Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Perry Properties Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 235 Hearing dates: 25 May 2017 Date of orders: 27 July 2017 Decision date: 27 July 2017 Jurisdiction: Administrative and Equal Opportunity Division Before: S Frost, Senior Member Decision: (1) Land tax assessments for the 2015 and 2016 land tax years confirmed. Catchwords: STATE TAXES – land tax – land used and occupied primarily for low cost accommodation – boarding house accommodation – whether the Tribunal satisfied that the land is used and occupied in accordance with guidelines approved by the Treasurer Legislation Cited: Land Tax Management Act 1956 – s 10Q Cases Cited: Perry Properties Pty Ltd v Chief Commissioner of State Revenue (2013) 85 NSWLR 240; [2013] NSWCA 274 Category: Principal judgment Parties: Perry Properties Pty Ltd (Applicant 2016/00378344) Perry Properties Pty Ltd atf The Perry No. 1 Trust (Applicant 2016/00378344) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: P English (Applicants) R Mansted (Respondent) Solicitors: NSW Crown Solicitor's Office (Respondent) File Number(s): 2016/00378344 and 2016/00378448 Publication restriction: No Restriction Reasons for decision Introduction 1. The applicant operates a number of lodging businesses through which it provides low cost accommodation to members of the community. 2. One of its businesses is conducted at a property in Marrickville that has been referred to in these proceedings as the Addison Road Property. A second business is conducted at an address in Glebe, referred to as the Glebe Point Road Property. 3. For the 2015 land tax year the respondent Chief Commissioner has made an assessment that includes an amount of land tax payable in respect of the Addison Road Property. For the 2016 land tax year the Chief Commissioner has made an assessment that includes an amount payable in respect of both the Addison Road Property and the Glebe Point Road Property. 4. The applicant claims that in making the land tax assessments, the Chief Commissioner has wrongly failed to allow a 'low cost accommodation' exemption in respect of each of the properties. Unsuccessful at objection, the applicant now asks the Tribunal to review the assessments. The facts 1. The background facts are not in dispute. I find them to be as follows, by reference to the affidavit sworn on 30 January 2017 by Mr Vince Perry, the sole director of the applicant. 2. Both properties are registered as general boarding houses under the Boarding Houses Act 2012. 3. Both properties provide dormitory style accommodation to residents, with access to shared facilities and resources. This includes access to cooking and laundry facilities, as well as to common areas, computers and internet within each room and secure lockers for personal possessions. All residents are provided with bedding and cooking utensils, and utilities like power and water are included in the weekly tariff charged. 4. The accommodation at the Addison Road Property is provided in dormitories accommodating between two and six residents per room. At the Glebe Point Road Property, all of the dormitories accommodate four residents per room. 5. Accommodation at both properties is on a per bed basis – a resident is entitled to the exclusive use of a physical space, being their own bed within the shared dormitory style accommodation. 6. Occupancy agreements for family or shared accommodation are not offered at either property. Families are not accepted to stay at either of the properties because persons under 18 years of age are not permitted on site. 7. Occupancy for a group of residents is not offered on a per room basis at either property. If a group of persons wishes to occupy an entire room at either property, each member of the group must enter a single occupancy agreement for the right to respectively occupy each of the beds housed within the room. The legislation 1. The application turns on whether the exemption in s 10Q of the Land Tax Management Act 1956 (LTM Act) is available. That exemption is available if (as specified in subsection (1)): 1. the land is used and occupied primarily for low cost accommodation; and 2. application for the exemption is made in accordance with this section (that is, s 10Q); and 3. the Chief Commissioner is satisfied that the land is so used and occupied in accordance with guidelines approved by the Treasurer for the purposes of this section. 1. It is agreed between the parties, and I find, that paragraphs (a) and (b) are satisfied. The question is then whether, standing in the shoes of the Chief Commissioner, I am satisfied that either of the properties is used and occupied in accordance with 'guidelines approved by the Treasurer' for the purposes of s 10Q. 2. The 'guidelines approved by the Treasurer' are set out in Revenue Ruling No. LT 095 for the 2015 land tax year (LT 95) and in Revenue Ruling No. LT 098 for the 2016 land tax year (LT 98) (together, the Revenue Rulings). 3. The relevant extract from LT 95, in clause 3, is in the following terms (original emphasis): i. Land anywhere in NSW that is used by the owner as the site of a boarding-house will be entitled to an exemption from land tax for the 2015 tax year if, during the whole of the year ended 31 December 2014, in respect of at least 80% of the accommodation actually occupied: a. occupation was by persons who were long term residents (as defined); and b. where full board and lodging was provided, the maximum tariff charged per room was no more than*: $348 per week for single accommodation; or $577 per week for family or shared accommodation or where less than full board and lodging was provided, the maximum tariff charged per room was no more than*: $232 per week for single accommodation; or $386 per week for family or shared accommodation. ii. … iii. The owner must provide a statutory declaration stating that, in respect of at least 80% of the accommodation actually occupied by boarding house residents, the tariff for each room for full board and lodging during the whole of 2015, will not exceed*: $356 per week for single accommodation or $590 per week for family or shared accommodation or where less than full board and lodging is provided, the tariff for each room will not exceed*: $238 per week for single accommodation or $395 per week for family or shared accommodation. {*Tariff rates do not include GST.} 1. I was informed by the applicant's counsel, and I accept, that full board and lodging is not available at either property, and so any references to full board and lodging tariffs are irrelevant to these applications. 2. Clause 4 of LT 95 contains the following definitions: "Family or shared accommodation" means a room or suite of rooms jointly used and occupied by a family or a group of persons under one agreement between the owner or operator of the boarding house and the family or group. "Family" includes a couple, whether or not married to each other. "Long term resident" is a boarder or lodger who, during 2014, uses and occupies a room or a bed for a continuous period of at least 3 months. "Room" means an area of a boarding house surrounded by 4 walls, with or without windows, containing 1 or more beds. "Single accommodation" means a bed or a room used and occupied solely by one person under an agreement between the owner or operator of the boarding house and the person. "Suite of rooms" means 2 or more rooms let to a family or a group of persons under a single agreement between the owner or operator of the boarding house and the family or group. "Tariff" means the cost of a room or bed as well as electricity, water and other charges. 1. The corresponding parts of LT 98 are, mutatis mutandis, relevantly identical to LT 95, except the tariff limits have been increased. Those for less than full board and lodging (the only ones relevant to these applications) have been increased as follows: 1. $232 and $386 per week in clause 3.i.b. have been increased to $238 and $395 per week respectively; and 2. $238 and $395 per week in clause 3.iii. have been increased to $244 and $405 per week respectively. Consideration of the applicant's claim 1. The only type of accommodation provided by the applicant in these two properties, by reference to the definitions in the Revenue Rulings, is 'single accommodation'. That is clear from Mr Perry's affidavit, but also from the occupancy agreements at Exhibit 2 Tabs 15 and 16. The applicant only ever enters into an agreement with one individual at a time. If a group of people want to stay together at either property, they have to make individual agreements with the applicant (Mr Perry's affidavit at [11]). That restriction necessarily makes the definition of 'family or shared accommodation' in the Revenue Rulings inapplicable. 2. That means the $386/$395 per week tariff limits in the Revenue Rulings are irrelevant; instead the focus must be on the $232/$238 per week figures. 3. The applicant's accommodation charge records are included in Exhibit 3. At the Addison Road Property the typical weekly charge per bed for the relevant period was $167.50; at the Glebe Point Road Property it was $154. Both figures are well below the $232/$238 limit in the Revenue Rulings. But the tariff figures in the Revenue Rulings are per room figures, not per bed. Taking into account the fact that the rooms in the Addison Road Property accommodate between two and six people, and those in the Glebe Point Road Property accommodate four, the per room figures in the Revenue Rulings are comfortably exceeded whenever a room has more than one occupant – as is confirmed by the records in Exhibit 3. 4. It may seem curious that the word 'Tariff' is defined in the Revenue Rulings to mean 'the cost of a room or bed' (my emphasis), whereas the tariff limits are expressed to be per room (clause 3.i.b.) or for each room (clause 3.iii.). Inserting the definition of 'Tariff' into clause 3.i.b. of LT 95 results in the clause reading relevantly as follows (the inserted definition is shown in bold): … where less than full board and lodging was provided, the maximum cost of a room or bed charged per room was no more than $232 per week for single accommodation. 1. The language is clumsy, but in my view there is no room for an argument that the words 'per room' can be read in any way other than literally. Even though the applicant does not provide 'single accommodation' for an entire room (since each agreement with a resident is a single agreement with an individual, so that if an entire room is occupied at any given time it is because multiple agreements have been made), nevertheless the tariff charged per room, for 'single accommodation', must be the sum of each of the amounts charged for the individual beds. I must reject the applicant's alternative argument, that the tariff charged for single accommodation in one bed – $154 or $167.50, as the case may be – is the appropriate comparator to the 'maximum tariff' figures in the Revenue Rulings, because that is not the tariff charged per room. It is, instead, the tariff charged per bed, and that is not what the Revenue Rulings are asking for. On the proper construction of LT 95 and LT 98, as soon as a room – 'an area of a boarding house surrounded by 4 walls, with or without windows, containing 1 or more beds' – in either of these properties is occupied by more than one person at a time, the tariff charged per room will have exceeded the limits specified in the Revenue Rulings. And that is irrespective of the fact that the applicant does not charge for accommodation on a per room basis, but only per bed. 2. It may follow from that conclusion that a dormitory-style boarding house will be less likely to attract the s 10Q exemption than a boarding house offering accommodation in private rooms. If that is the case on a proper construction of the Revenue Rulings, then so be it. The exemption is not available for all low-cost accommodation; it is confined to those subsets of low-cost accommodation that are within the guidelines approved by the Treasurer from time to time: Perry Properties Pty Ltd v Chief Commissioner of State Revenue (2013) 85 NSWLR 240 at 247-248; [2013] NSWCA 274 at [25]-[29]. Whether the guidelines need to be varied to allow the exemption in a case like this is a matter for the Treasurer. All the Tribunal can do is interpret the guidelines as made. Conclusion 1. The exemption under s 10Q is not available for either of the properties for the land tax years under consideration. The assessments denying the exemption are confirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. 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