Turbott v Chief Commissioner of State Revenue [2007] NSWADT 274

CITATION: Turbott v Chief Commissioner of State Revenue [2007] NSWADT 274

DIVISION: Revenue Division

FIRST APPLICANT Michael John Turbott SECOND APPLICANT PARTIES: Kathleen Marie Turbott

RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 076097

HEARING DATES: 9 November 2007

SUBMISSIONS CLOSED: 9 November 2007

DATE OF DECISION: 27 November 2007

BEFORE: Handley R - Judicial Member

CATCHWORDS: Land tax exemption - principal place of residence

MATTER FOR DECISION: Principal matter

Environmental Planning and Assessment Act 1979 LEGISLATION CITED : Land Tax Management Act 1956 Local Government Act 1993 State Revenue Legislation Further Amendment Act 2003

CASES CITED: Pearse v Chief Commissioner of State Revenue [2007] NSWADT 14 Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96

APPLICANTS REPRESENTATION: M Turbott

H El-Hage, solicitor

ORDERS: The decision under review is affirmed.

REASONS FOR DECISION 1 On 23 July 2007, Michael Turbott filed an application with the Tribunal for the review of a decision of the Chief Commissioner of State Revenue ('the Respondent'), disallowing his objection to a notice assessing Mr Turbott and his wife, Kathleen Turbott, ('the Applicants') as being liable for the payment of Land Tax on their property in Kangaroo Valley. Mrs Turbott was added as an applicant in these proceedings by order of the Tribunal on 31 August 2007. Background 2 On 15 December 2000, the Applicants settled on the purchase of two blocks of adjoining vacant land in Kangaroo Valley: Lot 2 comprising 3.952 hectares, and Lot 3 comprising 4.828 hectares. In July 2001, Shoalhaven City Council granted the Applicants development consent for the construction of a new dwelling on Lot 3. However, due to personal circumstances, the Applicants did not go ahead with the construction and the development consent expired. The Applicants still propose to build a dwelling on the property. 3 The Applicants do not own any other land. Due to Mr Turbott's work commitments, they rent a two bedroom unit at Cremorne Point where they stay on most weeknights. They maintain a postal address and telephone landline for this unit, which is their registered address for the purposes of the NSW Electoral Roll. The unit is also their nominated address for their driving licences issued by the NSW Road Traffic Authority ('RTA'). 4 The Applicants spend most weekends and holidays at their Kangaroo Valley property, where they have set up a camp comprising a refurbished shipping container for secure storage and water collection, for which there is an adjacent water tank, together with tent accommodation, a camp kitchen and bathroom facilities. The Applicants also have a dam fed water supply for fire protection, a generator for electricity, and a gas water heater. They use mobile phones on the property, coverage being good. They maintain insurance for the property, are on the waiting list for a Post Office Box at the Kangaroo Valley Post Office, and are members of the Kangaroo Valley Golf Club, Bowling Club, and Kangaroo Valley Arts Festival Inc. Kangaroo Valley Security patrol the property when the Applicants are not present. 5 On 25 October 2005, the Applicants lodged a Land Tax Questionnaire in which they stated that the Kangaroo Valley "property is unoccupied, however we intend to build our principal residence at a future date". On 16 November 2005, the Respondent issued a Land Tax Notice of Assessment for the 2003, 2004 and 2005 Land Tax years requiring payment of Land Tax totalling $13,624.23 (including interest) in respect of the property. The Applicants paid this sum in three instalments on 19 December 2005, 25 January 2006, and 27 February 2006. 6 By letter dated 23 December 2005, the Applicants lodged an objection to the Respondent's assessment, stating they did not complete the Land Tax Questionnaire correctly, and claiming that they occupied the property as their principal place of residence. By letter dated 6 February 2007, the Respondent noted that because the property was vacant land, a Land Tax concession had been applied for the 2001 and 2002 Land Tax years, and requesting further information in relation to the Applicants' claim that the property was occupied as their principal place of residence as at 31 December 2002, 2003 and 2004, in respect of the Land Tax years 2003, 2004 and 2005 respectively. 7 The Applicants responded by letter dated 17 March 2007, providing further information. On 22 May 2007, the Respondent disallowed the Applicants' objection to the assessment. In Mr Turbott's appeal to the Tribunal filed on 23 July 2007, he stated that Land Tax policy should recognise the eligibility of "non-traditional permanent dwellings such as that located at our property" for Land Tax exemption. The Relevant Legislation 8 Pursuant to sections 7, 8 and 9 of the Land Tax Management Act 1956 ('the LTM Act'), Land Tax was chargeable on the taxable value of the Kangaroo Valley land based on the ownership of the land as at midnight on the 31 December of each year. Thus, the Applicants were presumed to be liable for Land Tax on their land for the 2003, 2004 and 2005 Land Tax years based on their ownership of the land on 31 December 2002, 2003 and 2004, respectively, unless the land was exempted from tax. For the Land Tax year 2003, section 10(1)(r) of the LTM Act provided, relevantly, an exemption in respect of land: "that is used and occupied as the principal place of residence of the owner of the land (or, if there are joint owners, as the principal place of residence of one or more of them) and for no other purpose ... being: (i) ... (ii) a parcel of residential land, or (iii) ..." 9 Section 10(1D) stated: "In paragraph (r) of subsection (1) residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes: ..." 10 'Principal place of residence' was defined in section 3(1): " principal place of residence of a person means 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." 11 Section 3(3) stated: "For the purposes of this Act, in respect of any year in respect of which taxation is leviable or payable, land or a flat is not used or occupied as the principal place of residence of the person unless: (a) that land or flat and no other land or flat has, since before the first day of July that last preceded the commencement of that year, been continuously used and occupied by that person for residential purposes and for no other purpose, or (b) in any other case, the Chief Commissioner is satisfied that the land or flat is used and occupied by that person as the person's principal place of residence." 12 The State Revenue Legislation Further Amendment Act 2003 amended the LTM Act, including the transfer of the substantive provisions in sections 3(3) and 10(1)(r) to a new Schedule 1A, which provided as follows: "Part 1 Preliminary 1 Definitions (1) In this Schedule: principal place of residence exemption —see clause 2. residential land—see clause 3. taxing date—means midnight on the thirty-first day of December. (2) For the purposes of this Schedule, a reference to the owner of land includes, if there are joint owners, any one or more of those joint owners. Part 2 Principal place of residence exemption 2 Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing on 1 January 2004 or any succeeding year, if: (a) the land has a land value in respect of the year of less than the premium tax threshold, and a parcel of residential land, or (b) the land is: (i) a parcel of residential land, or (ii) a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986 . (2) Land is not used and occupied as the principal place of residence of a person unless: (a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence.