Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Guimaraes v Chief Commissioner of State Revenue [2024] NSWCATAD 95 Hearing dates: 19 March 2024 Date of orders: 10 April 2024 Decision date: 10 April 2024 Jurisdiction: Administrative and Equal Opportunity Division Before: S E Frost, Senior Member Decision: The assessment of surcharge land tax for the 2018 and 2019 land tax years is confirmed. Catchwords: TAXES AND DUTIES – Land tax – Surcharge land tax – Foreign person – Liability TAXES AND DUTIES – Land tax – Surcharge land tax – Joint ownership TAXES AND DUTIES – Land tax – Surcharge land tax – Exemptions – Principal place of residence Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Duties Act 1997 (NSW) Foreign Acquisitions and Takeovers Act 1975 (Cth) Land Tax Act 1956 (NSW) Land Tax Management Act 1956 (NSW) Migration Act 1958 (Cth) State Revenue and Other Legislation Amendment (Budget Measures) Act 2017 (NSW) State Revenue Legislation Amendment (Budget Measures) Act 2016 (NSW) Taxation Administration Act 1996 (NSW) Cases Cited: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 Li v So [2019] VSC 515 Mohammed v Chief Commissioner of State Revenue [2023] NSWCATAD 38 van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283 Texts Cited: Nil Category: Principal judgment Parties: Lucilara Guimaraes (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Applicant (Self-Represented) Crown Solicitor (Respondent) File Number(s): 2023/00275840 Publication restriction: Nil REASONS FOR DECISION Summary 1. The Applicant, Lucilara Guimaraes, was assessed to surcharge land tax for the 2018 and 2019 land tax years in respect of a property she jointly owns with her husband, and in which they and their two sons live. 2. Ms Guimaraes objected to the assessment but her objection was disallowed. She still thinks the assessment is wrong. She has applied to the Tribunal for an administrative review of the assessment. 3. I have concluded that the surcharge land tax liability for the 2018 and 2019 land tax years has been properly assessed and the assessment must be confirmed. I will explain why I have come to that conclusion. Jurisdiction 1. This is an application under s 96 of the Taxation Administration Act 1996 (NSW) (TA Act) for an administrative review of an assessment of surcharge land tax. The administrative review is conducted under the Administrative Decisions Review Act 1997 (NSW) (ADR Act). 2. The Tribunal's task is to decide what the correct and preferable decision is having regard to the material before it: ADR Act, s 63(1). The Applicant has the onus of proving her case: TA Act, s 100(3). That means she must prove all matters necessary for the Tribunal to answer the statutory questions in her favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]. The standard of proof is the balance of probabilities. Land tax and surcharge land tax legislation Land tax generally 1. Under the Land Tax Management Act 1956 (NSW) (the LTM Act), land tax is levied on the taxable value of all land in New South Wales unless it is exempt: LTM Act, s 7. 2. The tax is charged, under s 8 of the LTM Act, on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. The thirty-first of December is often referred to as the 'taxing date' for land tax purposes – 31 December 2017 is the taxing date for the 2018 land tax year, and 31 December 2018 is the taxing date for the 2019 land tax year. 3. There are some exemptions from the land tax. By way of example, a person's principal place of residence is exempt from land tax under s 10(1)(r) of the LTM Act. Surcharge land tax 1. From the 2017 land tax year onwards, surcharge land tax (SLT) is payable in respect of residential land owned by a foreign person: Land Tax Act 1956 (NSW) (LTA), s 5A(1). It is payable in addition to any land tax payable on the land, and is payable even if no land tax is payable on the land: LTA, s 5A(3). Again, the 'taxing date' for SLT for a land tax year is 31 December in the previous year. 2. The expression 'foreign person' for the purposes of the LTA has the same meaning as in Chapter 2A of the Duties Act 1997 (NSW): LTA, s 2A. 3. Chapter 2A of the Duties Act contains s 104J(1), where the expression 'foreign person' is defined to mean 'a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth (the Takeovers Act), as modified by this section'. (The modifications referred to in the Takeovers Act – which only deal with Australian citizens and certain New Zealand citizens – do not apply to the Applicant's circumstances because she has never been an Australian citizen or a New Zealand citizen.) 4. In the Takeovers Act, a 'foreign person' is an individual who is not ordinarily resident in Australia: s 4. 5. As far as relevant to this case, s 5 of the Takeovers Act provides that an individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if: * the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time (the 200-day test); and * the individual's continued presence in Australia was not subject to any limitation as to time imposed by law (the no-limitation test). 1. An individual who is not an Australian citizen has to pass both of those tests to be classed as ordinarily resident in Australia at the relevant time. If they fail either one of them then they will not be ordinarily resident and that will make them a foreign person potentially liable to SLT. 2. But there are some exemptions from the SLT, and one of them is the principal place of residence exemption in s 5B of the LTA. That exemption applies to a person for a land tax year only if: * the person is a permanent resident at midnight on 31 December of the previous year; and * the Chief Commissioner is satisfied that, during the land tax year, the person intends to use and occupy the land as the principal place of residence of the person in accordance with the residence requirement; and * the person lodges a declaration to that effect: s 5B(1). 1. The person must also actually comply with the residence requirement – which requires the person to use and occupy the land as their principal place of residence for a continuous period of 200 days in the land tax year: LTA, s 5B(2). (A person's principal place of residence is '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': LTM Act, s 3(1)). If they don't comply with the residence requirement, the SLT liability is to be assessed or reassessed as if the exemption for the land tax year had never applied: LTA, s 5B(3). What are the facts? 1. The Applicant was born in Brazil. She became an Australian citizen in 2022, but this was well after the relevant taxing dates of 31 December 2017 and 31 December 2018. 2. She and her husband married in October 2016. Her husband, who was born in Portugal, has been an Australian citizen since 1987. 3. In November 2017 the Applicant and her husband entered into a contract to purchase a property on the Central Coast. In completing the mandatory Purchaser/Transferee Declaration, the Applicant answered 'No' to the question whether she was a foreign person, nominating that she was 'a person who is ordinarily resident in Australia (including a New Zealand citizen as per explanatory notes)'. She also notified her intention to 'occupy this property as their principal place of residence'. The Applicant's physical presence in Australia 1. The Applicant's international movement records since early 2012 show that for the past 12 years the Applicant has never been out of the country for more than 95 days at a time. In fact, during the 2017 calendar year (which is the test period for the 2018 land tax year – see [13] above) she was in Australia for 326 days, and during the 2018 calendar year (the test period for the 2019 land tax year) she was in Australia for 350 days. The Applicant's visa status 1. At the time of entering into the purchase contract, and also at midnight on 31 December 2017, the Applicant was lawfully in Australia on a Bridging Visa B (subclass 020). That visa, granted on 13 November 2017, remained valid until 9 May 2018, when a new subclass 020 Bridging Visa B was issued, and which was still in effect on 31 December 2018. 2. Those bridging visas were apparently granted while the Applicant's application for a Partner visa was under consideration. The Applicant eventually obtained a permanent Partner visa (subclass 801) in July 2019. From that time the Applicant became a permanent resident of Australia and, as already noted, she became an Australian citizen in 2022. The Applicant's case 1. The Applicant's case was conveniently summarised by the Chief Commissioner (Respondent's Written Submissions, or RWS, at [43]) as follows: 1. She was a permanent resident for income tax purposes in 2017 and 2018 because she was married to an Australian citizen and met the residency status tests under the Income Tax Assessment Act 1997 (Cth). To the extent the definition of foreign person in the LTA is inconsistent with the Commonwealth legislation the Commonwealth legislation prevails. 2. As the Central Coast property is the Applicant's principal place of residence and is exempt from land tax, which is the 'main tax', surcharge land tax should not be charged as surcharge land tax is an additional tax and cannot be charged when there is no main tax liability. 3. The requirement in s 5B of the LTA that a person must hold a permanent visa did not come into effect until 1 July 2019, after the relevant tax years. 4. The definition of foreign person that turns on visa status was imposed by a Revenue Ruling and not the NSW legislation. 5. At the time she purchased the property the Chief Commissioner's information did not clearly state that a person who does not hold a permanent visa is a foreign person. 6. The amount of surcharge land tax is excessive. 1. During the hearing the Applicant confirmed the accuracy of the Chief Commissioner's summary of her case, adding for completeness her view that she did not meet the 'foreign person' definition in any event. The Chief Commissioner's position 1. The Chief Commissioner says that since the Applicant was not an Australian citizen at midnight on the relevant taxing dates, she will be liable to pay SLT unless she can establish she was ordinarily resident in Australia and thus not a foreign person. 2. There are two tests set by the 'ordinarily resident' definition – the 200-day test and the no-limitation test (as to which see [13] above). While the Applicant met the 200-day test for each land tax year, she failed the no-limitation test because she was on a temporary visa at midnight on each of the relevant taxing dates. 3. That means she was not 'ordinarily resident' at either relevant time, but instead she was a 'foreign person' and liable to pay SLT under s 5A of the LTA unless an exemption applies. 4. As far as the exemption under s 5B of the LTA is concerned, the Chief Commissioner accepts the Applicant met the 'residence requirement' (see [16] above) but she was not a permanent resident at either of the relevant taxing dates (see [15] above). The exemption is therefore not available. Consideration 1. The Chief Commissioner's position as outlined above is correct. Unless you pass both the 200-day test and the no-limitation test, you will be liable to SLT unless an exemption applies. The 200-day test 1. Here, the 200-day test was met for each relevant land tax year (see [20] above). The no-limitation test 1. This test is expressed in s 5(1)(b) of the Takeovers Act as requiring the person's continued presence in Australia not to be 'subject to any limitation as to time imposed by law'. 2. The Applicant's continued presence in Australia was authorised by each of the bridging visas she held at the relevant taxing dates. Bridging visas are temporary visas (s 37 of the Migration Act 1958 (Cth)) and, in the Applicant's case, had been issued while her application for a (permanent) Partner visa was being considered. 3. In the language of s 30(2) of the Migration Act, the bridging visas fell into the second of the three categories of temporary visas that can be granted: they permitted the Applicant to remain in Australia until a specified event happened – broadly, the approval of her application for a substantive visa, or the resolution of any reviews or appeals if her application was unsuccessful. (The other two categories of temporary visas are those that permit a person to remain in Australia either during a specified period, or while the holder has a specified status.) 4. It has been held that the holder of any of the three categories of temporary visas is a person whose continued presence in Australia is 'subject to any limitation as to time imposed by law': Li v So [2019] VSC 515. At [96], Croft J stated: Irrespective of the precise event which terminates the holder's right to remain in Australia, all three conditions render the holder subject to a temporal limitation. Such is inherent in the very nature of a 'temporary resident visa'. 1. The Tribunal has adopted that reasoning in other cases involving SLT or surcharge purchaser duty, including Mohammed v Chief Commissioner of State Revenue [2023] NSWCATAD 38 (Mohammed) and van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283. I respectfully adopt that reasoning as well. 2. The Applicant did not pass the no-limitation test at midnight on either of the relevant taxing dates. As a result she was liable to SLT, although her liability is reduced to take account of her joint ownership of the property with her husband, who was an Australian citizen and therefore not subject to the surcharge: LTA, s 5A(4)(b). 3. The next question is whether there is any exemption available. Exemption under LTA s 5B? 1. There are two relevant tests for exemption under LTA s 5B. They are: 1. The Applicant must have been a permanent resident at midnight on the relevant taxing date; and 2. The Applicant must have complied with the residence requirement, by using and occupying the land as her principal place of residence for a continuous period of 200 days in the relevant land tax year. 1. The expression 'permanent resident' is not defined in the LTA or the LTM Act, but it is hard to imagine that it means anything other than a person who has a permanent visa (see s 30 of the Migration Act) and who therefore has permanent residency in Australia. Indeed, a definition of 'permanent resident' that aligns with s 30 of the Migration Act applies to the corresponding 'principal place of residence' exemption in the Duties Act in relation to surcharge purchaser duty, which was introduced at the same time as the SLT and as part of the same broad legislative scheme: see the State Revenue Legislation Amendment (Budget Measures) Act 2016 (NSW). It makes sense that the same meaning should apply to the identical expression in both Acts. See also Mohammed at [50]-[55]. 2. It follows that the Applicant, as the holder of a temporary, rather than a permanent, visa at midnight on each of the relevant taxing dates, was not a permanent resident at either point in time. As a consequence she fails the first relevant test for exemption under s 5B of the LTA: see [38] above. 3. The exemption from SLT is therefore not available. Additional observations 1. For completeness, and in relation to the Applicant's case as summarised in RWS ([23] above): 1. The Applicant's reliance on matters such as the income tax definition of 'residency' is misplaced. The only relevant statutory provisions are those in the LTA and the LTM Act, and those imported from the Duties Act. 2. SLT is payable even if no land tax is payable under the other provisions of the LTA and the LTM Act: LTA, s 5A(3). 3. The requirement under s 5B that a person must be a permanent resident took effect from 1 July 2017, not 2019 as claimed by the Applicant: State Revenue and Other Legislation Amendment (Budget Measures) Act 2017 (NSW), Schedule 2, 2.2 [4]. 4. The definition of 'foreign person' was introduced by legislation, not by a Revenue Ruling: LTA, s 2A, adopting the definition in Chapter 2A of the Duties Act. 5. The Explanatory Notes to the Purchaser/Transferee Declaration completed by the Applicant clearly state the requirement that a person's presence in Australia must not be subject to any limitation as to time. 6. The amount of SLT payable has been correctly calculated, based on the average value of the land as recorded in the Valuer General's register, and reduced by 50% to reflect the Applicant's husband's interest in the property: LTA, s 5A(4)(b). Conclusion 1. For the reasons stated, the assessment of SLT is correct. Order 1. The assessment of surcharge land tax for the 2018 and 2019 land tax years is confirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 April 2024