Tang v Chief Commissioner of State Revenue [2021] NSWCATAD 274
Background
The Applicants (Mr and Mrs Tang) became the registered proprietors of a residential property (“the House”) in Canley Heights NSW (“the Property”) on 10 July 2018. On 12 October 2020, the Chief Commissioner issued land tax assessments for the 2019 and 2020 land tax years (“the Relevant Period”), which were objected to by the Applicants on 18 October 2020. The Chief Commissioner refused the objection and advised the Applicants in an Objection Determination dated 29 March 2021.
The Applicants sought administrative review of the Assessments on the grounds that they should be eligible for the principal place of residence (PPR) exemption pursuant to Schedule 1A, cl. 2 of the Land Tax Management Act 1956 (“the Act”), or in the alternative they should be eligible for the exemption for an intended PPR under Schedule 1A, cl. 6 of the Act.
At no time during the Relevant Period did Mrs Tang reside at the Property, a fact which was confirmed by the Applicants. Mrs Tang resided at another address during the relevant period, in close proximity to the Property, in order to care for a disabled family member.
On or around 10 July 2018, Mr Tang claimed that he moved into the Property. He says he lived frugally in what the Tribunal called a “self-denying regime” for a period of 2 years because he had a low income. Mr Tang did not use mains electricity or gas, instead using bottled gas for cooking. Mr Tang used little mains water, using bottled water for drinking and choosing not to use the toilet in his home but rather using public facilities, or at night choosing to use “a receptable for nocturnal urination”. Mr Tang claims to have lived in this manner because he was on a low income.
On 12 June 2020, Mr Tang says he vacated the Property after learning of a death that occurred in the House and becoming convinced that the Property was haunted.
Mr and Mrs Tang decided to demolish and rebuild the Property, entering into a contract for the construction of a new residence on 9 December 2020.
The statutory framework
Section 10 of the Act outlines categories of land exempt from land tax.
Schedule 1A, cl. 2 of the Act, the principal place of residence exemption, states that if land is used by the owner as the principal place of residence, and for no other purposes, the land is exempt from land tax. The land must be residential and be “continuously used and occupied” for residential purposes.
Schedule 1A, cl. 6 of the Act, provides an exemption for unoccupied land if the owner intends to use and occupy the land as the owner’s PPR. The exemption does not apply unless “the owner intends to carry out, or is carrying out, building or other works” and “if those building or other works have physically commenced…” (by the taxing date for the relevant tax year, i.e., by midnight on 31 December prior to the commencement of the relevant tax year).
Submissions
The Tribunal summarised the Applicant’s submissions and evidence at [12]-[14], including:
- Mr Tang lived on the Property from approximately 10 July 2018 until 12 June 2020.
- Mr Tang supported his principal place of residence claim by providing an $80.00 receipt from a removalist service dated 7 July 2018; a building insurance statement, three statements from Sydney Water, a Notice of Valuation and a rates instalment notice.
- Mr Tang supported his claim to have commenced building works by providing extracts of a construction contract totalling $549,776 dated December 2020.
The Tribunal summarised the Chief Commissioner’s submissions at [15]-[17], including:
- The Applicants did not adequately demonstrate that Mr Tang resided at the Property during the Relevant Period.
- Even if Mr Tang had resided at the Property, he did not demonstrate that any such residency was of sufficient length, nature or degree to amount to use or occupation required for the exemption.
- Objective factors such as the Applicants’ electoral addresses not being at the Property, negligible utilities usage and building insurance (as opposed to home and contents insurance) do not demonstrate a sufficient degree of permanent occupation of the Property or the undertaking of significant daily living activities.
- Statements made by the Applicants are “inconsistent and insufficient” to demonstrate Mr Tang’s use of the Property as a permanent place of residence.
- The Property was not furnished or habitable in any but the most rudimentary way nor did he undertake any significant activities of daily living at the Property.
- If Mr Tang claims that the Property was occupied as his PPR during the Relevant Period, it cannot also be unoccupied during that period as cl. 6 requires.
- The Applicants did not provide sufficient evidence of steps taken, consistent with construction of a new residence such as demolition, commencement of construction or obtaining any council approvals during the Relevant Period.
Decision
The Tribunal confirmed the Property was “residential” for land tax purposes.
To test the applicability of the PPR exemption, the Tribunal relied on Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160, [19]-[23] (“Yen-Cheng”), in asking the following factual questions about actual occupation of the house:
- Did the Applicant eat, drink and slept at the Property during the Relevant Period? The Tribunal concluded there was little corroboration of Mr Tang’s assertion that he spent nights at the Property as there were no receipts for bottled gas, batteries or bottled water provided. The fact that little articulated water was consumed at the Property during the Relevant Period was not inconsistent with Mr Tang’s use of bottle water and use of public facilities. However, this is also equally consistent with the fact that no one genuinely resided at the property for any extended period.
- What was the extent and quality of use and occupation of the Property? The Tribunal concluded that the Mr Tang’s assertion of his modest and frugal lifestyle were not sufficiently corroborated. The fact that the Applicants purchased the Property unencumbered and felt sufficiently confident to build a new residence “suggests the Applicants’ financial position was not so dire as to require Mr Tang to live in the manner he did such as not using the flushing toilet at the Property (at [23]).
- Are other indicia probative of the principal place of residence exemption? The Certificate of Valuation, council rate notices and absence of other evidence from official sources merely indicated the Applicants’ ownership of the Property, not residency. Further, per Yen-Cheng , it is a relevant consideration that the Applicant’s address for electoral purposes was not the Property (at [24]).
- What was the degree of permanence of occupation of the residence? The Applicant’s assertions of continued occupation were not corroborated by any source (at [25]).
The Tribunal subsequently discussed the concession for intended occupation of the property under Schedule 1A cl. 6 of the Act and highlighted the inconsistency of the Applicants’ case in raising this concession. For example, Mr Tang argued he ceased to reside at the Property on 12 June 2020, which would mean the Property was occupied at all relevant times (ie on the taxing dates) for purposes of the 2019 and 2020 Assessments, thereby rendering cl.6 of Schedule 1A inapplicable (at [28]).
Moreover, the Applicants demonstrated that the intention to construct a new residence on the Property was formed on or after 13 June 2020, which is supported by the date of the construction contract (9 December 2020). There was thus no intention to construct a new residence during the Relevant Period (at [30]) and the Schedule 1A, cl. 6 concession did not apply (at [32]).
The Tribunal dismissed the Applicant’s argument that the matter should be determined on compassionate and humanitarian grounds concluding that the Applicants did not discharge their onus in accordance with s.100 of the Taxation Administration Act 1996 (at [34]).
Orders
The Tribunal affirmed the Chief Commissioner’s 2019 and 2020 land tax assessments.
Link to decision
https://www.caselaw.nsw.gov.au/decision/17bf1dafcd510d6e4312aec5