Background
In 2014, the taxpayer acquired a property in Mount Eliza (the property) in its capacity as trustee of a discretionary family trust (the trust), of which Ms Tanei Williams and her siblings were the primary beneficiaries. At all relevant times the property was occupied by Ms Williams as her principal place of residence (PPR), which she occupied with her husband, mother and brother.
The Commissioner originally assessed the taxpayer to land tax on the property for the 2015 to 2018 land tax years at the general rate of land tax (set out in Part 1 of Schedule 1 to the Land Tax Act 2005), rather than the higher surcharge rate applicable to land owned by trustees. However, in September 2019, the Commissioner commenced an investigation as to whether the property was held by the taxpayer as trustee of a trust.
On 21 November 2019, and during an investigation conducted by the SRO, a nomination of PPR beneficiary was submitted on behalf of the taxpayer to the Commissioner of State Revenue, specifying Ms Williams as the PPR beneficiary for the trust to obtain the exemption from paying land tax at the trust surcharge rate for the property.
On 13 March 2020, the Commissioner reassessed land tax on the property for each of the 2015 to 2018 land tax years at the surcharge rate on the basis that the PPR nomination only took effect for the 2019 and subsequent land tax years and issued notices of reassessment to the taxpayer accordingly (reassessments).
The issue in this matter was whether the PPR nomination had the effect of applying to the 2015 to 2018 land tax assessments relieving the property from the trust surcharge rate for those years. The taxpayer argued that the PPR nomination can have that effect because of the definition of “tax year”, while the Commissioner maintained that the PPR nomination only has effect in the year the PPR nomination was submitted to the Commissioner (in this instance from the 2019 tax year).
Decision
On 7 October 2021 the Tribunal handed down its decision in favour of the Commissioner, confirming the reassessments for the 2015 to 2018 land tax years. This confirmed the Commissioner’s determination that the PPR nomination could not apply retrospectively to take effect for each of the 2015 to 2018 land tax years.
