Kamirice Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 2087
Background
This matter concerns the imposition of the Absentee Owner Surcharge (AOS) under sections 3A to 3C, and 35(1) of the LTX Act.
The Taxpayer, who owns land in Melbourne’s CBD, is a wholly owned subsidiary of a company which is incorporated outside Australia. That company is domiciled in the British Virgin Islands, and has two directors both of whom reside in Hong Kong, and is therefore an ‘absentee person’ within the meaning of s 3(1) of the LTX Act. Subject to the grant of an exemption under s 3B, the company holds an ‘absentee controlling interest’ in the Taxpayer. This is because, as the holder of all of the issued shares in the Taxpayer, it can control the composition of its board (s 3A(1)(a)); is in a position to cast or control the casting of more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the Taxpayer (s 3A(1)(b)); and holds more than 50 per cent of its issued share capital (s 3A(1)(c)).
The issue for determination by the Tribunal was whether the discretion under s 3B(2) of the LTX Act should be exercised to grant an exemption to the company, so that it is taken not to hold an absentee controlling interest in the Taxpayer.
Decision
On 14 December 2017, Senior VCAT Member Robert Davis ruled in favour of the Commissioner. Having considered all the matters in relation to section 3B(2) of the LTX Act, Senior Member Davis came to the conclusion that the discretion should not be exercised so as to exempt the Taxpayer from the payment of the surcharge.
The Tribunal held that: “This subsection and the Guidelines should be looked at as a whole giving appropriate weight to each of the matters referred to therein. For example, it is clearly more important to look at matters such as control and the benefit to the Victorian economy than matters, such as competitiveness.”[Paragraph 108]
