupy the Randwick Property on the taxing date for the 2021 land tax year, that is, at midnight on 31 December 2020.
The Chief Commissioner did not contest the Applicants’ claim that Emanuel occupied the Randwick Property between 2 July 2020 and 2 November 2020. The Tribunal also accepted the following facts:
- Prior to 9 May 2016, the Applicants converted the primary residence on the Randwick Property into 3 dwellings, being:
- “Unit 1” – located at the rear of the property. This was leased out between 9 May 2016 and 9 May 2017 and between 22 June 2019 and 22 June 2020;
- “Unit 2” – located at the front of the property. This was leased out to a tenant on 21 September 2019 until the expiration of his tenancy agreement in January 2021; and
- A granny flat – this was rented out for a period of time but was demolished in late 2020, although the demolition did not affect the habitability of the primary residence.
- Emanuel changed his residential address on the electoral roll to the Randwick Property on 24 July 2020. Similarly, the address registered with the Roads and Maritime Services (“RMS”) was changed on 22 July 2020.
The Statutory Framework
Land Tax Exemption
Section 7 of the Land Tax Management Act 1956 (NSW) (“LTMA”) provides that land tax is levied on the taxable value of all land in New South Wales unless exempt under the Act. Land Tax is charged on land owned at midnight on the 31st of December in the year immediately preceding the relevant land tax year.
The PPR exemption relied upon by the Applicants is contained in clause 2 of Schedule 1A of the LTMA. Relevantly, clause 2(1) of Schedule 1A provides for an exemption for land tax for parcels of residential land used and occupied as the PPR of an owner, including a joint owner, and for no other purpose. Clause 2(2) of Schedule 1A provides that land is not used and occupied as a PPR unless either one of two criteria are met:
- The land, and no other land, has been continuously used and occupied by the person for a residential purpose (and for no other purposes) since 1 July in the preceding tax year: clause 2(2)(a); or
- In any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s PPR on the taxing date: clause 2(2)(b).
“Principal place of residence” is defined in section 3 of the LTMA as “the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person”.
Submissions
Applicant's Submissions
The Applicants contended that, despite the relatively short occupation of the Randwick Property by Emanuel between 2 July and 2 November 2020, that occupation was not of a transient or temporary nature, and the PPR exemption should apply. The Tribunal understood the Applicants’ to have contended that it was not necessary for Emanuel Raissis to have used and occupied the property on the taxing date (31 December 2020) if he had otherwise done so for a reasonable part of the 2021 calendar year; at [39].
Chief Commissioner's Submissions
The Chief Commissioner submitted that for the PPR exemption to apply, the Tribunal had to be satisfied that Emanuel used and occupied the Randwick property as his PPR at midnight on 31 December 2020. The Tribunal could not so be satisfied that this was the case as Emanuel stopped living in the Randwick Property on 2 November 2020.
Alternatively, the Chief Commissioner argued that if it was not necessary for Emanuel to have used and occupied the Randwick Property at midnight on 31 December 2020, Emanuel’s occupation did not have the requisite degree of permanence to satisfy the PPR test.
In any case, the Chief Commissioner argued that the tenancy at the Randwick Property between September 2019 and January 2021 meant that the Applicants could not claim the PPR exemption because the tenant was not an owner.
Decision
Dominant Use Test
The Tribunal considered that the requirements of clause 2(2)(a) of Schedule 1A of the LTMA were not satisfied in respect of the 2021 tax year. The evidence was that Emanuel did not continuously use and occupy the Randwick Property between 1 July 2020 and the taxing date of midnight on 31 December 2020, as required by that clause.
As Emanuel had not used and occupied the Randwick Property as at midnight on 31 December 2020, the Tribunal decided that clause 2(2)(b) of Schedule 1A of the LTMA could not apply: at [40].
Even if Emanuel could have been said to have used the Randwick property as his PPR for a reasonable period before 31 December 2020, it was necessary for him to have used and occupied it as at 31 December 2020: at [39]-[40].
Given that the Tribunal was satisfied that Emanuel did not use and occupy the Randwick Property as his PPR as at midnight on 31 December 2020, it was not necessary to consider the PPR question further. Nevertheless, the Tribunal considered that Emanuel would not otherwise meet the PPR Exemption because:
- There was not enough evidence that the quality and nature of Emanuel’s residency met the requisite degree of permanence: at [48].
- There was no evidence to suggest that Emanuel was not living in the Bondi Property: at [49].
- There was no evidence of furniture, such as a bed, that Emanuel moved into and used in the Randwick Property, and no evidence established that he ate at the property, entertained anyone at the property or used any of the utilities in the property: at [50].
- There was no explanation as to whether Emanuel intended to stay in the Randwick Property after November 2020, no explanation as to where he moved to, or why he moved out, noting that the primary residence was not demolished until sometime after January 2021: at [51].
- Although Emanuel did change his postal address on the electoral roll and with RMS, there was no evidence to suggest that he used the Randwick Property as his postal address generally: at [52].
- The fact that the tenant of Unit 2 used the Randwick Property as his PPR did not mean the PPR exemption applied in respect of Emanuel: at [58].
Orders
The decision under review is affirmed.
Link to decision