Western Australia: principal residence exemption applied to adjoining lots
The Western Australia (WA) Court of Appeal has held in Commissioner of State Revenue v De Campo [2007] WASCA 136 (27 June 2007) that three adjoining lots should be treated as a single private residential property for the purposes of the principal residence exemption from WA land tax.
At all relevant times, the taxpayer was the beneficial owner of three adjoining lots of land (Lots 11, 13 and 15). In November 2002, the taxpayer became the registered proprietor of Lot 11, which had an existing near-new two-storey house with a swimming pool but no garden. The taxpayer, her husband and her son resided in this house.
In February 2003, the taxpayer became the registered proprietor of Lot 13, which had an existing brick and tile house. In August 2003, the taxpayer had this house demolished so that a vegetable garden could be established. However, there was an uninterrupted brick wall across the whole of the boundary separating Lots 11 and 13. Nevertheless, the taxpayer’s son played, and the taxpayer and her family had picnics in Lot 13.
In September 2004, the taxpayer became the registered proprietor of Lot 15, which had an existing house. This house was demolished, along with the dividing fence between Lots 13 and 15, and a common front fence was built.
By March 2006, the initial site for the vegetable garden on Lot 13 became the location for a two-car garage and studio to complement the house on Lot 11. Various trees on Lot 13 were relocated to Lot 15.
The issue was whether as at 30 June 2004, Lots 11 and 13, and as at 30 June 2005, Lots 11, 13 and 15 were established and used as one integrated area that constituted the place of residence.
At first instance, the WA State Administrative Tribunal held that the lots were firm and permanent as one integrated area. The Tribunal also found that there was a continuous and varied use of the lots by the taxpayer and her family.
On appeal, the Court rejected all of the Commissioner’s grounds of appeal, holding that the Tribunal had properly evaluated the evidence and that its conclusions were reasonably open to it. The Commissioner had not demonstrated that the Tribunal made a material error of law or fact.
Victoria: payroll tax rulings
Following the enactment of the new Payroll Tax Act 2007 (Vic), which is harmonised with the proposed payroll tax legislation in New South Wales (NSW), the Victorian State Revenue Office has issued nine new payroll tax rulings. To complement this, it has also issued an information circular which provides a general overview of payroll tax as governed by the new law which is effective from 1 July 2007. The new rulings replace the rulings applicable under the previous law. The subject matter of the rulings are:
- Victorian payroll tax liability for wages paid by an employer
- expatriate employees
- fringe benefits
- termination payments
- exempt allowances - motor vehicle and accommodation
- payroll tax exemption for payments to owner-drivers
- contractor provisions - door-to-door sale of goods
- GST considerations for the calculation of payroll tax liability, and
- payroll tax charitable exemption - meaning of ‘exclusively’.
NSW land tax: principal place of residence
On 21 June 2007, the NSW Supreme Court handed down its decision in the NSW land tax case of Chief Commissioner of State Revenue v Geoffrey Harry Coleman & Another [2007] NSWSC 625 and overturned the decision of the Appeal Panel of the Administrative Decisions Tribunal (ADT). At issue in this case was whether or not a parcel of land was eligible for the principal place of residence exemption for NSW land tax purposes.
The taxpayers had subdivided the land on which they had resided and constructed a new dwelling on the new block. At the relevant taxing date (for land tax purposes), the new dwelling had foundations, stone walls and concrete slab floors at ground level and the first story, and was therefore unoccupiable. The taxpayers were living in the original dwelling at that time. The taxpayers contended that at the taxing date, the use of the block upon which the new house was being constructed was still part of their principal place of residence - that is, both blocks were being used for their ordinary domestic and recreational purposes.
At first instance, the ADT found in favour of the Commissioner and held that there was a construction of a new dwelling on the land and that the land was therefore not being used “as the principal place of residence and for no other purpose”. On appeal, the Appeal Panel of the ADT found in favour of the taxpayer when it determined that the legislation that requires land to be used for ‘residential purposes and for no other purpose’ should not be construed too narrowly. This would not provide the protection of the exemption (which was intended by Parliament) for land which is subject to residential use, or recognition of the multi-faceted nature of residential use. It was noted that, while the construction use of the new block was considerable, the owners still used it as part of their principal place of residence - for relaxation and as a patio.
The Appeal Panel of the ADT found that the use of one of the blocks had not changed sufficiently so as to constitute a change of use which would take it out of the exemption, and concluded that both blocks did constitute a ‘parcel of residential land’ and that there was no division of use.
On appeal, the Supreme Court set aside the Appeal Panel’s decision and found in favour of the Commissioner. The Court found that the Appeal Panel’s conclusion, that the concurrent use of the lot as part of the taxpayer’s principal place of residence entitled them to the exemption, was vitiated by legal error. The Appeal Panel had committed an error by holding, inferentially, that the ancillary use of the lot as part of the principal place of residence impliedly overrode its use as a construction site. In addition, Court held that the Appeal Panel’s reasoning that there was no division of use was erroneous in point of law, because it was inconsistent with and contradicted the factual finding of dual use.
For further information, please complete the following form, or contact:
Barry Diamond, Partner
PricewaterhouseCoopers Tax
Stamp Duty
Phone: +61 3 8603 1118
Angela Melick, Partner
PricewaterhouseCoopers Tax
Stamp Duty
Phone: +61 2 8266 7234
