Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Sheedy v Chief Commissioner of State Revenue [2012] NSWADT 99 Hearing dates: 14 May 2012 Decision date: 23 May 2012 Jurisdiction: Revenue Division Before: A Verick, Judicial Member Decision: The assessments are confirmed. Catchwords: Land tax exemption - vacant land - principal place of residence exemption - effect of revocation Legislation Cited: Land Tax Management Act 1956 Valuation of Land Act 1916 Cases Cited: Tuck v Chief Commissioner of State Revenue [2005] NSWADT 196 BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003 Commissioner of Taxation v Ryan (2000) 201 CLR 109 Chief Commissioner of State Revenue v Aldridge and Anor (RD) [2003] NSWADTAP 50 Ambience (Arncliffe) Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 2006 Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271 Category: Principal judgment Parties: Karyn Sheedy and Gemma Campbell (Applicants) Chief Commissioner of State Revenue (Respondent) Representation: Counsel H El-Hage , (Respondent) K Sheedy (Agent for the Applicants) Crown Solicitor (Respondent) File Number(s): 116072 reasons for Decision 1The applicants seek a review of two assessments issued by the Chief Commissioner of State Revenue ("the Chief Commissioner") under the Land Tax Management Act 1956 ("the Act") for the land tax years 2004 - 2011 in respect of land situated at 81B Bignell Street, Illawong. 2The land is vacant land, which was purchased by the applicants together with Adam Curtis pursuant to a contract dated 30 September 2003 to build their principal place of residence. The applicants were given a principal place of residence exemption to land tax under clause 6 of Schedule 1A to the Act for all the land tax years under review but the Chief Commissioner revoked the concession in May 2011 and issued two land tax assessments, one for the land tax years 2004-2006 and the other for the 2007-2011 land tax years. These assessments are the subject of this review. Relevant legislative provisions 3Under s 7 of the Act, land tax is levied and payable on the taxable value of all land in New South Wales, except land, which is exempted from taxation under the Act. Land tax is charged on land as owned at midnight on 31 December in the preceding year. 4Section 10 of the Act provides, and was in the same terms in the years in issue: 10 Land exempted from tax (1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10B, 10D, 10E, 10G, and 10P, be exempted from taxation under the Act: ... (r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A. 5Schedule 1A of the Act was in the following terms in the relevant years: Schedule 1A Principal place of residence exemption 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 the 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 (b) the land is: (i) a parcel of residential land, ... 6 Concession for unoccupied land intended to be owner's principal place of residence (1) If the Chief Commissioner is satisfied that theowner of unoccupied land intends to use and occupy the land solely as his or her principal place of residence, the owner is taken, for the purposes of the principal place of residence exemption, to use and occupy that land as his or her principal place of residence. (2) This clause does not apply unless the Chief Commissioner is satisfied that: (a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and (b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement and (c) the intended use and occupation of the land is not unlawful. (3) This clause applies in respect of the assessment of a person's ownership of land only in the period of: (a) 2 tax years immediately following the year in which the person became owner of the land, or (b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 2 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner's intended use and occupation of the land are physically commenced on the land. (4) The Chief Commissioner may extend the period in which this clause applies if satisfied that: (a) there is a delay in the completion or, in a case referred to in subclause (3) (b), the commencement of the building or other works necessary to facilitate the owner's intended use and occupation of the land, and (b) the delay is due primarily to reasons beyond the control of the owner. (5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least 6 months. (6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly. ... (8) For the purposes of this clause: unoccupied land means land that is not used or occupied for any purpose. Factual Background 6This matter has a long history. In 2004, the Chief Commissioner granted the applicants and Adam Curtis an exemption under cl. 6 of Schedule 1A to the Act. 7In 2006, a de facto relationship between Adam Curtis and Gemma Sheedy ended and as part of the settlement between the parties, Adam Curtis transferred his share in the property to Gemma Sheedy. 8On 8 January 2007, the Chief Commissioner revoked his concession under cl.6 (4) and issued an assessment for the land tax years 2004-2006. An objection against the assessment was disallowed and in 2007 the applicants and Adam Curtis sought a review of the Chief Commissioner's decision to refuse an extension of time under cl. 6of Schedule 1A to the Act. The Tribunal in Sheedy & Ors v Chief Commissioner of State Revenue [2007] NSWADT 283 set aside the Chief Commissioner's decision and remitted the matter to the Chief Commissioner to reconsider his decision. 9Following the decision in Sheedy the Chief Commissioner allowed the applicants the extension under cl. 6 for the years 2004-2006. Further extensions under cl. 6 were granted to the applicants for the 2007 and 2008 land tax years. 10The subsequent events leading to the present application for review are set out in the Chief Commissioner's written submissions - 25. On 5 December 2008, the applicants lodged a development application(DA) with the Council. The applicants subsequently wrote to the Chief Commissioner on 9 December 2008. By letter dated 22 December 2008, the Chief Commissioner advised the applicants that he had granted them a further extension of time under cl. 6(4) of Sch. 1A, until the end of 2009, for the completion of the house on the Property. 26. On 13 May 2009, the Council granted its consent to the applicants' DA. The consent remains in force for a period of 3 years. 27. According to the applicants, on 19 August 2009, Gemma Campbell gave birth to her first child, Vincent. 28. On 1 December 2009, the applicants sought a further extension of time under cl. 6(4) of Sch. 1A to construct the dwelling on the Property. It is not in dispute that the Chief Commissioner granted them a further extension until the end of 2010. 29. Subsequently, on 5 January 2010, Karyn Sheedy wrote to the Chief Commissioner and, inter alia, stated: Due to unforseen circumstances we may have to sell the land. Please advise of the total Land Tax liability should the land be sold. 30. In a letter sent in response dated 8 January 2010, the Chief Commissioner explained that if the Property was sold, the exemption in cl. 6 would be revoked and the applicants would be liable for the land tax for the 2007-2010 tax years. The Chief Commissioner set out the amount of land tax calculated for each of those land tax years by reference to the land values set out in that letter. 31. On or about 18 January 2010, the applicants instructed Barker Lawyers to prepare the relevant conveyancing documents for the sale of the Property. 32. On 21 July 2010, the Property was listed for sale. It seems that the applicants received at least one offer for the purchase of the Property from a prospective buyer with the surname "Khattar", who agreed to buy the Property for $483,500. 33. By letter dated 29 November 2010, Karyn Sheedy informed the Chief Commissioner that, although the building work had commenced on the Property, it had come "to a stand-still" because of, inter alia, her husband's medical problems and Vincent's ill health. Mrs Sheedy provided a copy of a letter from Dr George Han regarding these matters and sought a further extension of time under cl. 6 of Sch. 1A. 34. In a letter dated 16 March 2011, the Chief Commissioner informed the applicants that he had denied their request for a further extension of time. He pointed out that the property was listed for sale in 2010 and, if sold, the applicants would be liable to pay land tax for the period commencing from the date of acquisition. The Chief Commissioner provided an estimate of the land tax payable for the 2004-2010 land tax years. 11On 31 May 2011, the Chief Commissioner issued two land tax assessments, "one for the tax years 2004-2006 (when Adam Curtis was a joint owner) and the other for 2007-2011 tax years, requiring the payment of $10,481.35 and $15,782.05 in land tax respectively". Objections against these assessments were disallowed by the Chief Commissioner. 12On 12 September 2011, the applicants filed the current application seeking review of the Chief Commissioner's decision to assess them as being liable to pay land tax in respect of the land for the 2004-2011 land tax years. Consideration 13At the hearing Mrs Sheedy confirmed that the applicants were not seeking any further extensions but challenged the assessments on two grounds. 14Their principal grievance was that when the Chief Commissioner was asked in writing to indicate the applicants' total liability to land tax in the event the land was sold, the response was that the applicants had a liability for the land tax years 2007 to 2010 but the Chief Commissioner has, however, proceeded to issue assessments for the 2004-2011 land tax years, contrary to his written advice. 15The applicants are also dissatisfied with the land valuations used by the Chief Commissioner in the assessments. Mrs Sheedy informed the Tribunal that the applicants have in each of the relevant years objected to the high valuation given to the land but the Valuer General has only reduced the valuation of the land for the 2011 land tax year. 16The Chief Commissioner's case was that the applicants have decided to sell the land, and as they have failed to actually use and occupy the land as their principal place of residence by the end of the period allowed under cl.6, the exemption was correctly revoked under cl.6 (5). And that the "effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied: cl.6 (6)". 17In this matter, the applicants have been granted a number extensions in respect of the land tax years from 2004 to 2010 and are now faced with a fairly large land tax liability. Unfortunately, the provisions apply as submitted by the Chief Commissioner. In Tuck v Chief Commissioner of State Revenue [2005] NSWADT 196, in a similar factual situation, the President of the Tribunal in affirming the assessment issued pursuant to cl. 6 (6) said: ... the clear effect of cll. 6(5) and 6(6) is that the PPR exemption is revoked and is taken not to have applied in respect of any year to which, but for the revocation, it would have applied. 18There is no discretion in cl.6(6), the provisions require the Chief Commissioner to assess "any year", but for the revocation, the exemption would have applied. In this matter the relevant land tax years are 2004-2010. The Chief Commissioner is required under cl.6 (6) to assess or reassess the land tax liability accordingly. 19As regards the applicants' submission that they were provided with "incorrect advice" of their total land tax liability, the Chief Commissioner's response is that "if there was an error in the information provided by the Chief Commissioner, that itself would not absolve the applicants from their land tax liability". Because, it was submitted, the Chief Commissioner cannot be estopped from administering the Act in accordance with its terms. Reliance was placed on "BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003, esp. at [111]; Commissioner of Taxation v Ryan [2000] 201 CLR 109, at 124; Chief Commissioner of State Revenue v Aldridge and Anor (RD) [2003] NSWADTAP 50, at [32] - [34]; Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271, at [11] - [12]". 20I agree with the Chief Commissioner's submission. It is well-established principle of law that revenue authorities cannot be estopped from administering a revenue law as required by the terms of the law. 21"Land value" used in the Act means "the land value of land as determined in accordance with the Valuation of Land Act 1916" ("the Valuation Act": s 62TC. A landowner dissatisfied with a valuation determined by the Valuer General has independent rights of review under the Valuation Act. There are no provisions in the Act for any review of the valuation determined by the Valuer General. The Chief Commissioner also has no power under the Act to substitute any other valuation. 22The Chief Commissioner was, accordingly, required to assess the land in accordance with valuations made by the Valuer General. 23In this matter, the applicants have had more than 8 years to construct their principal place of residence but have, for various reasons, not been able to proceed beyond some preliminary work on the land. As they have now placed the land for sale, the Chief Commissioner was clearly entitled to revoke the concession and act under cl. 6(6) to protect the revenue. 24The assessments must be confirmed. ********** 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: 23 May 2012