Zughbi v Chief Commissioner of State Revenue [2009] NSWADT 106

CITATION: Zughbi v Chief Commissioner of State Revenue [2009] NSWADT 106

DIVISION: Revenue Division

APPLICANTS Habib Daoud Zughbi and Suyati Zughbi PARTIES: RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 086132

HEARING DATES: 1 May 2009

SUBMISSIONS CLOSED: 1 May 2009

DATE OF DECISION: 13 May 2009

BEFORE: Handley R - Deputy President

CATCHWORDS: Land Tax threshold – joint owners of land

Taxation Administration Act 1996 Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Land Tax Management Act 1956 Land Tax Act 1956 Land Tax Assessment Act 1910 (Cth) Interpretation Act 1987

CASES CITED: Bailey v Federal Commissioner of Land Tax (1911) 13 CLR 302

APPLICANT Habib Zughbi, in person REPRESENTATION: RESPONDENT A Tsekouras, counsel

ORDERS: The decision under review is affirmed.

1 On 16 December 2008, Habib Zughbi filed an application with the Tribunal for the review of a decision of the Chief Commissioner of State Revenue disallowing the Applicant's objection to a notice assessing Dr Zughbi and his wife, Suyati Zughbi, as being liable for the payment of Land Tax on their investment properties. On 9 February 2009, Dr and Mrs Zughbi lodged an amended application including Mrs Zughbi as a joint applicant. The Facts 2 The facts are not in dispute. Dr and Mrs Zughbi's principal place of residence is their jointly owned property in Earlwood. In addition to this property, they jointly own two investment properties: one in Sefton and one in Bulli. Mrs Zughbi also separately owns a property in Ryde. The Office of State Revenue ('OSR') has assessed Dr and Mrs Zughbi's properties for Land Tax for the Land Tax years 1998 to 2008. 3 On 22 January 2008, the OSR issued Dr and Mrs Zughbi with a Land Tax Notice of Assessment for the 2008 Land Tax year. In this, as in previous years, the OSR granted a principal place of residence exemption in respect of Dr and Mrs Zughbi's Earlwood property, but otherwise assessed them as being liable for Land Tax on their other properties. 4 By letter dated 26 February 2008, Dr and Mrs Zughbi objected to the assessment on the ground that they should each be entitled to a tax threshold for the purpose of assessing their liability for Land Tax in respect of their jointly owned properties. On 8 April 2008, a delegate of the Commissioner disallowed their objection in respect of the 2005 to 2008 Land Tax years, explaining that jointly owned land is assessed as if it is owned by one person. 5 On 16 December 2008, Dr Zughbi lodged his application for a review of this decision by the Tribunal. As stated above, this application was subsequently amended to include Mrs Zughbi. Because the application for review was made outside the 60 day period allowed by s 99 of the Taxation Administration Act 1996 ('the TA Act'), it was necessary for Dr and Mrs Zughbi to apply for an extension of time. At the hearing, there being no objection from the Chief Commissioner, and on my being satisfied that Dr and Mrs Zughbi had a reasonable explanation for the delay (as per section 57(1) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act')), I granted an extension of time for the making of the application. The Relevant Legislation 6 Pursuant to section 100(3) of the TA Act, an applicant for review bears the onus of proving his/her case in the Tribunal. 7 During the relevant period, 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 land that was not exempt based on the ownership of the land as at midnight on the 31 December of each preceding year for which Land Tax was to be levied. Thus, Dr and Mrs Zughbi, being the registered owners of land, were presumed to be liable for Land Tax on that land for the years in issue - the 2005 to 2008 Land Tax years - based on their ownership of the land on the 31 December of each preceding year, unless the land was exempt from tax. 8 The issue in dispute is whether, as contended by the Chief Commissioner, Dr and Mrs Zughbi are entitled to one tax threshold for the purpose of calculating their liability for Land Tax by reason of their joint ownership of the Sefton and Bulli properties, or whether, as Dr and Mrs Zughbi contend, they are each entitled to a tax threshold for that purpose. The Chief Commissioner accepts they are entitled to a principal place of residence exemption for their jointly owned Earlwood property. 9 The 'tax threshold' for Land Tax is defined in section 62TB of the LTM Act for the pre-2005 Land Tax years and in section 62TBA in respect of the 2006 Land Tax year and subsequent years. The Land Tax threshold in 2006 was $352,000 and is indexed for subsequent years and calculated in accordance with the formula set out in section 62TBA. 10 Land Tax is levied in accordance with the provisions of the Land Tax Act 1956. For example, for the 2008 Land Tax year, Land Tax is levied in respect of the taxable value of "all the land owned by any person at midnight on 31 December 2007": section 3AK(1). Where the taxable value is more than the tax threshold, the rate of Land Tax payable is $100 plus 1.6c for each $1 in excess of the tax threshold: section 3AK and Schedule 12. 11 Section 27 of the LTM Act applies to 'joint owners' of land (defined in section 3 as including those who own land jointly or in common): 27 Joint owners (1) Joint owners of land shall be assessed and liable for land tax in accordance with the provisions of this section. (2) Joint owners (except those of them whose interests are exempt from taxation under section 10) shall be jointly assessed and liable in respect of the land (exclusive of the interest of any joint owner so exempt) as if it were owned by one person, without regard to their respective interests therein and without taking into account any land owned by any one of them in severalty or as joint owner with any other person. (2A) ... (3) Each joint owner of land shall in addition be separately assessed and liable in respect of: