Aston v Chief Commissioner of State Revenue [2006] NSWADT 148

CITATION: Aston v Chief Commissioner of State Revenue [2006] NSWADT 148

DIVISION: Revenue Division

APPLICANT PARTIES: William Leonard ASTON RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 056128

HEARING DATES: 8/05/2006

SUBMISSIONS CLOSED: 05/08/2006

EXTEMPORE DECISION DATE: 05/18/2006

DATE OF DECISION: 05/08/2006

BEFORE: Block J - ADCJ (Judicial Member)

CATCHWORDS: Land tax exemption - land subject to an agreement for sale

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Land Tax Management Act 1956

APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor

ORDERS: The decision under review is affirmed

REASONS FOR DECISION 1 The decision under review relates to the disallowance by the Respondent of an objection by the Applicant against land tax imposed in respect of the property situate at 3 Neirbo Avenue, Hurstville ("Neirbo") for the 2005 land tax year, (and which is referred to in this decision as "the relevant year"). The relevant year is the calendar year which commenced on 1 January 2005. 2 The Tribunal had before it the documents lodged pursuant to s 58 of the Administrative Decisions Tribunal Act 1997, together with written submissions by the parties. The Applicant, in addition, furnished the Tribunal with a document entitled "Sale Inspection Report and Auction Agency Agreement" dated 28 June 2004, and in terms of which he empowered PRD Nationwide Realty to procure a purchaser for Neirbo; that contract is referred to in these reasons as the "agency contract". 3 The facts fall within a narrow compass: - (a) Neirbo was acquired by the Applicant in about 1993 and he and his family lived in it as their principal place of residence. While the Applicant was the owner of Neirbo, he purchased 10 The Esplanade, South Hurstville ("Esplanade"). (b) The purchase of Esplanade was completed on 19 January 2004, and so that it would have been purchased either in late 2003 or early 2004 and of these two alternatives the former is more probable. At the time of its purchase Esplanade was improved to the extent of an old house which was demolished; a new house was constructed on Esplanade and the Applicant moved into Esplanade in December 2004. (c) The Applicant in respect of Neirbo, entered into the agency contract, as I have said, on 28 June 2004. However, for reasons which need not be referred to in this decision, Neirbo was not sold until 21 October 2005 about a year and a quarter after the execution of the agency contract. 4 The taxing date for the relevant year was 31 December 2004; on that date the Applicant was the owner of each of Neirbo and Esplanade. The Respondent allowed the Applicant, in respect of the relevant year, a principal place of residence exemption for that relevant year in respect of Esplanade, and notwithstanding the fact that the Applicant had not owned it for the statutory period of six months prior to the taxing date. Put in other words, the Respondent dispensed with the six months ownership requirement to which I have referred in the exercise of his discretionary powers for this purpose under the Land Tax Management Act 1956 ("the Act"). By doing so the Respondent granted the principal place of residence exemption for Esplanade, whose land value was considerably in excess of that of Neirbo. 5 Clause 7 of schedule 1A to the Act is entitled "Concession for unoccupied land intended to be owner's principal place of residence". I include in this decision a part only of clause 7 and being subclauses 7(2) and 7(5). Subclause 7(2) of schedule 1A to the Act reads as follows: (2) This clause applies in respect of land owned by a person only if the Chief Commissioner is satisfied that (a) The former residence has not been used or occupied except as the person's principal place of residence and no income has been derived from the use or occupation of the residence since the preceding 1 July except: (i) Income derived from an excluded residential occupancy (within the meaning of subclause 4) or (ii) Income derived under a lease or licence entered into by the purchaser under a contract for the sale of the former residence for a period pending completion of the sale, and (b) The person became the owner of the new residence within the period of six months before the relevant taxing date, and (c) (not relevant) (d) (not relevant) 6 Subclause 7(5) of schedule 1A to the Act reads as follows: For the purposes of this clause a person "disposes" of a former residence if: (a) The person ceased to be an owner of the former residence, or (b) The person enters into an agreement for the sale of the former residence. 7 The Applicant contended that he was entitled in respect of the relevant year to an exemption for Neirbo in addition to the exemption granted to him in respect of Esplanade by virtue of clause 7(5) (b) of schedule 1A in that he had entered into an agreement for the sale of the former residence; the Applicant was referring in this context to the agency contract. The Applicant, in other words, contended that when he entered into the agency contract he entered into an agreement for the sale of his former residence. That contention was mistaken; subclause 7(5) (b) of schedule 1A will be satisfied if, and only if, the Applicant had entered into a binding agreement for the sale of Neirbo to a purchaser of that property. The agency contract was no more than a contract empowering the nominated agent to find a purchaser for Neirbo and this was accomplished much later. That this is the only permissible interpretation of subclause 7(5)(b) of schedule 1A is borne out by certain explanatory material to which Mr Benjamin referred the Tribunal, but which it is not necessary to quote in this decision. 8 There is another reason why the Applicant cannot succeed. Subclause 7(5), and in particular subclause 7(5) (b), cannot be read in isolation; regard must be had to the whole of clause 7 and in particular subclause 7(2)(b) which required that the Applicant become the owner of the new residence within six months before the relevant taxing date. The new residence in this instance is Esplanade which was acquired, as set out previously in this decision, either in late 2003 or early 2004 and thus outside the period of six months prescribed by subclause7 (2) (b) of schedule 1A. It is important to remember that clause 7 of schedule 1A contains what amounts to a package in respect of the concession referred to therein and being a concession referable to the sale by a taxpayer of his former principal place of residence. It is necessary, in other words, to comply with all of the provisions of clause 7. If the agency contract had constituted an agreement for the sale of the former residence under clause 7(5) (b) of schedule 1A, (although that construction of the relevant statutory provision would be incorrect), the Applicant would be obliged also to comply with clause 7(2) (b) of schedule 7 and that, of course, he cannot do. 9 In all the circumstances the decision under review must be affirmed. 10 It should be noted that at the hearing on 8 May 2006 a decision in accordance with the preceding paragraphs was given ex tempore, the Tribunal reserving the right to edit that decision only to correct typographical or similar errors, and those (few) corrections have been effected.