White Star Developments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 180

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: White Star Developments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 180 Hearing dates: 17 August 2015 Decision date: 26 August 2015 Jurisdiction: Administrative and Equal Opportunity Division Before: R Perrignon, Senior Member Decision: The respondent's decision to assess land tax in respect of the of the 2013 and 2014 tax years is confirmed. Catchwords: Land tax - taxpayer trustee for a special trust - trust formed with intention of being a fixed trust - trustee not aware that it was a special trust until it answered respondent's questionnaire during 2014 tax year - trustee then amended its trust deed to comply with requirements for a fixed trust - trustee would have done so earlier if assessment had been issued earlier - whether in the circumstances assessments for the 2013 and 2014 tax years ought be set aside. Legislation Cited: Land Tax Management Act 1956 Taxation Administration Act 1996 Cases Cited: EK Anderson Investments Pty Limited ATF Cacs Property Trust v Chief Commissioner of State Revenue [2012] NSWADT 132 Category: Principal judgment Parties: White Star Developments Pty Limited atf Moffat St Unit Trust (Applicants) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: A Stafford (Respondent)

Solicitors: G Butterfield (Agent for Applicant) Crown Solicitor's Office (Respondent) File Number(s): 1510033

reasons for decision 1. The taxpayer is the trustee of the Moffat Street Unit Trust, whose assets include land in New South Wales. On 18 August 2014, the Chief Commissioner of State Revenue assessed the land to land tax in respect of the 2012, 2013 and 2014 years, on the basis that the trust was a 'special trust' for the purposes of section 3A(2) of the Land Tax Management Act 1956. In the circumstances of this case, a special trust one that is not a 'fixed trust'. Fixed trusts enjoy the benefit of a tax threshold not available in respect of special trusts. 2. The trustee objected unsuccessfully to the assessments of 18 August 2014, and sought review of them by in this Tribunal. The Tribunal enjoys jurisdiction to review them: section 101, Taxation Administration Act 1996. 3. In the course of the hearing, the trustee conceded that the Moffat Street Unit Trust was at all relevant times a special trust for the purposes of section 3A, but said that the intention of the trustee had always been to form and operate a fixed trust. 4. At the hearing, the trustee was represented by its agent and accountant, Mr Butterfield. It abandoned its claim for review of the assessment in respect of the 2012 tax year, but asked that the assessments for the 2013 and 2014 tax years be set aside (presumably to be replaced by assessments on the basis of fixed trusts) because of what essentially amounted to unfairness. Its reasons were not articulated in writing, but doing its best on the basis of the oral submissions, the Tribunal understands the factual basis for that submission to be as follows. 1. The only reason the trust failed to satisfy the requirements for a fixed trust was that the trust deed did not meet the criteria in section 3A(3B). 2. At all material times, the trustee intended that the trust should be a fixed trust, both for land tax purposes and for income tax purposes. This, it said, was corroborated by its application for an ABN lodged on 29 July 2010, by its accounts prepared in respect of the tax years 2010 to 2014, and by its tax returns in respect of those years. 3. On or about 6 August 2014, it first became aware, through Mr Butterfield, that it was a special trust for the purposes of the land tax legislation, when Mr Butterfield answered a questionnaire which had been issued by the Chief Commissioner in order to assess land tax on a proper basis. 4. The trust deed was ten rectified to comply with the requirements for a fixed trust. 5. Had the Chief Commissioner issued a notice of assessment in 2012, the trustee would have been alerted earlier to the fact that the trust deed did not satisfy the requirements for a fixed trust, and would have been in a position to rectify the trust deed immediately, so as not to incur land tax in respect of the 2013 and 2014 tax years. 1. The Chief Commissioner did not dispute any of these propositions of fact, and I shall assume them to be correct. 2. On the basis of those facts, the trustee submitted that it was not appropriate that it be assessed as a special trust in respect of the 2013 and 2014 tax years. This was essentially the same argument that Mr Butterfield had put to the Chief Commissioner when he requested an internal review of the assessments by letter dated 17 December 2014: Our issue is that as only one assessment has ever been issued dated 18 August 2014, which includes 2012, 2013 and 2014 years we were not able to amend the trust deeds earlier. Our argument is that if the OSR had issued an assessment notice of the 2012 year earlier we would have been able to arrange for the trust deed to be amended earlier and therefore not incur subsequent years assessments. As our client [sic] have always believed and operated as if it was a fixed unit trust they were under the impression that they were not liable to land tax and therefore were stunned when the assessments arrived. 1. The Chief Commissioner submitted that he was under no duty to issue an assessment in 2012, or to advise the trustee that its trust deed did not satisfy the requirements of a fixed trust. Even if there were any such duties, he said the liability to pay land tax would be unaffected. 2. The sole issue for determination is whether the assessments for the 2013 and 2014 tax years ought be set aside because of the failure of the Chief Commissioner to alert the trustee in 2012 to the fact that the trust deed did not fulfil the requirements for a fixed trust, either by issuing an assessment or otherwise.