CITATION: Yen-Cheng Chuang & Anor v Chief Commissioner of State Revenue [2009] NSWADT 160 DIVISION: Revenue Division Applicants: Yen-Cheng Chuang and Jen-Jen Chen PARTIES: Respondent: Chief Commissioner of State Revenue FILE NUMBER: 086112 HEARING DATES: 18 May 2009 SUBMISSIONS CLOSED: 18 May 2009 DATE OF DECISION: 24 June 2009 BEFORE: Verick A - Judicial Member CATCHWORDS: Land tax exemption – principal place of residence LEGISLATION CITED : Land Tax Management Act 1956 State Revenue Legislation Further Amendment Act 2003 Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 Dean v Commissioner of Stamp Duties (Qld)(NO2) [1996] 2 Qd R 557 CASES CITED: Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26 Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 Applicant Representative: In person REPRESENTATION: Respondent Representative: S Kaur-Bain, counsel ORDERS: The decision under review is affirmed. REASONS FOR DECISION Introduction 1 The applicants seek a review of the respondent's decision dated 21 August 2008 to disallow the applicants' objection against Land Tax Assessment for the 2002, 2003, 2004. 2005, 2006 and 2007 Land Tax years ("the Land Tax Years") in respect of land situated at Rouse Hill in New South Wales ("the Rouse Hill property"). 2 The question raised by this application concerns a claim by the applicants that the Rouse Hill property was exempt in the relevant Land Tax Years as land used and occupied by the applicants as their principal place of residence under the Land Tax Management Act 1956 (NSW) ("the Act"). Factual Background 3 The applicants are married with two children. They migrated to Australia from Taiwan some time in 1997. Their involvement in real estate in New South Wales, by way of a chronology, is as follows: (1) On 2 April 1997 the applicants purchased a residential property at West Pennant Hills. (2) The applicants were registered as joint tenants of the Rouse Hill property on 14 June 2001. (3) The applicants sold the West Pennant Hills property on 6 August 2002. (4) From August 2002 to December 2002 the applicants rented a residential property situated at Box Hill. (5) On 3 December 2002, the applicants purchased a residential property in Windsor. (6) On 18 December 2002, the applicants were registered as joint tenants of a rural property at Mulgrave. (7) On 11 June 2004 the applicants sold the Windsor property. 4 Their travel movements relevant to the application were usefully set out in the written submissions prepared by Ms Kaur-Bain, counsel for the respondent, as follows: "16. The Australian immigration records show the following: (a) On 20 December 2002, the Applicants departed Australia and travelled to Taiwan to visit family and friends; (b) On 23 January 2003, the Applicants returned to Australia. Both Applicants completed the arrival card for customs. The Applicants both stated their intended address in Australia was … Windsor … ; (c) On 27 July 2003, the Applicants departed Australia and travelled to the United States of America ("USA") for 20 days to visit family and friends. (d) On 25 September 2003, the Applicants returned to Australia. Both Applicants completed the arrival card for customs. The Applicants both stated their intended address in Australia was … Windsor … ; (e) On 26 October 2003, the Applicants departed Australia and travelled to USA. The Applicants wrote on their customs departure card that they intended to stay in USA for 3 years; (f) On 16 June 2008 Mr Chuang returned to Australia; (g) On 9 September 2008 Ms Chen returned to Australia." 5 The applicants in their objection dated 30 September 2007 to the assessment for the relevant land tax years claimed: (a) That the West Pennant Hills property was their principal place of residence from 2 April 1997 to 14 June 2001; (b) That their principal place of residence from 14 June 2001 to October 2003 was the Rouse Hill property; (c) That from 31 December 2002 to 11 June 2004 the Windsor property was used as the applicants' holiday home; and (d) That the applicants left Australia temporarily in October 2003 to reside in the USA. They returned to Australia in 2008 after almost 5 years in USA. 6 In their objection, the applicants also stated that: "Because of the nature of my work and size of the house in Rouse Hill we had to rent the house in Box Hill and then bought a house in Windsor to accommodate my guests from overseas … our children went to Hills Grammar School in Glenhaven. It was much closer that we live in Rouse Hill rather than in Windsor. However, we stayed in Windsor's house during weekends and school holidays … I have to travel a lot to out states and overseas because of my work." 7 In their written submissions dated 19 January 2009, the applicants made the following claims: (a) that the "main reason" the applicants purchased the Rouse Hill property was to get a contract to market products supplied from Malaysia and Taiwan, which business required "a big land for storage". The "second reason" was the relationship between the first applicant and his wife, which was "not in good condition". The second applicant and the children "stayed in West Pennant Hills, Box Hill (a rented house), then in Windsor" since the first applicant moved to Rouse Hill in 2001; and (b) that they were not able to produce any telephone, electricity or water bills because the property was "a rural zoned area" with no electricity, water or sewage services. The first applicant used a power generator, mobile phone and bought tank water. 8 In a further submission dated 14 May 2009, the first applicant said that he had used the second applicant's address for "RTA, Electoral, Tax return filing and others to make sure that I could be contacted". Attached to the submission were two "To Whom It May Concern" statements. One from a person named Nan Lin signed in Chinese in which the person stated: "I, Nan Lin, hereby testify that I visited Mr. Chuang at … Rouse Hill few times during the period between year 2001 and 2003 for advice of my car problem. I was asked to take care of his property at Rouse Hill during the time he was in America from October 2003 to June 2008. I saw bed, desk, computer, moveable closet, round dining table, gardening tools, plastic outdoor furniture and others in that property." The second statement was from the first applicant's parents, also signed by both in Chinese stating that "we stayed at … Rouse Hill with my son during the period 1/1/2002 and 20/1/2002 when we visited Australia." 9 At the hearing, the first applicant, assisted by an interpreter, gave oral evidence and was cross-examined. He said that in the years under review he was not employed nor did he carry on any business activity. He only did odd and casual jobs and that his wife has only attended to domestic duties. He further said that the Rouse Hill property was essentially purchased for a proposed business venture to market in Australia connections for electric wires that he was hoping to undertake for a Taiwanese company with a factory in Malaysia. A large area was required for storage purposes. He was, however, not successful in getting the business agency for Australia. 10 He described the building on the Rouse Hill property as a large open plan shed with no toilet, bathing, or cooking facilities. He had a portable gas stove but did not cook his meals there except for the odd occasion when he would eat packaged instant noodles. He would return to the residence occupied by the second applicant and have his showers, eat meals and often-stayed overnight there. The second applicant attended to his laundry requirements at her residence. He only took a few essentials to the Rouse Hill property and had all his other belongings at the residence occupied by the second applicant. 11 The first applicant also confirmed that from October 2003 and until the applicants returned to Australia in 2008, they stayed as a family in California, in a rented house. 12 The first applicant did not produce any independent evidence at the hearing. The second applicant, although requested by the respondent's solicitor to attend the hearing for purposes of cross-examination, did not attend the hearing. Relevant Statutory Provisions 13 Part 3 of the Act provides that land tax is to be levied and paid on all land situated in New South Wales other than that which is exempt. Under s 3(1) of the Act the relevant ownership date is identified as at midnight on 31 December in the year immediately preceding the relevant land tax year. Exemptions to land tax are provided by s 10 of the Act and include, relevantly for this matter, "land that is exempt from taxation under the principal place of residence exemption". 14 For purposes of this matter, the relevant provisions dealing with the principal place of residence exemption are found in s 3 and s 10 of the Act as they stood for the 2002 and 2003 land tax years. These provisions were amended by State Revenue Legislation Further Amendment Act 2003 and a more comprehensive regime was introduced by the insertion of a new Schedule 1A to the Act to deal with the exemption. The provisions of Schedule 1A came into operation from 31 December 2003 and apply to the land tax years 2004 to 2007 in this matter. 15 The provisions applicable to the 2002 and 2003 land tax years were in the following terms: "3 Definitions (1) In this Act unless the context or subject matter otherwise indicates or requires: … principal place of residence of a person means the one place of residence that is, among one or more places of residence of the person within and outside Australia, the principal place of residence of the person. … (3) For the purposes of this Act, in respect of which taxation is leviable or payable, land or a flat is not used and occupied as the principal place of residence of a 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. … 10 Land exempted from tax (1) Except where otherwise expressly provided in this Act the following lands shall, …be exempted from taxation under this Act: … (r) … land that has a land value in respect of the year of less than the premium tax threshold and 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 (except as provided by subparagraph (iii), being: … (ii) a parcel of residential land, or … (1D) 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 … … (1G) For the purposes of subsection (1D), land does not cease to be used and occupied as provided by that subsection by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the buildings are, designed, constructed or adapted. …" 16 The relevant provisions that came into operation as from 31 December 2003,which apply in respect of the 2004-2007 land tax years, are as follows: "Schedule 1A Principal place of residence exemption Part 1 Preliminary 1 Definitions … 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 purposes, is exempt from taxation under this Act, in respect of the year commencing 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 (b) the land is: (i) a parcel of residential land, or … (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. … (4) The exemption conferred by this clause is referred to as the principal place of residence exemption . … 8 Concession for absences from former residence (1) If the Chief Commissioner is satisfied that: (a) a person is the owner of the land ( the former residence ) that has been used and occupied by the person as his or her principal place of residence for a continuous period of at least 6 months, and (b) the person uses and occupies other land (whether or not in New South Wales), that is not owned by the person, as his or her principal place of residence, the person is taken, for the purpose of the principal place of residence exemption, to continue to use and occupy the former residence as his or her principal place of residence. (2) The maximum period for which a person may be taken, under this clause, to continue to use and occupy a former residence as a principal place of residence is 6 years starting at the end of the last period (of at least 6 months) during which the former residence was used and occupied by the person as a principal place of residence (not including any period for which the person may be taken, under clause 7 or this clause, to have used and occupied the former residence as a principal place of residence). … 12 Only one principal place of residence for all members of same family (1) For the purposes of the principal place of residence exemption, only one place may be treated as the principal place of residence of all members of the same family …" Discussion and Reasons for Decision 17 The applicants' case was that the first applicant had used and occupied the Rouse Hill property as his principal place of residence from 14 June 2001 up to 26 October 2003 and they were entitled to the exemption in the land tax years under review. In relation to the land tax years 2002 and 2003, the applicants' claim was that the Rouse Hill property was their principal place of residence and exempt under the former s 10(1)(r) of the Act. In relation to the 2004, 2005, 2006 and 2007, the exemption was claimed under Schedule 1A to the Act. In particular, it was argued that the applicants were entitled to the principal place of residence exemption for the Rouse Hill property pursuant to clause 8 of Schedule 1A to the Act. 18 The respondent's case was that the objective evidence pointed to the applicants occupying as their principal place of residence the West Pennants Hill property from 14 June 2001 to July 2002, the rented accommodation at Box Hill from July 2002 to December 2002 and the Windsor property from December 2002 to October 2003. 19 The Act does not provide any technical or legal meaning for the expression "principal place of residence" and accordingly, the expression has its ordinary meaning. A person's place of residence is usually understood as "the place where he eats, drinks and sleeps" (per Ridley J in Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706). The use of the term "principal" in the expression suggests that a person may use and occupy more than one residence but that the exemption is only available for the principal place of residence of the person. 20 In ascertaining whether a particular residence of a person is the principal place of residence of that person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of use and occupation of the residence in each case (per Fryberg J in Dean v Commissioner of Stamp Duties (Qld)(No 2) [1996] 2 Qd R 557 in considering the meaning of the expression "principal place of residence" found in the Stamps Act 1894 (Qld)). 21 The onus to establish one's principal place of residence is usually discharged on the basis of various matters. It is important to note, as observed by the Victorian Civil and Administrative Tribunal in Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 that: "… while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters …One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house… Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases…" 22 Other indicia of matters would include evidence of an applicant's use of the address of the property as the residential address for purposes of his or her mail, driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills. 23 In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 the Appeal Panel of the Tribunal agreed that "to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor occupation for any other reason". The Appeal Panel also held that "the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue". (Also see Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26). 24 In this matter the applicants sought to establish that the Rouse Hill property was their principal place of residence in the relevant years on the basis of its use and occupation by the first applicant. The Rouse Hill property was just a large shed with no electricity, water or sewerage facilities. The first applicant's own evidence was that he went to the residence occupied by his wife and children for his daily bath, meals and to get his clothes washed. He also did not do any cooking or entertaining of any friends at the property. There were only a few items of furniture at the property and the first applicant also confirmed at the hearing that he only brought a few personal essentials to the property and that all his other belongings remained at the residence occupied by his wife and children. He also confirmed that when they departed for an extended stay in the United States of America, all his belongings at the Windsor property were shipped with the rest of the family's belongings to America. 25 The fact of the matter is that the Act requires the applicants to establish more than just acquisition of a property and use of the property as a place to sleep to qualify for the exemption. This is particularly important when an owner seeks to nominate one of two or more properties used and occupied as his or her principal place of residence. It does not seem to me that the applicants did enough to establish that the property was their principal place of residence during the relevant years. As observed by the Appeal Panel in Ferrington "a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor occupation for any other reason". The Rouse Hill property, on their own evidence, was purchased for a proposed business venture. Even if the first applicant had used the place to sleep on some nights during the relevant period, all matters that are performed to make a place a residence were, however, carried out at his family home which was until 2002 the West Pennants Hill property, from July 2002 to December 2002 the rented property at Box Hill, and from December 2002 until October 2003, the Windsor property. The next five years were spent in the United States by the applicants, living together in a rented residence. 26 In the immigration records produced by the respondent the first applicant disclosed the Windsor property address as his "intended address in Australia". For the period 10 December 2002 to 21 October 2003, the first applicant gave the Windsor property address as his contact address to the Road Transport Authority. In the draft tax returns for the 2003 tax year that he produced under subpoena, he stated his residential address as the Windsor property. The cumulative effect of these documents or the inference that I can make on the basis of these documents is that the first applicant did not regard the Rouse Hill property as his place of residence in the relevant years. 27 It is also important to note that the version of events relevant to this matter changed from the original statement in their objection to the position taken at the hearing. In the objection, the applicants had claimed that the whole family had moved to the Rouse Hill property and that the Windsor property was for their overseas guests and their weekend holidays. However, in their submissions they retracted that version and placed reliance on just the use and occupation of the Rouse Hill property by the first applicant. The only inference that can be made is that the applicants have not been honest in their dealings with the respondent as to the use and occupation of the Rouse Hill property. The statements made in their submissions as to the use and occupation of the Rouse Hill property by the first applicant were not corroborated by any independent evidence. Against that background, it is difficult to give any credence to their statements. 28 The short statement the applicants produced from Nan Lin is also not helpful to the applicants' case. He merely says that he "saw" some items of furniture at the Rouse Hill property. There was no evidence as to the actual use and occupation of the property by the first applicant. Nan Lin was also not produced to give sworn evidence or for any cross-examination. The statement made by the first applicant's parents was somewhat contradicted by the statement made by Nan Lin. In their statement his parents claimed that they stayed with the first applicant at the Rouse Hill property when they were on a holiday in Australia. But what Nan Lin "saw" among the few items of furniture at the property was a single bed at the property. No explanation was given as to how three adults could have shared the one bed at the property. Both statements are signed in Chinese and there was no explanation that the statements had been properly translated for the benefit of the signatories. Accordingly, very little weight can be given to these two statements. 29 The absence of the second applicant at the hearing to give evidence is also a matter that I need to take into account. I can only presume that her evidence would not have been of any assistance to the applicants' case. No evidence was produced to support the claim by the first applicant that he had moved to the Rouse Hill property because his marriage was "not in a good condition". On the contrary, the first applicant in his evidence at the hearing confirmed that he and the second applicant lived in the same rented house during the five years they were in the United States of America. 30 The applicants have not, in my opinion, discharged their onus of establishing that the first applicant had relinquished the family home at the properties occupied by the second applicant and their children at any stage or for any period in the relevant years under review and had adopted the Rouse Hill property as his principal place of residence. 31 Because the applicants have failed to establish that the Rouse Hill property was used and occupied continuously for any period as the principal place of residence prior to their departure to the United States of America in October 2003, I need not determine the application of clauses 8 or 12 of Schedule 1A to the Act in this matter. 32 Clause 8 only comes to the aid of an owner who has used and occupied the former residence as his or her principal place of residence for a continuous period of six months before the owner's absence from the property. In this matter, I have found that the Rouse Hill property was not used or occupied for any period as the principal place of residence in terms of the former s 10(1)(r) or the new Schedule 1A of the Act. In those circumstances Clause 8 did not have any application to grant the applicants the exemption in relation to the 2004, 2005, 2006 and 2007 land tax years. 33 Clause 12 was inserted to ensure that a family could only claim the principal place of residence exemption for one property if more than one property is owned and used as their residence. The family is allowed to nominate only one property for purposes of the exemption. The question does not arise in this matter, because the applicants did not use and occupy more than one property as their principal place of residence in the relevant years. Order 34 The objection decision of the respondent under review is affirmed. 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.