States Taxation Conference - Amazon S3...States Taxation Conference Cases Update 2016 Written and...

© Nicholas Clifton and Jacqueline Wood, Deloitte 2016

Disclaimer: The material and opinions in this paper are those of the author and not those of The Tax Institute. The Tax Institute did not review the contents of this paper and does not have any view as to its accuracy. The material and opinions in the paper should not be used or treated as professional advice and readers should rely on their own enquiries in making any decisions concerning their own interests.

States Taxation Conference

Cases Update 2016

Written and Presented by:

Nicholas Clifton

Partner

Deloitte

Jacqueline Wood

Principal

Deloitte

With special thanks to:

Deloitte Stamp Duty

Team

Sydney and Melbourne

National

28 July 2016

Darwin Convention Centre, Darwin

Nicholas Clifton and Jacqueline Wood Cases Update 2016


CONTENTS

1 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 .................... 10

1.1 Summary ................................................................................................................................. 10

1.2 Facts ....................................................................................................................................... 10

1.3 Legislation ............................................................................................................................... 11

1.4 Issues ...................................................................................................................................... 11

1.5 Decision .................................................................................................................................. 11

1.6 After the decision .................................................................................................................... 12

2 Alacer Gold Corp and Hill 51 Pty Ltd (formerly Alacer Gold Pty Ltd) and Commissioner of

State Revenue [2016] WASAT 31 ....................................................................................................... 13

2.1 Summary ................................................................................................................................. 13

2.2 Facts ....................................................................................................................................... 13

2.3 Legislation ............................................................................................................................... 14

2.4 Issues ...................................................................................................................................... 16

2.5 Decision .................................................................................................................................. 16

3 BD Corporation Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 163 18

3.1 Summary ................................................................................................................................. 18

3.2 Facts ....................................................................................................................................... 18

3.3 Legislation ............................................................................................................................... 19

3.4 Issues ...................................................................................................................................... 19

3.5 Decision .................................................................................................................................. 19

4 The Queen v Beckett [2015] HCA 38 .......................................................................................... 21

4.1 Summary ................................................................................................................................. 21

4.2 Facts ....................................................................................................................................... 21

4.3 Legislation ............................................................................................................................... 21

4.4 Issues ...................................................................................................................................... 22

4.5 Decision .................................................................................................................................. 22

5 BPG Caulfield Village Pty Ltd v Commissioner of State Revenue [2016] VSC 172 .............. 23



5.1 Summary ................................................................................................................................. 23

5.2 Facts ....................................................................................................................................... 23

5.3 Legislation ............................................................................................................................... 23

5.4 Issues ...................................................................................................................................... 24

5.5 Decision .................................................................................................................................. 25

6 Can Barz Pty Ltd & Anor v Commissioner of State Revenue & Ors [2016] QSC 59, Bird and

Scott & Ors v Commissioner of State Revenue [2016] QSC 132 .................................................... 26

6.1 Summary ................................................................................................................................. 26

6.2 Facts ....................................................................................................................................... 26

6.3 Legislation ............................................................................................................................... 27

6.4 Issues ...................................................................................................................................... 27

6.5 Decision .................................................................................................................................. 28

7 Chan & Naylor Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAD 4 ...... 31

7.1 Summary ................................................................................................................................. 31

7.2 Facts ....................................................................................................................................... 31

7.3 Legislation ............................................................................................................................... 31

7.4 Issues ...................................................................................................................................... 33

7.5 Decision .................................................................................................................................. 33

8 Chiang v Commissioner of State Revenue (Review and Regulation) [2016] VCAT 304 ....... 35

8.1 Summary ................................................................................................................................. 35

8.2 Facts ....................................................................................................................................... 35

8.3 Legislation ............................................................................................................................... 35

8.4 Issues ...................................................................................................................................... 36

8.5 Decision .................................................................................................................................. 36

9 Codlea Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAP 30 .................. 37

9.1 Summary ................................................................................................................................. 37

9.2 Facts ....................................................................................................................................... 37

9.3 Legislation ............................................................................................................................... 37



9.4 Issues ...................................................................................................................................... 38

9.5 Decision .................................................................................................................................. 38

10 Commercial Property Management Pty Ltd & Ors v Commissioner of State Revenue

[2015] QCA 209 .................................................................................................................................... 40

10.1 Summary ............................................................................................................................. 40

10.2 Facts .................................................................................................................................... 40

10.3 Legislation ........................................................................................................................... 40

10.4 Issues .................................................................................................................................. 41

10.5 Decision ............................................................................................................................... 41

11 Commissioner of State Revenue v Di Sipio & Anor [2015] QCA 198 .................................. 42

11.1 Summary ............................................................................................................................. 42

11.2 Facts .................................................................................................................................... 42

11.3 Legislation ........................................................................................................................... 42

11.4 Issues .................................................................................................................................. 43

11.5 Decision ............................................................................................................................... 43

11.6 After the decision ................................................................................................................. 43

12 Commissioner of State Revenue v EHL Burgess Properties Pty Ltd [2015] VSCA 269 .... 44

12.1 Summary ............................................................................................................................. 44

12.2 Facts .................................................................................................................................... 44

12.3 Legislation ........................................................................................................................... 44

12.4 Issues .................................................................................................................................. 45

12.5 Decision ............................................................................................................................... 45

13 Harvey v Commissioner of State Revenue [2015] QCA 258 ................................................. 46

13.1 Summary ............................................................................................................................. 46

13.2 Facts .................................................................................................................................... 46

13.3 Legislation ........................................................................................................................... 48

13.4 Issues .................................................................................................................................. 49

13.5 Decision ............................................................................................................................... 49



14 Kamareddin v Chief Commissioner of State Revenue [2016] NSWCATAD 21 ................... 51

14.1 Summary ............................................................................................................................. 51

14.2 Facts .................................................................................................................................... 51

14.3 Legislation ........................................................................................................................... 51

14.4 Issues .................................................................................................................................. 52

14.5 Decision ............................................................................................................................... 52

15 Kameel Pty Ltd v Commissioner of State Revenue [2016] VSCA 83 .................................. 54

15.1 Summary ............................................................................................................................. 54

15.2 Facts .................................................................................................................................... 54

15.3 Legislation ........................................................................................................................... 55

15.4 Issues .................................................................................................................................. 56

15.5 Decision ............................................................................................................................... 56

16 Re Keadly Pty Ltd & Ors [2015] SASC 124............................................................................ 58

16.1 Summary ............................................................................................................................. 58

16.2 Facts .................................................................................................................................... 58

16.3 Legislation ........................................................................................................................... 58

16.4 Issues .................................................................................................................................. 58

16.5 Decision ............................................................................................................................... 59

17 Kloester v Comr of State Revenue [2016] VCAT 16 .............................................................. 60

17.1 Summary ............................................................................................................................. 60

17.2 Facts .................................................................................................................................... 60

17.3 Legislation ........................................................................................................................... 61

17.4 Issues .................................................................................................................................. 62

17.5 Decision ............................................................................................................................... 62

18 Commissioner of State Revenue v Konann Pty Ltd [2015] VSCA 278 ................................ 63

18.1 Summary ............................................................................................................................. 63

18.2 Facts .................................................................................................................................... 63

18.3 Legislation ........................................................................................................................... 64



18.4 Issues .................................................................................................................................. 65

18.5 Decision ............................................................................................................................... 65

19 Liu v Commissioner of State Revenue (Review and Regulation) [2016] VCAT 87 ............ 67

19.1 Summary ............................................................................................................................. 67

19.2 Facts .................................................................................................................................... 67

19.3 Legislation ........................................................................................................................... 67

19.4 Issues .................................................................................................................................. 67

19.5 Decision ............................................................................................................................... 68

20 Law Institute of Victoria v Commissioner of State Revenue [2015] VSC 604 ................... 69

20.1 Summary ............................................................................................................................. 69

20.2 Facts .................................................................................................................................... 69

20.3 Legislation ........................................................................................................................... 69

20.4 Issues .................................................................................................................................. 70

20.5 Decision ............................................................................................................................... 70

21 Macedo v Chief Commissioner of State Revenue [2015] NSWCATAD 227 ........................ 72

21.1 Summary ............................................................................................................................. 72

21.2 Facts .................................................................................................................................... 72

21.3 Legislation ........................................................................................................................... 73

21.4 Issues .................................................................................................................................. 73

21.5 Decision ............................................................................................................................... 73

22 Metricon Qld Pty Ltd v Chief Commissioner of State Revenue (No. 2) [2016] NSWSC 332

74

22.1 Summary ............................................................................................................................. 74

22.2 Facts .................................................................................................................................... 74

22.3 Legislation ........................................................................................................................... 75

22.4 Issues .................................................................................................................................. 75

22.5 Decision ............................................................................................................................... 75

23 Robert John Mould (as trustee for the estate of Gwenda Meryl Mould) v Commissioner of

State Revenue [2015] VSCA 285 ....................................................................................................... 78



23.1 Summary ............................................................................................................................. 78

23.2 Facts .................................................................................................................................... 78

23.3 Legislation ........................................................................................................................... 79

23.4 Issues .................................................................................................................................. 79

23.5 Decision ............................................................................................................................... 79

24 Pascu & Ors v Commissioner of State Revenue [2016] VCAT 668 ..................................... 82

24.1 Summary ............................................................................................................................. 82

24.2 Facts .................................................................................................................................... 82

24.3 Legislation ........................................................................................................................... 83

24.4 Issues .................................................................................................................................. 84

24.5 Decision ............................................................................................................................... 84

25 Perrone v Commissioner for State Revenue [2015] VCAT 1722 .......................................... 86

25.1 Summary ............................................................................................................................. 86

25.2 Facts .................................................................................................................................... 86

25.3 Legislation ........................................................................................................................... 86

25.4 Issues .................................................................................................................................. 87

25.5 Decision ............................................................................................................................... 87

26 Placer Dome Inc (now an amalgamated entity named Barrick Gold Corporation) and

Commissioner of State Revenue [2015] WASAT 141 ...................................................................... 88

26.1 Summary ............................................................................................................................. 88

26.2 Facts .................................................................................................................................... 88

26.3 Legislation ........................................................................................................................... 89

26.4 Issues .................................................................................................................................. 91

26.5 Decision ............................................................................................................................... 91

27 Regis Mutual Management Pty Ltd v Chief Commissioner of State Revenue [2015]

NSWCATAD 213................................................................................................................................... 93

27.1 Summary ............................................................................................................................. 93

27.2 Facts .................................................................................................................................... 93

27.3 Legislation ........................................................................................................................... 93



27.4 Issues .................................................................................................................................. 94

27.5 Decision ............................................................................................................................... 94

28 Seovic Engineering Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCA 242

96

28.1 Summary ............................................................................................................................. 96

28.2 Facts .................................................................................................................................... 96

28.3 Legislation ........................................................................................................................... 97

28.4 Issues .................................................................................................................................. 97

28.5 Decision ............................................................................................................................... 97

29 Styling Australia Pty Ltd v Commissioner of State Revenue [2015] VCAT 1792 ............. 100

29.1 Summary ........................................................................................................................... 100

29.2 Facts .................................................................................................................................. 100

29.3 Legislation ......................................................................................................................... 100

29.4 Issues ................................................................................................................................ 102

29.5 Decision ............................................................................................................................. 102

30 Commissioner of State Taxation v T & S Liapis Pty Ltd [2015] SASCFC 151 ................. 104

30.1 Summary ........................................................................................................................... 104

30.2 Facts .................................................................................................................................. 104

30.3 Legislation ......................................................................................................................... 104

30.4 Issues ................................................................................................................................ 105

30.5 Decision ............................................................................................................................. 105

31 Terick Pty Ltd v Commissioner of State Revenue [2015] VCAT 1901 ............................... 106

31.1 Summary ........................................................................................................................... 106

31.2 Facts .................................................................................................................................. 106

31.3 Legislation ......................................................................................................................... 107

31.4 Issues ................................................................................................................................ 107

31.5 Decision ............................................................................................................................. 107

32 Webeck v Chief Commissioner of State Revenue [2015] NSWCATAD 165 Chief

Commissioner of State Revenue v Webeck [2015] NSWCATAP 279 ........................................... 108



32.1 Summary ........................................................................................................................... 108

32.2 Facts .................................................................................................................................. 108

32.3 Legislation ......................................................................................................................... 109

32.4 Issues ................................................................................................................................ 109

32.5 Decision ............................................................................................................................. 109

33 Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216 ...................................................... 111

33.1 Summary ........................................................................................................................... 111

33.2 Facts .................................................................................................................................. 111

33.3 Legislation ......................................................................................................................... 111

33.4 Issues ................................................................................................................................ 112

33.5 Decision ............................................................................................................................. 112

Nicholas Clifton and Jacqueline Wood, Deloitte

© Nicholas Clifton and Jacqueline Wood, Deloitte 2016 10

1 ACN 005 057 349 Pty Ltd v Commissioner of

State Revenue

[2015] VSCA 332

1.1 Summary

The Victorian Court of Appeal held that the applicant ACN 005 057 349 Pty Ltd (ACN) was entitled to

a refund of overpaid land tax outside specific limitation periods set out under the Land Tax Act 1958

(Vic) (LTA 1958 Vic) in cases of conscious maladministration.

1.2 Facts

The applicant held the properties located at 2 Ottawa Road Toorak and 65 Albany Road Toorak from

1988 to 2007 and paid all land tax assessment notices issued by the Victorian State Revenue Office

in respect of these properties.

In 2012, the Commissioner advised the applicant that in previous land tax years it had erroneously

assessed land tax twice on the property located at 65 Albany Road Toorak, as the valuation for the

property located at 2 Ottawa Road Toorak erroneously included the property located at 65 Albany

Road Toorak; there had been a duplication error in respect of the property located at 65 Albany Road

Toorak.

Objections was made against the land tax payable in the periods 1990 to 2005, 2006 and 2007.

Reassessments and refunds of excess land tax paid in and the 2006 and 2007 land tax years were

subsequently approved by the Commissioner and payments by way of ex gratia relief were made by

the Treasurer in respect of the excess land tax paid in the 2003, 2004 and 2005 land tax years.

However, following a request for refund, on 15 December 2013, the Commissioner refused to

reassess and refund any excess land tax paid in respect of 1990 to 2002 land tax years, broadly on

the basis that the request for refund was made outside the 3 year period prescribed under the LTA

1958 Vic for recovery. The amount of the refund that was refused was $363,680.

On 21 March 2013, the Supreme Court (Sloss J) dismissed the applicant’s application for mandamus

broadly seeking orders directing the Commissioner to amend the relevant assessments (ACN 005

057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76).

The applicant subsequently appealed against the decision of the Supreme Court.



1.3 Legislation

The decision concerned the application of section 19 of the LTA 1958 Vic which gave the

Commissioner a broad discretion to amend an assessment as follows:

19. Amendment assessments

The Commissioner may from time to time amend an assessment by making such alterations

or additions to it as he thinks necessary to ensure its completeness and accuracy, and shall

notify to the taxpayer affected every alteration or addition which has the effect of imposing

any fresh liability or increasing any existing liability and unless made with the consent of the

taxpayer every such alteration or addition shall be subject to objection in the same manner

and to the same extent as the original assessment but the validity of an assessment shall not

be affected by reason only that any of the provisions of this Act have not been complied with.

The decision also concerned subsection 90AA(2) of the LTA 1958 Vic, which relevantly provides that

in a proceeding for the refund of tax paid under the LTA 1958 Vic, an applicant must lodge an

application for refund with the Commissioner within 3 years after the payment was made.

1.4 Issues

Whether the Commissioner is required to repay the applicant overpayments of land tax made in

respect of the 1990 to 2002 land tax years.

1.5 Decision

The Victorian Court of Appeal (Hansen and Tate JJA and Robson AJA) unanimously allowed the

applicant’s appeal making orders in the nature of mandamus directing the Commissioner to exercise

his discretion under section 19 of the LTA 1958 Vic to issue amended assessments for the 1990-2002

land tax years and refunding the excess land tax paid in those years.

The Court held that the relevant overpaid land tax could be recovered by the taxpayer outside the

limitation period prescribed by the LTA 1958 Vic by a proceeding for mandamus, having found the

Commissioner’s conduct amounted to conscious maladministration.

What is the nature of the power to amend under section 19?

The Court held that the power under section 19 of the LTA 1958 Vic to amend assessments was a

measure to ensure the integrity of the system of tax collection under the LTA 1958 Vic that was

enlivened when the Commissioner knew he had wrongly collected taxes that were not otherwise due.

The Court concluded that the Commissioner was under a duty to exercise his discretion under section

19 of the LTA 1958 Vic to amend the relevant assessments and that the power to refund was a

necessary incident of the power to amend. Once the Commissioner knew an assessment was

inaccurate and amendment was necessary to ensure its accuracy the Commissioner had a duty to



exercise his power under section 19 of the LTA 1958 Vic to amend (Finance Facilities v Federal

Commissioner of Taxation (2009) 240 CLR 319).

Did the Commissioner engage in conscious maladministration?

In light of the Commissioner’s duty under section 19 of the LTA 1958 Vic to amend the 1990 to 2002

assessments the Court concluded that the Commissioner’s deliberate refusal to amend the relevant

assessments, knowing they collected tax not otherwise due, amounted to conscious

maladministration. This was particularly so, given the evidence was overwhelming that the duplication

error was operative and enduring in the 1990 to 2002 land tax years and the Commissioner never

sought to distinguish the 1990 to 2002 land tax years from other years where he had acknowledged

the error and issued refunds.

The existing objection and refund regimes were not exclusive and exhaustive where the

Commissioner’s actions amounted to conscious maladministration.

1.6 After the decision

On 17 June 2016 the Commissioner was successful in seeking special leave to appeal against the

appeal decision.



2 Alacer Gold Corp and Hill 51 Pty Ltd

(formerly Alacer Gold Pty Ltd) and

Commissioner of State Revenue

[2016] WASAT 31

2.1 Summary

Alacer Gold Pty Ltd (Alacer) acquired all the shares in Anatolia Minerals Development Limited

(Anatolia) in February 2011.

Like the Placer Dome case, each party had substantial valuation evidence and expert witnesses

supporting the relevant contentions.

The taxpayer attempted to use a Discount Cash Flow (DCF) analysis based on the expected future

life of the asset and future gold prices to arrive at the value of the land. The taxpayer asserted that

taking the market capitalisation of the target company immediately prior to the announcement of the

underlying transaction is unlikely to produce an accurate assessment of the relevant underlying

assets. The taxpayer also contended for the use of the ‘restoration methodology’.

The Commissioner contended that the correct method was to take the purchase price and back out

the value of identifiable non-land assets to arrive at the land value. As a check, the Commissioner

applied a DCF analysis but with higher gold production forecasts.

The tribunal accepted the Commissioner’s approach and also rejected the ‘restoration methodology’.

2.2 Facts

Avoca Resources Limited (Avoca) and Anatolia entered into a scheme of arrangement for Anatolia

through its subsidiary, Alacer, to acquire all of the shares in Avoca. This completed on 18 February

2011.

Anatolia had no relevant assets in Western Australia. However, Avoca had the South Kalgoorlie gold

mining operation and a 49% joint venture interest in the Frog’s Leg gold mining operation.

The Commissioner assessed the dutiable value of land and chattels to be $1.25 billion. Alacer

argued that the dutiable value should be only $382 million.

There was no dispute as to whether Avoca was a landholder or that the transaction was subject to

landholder duty.



2.3 Legislation

Section 186 of the Duties Act 2008 (WA) sets out that the duty is payable on the sum of the

unencumbered value of the land and chattels in Western Australia to which the landholder is entitled.

186. Value of landholder

(1) For the purposes of calculating duty in respect of a relevant acquisition the value of a landholder is taken to be the sum of

(a) the unencumbered value of the land and chattels in Western Australia to which the landholder is entitled; and

(b) the same percentage of the unencumbered value of the land and chattels in Western Australia to which any linked entity in respect of the landholder is entitled as the percentage of the landholder's interest in the linked entity taken into account under section 157.

Section 36 provides the definition of unencumbered value for the property.

36. Unencumbered value of property

(1) The unencumbered value of property is the value of the property determined without regard to

(a) any encumbrance to which the property is subject, whether contingently or otherwise; or

(b) any overriding power of revocation or reconveyance; or

(c) any scheme or arrangement

(i) that results in the reduction of the value of the property; and

(ii) for which a dominant purpose of any party to the scheme or arrangement was, in the opinion of the Commissioner, the reduction of the value of the property.

Note: Example for paragraph (c)

A owns land that B wishes to purchase. The land is valued at $1m. Before the purchase, A grants B a 50 year lease of the land. B is not required to pay any rent under the lease. A and B then enter into an agreement for the transfer of the land for $50 000, being the value of A’s interest in the land taking into account that it is subject to the lease to B.

The unencumbered value of the land is determined without regard to the grant of the lease if the Commissioner is of the opinion there is a scheme or arrangement under which A or B’s purpose in entering into it was to reduce the value of the land.

(2) Subsection (1)(c) does not apply to or in respect of a scheme or arrangement that was entered into before 27 December 1996.



(3) For the purposes of subsection (1)(c), the Commissioner may have regard to

(a) the duration of the scheme or arrangement before the dutiable transaction or the relevant transaction concerning the property; and

(b) whether the scheme or arrangement has been entered into with a related person within the meaning given in section 162; and

(c) whether there is any commercial efficacy to the making of the scheme or arrangement other than to reduce duty;

and

(d) any other matters the Commissioner considers relevant.

(4) When determining the unencumbered value of property

(a) the unencumbered value of an undivided share in the property, whether held jointly or in common, is to be ascertained by multiplying the total unencumbered value of the property by the share expressed as a fraction; and

(b) in applying the ordinary principles of valuation

(i) it is to be assumed that a hypothetical purchaser would, when negotiating the price of property, have knowledge of all existing information relating to the property; and

(ii) no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to property;

and

(c) that is land

(i) if the land is the subject of an agreement to transfer, any improvement made to the land at the expense of the purchaser or transferee before the date liability to duty arises on the agreement is to be taken not to have been made to the land;

and

(ii) if the land is the subject of a transfer, any improvement made to the land at the expense of the transferee before the land is transferred is to be taken not to have been made to the land; and

(iii) having regard to the use of the land that would best enhance its commercial value; and



(iv) having regard to commercial advantages (such as goodwill) that

(I) attach to the location or other aspects of the land; and

(II) would affect the price that a reasonable purchaser would be willing to pay for the land.

2.4 Issues

What was the correct methodology to apply in determining the dutiable asset value of the target

company?

2.5 Decision

The Tribunal rejected the valuation suggested by the taxpayer.

The Tribunal (at paragraphs 240-243 and following) set out the agreed valuation methodologies:

“Valuation principles

240 There is no dispute between the parties as to what are the ordinary principles

of valuation to be applied in this case.

241 In Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437

(Nischu) at 443 Malcolm CJ agreed that when property is valued for stamp duty purposes, it is

necessary to determine the real or true value of the property by applying the approach used in

determining compensation for compulsory acquisition.

242 I consider that the same applies when property is valued for duty purposes

under the Duties Act.

243 His Honour went on to say that the general principle is that the true value is

the price which a willing but not anxious vendor could reasonably expect to obtain and a

hypothetical willing but not anxious purchaser could reasonably expect to pay after proper

negotiations between them have been concluded; Spencer v Commonwealth of Australia

(1907) 5 CLR 418 (Spencer); Perpetual Trustee Co Ltd v Commissioner of Federal

Taxation (1942) 65 CLR 572 at 579 (Perpetual); Abrahams v Federal Commissioner of

Taxation (Cth) (1944) 70 CLR 23 (Abrahams) at 29; Executors of the Estate of Crane v

Federal Commissioner of Taxation (Cth) (1975) 49 ALJR 1 at 2.”

The parties agreed that what is brought to duty is a single sum for all the relevant land and chattels,

valued in the hands of the company – not an aggregation of separate or distinct sums.

The Tribunal accepted that the price for which property changes hands in the ordinary course of

business and the ordinary course of the markets is usually the true value (at paragraph 250), the

Tribunal then continued:



“254 It follows that where there is an actual sale at the relevant date under which a

price has been paid for indirect ownership of the land and chattels in issue, that price will

represent the value of that land and those chattels unless there is evidence to support the

proposition that this test of value does not satisfy the Spencer test.

255 In this case, there was a price actually paid by Anatolia to obtain ownership,

albeit indirectly, of Avoca's land and chattels. The amount of that price is not in contest.”

This resulted in an approach that was taken to derive the market value as follows:

Consideration for Avoca equity 1,146,335,000

Plus liabilities of Avoca 107,140,000

Less excluded assets (114,110,000)

Consideration for land and chattels 1,139,365,000

However, this was not the end of the matter. The Tribunal still had to analyse the transaction to

confirm whether it complied with the Spencer test of value (being “a hypothetical willing but not

anxious purchaser could reasonably expect to pay after proper negotiations … have been concluded”).

As there was no evidence that this was anything other than a voluntary sale between arm’s length

parties – the valuation derived above was accepted. In doing so, there was no recognition of “mining

information” or a “marriage value” as being distinct from the value of the land and chattels.

At paragraph 263, the tribunal confirmed that DCF or other values could be used as a check against

this valuation methodology.

“263 Of course, valuations produced by alternative valuation methodologies

cannot be ignored and are useful as a cross-check against a valuation based on the inferred

price paid. If different valuation methodologies produce substantially different valuations, it

would be necessary to make further enquiry.”

Restoration methodology

This approach was suggested by the taxpayer and involved discounting the value of the land and

chattels derived from a DCF analysis, by the expected costs that would be incurred (including delayed

receipt of revenue) in restoring an operating business.

The Tribunal rejected this approach – effectively coming to the view that the operations, as currently

in existence at the date of the transaction, are required to be valued.



3 BD Corporation Pty Ltd v Chief


[2015] NSWCATAD 163

3.1 Summary

The New South Wales Tribunal held that the applicant had failed to discharge the burden of proof that

it was not a party to any dutiable transaction, namely a declaration of trust under paragraph 8(1)(b)(ii)

of the Duties Act 1997 (NSW) (DA NSW); albeit that the applicant had not in fact signed the relevant

unit trust deed.

3.2 Facts

In early August 2010, Mr Zhang and Mr Elias met and agreed to acquire an investment property

situated at Rockdale (the Rockdale Property) as partners. The investors were companies, Aqua Blu

Swimwear Pty Ltd owned by Mr Zhang and Auspat International Pty Ltd, owned by Mr Elias and his

wife.

It was agreed that the Rockdale Property should be owned by the Rockdale Unit Trust with BD

Corporation Pty Ltd (the applicant) to be the trustee.

The affidavits of Mr Zhang and Mr Elias confirmed that in a separate meeting on 28 August 2010, the

deed of declaration of a unit trust (Unit Trust Deed) was signed, before the purchase of the Rockdale

Property, with the applicant as the corporate trustee under the Unit Trust Deed.

The Unit Trust Deed was signed by Mr Zhang and Mr Elias in their capacity as directors of the

investor companies. However, the Unit Trust Deed was not signed by the applicant. At the time, Mr

Elias was the sole director and shareholder of the applicant.

A Unit Holders & Management Agreement Pty Ltd was also signed and stated that the 2 investors

wish to develop real estate at Rockdale and to own a Unit Trust under the name of Rockdale Unit

Trust established by a declaration of trust dated 28 August 2010 and the corporate trustee shall be

BD Corporation Pty Ltd.

On 31 August 2010, the applicant as trustee for the Rockdale Unit Trust executed a contract to

purchase the Rockdale Property - stamping for transfer duty occurred.

On 1 November 2010, the Unit Trust Deed was stamped and assessed with nominal duty of $500 as

a declaration of trust over non-dutiable property (pursuant to subsection 58(1) of the DA NSW).

In August 2011, a change of exemption application was lodged in relation to the transfer of the

Rockdale Property from the applicant to another company. The accountant highlighted to the revenue



office that there was an error in the deed in that it referred to the Rockdale Property as trust property

but that the property was yet to be purchased at the time of the trust deed.

On 17 February 2012, a notice of assessment was issued to the applicant for $129,920.01 for a

declaration of trust over the land.

3.3 Legislation

Section 8 of the DA NSW relevant provides:

(1) This Chapter charges duty on:

…

(b) The following transactions:

...

(ii) a declaration of trust over dutiable property,

…

(3) In this Chapter:

declaration of trust means any declaration (other than by a will or testamentary instrument)

that any identified property vested or to be vested in the person making the declaration is or is

to be held in trust for the person or persons, or the purpose or purposes, mentioned in the

declaration although the beneficial owner of the property, or the person entitled to appoint the

property, may not have joined in or assented to the declaration.

The DA NSW further in section 10 provides:

It is immaterial whether or not a dutiable transaction is effected by a written instrument or by

any other means, including electronic means.

3.4 Issues

Was there a dutiable transaction under paragraph 8(1)(b)(ii) of the DA NSW, being a declaration of

trust over dutiable property.

3.5 Decision

The applicant was unsuccessful before Senior Member Verick.

The Tribunal referred to Pembroke J’s comments McEvoy v McEvoy [2012] NSWSC 1494 which set

out the principals in determining the existence of a trust, including whether ‘there is language or

conduct which shows a sufficiently clear intention to create a trust.’

The Applicant had the onus of establishing that the relevant parties had made no declaration of trust

in respect of the Rockdale Property and that the Applicant was not a trustee of any such trust.



The applicant sought to discharge its onus by only pointing to the fact that it did not sign the Unit Trust

Deed.

This was not in itself sufficient to discharge the applicant’s onus. More evidence was required to be

adduced to demonstrate it was not a party to a dutiable transaction whether in writing, orally or a

combination.

Consequently the Tribunal found that the applicant had failed to discharge its onus and the

assessment of the Chief Commissioner was confirmed.



4 The Queen v Beckett [2015] HCA 38

4.1 Summary

The High Court of Australia held that the liability for the section 319 of the Crimes Act 1900 (NSW)

(Crimes Act) offence (that is, an offence for a person to do any act, or make any omission, intending

in any way to pervert the course of justice) is not confined to acts or omissions carried out with the

intention of preventing an existing course of justice.

4.2 Facts

The respondent, a solicitor, was an “approved person” under the Electronic Duties Returns (‘EDR’)

scheme operated by the New South Wales Office of State Revenue (OSR). As an “approved person”

under the scheme, the respondent was authorised to lodge, pay tax and stamp documents on behalf

of the taxpayers subject to the approvals issued by the Commissioner of State Revenue which

stipulate various conditions. One of the conditions, as provided in the EDR Directions, was that the

approved person must have the duty payable available to them prior to processing transactions online.

On 11 June 2010, the respondent raised an online assessment of duty made payable for the transfer

of a unit in Darling Point for $29,240 (with $17,416 penalty interest for late payment). The respondent

stamped the transfer but the duty and the interest were never paid.

The OSR raised questions regarding the unpaid duty and interest. During the course of the

investigation by OSR, the respondent informed the OSR that the ANZ Bank had lost the bank cheque

for the stamp duty on the unit. Upon request by the OSR, the respondent later produced her file for

the transfer of the unit as well as the photocopies of two bank cheques in favour of the OSR.

The appellant argues that the dates on the bank cheques are forged and that the respondent had

made intentionally false statements in an interview with the OSR stating that she had the stamp duty

amount available to her at the date she stamped the transfer for the Darling Point Unit. The

respondent is alleged to have produced the photocopies of the cheques and made false statements

with the intention of preventing possible prosecution for offences under the Taxation Administration

Act 1996 (NSW)(TAA NSW).

4.3 Legislation

Section 319 in Pt 7 of the Crimes Act provides

“A person who does any act, or makes any omission, intending in any way to pervert the

course of justice, is liable to imprisonment for 14 years.”

Section 312, which is also in Pt 7, provides



“A reference in this Part to perverting the course of justice is a reference to obstructing,

preventing, perverting or defeating the course of justice or the administrative of the law.”

4.4 Issues

Does section 319 apply if the act or omission was made before the institution of proceedings was on

foot (i.e. does there need to be an existing proceeding for it to trigger liability)?

Does the act or omission need to have the tendency, objectively speaking, to pervert the course of

justice for section 319 to apply?

4.5 Decision

On the issue of whether there needs to be an existing proceeding

The defined phrase for the purpose of liability under section 319 is “perverting the course of justice”,

the meaning of which includes “preventing…the course of justice”. This inclusion illustrates the

legislation intention that liability extend to acts done with the proscribed intention in relation to

contemplated / anticipated proceedings.

Liability for the offence created by section 319 hinges on the intention to pervert the course of justice.

This must be present when the act or omission occurs, but they need not be contemporaneous with

the actual perversion of a course of justice (i.e. the proceedings).

Whilst Part 7 of the Crimes Act has abolished the common law offences of (1) preventing the course

of justice and (2) attempting or conspiring to pervert the course of justice, the language of section 319

does not suggest that its object is confined to liability to acts done or omission made with the requisite

intention in respect of existing proceedings.

On the issue of (objective) tendency to pervert the course of justice

Whether or not the act or omission is ultimately successful in perverting the course of justice is

irrelevant to criminal liability. However, the majority did not ultimately find it necessary to rule on

whether an act or omission made with the intention to pervert the course of justice, but has no rational

connection to obstructing, preventing, perverting or defeating proceedings or contemplated

proceedings, falls within the ambit of section 319.

Notwithstanding the majority’s view, in a separate lone judgement Justice Nettle expressed the view

that the act or omission must have a tendency to pervert the course of justice.



5 BPG Caulfield Village Pty Ltd v


[2016] VSC 172

5.1 Summary

The Victorian Supreme Court held that a developer’s entitlement to participate in the proceeds of sale

of the developed land held by a land-owning company were not sufficient to trigger the acquisition of

an ‘economic entitlement’ for the purposes of the Victorian landholder provisions – this is because the

developer did not obtain an entitlement to participate in any other Victorian land held by the land-

owning company.

5.2 Facts

The facts were all agreed by the parties.

Victorian Amateur Turf Club (incorporating the Melbourne Racing Club) trading as the Melbourne

Racing Club) (MRC) is a ‘private company’.

On 17 August 2012, MRC and BPG Caulfield Village Pty Ltd (BPG) entered into a Development

Agreement whereby BPG was to carry out the development of certain land adjacent to the Caulfield

racecourse, which is to be called “Caulfield Village” (CV Land) – comprising land owned by MRC (the

Subject Land) and lands owned by other parties in respect of which MRC had contractual rights.

Pursuant to the Development Agreement, BPG was entitled to participate in the proceeds of sale of

the CV Land calculated in accordance with the terms of that agreement.

MRC also has other land holdings in Victoria and, at all relevant times, the unencumbered value of

the Subject Land has been less than 50% of the unencumbered value of all land holdings of MRC in

Victoria.

5.3 Legislation

Section 81 of the Duties Act 2000 (Vic) (DA Vic) sets out what is an ‘economic entitlement’, relevantly

(emphasis added):

…

(2) For the purposes of this section, a person acquires an economic entitlement if the

person acquires shares or units in a private landholder or enters an arrangement in relation to

a private landholder under which the person is entitled to all or any of the following—



…

(d) to participate in the proceeds of sale of the land holdings of the private landholder;

…

(5) If—

(a) an economic entitlement acquired by the person, either alone or together with an

associated person; or

(b) the total economic entitlements acquired by the person, either alone or together

with an associated person, within a 3 year period—

amounts or amount to an interest of 50% or more in a private landholder, the person is taken,

for the purposes of this Part, to have made a relevant acquisition of—

(c) that percentage interest in the landholder; or

(d) a lesser percentage interest in the landholder determined by the Commissioner to

be appropriate in the circumstances.

(6) The duty chargeable on the relevant acquisition is calculated in accordance with section

86(1), as if—

(a) in the case of subsection (5)(b), all acquisitions of economic entitlements by the

person or an associated person (or both) within the 3 year period were a single

acquisition; and

(b) a reference to all land holdings of the landholder in Victoria were a reference to

the land holdings of the private landholder to which the economic entitlement relates.

(7) For the avoidance of doubt, a person may acquire an economic entitlement by any means,

including, but not limited to, the creation of the economic entitlement or the transfer of the

economic entitlement to the person.

(8) This section applies regardless of interests held by any other person in the private

landholder.

…

5.4 Issues

Did BPG acquire an ‘economic entitlement’ within the meaning of paragraph 81(2)(d) of the DA Vic?

If yes, did the economic entitlement amount to an interest of less than 50% in the private landholder

within the meaning in subsection 81(5) of the DA Vic?



5.5 Decision

The court held that BPG did not acquire an ‘economic entitlement’ within the meaning of paragraph

81(2)(d) of the DA Vic – BPG acquired the right to participate in the proceeds of sale of some but not

all of the landholdings of MRC.

The court took account of the legislative history of the land rich/ landholder provisions and the context

of the provision and took the view that section 81 was anti-avoidance in nature, although limited to fill

a ‘gap’ and no more.

The Court considered it was clear that the legislature did not intend to create a new head of liability to

duty – this was manifest in the words of the legislation as well as supported by the Explanatory

Memorandum and the Second Reading Speech.

The court held that the word 'the' (in front of land holdings) in paragraph 81(2)(d), required a reference

to all of the land holdings of MRC.

The Commissioner put considerable weight on the effect of paragraph 81(6)(b) in support of his

contention that section 81 can relate to some, but not all, of the landholdings of a private landholder.

BPG contended that it was admittedly difficult to see how subsection 81(6) has any independent work

to do. The court considered that the better view was that, in construing section 81 in context and

promoting the purpose, section 81(6) does not cause the Commissioner’s interpretation to be

accepted – subsection 81(6) is rather in the nature of a ‘for the avoidance of doubt’ provision

(paragraph 53).

If the Commissioner’s interpretation of section 81 were to be applied, there would be different

outcomes for the acquisition of (what was described by BPG as) a “direct interest” (sections 78 to 80)

and a “synthetic interest” (section 81) for economically similar transactions. Such an approach would

not be consistent with the context and purpose of the provisions, being the obtaining of an interest

(whether ‘direct’ or ‘synthetic’) in a landholder, rather than in particular land.

Even though not necessary to answer, if BPG acquired an economic entitlement it was not 50% or

more in MRC – it was an agreed fact that the Subject Land is less than 50% of the value of all of the

land of MRC.

The Commissioner relied on the amendment to subsection 81(5) in 2013 (which removed the words

“in a private landholder”), in support of his construction. The construction required to support the

Commissioner’s assessment was: an interest of 50 per cent or more in the relevant lands of a private

landholder (i.e. only the land the subject of the economic entitlement). The court considered the

amendment did not inform the current process of statutory construction. The construction favoured by

the Court was consistent with the provision being a “synthetic” version of the “direct” acquisition

provisions –any other interpretation would give section 81 a broader operation than that of a “direct”

acquisition.

Also, the Court noted that the time for determining whether subsection 81(5) is satisfied is at the time

of the acquisition of the entitlement, and not some other time in the future – “the economic value of

the right to proceeds would be tested by reference to the value of the relevant land at the time of the

acquisition of the right” (at paragraph 75).



6 Can Barz Pty Ltd & Anor v Commissioner of

State Revenue & Ors [2016] QSC 59,

Bird and Scott & Ors v Commissioner of State

Revenue [2016] QSC 132

6.1 Summary

These were both Queensland Payroll Tax Cases relating to the same parties.

In the Can Barz decision, the Queensland Supreme Court declared that garnishee notices issued in

relation to the sale of land were invalid, where the Commissioner sought to garnishee the sale

proceeds of land held on trust by a company for individuals as trustees of their SMSF. The Court held

that the Commissioner could not issue garnishee notices where the recipient was not entitled to

receive the funds in their own capacity.

Under the Bird and Scott decision, the Court held that discretionary degrouping for payroll tax was not

available, although returned the decision to the Commissioner for consideration on other grounds.

6.2 Facts

Ms Bird and Mr Scott were trustees of the Mewcastle Superannuation Fund (the SMSF). Can Barz

Pty Ltd (Can Barz) held two parcels of real estate on separate trusts, both for the benefit of Ms Bird

and Mr Scott as trustees of the SMSF.

Under the SMSF trust deed, Ms Bird and Mr Scott were obliged to hold the fund property under the

terms of the SIS Act. As members, Ms Bird and Mr Scott were not entitled to the assets of the Fund,

other than as provided under the terms of the Trust Deed and they were not presently able to access

those funds.

The Commissioner decided that Ms Bird, Mr Scott and Can Barz and other persons and entities were

grouped for the purposes of the Payroll Tax Act 1971 (Qld). At that time, the Commissioner issued

assessments to two other corporate members of the group - Mewcastle Pty Ltd and Mewcastle

Internal Linings Queensland Pty Ltd for a primary payroll tax liability of c$2.6 million (plus penalty and

interest), which went unpaid.

The Commissioner then sought to issue garnishee notices to Ms Bird and Mr Scott and to Can Barz,

in respect of the sale proceeds of a property at Bulimba that was about to be sold. Ordinarily, the sale

proceeds after expenses would have been passed from Can Barz (as trustee) to Ms Bird and Mr Scott

as trustees of the SMSF.



Under separate litigation, the parties sought to have the garnishee notices declared invalid (the Can

Barz case) and sought to be degrouped from the payroll tax group (the Bird and Scott case).

6.3 Legislation

Can Barz

Section 50 of the Taxation Administration Act 2001 (Qld) (TAA Qld) provides that the Commissioner

can issue a garnishee notice where a debt under a tax law is payable by a taxpayer, and the

Commissioner reasonably believes that the garnishee ‘is liable or may become liable to pay an

amount to the taxpayer’.

Bird and Scott

Subsections 34(2), 42(2) and 51A(2) of the Payroll Tax Act 1971 (Qld) (PTA Qld) provide that all

members of a payroll tax group are joint and severally liable for any unpaid payroll tax or other

payments due under the Act.

Section 74 of the PTA Qld provides the Commissioner may exclude a person from a group, ‘only if the

Commissioner is satisfied a business carried on by the person is carried on independently of, and is

not connected with the carrying on of a business by any other member of the group.’ There are

various factors the Commissioner must have regard to, set out in subsection 74(3), these include:

The nature and degree of ownership and control of the business sought to be excluded and

the other members of the group;

The nature of the businesses.

An exclusion order cannot be made for related bodies corporate (subsection 74(4)).

A payroll tax group is formed under the tests in part 4 of the PTA Qld, and relevantly includes:

Section 69: all related bodies corporate for the purposes of section 9 of the Corporations Act

2001 (Cth)

Section 70: groups arising from the use of common employees

Section 71 and the following tracing provisions: groups arising where a person or set of

persons has a ‘controlling interest’ in each business.

6.4 Issues

Can Barz

Can the Commissioner issue a garnishee notice for unpaid payroll tax owed by a payroll tax group,

where the funds sought to be garnished are held on trust by a company for the trustees of a self-

managed superannuation fund.

Bird and Scott

Should the Commissioner issue an exclusion order, removing the company and the trustees from the

payroll tax group.



6.5 Decision

Can Barz

The applicants were successful in having the garnishee notices declared invalid and ineffective in the

Trial Division of the Supreme Court.

The applicants argued that section 50 of the TAA Qld could not operate to authorise the

Commissioner to issue a garnishee notice, where the Commissioner knows that the taxpayer’s right to

receive the payment is not beneficially held by the taxpayer. They found support in the observations

by Pagone J in Ultra Thoroughbred Racing Pty Ltd v Commissioner of Taxation (2013) 96 ATR 117,

where Pagone J stated in reference to the similar provision under the Commonwealth legislation:

“The purpose of the provision is not to have paid to the Commissioner money which does not

belong to the taxpayer.”

Bond J had difficulty accepting the proposition in the way the applicants put it, as trust assets are still

owned by the trustee and are not properly regarded as owned by or belonging to a beneficiary. But

after considering earlier decisions including the Ultra Thoroughbred case (see above), Zuks v Jackson

McDonald (1996) 132 FLR 317 and FCT v Park (2012) 505 FCR 1, Bond J concluded at paragraph

39 that:

“I would not attribute to Parliament the intention that the Commissioner should be paid tax out

of property which the Commissioner must have reasonably believed in equity did not belong

to the taxpayer at the time of receipt of the relevant notice. To put the same proposition

positively, where s 50 refers to “liable to pay an amount to the taxpayer” I would construe that

phrase as encompassing only circumstances in which the right to payment from the garnishee

was legally and beneficially held by the taxpayer and the taxpayer was free to use the right in

the taxpayer’s own interest. To take any other view would be to attribute intention to the

parliament in a way which I am not prepared to do.”

In other words, the Commissioner has to know that a taxpayer has full legal and beneficial interest in

the debt, before issuing a garnishee notice.

Bird and Scott

The applicants were unsuccessful in their application for judicial review of the decision not to remove

Can Barz and Bird and Scott as trustees for the SMSF from the payroll tax group –but had the

decision partly remitted to the Commissioner for further review.

Quoting the Seovic decision (Seovic Engineering Pty Ltd v Chief Commissioner of State Revenue

[2015] NSWCA 242), Bond J confirmed that the broad purpose of the section 74 power to exclude a

person from a group is to enable the Commissioner to relieve against the unreasonable operation of

the grouping provisions, but that nevertheless it remains the position that the Commissioner must be

satisfied that that the business to be excluded is carried on independently of, and is not connected

with the carrying on of a business carried on by any other member of the group.

Bond J quoted from the relevant explanatory note to the legislation at the time of payroll tax

harmonisation in 2008, to note in relation to the purpose of the provisions (at paragraph 24):



“(a) the grouping provisions were aimed at a particular mischief namely the tax avoidance

which might occur if employers split their payroll over several entities each claiming the (now

$1.1 million) deduction/threshold;

(b) in order to ensure that purpose was achieved, the grouping provisions were

expressed in broad language; and

(c) the purpose of conferring on the Commissioner a discretion to make an exclusion

order was to enable the Commissioner to grant relief against the inappropriate operation of

the broadly expressed grouping provisions. “

However, that did give rise to the conclusion that degrouping should be exercised, where there is no

evidence of an intention to engage in avoiding tax through splitting an employer’s payroll (paragraph

27).

In the original decision under review (see paragraph 29), the Commissioner had sought to group the

applicants with other members of the Mewcastle group because Bird and Scott held a controlling

interest in each of the relevant businesses. There was no challenge to this decision. The

Commissioner then rejected an application to degroup under section 74, on the basis that the

delegate of the Commissioner was not satisfied that the business of the applicant was not connected

and was not independent of the carrying on of the other businesses of the members of the Mewcastle

group.

Bond J (at paragraphs 30 and 31) noted that the original decision in a letter from the Commissioner’s

delegate dated 10 September 2015, did not identify with any precision, the matters and evidence

considered by the Commissioner. However, on review, the Commissioner was able to provide an

affidavit that supplemented the reasons articulated in the original letter (with one successful objection

to part of the content).

The Commissioner argued that judicial review was not available under section 77 of the TAA Qld, on

the grounds that the decision was “an assessment” or “a decision or conduct leading up to or forming

part of the process of making an assessment”. Bond J at paragraph 35 determined that as the

assessments had been issued before making the decision on exclusion, section 77 would not be

applicable.

In respect of the substantial components of the judgement – in particular the claimed grounds for

judicial review of the decision not to exclude, Bond J held, relevantly:

(a) On the claimed failure to take into account that none of the applicants had any employees:

Bond J held at paragraph 45, that the Commissioner’s delegate had made an error law in

determining that it was a necessarily irrelevant whether the businesses carried on by the

applicants had employees. However, at paragraph 46, Bond J held that this error did not

materially affect the decision in the circumstances of the case.

In this respect, neither Can Barz nor Bird and Scott as trustees for the SMSF had employees.

The Commissioner argued that as nothing in the definition of “business” or the grouping

provisions in the PTA Qld required there to be employees, it must be irrelevant whether there

were employees. Bond J held that it may be relevant in some scenarios in determining

whether two businesses were carried on independently of each other or whether one was not



connected with the carrying on of the other – but that it was not material in the present

circumstances.

(b) On the claimed failure to take into account that each of the applicants operated independently

of each other, and independently of each any every other entity in the Mewcastle Group:

Bond J noted that the delegate of the Commissioner had applied the terms of revenue ruling

PTA 031.2 and agreed that the factors taken into account were consistent with the factors

taken into account by the Courts looking at similar concepts. The following factors had been

considered:

Nature and degree of ownership and control of the various businesses (Bird and Scott,

being trustees of the SMSF and directors and shareholders of a number of group

entities);

Extent to which the members shared resources, facilities or services;

The extent of financial interdependence (this involved considering factors such as the

various real property held by Can Barz had been rented to other members of the group,

other property held in the fund had been leased to other group entities for rent that was

not at arm’s length and exceeded market rent by up to 3 times and loans or investments

had been made from the SMSF to group members).

The degree to which there is a connection between the applicants and the other members

of the group in the purchase of goods and services (not relevant here, as none were

purchased)

The extent to which there was a connection between the businesses of the group

The connection between the ultimate owners of the members of the group (here, all being

Bird and Scott).

In relation to the successful component of the applicant’s position – Bond J at paragraph 31 noted

that the Commissioner had not made a decision in relation to excluding the applicants from a second

payroll tax group (the Wilson/Voll group) and put this back to the Commissioner for a decision.

This case does set a high bar for excluding members of groups, where there is common ownership

and significant commercial dealings. Once the Commissioner has taken into account the relevant

factors above, judicial review would appear to be difficult to obtain.



7 Chan & Naylor Pty Ltd v Chief Commissioner

of State Revenue

[2016] NSWCATAD 4

7.1 Summary

The NSWCAT in a single member decision upheld the Commissioner’s decision that the two

applicants were grouped for payroll tax.

7.2 Facts

The applicants, Chan & Naylor Australia Pty Ltd (C&N Australia) and Chan & Naylor Pty Ltd (Chan &

Naylor) as trustee for Chan & Naylor Discretionary Trust were grouped for payroll tax purposes

following an investigation for the financial years 2009-2013.

The Chief Commissioner’s decision was based on the grouping provisions of the Payroll Tax Act 2007

(NSW) (PTA NSW). In particular, after a slight change of position on objection:

Chan & Naylor was grouped with Chan & Naylor Holdings Pty Ltd (C&N Holdings) under

subsection 72(1);

C&N Australia was a wholly owned subsidiary of C&N Holdings, therefore those two

companies were grouped under section 70; and

Chan & Naylor was therefore grouped with C&N Australia, as they were each members of

a group which contained C&N Holdings – thereby merging the two groups.

The applicants were assessed for an aggregate $203,714.60 in tax, penalties and interest.

Before the tribunal, the Chief Commissioner sought to justify the decision to group on two alternative

bases:

The first, through a series of six separate groups of companies, either on their own

account or as trustees of various trusts; or

A simpler “alternative grouping” consisting of three steps (set out below).

7.3 Legislation

Section 67 of the PTA NSW defines the term “business” for the purpose of the grouping provisions as:

“business" includes:



(a) a profession or trade, and

(b) any other activity carried on for fee, gain or reward, and

(c) the activity of employing one or more persons who perform duties in connection

with another business, and

(d) the carrying on of a trust (including a dormant trust), and

(e) the activity of holding any money or property used for or in connection with

another business,

whether carried on by 1 person or 2 or more persons together.

Section 70 of the PTA NSW provides that “corporations constitute a group if they are related bodies

corporate within the meaning of the Corporations Act 2001 of the Commonwealth.”

Relevantly, section 72 of the PTA NSW provides:

72 Groups of commonly controlled businesses

(1) If a person or set of persons has a controlling interest in each of 2 businesses, the

persons who carry on those businesses constitute a group.

(2) For the purposes of this section, a person or set of persons has a controlling interest in a

business if:

…

(c) in the case of a business carried on by a corporation:

(i) the person or each of the set of persons is a director of the corporation and

the person or set of persons is entitled to exercise more than 50% of the

voting power at meetings of the directors of the corporation, or

(ii) a director or set of directors of the corporation that is entitled to exercise

more than 50% of the voting power at meetings of the directors of the

corporation is under an obligation, whether formal or informal, to act in

accordance with the direction, instructions or wishes of that person or set of

persons, or

…

(e) in the case of a business carried on by a corporation that has a share capital-that

person or set of persons can, directly or indirectly, exercise, control the exercise of, or

substantially influence the exercise of, more than 50% of the voting power attached to

the voting shares, or any class of voting shares, issued by the corporation, or

…



(g) in the case of a business carried on under a trust-the person or set of persons

(whether or not as a trustee of, or beneficiary under, another trust) is the beneficiary

in respect of more than 50% of the value of the interests in the first-mentioned trust.

Section 74 provides:

74 Smaller groups subsumed by larger groups

(1) If a person is a member of 2 or more groups, the members of all the groups together

constitute a group.

(2) If 2 or more members of a group have together a controlling interest in a business (within

the meaning of section 72), all the members of the group and the person or persons who

carry on the business together constitute a group.

7.4 Issues

Were the applicants’ members of the same group for payroll tax purposes?

An application for degrouping had been made, but the parties agreed to adjourn that until after the

initial review of the grouping decision.

7.5 Decision

Senior Member Isenberg held that the applicants were members of a group and upheld the Chief

Commissioner’s decision on review.

Given the decision on the alternative grouping method – the tribunal did not address the 6-step

primary method of grouping advanced by the Commissioner.

Alternative grouping method suggested by the Commissioner

This analysis suggested by the Commissioner involved 3 steps:

(1) The first step had two components (at paragraph 36):

Chan & Naylor carries on at least two businesses – first the business of acting as trustee

of the Chan & Naylor Trust (which is a deemed business under paragraph (d) of the

definition in section 67) and secondly as a professional accounting and tax service

business in its own account (paragraph (a) of the definition of business).

C & N Australia licences and sells IP, precedents and educational material to third parties

for a fee and therefore carries on a business (under paragraph (b) of the definition of

business).

On this point, it was noted that of the professional accounting and tax services business, Chan &

Naylor Pymble, was conducted by Chan & Naylor as trustee of the Chan & Naylor Trust (a

discretionary trust).



This step was conceded by the applicants (at paragraph 37).

(2) The second step put forward by the Commissioner involved paragraph 72(2)(e) – grouping of

commonly controlled businesses, which was that Mr Chan and Mr Naylor comprises a set of persons

who have a controlling interest:

in the business carried on by C & N Australia; and

at least one of the businesses carried on by Chan & Naylor.

This was accepted by the tribunal.

In particular, Mr Chan and Mr Naylor had more than 50% of the voting power attached to the shares

in Chan & Naylor Pty Ltd and so had a controlling interest in the business of Chan & Naylor Pty Ltd.

They also had more than 50% of the voting power attached to the shares in C & N Holdings. C & N

Holdings in turn was the holding company of C & N Australia. Therefore Mr Chan and Mr Naylor had

indirect control over C & N Australia.

The applicants had submitted that as the shares held by C & N Holdings in C & N Australia was held

as trustee of 3 discretionary trusts, it could not be said to control those shares. This was rejected at

paragraph 46, partly on account of a lack of evidence.

(3) The third step was to apply subsection 72(1) was to apply the common controlling interest

provisions – as Mr Chan and Mr Naylor held control over the businesses conducted by C & N

Australia and Chan & Naylor.

This step was undisputed, except that the applicants disagreed that Mr Chan and Mr Naylor had a

controlling interest in C & N Australia (at paragraph 48).

This disagreement was determined in favour of the Commissioner. This was because it was clear to

the tribunal that the board of directors of C & N Holdings were the persons who could exercise or

substantially influence the exercise of the voting power of C & N Holdings over C & N Australia (at

paragraph 50). This board was made up Mr Chan and Mr Naylor and one or two other directors – and

there was no evidence against their control of the board – and therefore indirectly controlled C & N

Australia (at paragraph 86). Likewise, they also had the same level of control in their personal

capacities over the board of C & N Australia (at paragraph 82).

Accordingly, applying subsection 72(1) – as there were common control, C & N Australia and Chan &

Naylor constituted a group for payroll tax purposes.

As the group was in place on the above analysis – the assessment of primary tax was upheld. The

applicant also was unsuccessful in having the penalty tax and interest removed.



8 Chiang v Commissioner of State Revenue

(Review and Regulation) [2016] VCAT 304

8.1 Summary

Consistent with the decision in Liu v Commissioner of State Revenue (Review and Regulation) [2016]

VCAT 87 the Tribunal held that the exemption under section 36A of the Duties Act 2000 (Vic) (DA

Vic) did not apply to the transfer of real property from a discretionary trust to a beneficiary as trustee

of the receiving trust because the beneficiaries of the receiving trust were not beneficiaries of the

receiving trust at the time the real property was first acquired by the principal trust.

8.2 Facts

The YHC Family Trust was established in 2004 (Principal Trust). The YHC Family Trust acquired

real property located in Melbourne in 2005. The HLC Trust was established in 2014 (Receiving

Trust).

In July 2014, Mr Chiang lodged a statement of change of beneficial ownership in respect of the real

property presumably declaring he ceased to hold the real property as trustee for the Principal Trust

and commenced holding it as trustee for the Receiving Trust.

Mr Chiang acted as trustee of both trusts and the beneficiaries under both trusts were identical.

Mr Chiang claimed the exemption under section 36A of the DA Vic. The exemption was denied and

the transaction assessed to duty. The Commissioner disallowed Mr Chiang’s objection against the

assessment.

8.3 Legislation

Relevantly under the DA Vic, duty is chargeable on, among other things, any ‘transaction that results

in a change in beneficial ownership of dutiable property’ (see paragraph 7(1)(b)(vi)) and ‘beneficial

ownership’ includes ownership by a trustee of a trust and a ‘change in beneficial ownership’ includes

property becoming subject to a trust or ceasing to be subject to a trust (see subsection 7(4)).

Section 36A of the DA Vic, relevantly exempts the transfer of dutiable property from a discretionary

trust (principal trust) to a beneficiary as trustee of a second trust, where, among other things, the

beneficiaries of that trust are ‘relevant beneficiaries’.

Section 36A(3) of the DA Vic defines a ‘relevant beneficiary’ as a natural person who was a

beneficiary of that trust at the ‘relevant time’ and ‘relevant time’ is defined as the time when the

dutiable property first became subject to the principal trust.



8.4 Issues

Whether the transfer of real property from the Principal Trust to the Receiving Trust was exempt from

duty under section 36A of the DA Vic.

8.5 Decision

Senior Member Robert Davis decided this matter in favour of the Commissioner affirming the

Commissioner’s assessment. Consistent with the decision in Liu v Commissioner of State Revenue

(Review and Regulation) [2016] VCAT 87 he held relevantly, that for the exemption to apply, among

other things, the beneficiaries of the Receiving Trust had to be beneficiaries of the Receiving Trust

when the land was first acquired by the Principal Trust. It was impossible for the beneficiaries of the

Receiving Trust to have been beneficiaries of the Receiving Trust when the land was first acquired by

the Principal Trust in 2005, because the Receiving Trust was not established until 2014.



9 Codlea Pty Ltd v Chief Commissioner of State

Revenue [2016] NSWCATAP 30

9.1 Summary

The NSW Civil and Administrative Tribunal (the Tribunal) initially ruled that the appellant’s use of the

relevant land for beekeeping did not, for any of the land tax years in question, meet the requirements

for an exemption to be available under section 10AA(2)(a) and (b) of the Land Tax Management Act

1956 (NSW) (the LTMA NSW).

The Appeal Panel of the Tribunal refused the appellant’s request for leave to appeal and dismissed

the appeal on the basis that there was no ‘question of law’ in the grounds of the Notice of Appeal. The

initial decision of the Tribunal was upheld.

9.2 Facts

Codlea, the appellant, owned the land in question with an area of 31.33 hectares. Of this land, 23.7

hectares is within the 2(a) residential zone, within which the keeping of bees was permissible with

consent.

The appellant sought to subdivide and develop the land, and expended considerable sums on

consultants to obtain the necessary consents.

Pending such consents, the appellant decided to pursue beekeeping and honey production. He

contracted Mr Michael Howes to purchase the hives, maintain and propagate them, and collect,

process, harvest and sell the resulting honey. The initial services fee paid to Mr Howes by Codlea was

$8,000 per quarter but it was later reduced to $5,000 per quarter.

Codlea was assessed for land tax for the 2012-2014 land tax years on the basis it was not entitled to

the primary production land tax exemptions as subsection 10AA(2) of the LTMA NSW was

inapplicable. Specifically, the ‘commerciality requirements’ for the exemption were not met.

Codlea unsuccessfully applied to the Tribunal for those assessments to be set aside. Codlea asserted

an appeal as a right on three questions of law and sought leave to appeal on certain grounds.

However, the Chief Commissioner submitted that the appellant had identified no questions of law, and

should be denied leave to appeal.

9.3 Legislation

Subsection 10AA(2) and paragraph 10AA(3)(d) of the LTMA NSW relevantly provides:

10AA Exemption for land used for primary production



(2): Land that is not rural land is exempt from taxation if it is land used for primary production and

that use of the land:

(a) has a significant and substantial commercial purpose or character, and

(b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not

a profit is actually made).

…

(3) For the purposes of this section, "land used for primary production" means land the dominant

use of which is for:

…

(d) the keeping of bees, for the purpose of selling their honey…

Subsection 10AA(2) of the LTMA NSW provides the grounds on which land that is not zoned ‘rural

land’ can be exempt from taxation.

In addition, subsection 80(2) of the Civil And Administrative Tribunal Act 2013 (NSW) (CAT Act)

relevantly provides:

80 Making of internal appeals

(2) Any internal appeal may be made:

(a) in the case of an interlocutory decision of the Tribunal at first instance – with the leave of

the Appeal Panel, and

(b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal

at first instance-as of right on any question of law, or with the leave of the Appeal Panel,

on any other grounds.

9.4 Issues

Were there questions of law from the initial findings to warrant a right of appeal or leave to appeal on

certain grounds under paragraph 80(2)(b) of the CAT Act.

9.5 Decision

The appellant was unsuccessful before the Appeal Panel of the Tribunal.

Initial decision by the Tribunal

The Tribunal identified the below three key factors for determination of whether an exemption under

subsection 10AA(2) of the LTMA NSW should be available:

1. Under the statutory definition, it was determined that the dominant use of the land was for the

keeping of bees for the purpose of selling their honey, i.e. for the purpose of primary

production.



2. However, the Tribunal accepted expert evidence that the beekeeping activities were not on

the same scale as ‘commercial’ beekeepers, and concluded that the beekeeping operations

did not have the ‘significant and substantial commercial purpose or character’ required for the

exemption to be available.

3. In addition, expert evidence was provided by a chartered accountant and insolvency

practitioner, who determined that the beekeeping business was loss making. Given that the

beekeeping activities of Codlea did not produce a profit and were not sustainable (without

resorting to capital raising or external funding), it failed to reach the statutory indicators of a

business enterprise that is set up with the aim of generating a profit year to year.

Accordingly, the Tribunal decided that the exemption under subsection 10AA(2) of the LTMA NSW

was not available for Codlea.

Grounds of appeal

It was determined by the Appeal Panel that an appeal of the Tribunal’s decision was not permitted on

any ground under section 80(2) of the CAT Act, nor would leave be granted to appeal.

Codlea presented three grounds for appeal as outlined below, all of which failed.

1. Ground One – Misconstruction of paragraph 10AA(2)(b)

The appellant argued that the Tribunal should have properly construed paragraph 10AA(2)(a)

as enquiring into whether the beekeeping use of the land, as opposed to the holding of the

land for future potential development, ‘is engaged in for the purpose of profit’. This first ground

failed on the basis that the Tribunal correctly construed the words of subsection 10AA(2), of

“whether the beekeeping use of the land” fell within the relevant statutory definition. That is,

the Tribunal made clear that the beekeeping activities were the dominant use of the land.

2. Ground Two – Misconstruction of paragraph 10AA(2)(a)

The appellant argued that by accepting Mr White’s evidence that Codlea’s beekeeping

activities fell within the “sideline” category, the Tribunal did not have proper regard to the

actual statutory questions. However, the Appeal Panel held that this second ground must fail

as the factual conclusions from Mr White’s evidence amply supported the legal conclusion

that the beekeeping operations did not meet the statutory test: i.e. the business was not set

up with the aim of generating a profit year-to-ear over a succession of years.

3. Ground Three – Finding of uncommerciality

The appellant argued that it was unclear if the Tribunal’s finding that the beekeeping was “not

for a commercial arrangement” was based on Mr Fraser’s (the appellant’s director)

undertaking general repairs to the hives and not being compensated for such works. The

appellant sought leave to adduce new evidence as to the value of Mr Fraser’s services. This

was rejected, as the conclusion of uncommerciality was based on evidence provided by Mr

Hillig, the independent chartered accountant. Furthermore, even if new evidence was

permitted regarding Mr Fraser’s activities, such evidence would not alter the conclusion that

the beekeeping activities were actually making losses (i.e. no profit).

Ultimately, the above factors led to the conclusion that the grounds of appeal were not permitted, as

of right on any question or law, and no leave would be granted to appeal.



10 Commercial Property Management Pty Ltd

& Ors v Commissioner of State Revenue

[2015] QCA 209

10.1 Summary

Entry into a tax payment arrangement was not sufficient to mean that the taxpayer had paid the whole

of the amount of the tax and late payment interest payable under an assessment. Therefore, the

taxpayer had no right to an appeal from an objection decision of the Commissioner under section 69

of the Taxation Administration Act 2001 (Qld) (TAA Qld).

10.2 Facts

The Queensland Commissioner issued default payroll tax assessments in August 2013 to the

applicants in excess of $360,000. An objection was made in October and was disallowed in March

2014. In February 2014, the Commissioner approved an interim payment repayment arrangement for

the payment of $20,000 upfront and monthly payments of $5000.

An appeal against the objection decision was made to the Queensland Civil and Administrative

Tribunal (QCAT).

At first instance, the QCAT member acceded to an application by the Commissioner to strike out the

application under paragraph 69(1)(b) of the TAA Qld on the basis that the right to apply for a review

was subject to the payment of the whole amount of outstanding tax under the assessment and

dismissed the application for review.

The applicants appealed that decision to the QCAT appeal tribunal – which held that the original

member had made an error of law by failing to give the applicants an oral hearing, which they had

sought, and failing to give reasons for not affording them such a hearing. On a rehearing of the

substantive issue, the appeal tribunal again dismissed the application on the basis that the word

“payable” meant “yet to be paid”, and therefore there was no ability to hear the application for review.

The matter was then appealed to the Queensland Court of Appeal.

10.3 Legislation

Section 34 of the TAA Qld relevantly provides the power for the Commissioner to enter into a payment

arrangement with a taxpayer (emphasis added):

34 Payment arrangements



(1) If the commissioner is satisfied payment of a taxpayer's tax law liability would cause the

taxpayer significant financial hardship, the commissioner may, on the taxpayer's written

application, extend the time for paying an amount under a tax law.

(2) Without limiting subsection (1), the commissioner may approve an arrangement for paying the

amount by way of instalments (a payment arrangement).

Subsection 69(2) of the TAA Qld provides the right to appeal, while paragraph 69(1)(b) limits that right

to only taxpayers that has paid the whole of an assessment.

69 Right of appeal or review

(1) This section applies to a taxpayer if—

(a) the taxpayer is dissatisfied with the commissioner's decision on the taxpayer's objection;

and

(b) the taxpayer has paid the whole of the amount of the tax and late payment interest

payable under the assessment to which the decision relates.

(2) The taxpayer may, within 60 days after notice is given to the taxpayer of the commissioner's

decision on the objection—

(a) appeal to the Supreme Court; or

(b) apply, as provided under the QCAT Act, to QCAT for a review of the commissioner's

decision.

10.4 Issues

Does the entry into a tax payment arrangement preclude the ability to exercise the right to an appeal

from an objection decision in relation to an assessment?

10.5 Decision

Fraser JA, with whom Henry and Burns JJ agreed, held that the “payable”, in some contexts, meant a

liability to pay which has matured by the date for payment having arrived without payment having

been made, that construction is not in the context of the TAA Qld.

The task, according to the Court, was not to interpret “payable” by itself, but in the context of “payable

under the assessment” – which meant the amount payable pursuant to the assessment.

The Court determined that the purpose of the provision is to protect the revenue. It did not matter that

section 34 puts the ability to enter into a payment arrangement in circumstances of hardship on the

Commissioner. Further, the Court held that there was no indication that the purpose of section 34

was to relieve taxpayers of the obligations to pay the whole amount of an assessment prior to

exercising the right to appeal or review a decision.



11 Commissioner of State Revenue v

Di Sipio & Anor [2015] QCA 198

11.1 Summary

The Queensland Court of Appeal held that a first home buyers’ acquisition of a property subject to an

existing lease did not constitute a disposal of the land for the occupancy requirements of section

154(2) of the Duties Act 2001 (Qld) (DA Qld), such that the buyers should not lose the benefit of the

first home buyer’s concession.

11.2 Facts

In July 2011, Mr Di Sipio and Ms Rotolone (the respondents) entered into a contract to buy a

residence in Aspley, Queensland. The contract was subject to a 12 month tenancy expiring in in April

2012. Settlement of the acquisition occurred in August 2011. The respondents claimed the first home

buyer’s concession. As the property was tenanted, the respondents were not able to move into the

property until April 2012, being more than 6 months after settlement date.

The Commissioner reassessed the transfer duty on the basis that the respondents had disposed of

the property by leasing or otherwise granting exclusive possession to the tenants, and the tenants

had not vacated the property within 6 months of settlement date.

The QCAT member sitting at first instance confirmed the Commissioner’ decision on the basis that the

respondents had granted exclusive possession of the property to the tenants and the tenants had not

vacated with 6 months of the settlement date.

The QCAT Appeal Tribunal set aside the decision on the basis that there had not been a disposal of

the property by respondents as the tenants already had exclusive possession under the lease granted

by the transferor.

11.3 Legislation

Section 92 of the DA Qld provides a concessional rate of transfer duty for the acquisition of a

residence as the buyer’s first home. Section 86 states that a residence is a “home” if the buyer starts

occupying it as his/her principal place of residence within 1 year after the transfer date.

Section 154 of the DA Qld provides for a reassessment of duty in the event of non-compliance with

the occupancy requirements. Relevantly, paragraph 154(1)(b)(i) specifies the non-compliance event

as (emphasis added):

(i) a transferee, lessee or vested person for land disposes of the land before the occupation date;



Subsection 154(2) states how a transferee can dispose of land (emphasis added):

For subsection (1)(b)(i), a transferee … disposes of land if the … transferee … transfers, leases or otherwise grants exclusive possession of, part or all of the land, to another person, other than if—

(a) another person (the occupier) has exclusive possession of the land before the occupation date; and

(b) the occupier— ...

(ii) has exclusive possession of the land under a lease granted before the transfer date; and

(c) the occupier— …

(ii) if paragraph (b)(ii) applies—vacates the land on the termination of the current term of the lease, or within 6 months after the transfer date, whichever is the earlier.

11.4 Issues

Whether subsection 154(2) of the DA Qld should be construed so that a first home buyer’s acquisition

of a property subject to an existing lease constitutes a ‘disposal of land’ by way of the buyer leasing or

otherwise granting exclusive possession of the land.

11.5 Decision

The Commissioner’s appeal was dismissed.

Subsection 154(2) should be construed as the words “lease or otherwise grants exclusive possession”

require a positive act in that that regard, not the mere continuation of an existing state of affairs. It

could not occur merely by the transferee’s acquisition of a property subject to an existing lease.

The exceptions in section 154 were considered ambiguous and recourse to the explanatory notes

shed light on the exceptions as being designed to make some accommodation for the previous owner

or existing tenant. The court considered an exception could be understood as a buyer may grant a

further lease to an existing tenant, provided the tenant vacates on the termination of the lease granted

by the buyer or within 6 months of the transfer date, whichever is earlier.

The respondents did not merely by acquiring land subject to a tenancy dispose of that land or any

interest in it. Accordingly, the respondents could claim the first home buyer’s concession despite the

property being leased for more than 6 months after the transfer date.

11.6 After the decision

The Revenue and Other Legislation Amendment Act 2016 (Qld) has amended section 154 of the DA

Qld to overcome the decision. The amendments commence on Royal Assent (27 June 2016).



12 Commissioner of State Revenue v EHL

Burgess Properties Pty Ltd [2015] VSCA 269

12.1 Summary

The Victorian primary production land tax exemptions apply different tests depending on whether land

is inside or outside “greater Melbourne”.

The Land Tax Act 2005 (Vic) (LTA Vic) relied on a definition of “metropolitan area” under the

Melbourne and Metropolitan Board of Works Act 1958 as in force on 30 June 2007 – this definition

relied on the boundary of various municipal districts of Cities and Shires, all but one that had been

abolished by 1994 or earlier.

The Court of Appeal of the Supreme Court of Victoria overturned an earlier judgement that the

references to those districts lacked any meaning or effect.

12.2 Facts

The taxpayer owned land used for primary production that was partly within the boundary of the Shire

of Whittlesea.

The Shire of Whittlesea had been replaced by the City of Whittlesea on 15 April 1988. In turn, the

City of Whittlesea was abolished on 15 December 1994 and replaced with the Whittlesea City Council.

On or around that time, there was a general reorganisation of the local government areas around

Melbourne.

12.3 Legislation

Section 64 of the LTA Vic provided that:

64 Definitions

(1) In this Division –

…

greater Melbourne means

(a) metropolitan area within the meaning of section 201 of the Melbourne and Metropolitan Board of Works Act 1958 (as in force immediately before its repeal); or

(b) an area declared by the Governor in Council under subsection (3) to be the metropolitan area.

Section 65 of the LTA Vic provided:



65 Exemption of primary production land outside greater Melbourne

(1) Land outside greater Melbourne that is used primarily for primary production is exempt land.

The definition of metropolitan area in section 201 of the Melbourne and Metropolitan Board of Works

Act 1958 (MMBWA) referred to an area in the Third Schedule that was defined through a lengthy list

of various cities and shires as existed in or around 1 July 1985 when the concepts were introduced

into that Act. These were not altered until the repeal of the MMBWA on 1 July 2007.

12.4 Issues

Does the definition of ‘greater Melbourne’ for the purposes of section 65 include land outside of the

narrow Melbourne CBD.

12.5 Decision

The original single judge decision had held that, as most of the cities or councils listed in the third

schedule of the MMBWA had ceased to exist in 1994 or earlier, the references to those entities had

no meaning and accordingly drastically narrowed the meaning of ‘greater Melbourne’.

The Court of Appeal decided that that general principles of statutory interpretation required them to a

take an interpretation that avoided attributing to Parliament “either incompetence or institutional

amnesia” (see paragraph 122).

Accordingly the Court of Appeal adopted an approach of interpreting the definition of greater

Melbourne as follows (at paragraph 113):

In our opinion, when regard is had to the matters that we have already discussed and the

matters that follow, the only sensible construction that can be given to the language of para

(a) of the Third Schedule is as follows:

(a) where, as at 30 June 2007, a legal entity for a municipal district listed in para

(a) remained extant, the area within the boundaries of that municipal district as at that

date fell within ‘greater Melbourne’; and

(b) where, as at 30 June 2007, a legal entity for a municipal district listed in para

(a) was no longer in existence, the area within the boundaries of that municipal

district on the day before the legal entity ceased to exist, fell within ‘greater

Melbourne’.

Accordingly, the Commissioner was successful in arguing that the land was within Greater Melbourne.



13 Harvey v Commissioner of State Revenue

[2015] QCA 258

13.1 Summary

The Supreme Court of Queensland upheld a default assessment for transfer duty for a transfer of land

that was subsequently cancelled, as the transfer was relied on, prior to cancellation, for the purposes

of land tax exemption.

13.2 Facts

Ms Harvey began residing at a property at Mermaid Beach in December 2008.

The registered proprietor was Laworld Brisbane Pty Ltd (Laworld). The sole director of the company

was Michael Harvey, Ms Harvey’s husband.

On 15 May 2009, it was (verbally) agreed that Laworld would sell Ms Harvey the property for $1.5m,

with completion on 15 June 2009 or 14 days from written confirmation by Laworld that the NAB had

agreed to release its security over the property.

On 16 May 2009, Ms Harvey signed a minute of resolution already signed by Laworld, which recorded

the terms and conditions of the agreement to sell and including a $100 deposit and that the property

would be sold free of encumbrances with vacant possession but if settlement was not completed she

would vacate the property. It also noted a resolution to instruct a local real estate agent to provide a

letter regarding market value once confirmation was received from NAB.

On 15 June 2009, a Transfer of Land was signed by Laworld (via Mr Harvey) and Ms Harvey, with

consideration of $1.5m, and a Form 24 was executed.

On 17 August 2009, a Land Tax assessment notice was issued to Laworld. Laworld sought to reduce

its liability for land tax because of its transfer to Ms Harvey.

On 2 November 2009, Ms Harvey sought an exemption from land tax under the principal place of

residence exemption – she lodged a signed Form LT12 exemption claim. Later, she also provided

other supporting material including, a copy of a Form 23 settlement notice, copies of the Transfer of

Land and Form 24 (which showed the date of possession and settlement as 15 June 2009).

On 18 November 2009 Laworld was issued with an amended Land Tax assessment showing ‘nil’. On

the same day, Ms Harvey was issued an amended Land Tax assessment, allowing her principal place

of residence deduction for the full unimproved value.

On 25 November 2009, the Commissioner sought information from Laworld (under section 87 of the

Taxation Administration Act 2001 (Qld) (TAA Qld)) including the value of the property at the date of

transfer.



On 23 December 2009, Laworld responded stating there was no agreement in writing and a letter

from a real estate agent stating a “reasonable asking price” was $1,480,000 - $1,520,000.

On 8 January 2010, an investigator from the OSR wrote to Ms Harvey requesting information and

stating that their records showed an unimproved value of $6,200,000.

On 8 December 2010, Ms Harvey’s solicitors informed the Commissioner that: (a) notice had been

given to Laworld to terminate the agreement and Laworld had accepted; (b) there was an oral

agreement with a term that the property be transferred free of encumbrances and that Laworld was

unable to give effect to that agreement.

On 1 June 2011, the bank informed the Commissioner that Laworld had not submitted any application

to release the bank’s security over the property.

On or about 15 September 2011, the bank exercised its mortgagee’s power of sale and transferred

the property to a third party for consideration of $3,200,000.

On 13 December 2010, a default assessment notice was issued to Ms Harvey for transfer duty of

$274,425 (based on $5,500,000, a figure derived from a valuation sought by the Commissioner

containing a range of $5,000,000 - $5,500,000), 75% penalty of $205,818.75 and interest of

$22,874.97 (Dec 2010 Assessment). The notice included under the heading ‘Transaction Type:

“Transfer of Residential Land” and “Agreement to transfer dutiable property, Land in Queensland”. In

the cover letter the Commissioner also invoiced for the recovery of valuation costs of $660.

Ms Harvey objected to the Dec 2010 Assessment, the grounds of which included that the agreement

had been cancelled. The Commissioner disallowed the objection but stated he would consider her

application based on the cancellation provision in section 115 of the Duties Act 2001 (Qld) (DA Qld).

However, on 18 April 2011, the Commissioner notified Ms Harvey that subsection 115(1) of the DA

Qld did not apply and confirmed the Dec 2010 Assessment. On 20 April 2012, Ms Harvey objected to

that decision.

On 26 May 2011, Ms Harvey commenced the proceeding the subject of the appeal.

On March 2013, the Commissioner disallowed her objection.

On 11 February 2014, Ms Harvey cancelled the Transfer and on 13 February applied to the

Commissioner for reassessment on the grounds of that cancellation.

Ms Harvey applied to the Supreme Court seeking:

a mandatory injunction requiring the Commissioner to reassess the Transfer to nil duty

under the provision for reassessments for cancelled transfers in subsection 156A(6) of

the DA Qld.

alternatively, a mandatory injunction requiring the Commissioner to reassess the

agreement to nil duty under the provision for exemption for cancelled agreements in

subsection 115(1) of the DA Qld.

an injunction restraining the Commissioner from entering judgement or otherwise

enforcing the Dec 2010 assessment.



Ms Harvey’s application was dismissed by Jackson J of the Supreme Court – appeal was made by Ms

Harvey to the Court of Appeal.

13.3 Legislation

Section 115 of the DA Qld contains an exemption for cancelled agreements and states:

(1) Transfer duty is not imposed on a dutiable transaction that is an agreement for the transfer

of dutiable property (the cancelled agreement) if –

…

(b) The agreement is ended because of non-fulfilment of a condition of it;

…

Section 156A of DA Qld sets out reassessment for cancelled transfers and stated at the time

(emphasis added):

(1) This section applies if —

(a) a person, directly or by the person’s agent, pays transfer duty on a transfer of

dutiable property effected or evidenced by an instrument; and

(b) the instrument is cancelled by the parties before it has legal effect; and

(c) the dutiable property has not been transferred to the transferee or a related

person of the transferee; and

(d) the instrument was not cancelled—

(i) to give effect to a resale agreement; or

(ii) as part of an arrangement under which any of the dutiable property is

or will be transferred, or is agreed to be transferred, to the transferee or a

related person of the transferee.

(2) For this section, an instrument has legal effect if—

(a) for an instrument that, when recorded in a register, will effect the transfer of

dutiable property—the instrument is lodged for recording in the register; or

(b) a right has been exercised, or an obligation fulfilled, under the instrument; or

(c) the instrument has been relied on in any other way.

…

(6) The commissioner must make a reassessment of transfer duty for the transaction on

the basis that transfer duty is not imposed on the transaction.



13.4 Issues

Whether, because of post-assessment events (i.e. failure of bank to release security, bank’s sale to a

third party, Ms Harvey’s termination of the agreement and cancellation of the Transfer), the judge

wrongly held that, under paragraph 156A(2)(c) of the DA Qld, Ms Harvey relied on the Transfer (i.e.

exemption from land tax).

Whether the judge erred in holding the Transfer liable to duty (because it was not “signed” as it was

executed in escrow and the condition of the escrow was never fulfilled), and wrongly held the

Commissioner could rely on the particular valuation obtained by the Commissioner.

Whether the judge wrongly construed the justiciability of the validity and correctness of the Dec 2010

Assessment.

13.5 Decision

The appellant was unsuccessful on all 3 issues.

The Court held that the applicant had not demonstrated that the post-assessment events made the

Dec 2010 Assessment unenforceable.

The Court rejected the appellant’s contention that paragraphs 156A(2)(b) and (c) were not relevant

where the instrument was a kind referred to in paragraph 156A(2)(a) (i.e. those which when recorded

in a register would effect the transfer of dutiable property). The clear terms of section 156A do not limit

the provision in this way paragraph – 156A(2)(c) is broad and all-encompassing.

The Court also rejected the appellant’s contention that the transfer form was irrelevant to whether

Laworld ceased to be liable for land tax or whether she was entitled to the land tax exemption – the

exemption form did not refer to the transfer form and therefore did not rely on it. However, the court

concluded that the “only rational inference” from the dealings with the Commissioner in relation to

land tax is that Laworld and the appellant relied on the transfer in applying to reduce their land tax

liability.

The Court concluded that (at paragraph 60) there is no warrant in the text or context of the DA Qld for

importing an exception if the transfer is signed or held in escrow.

The court rejected the contention that the Commissioner was bound to determine the value of

property only by a adopting a valuation under paragraph 505(2)(a) of the DA Qld. The appellant could

have challenged the valuation issue though an appeal process.

The appellant’s contention that the judged wrongly construed the justiciability of the validity and

correctness of the assessment are not made out.

The Commissioner’s breach of section 21, in not identifying whether the agreement or the transfer

was the dutiable transaction subject to duty, was of a technical nature in that there was only 1

assessment of transfer duty.



However the appellant was not liable to pay the Commissioner’s valuation cost of $660 – the

valuation obtained was not lawful as it did not specify a particular figure, but rather a range and

therefore was not a valuation of the kind envisaged by section 505.



14 Kamareddin v Chief Commissioner of State

Revenue

[2016] NSWCATAD 21

14.1 Summary

The New South Wales Tribunal held that a transfer of land was exempt from duty under section 68 of

the Duties Act 1997 (NSW) (DA NSW), as the marriage between the applicant and Mr Hussein had

irretrievably broken down and the transfer was in accordance with an agreement, albeit oral, to divide

the matrimonial property as a consequence of the breakdown.

14.2 Facts

The applicant and Mr Hussein were married in 2003.

Mr Hussein was the owner of the residential land at Greenacre (the Property) and had previously

received a first home owner grant. The Property was accepted by the parties to the proceeding as

matrimonial property.

The applicant gave evidence that she separated from Mr Hussein in September 2011 and that on 3 or

4 November 2011 she and Mr Hussein were divorced in accordance with their Muslim beliefs. The

applicant conceded that at no stage was she divorced from Mr Hussein under Australian law.

The applicant and Mr Hussein made an oral agreement to dispose of the major family assets including

the transfer of the Property to the applicant. On 4 November 2011 a contract of sale was executed

and the Property was sold by Mr Hussein to the applicant for $480,000.

The contract and transfer were stamped ‘exempt’ by the New South Wales Office of State Revenue

(OSR). Also, the Applicant applied for FHOG, which was ultimately reversed by the OSR.

On 4 May 2012 a financial agreement (stated to be under s90C of the Family Law Act 1975 (Cth))

was made between the applicant and Mr Hussein which included the transfer of the Property from Mr

Hussein to the applicant – the Property had an agreed estimated value of $600,000.

Mr Hussein moved to Melbourne but returned to New South Wales to visit the children. The applicant

fell pregnant on the visit, and then re-married Mr Hussein in accordance with their religious practices.

14.3 Legislation

Section 68 of the DA NSW provides as follows (emphasis added):

(1) Break-up of marriage



No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or

transfer, of matrimonial property if:

(a) the property is transferred, or agreed to be sold or transferred, to the parties to a marriage

that is dissolved or annulled, or in the opinion of the Chief Commissioner has broken

down irretrievably, or to either of them, or to a child or children of either of them or a

trustee of such a child or children, and

(b) the transfer or agreement is effected by or in accordance with:

(i) a financial agreement made under section 90B, 90C or 90D of the Family Law Act

1975 of the Commonwealth that, under that Act, is binding on the parties to the

agreement, or

(ii) an order of a court under that Act, or

(iia) an agreement that the Chief Commissioner is satisfied has been made for the

purpose of dividing matrimonial property as a consequence of the dissolution,

annulment or breakdown of the marriage, or

(iii) a purchase at public auction of property that, immediately before the auction, was

matrimonial property where the public auction is held to comply with any such

agreement or order.

…

14.4 Issues

Whether the exemption in section 68 of the DA NSW applies to the relevant agreement to sell or

transfer the Property. In particular whether:

At the date of the execution of the Contract for sale of the Property, i.e. 4 November

2011, had the marriage between the Applicant and Mr Hussein broken down irretrievably.

the transfer of the Property was effected by or in accordance with an agreement made for

the purpose of dividing matrimonial property as a result of the breakdown of the marriage.

14.5 Decision

The applicant was successful before Senior Member Isenberg.

The Tribunal found that the as financial agreement that was made under section 90C of the Family

Law Act 1975 (NSW) was only made after the execution of the contract of sale, the dutiable

transaction was not one ‘effected by’ the financial agreement. Therefore subparagraph 68(1)(b)(i)

was not applicable.

The applicant submitted in her grounds for review by the Tribunal that the Assessment was ‘incorrect

and unfair’. The Tribunal did not find it necessary make a finding in relation to the unfairness claim.

The Tribunal also confirmed that the applicant was not entitled to the First Home Plus duty exemption

or concession.



The Tribunal accepted that there were various discrepancies in the evidence presented by the

applicant, in particular, between the oral evidence and documentary evidence. However the Tribunal

noted that the applicant had limited understanding of English and consequently did not fully

understand the documents she had signed.

The Tribunal preferred the oral evidence of the Applicant and accepted her as a witness of truth. The

evidence that the applicant re-married Mr Hussein (in order that her baby would be born in the course

of marriage) was consistent with the evidence that the applicant held the belief that the marriage had

ended as they had been divorced in accordance with religious practices.

Consequently the Tribunal accepted that on the balance of probabilities that on 4 November 2011, for

the purposes of section 68(1) of the DA NSW, the applicant’s marriage with Mr Hussein had

irretrievable broken down.

Furthermore, for the purposes of subparagraph 68(1)(b)(iia), the transfer of the Property to the

applicant was subject to the oral agreement between the applicant and Mr Hussein for the purpose of

dividing their matrimonial property as a consequence of the breakdown of the marriage.

Therefore the applicant was entitled to the exemption under section 68 of the DA NSW and a new

Notice of Assessment was ordered to be issued.



15 Kameel Pty Ltd v Commissioner of State

Revenue [2016] VSCA 83

15.1 Summary

The Court of Appeal of the Supreme Court of Victoria considered whether the purchaser under an

uncompleted contract of sale of land was deemed to be the owner of the land for land tax purposes

and whether the vendor was no longer deemed to be the owner.

The Court determined that de facto possession was sufficient to satisfy the test in section 15 Land

Tax Act 2005 (Vic) (LTA Vic), even where there was no specific legal right to occupy the property.

15.2 Facts

The applicant, Kameel Pty Ltd (Kameel) owned land in Berwick, Victoria. It intended to subdivide and

sell the land. Yassmin Investments Pty Ltd (Yassmin) was to run a pizza restaurant on part of the

land.

The litigation concerned the 2010, 2011 and 2012 land tax years (land tax being imposed in respect

of the ownership of land at 31 December 2009, 2010 and 2011 respectively). The relevant facts

were:

Kameel had owned the land since May 2000.

In April 2006, Kameel and Yassmin entered into a contract of sale, and another

agreement in relation to construction by Yassmin on the land for which Kameel was

financing.

Yassmin paid a deposit of $143,900 (plus GST).

A building permit issued in July 2006 and construction commenced.

Yassmin was permitted to occupy the land. The contractual arrangements did not give a

specific right to occupy the property, but Yassmin was allowed to go onto the land to build

the restaurant.

VCAT had found that Yassmin had entered into early occupation of the land to build the

building and had taken de facto possession prior to paying the balance of the purchase

price.

In January 2008, the plan of subdivision was registered.

In April 2008, the restaurant was completed and Yassmin began operating the restaurant.

Yassmin had paid a significant amount to Kameel under the contract of sale.



In 2011, Yassmin leased the restaurant to another company.

By the end of 2012, Yassmin had failed to make payments due to Kameel and the

contracts were terminated in either November 2012 or 2013.

15.3 Legislation

Section 15 of the LTA Vic provides that:

15 Purchaser of land under contract of sale

(1) For the purposes of this Act, a purchaser under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) if the purchaser has taken possession of the land.

(2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.

Section 16 of the LTA Vic provides:

16 Vendors of land

(1) For the purposes of this Act, the vendor of land under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) until—

(a) the purchaser has taken possession of the land; and

(b) subject to subsection (3), at least 15% of the purchase money has been paid.

(2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.

(3) The Commissioner may determine that the vendor is deemed not to be the owner of land despite the fact that 15% of the purchase money has not been paid if the Commissioner is satisfied that—

(a) the contract of sale was made in good faith and not for the purpose of evading the payment of land tax; and

(b) the contract of sale is still in force.

(4) In determining the percentage of purchase money that has been paid, the following amounts must be considered to be unpaid purchase money—

(a) all money owing by the purchaser to the vendor and secured by a mortgage over the land;

(b) all money lent to the purchaser by the vendor;

(c) all money owing by the purchaser to any other person that is directly or indirectly guaranteed by the vendor.



(5) If the vendor and the purchaser are both deemed to be the owners of land under this Part, there is to be deducted from any land tax payable on the land by the vendor any land tax payable on the land by the purchaser.

15.4 Issues

Did section 15 of the LTA apply to make Yassmin the owner of the land for land tax purposes.

15.5 Decision

The Court decided that where a person is in physical possession of the land and that physical

possession is referrable to or in performance of a contract of sale of land, then that person is a

purchaser in possession for the purposes of section 15 of the LTA Vic (see paragraph 93 per Warren

CJ and Tate JA and paragraph 234 per Whelan JA).

In the circumstances, the possession of the property by Yassmin was in intended performance of the

contract and, according to the majority, this was consistent with the parties’ contractual arrangements

as evolved. Accordingly, the purchaser owned the land for the purposes of the LTA Vic (see 92 per

Warren CJ and Tate JA).

In respect of the principles to be adopted, there was a split in the Court. Warren CJ and Tate JA

disagreed with Whelan JA in relation to the impact of the decision in Highlands Ltd v Deputy Federal

Commissioner of Taxes (1931) 47 CLR 191.

Whelan JA stated at paragraph 188 in relation to Highlands:

“It seems to me that Highlands stands for the proposition that a buyer will have obtained

possession of land in the relevant sense when, as a factual matter (de facto), he has all the

control which the nature of the land admits, and when he is in that position in intended

execution of an agreement for sale of the land, whether it can be said that the particular

actions taken are properly to be seen as pursuant to the provisions of that agreement or not.

Provided the parties take the relevant actions in intended execution of the agreement it does

not matter, and it is unnecessary to resolve the question, of what might be the contractual

consequences of what has in fact occurred. In analysing Highlands in this way, I rely in

particular upon the judgment of Dixon J, although it seems to me that the other judgments are

consistent with his analysis.

This was supported by the majority at paragraph 7 – except they did not agree that it was irrelevant

whether the particular actions are taken pursuant to the provisions of a contract of sale and whether it

was necessary to determine that issue.

The majority stated at paragraph 13 that:

“… when considering whether a purchaser has acted in intended execution of the agreement

for sale it is necessary to ask the following question: Is the conclusion that the purchaser has

taken possession consistent with the parties’ contractual arrangements for the sale of the land,

as they have evolved?”



This required attention to what the parties had done and what was the legal effect of what they had

done. It also required a consistency between what was done and the contractual provisions –

otherwise section 15 would not apply (paragraph 14 of the majority decision).

Whelan JA also supported the proposition that possession can pass pursuant to contractual terms,

without there being physical possession (at paragraph 214) – although that was not the situation in

this matter.



16 Re Keadly Pty Ltd & Ors

[2015] SASC 124

16.1 Summary

The South Australian Supreme Court allowed rectification of trust deeds to eliminate beneficiaries that

would fall outside of the interfamilial transfer of farming property under section 71CC of the Stamp

Duties Act 1923 (SA) (SDA SA).

16.2 Facts

Three brothers and their families operated a vineyard business in the Barossa Valley. In 2010, they

decided to split the relevant land between the three families and three discretionary trusts were

created. Each parcel of land was then transferred to one of the three trustees.

The parties intended that this would obtain the exemption in section 71CC of the SDA SA for transfers

between family members.

Unfortunately, due to confusion in the instructions between their accountant and the lawyers, the

range of beneficiaries of the trusts extended beyond the allowed beneficiaries for the purposes of

section 71CC. This was not detected before the documents were executed.

This was picked up by the revenue office, but the Commissioner allowed the parties to apply for

rectification of the trust deeds to remove the duty liability.

16.3 Legislation

Section 71CC provides an exemption for certain transfers of farming land between members of family

groups. For trustees to be able to take advantage of the exemption, only natural persons are able to

be beneficiaries of the relevant trust.

16.4 Issues

Is rectification of the trust deeds allowed to limit the beneficiaries to those allowed for the purposes of

section 71CC?



16.5 Decision

Bampton J allowed the rectification to occur as it was clear that the intention of the settlor and other

parties to the arrangement was that the beneficiaries under the trust deed would be limited to the

beneficiaries allowed under section 71CC.

This was sufficient mistake or inadvertent error in preparation of the trust deeds. It was not a bar to

the relief that the mistake in the trust deeds was due to the negligence of the accountant or that it was

to avoid a stamp duty liability.



17 Kloester v Comr of State Revenue [2016]

VCAT 16

17.1 Summary

There was a transfer of a property from the First Applicant’s parents to the Applicants. This transfer

was assessed with stamp duty under the Duties Act 2000 (DA Vic). The Applicants were of the view

that the transfer was exempt from duty on the basis they were at all times the beneficial owners of the

property. Specifically, the Applicants reviewed on the exemption under section 34 or section 36 of the

DA Vic.

The Victorian Civil and Administrative Tribunal (VCAT) found that on the balance of probabilities, the

necessary criteria to satisfy the exemption under sections 34 or 36 of the DA Vic could not be proven.

The decision highlighted the importance of evidence contemporaneous with the original transfer to an

apparent purchaser, which supports the establishment of a trust and the continuing intention to hold

the property for the benefit of the real purchaser.

17.2 Facts

The First Applicant (Ian Kloester) was married to the Second Applicant (Alice Kloester). The First

Applicant is the son of Keith and Marian Kloester (together, the Parents).

The Parents acquired property in Dandenong, Victoria, (the Property) by instrument of Transfer of

Land dated 30 June 1994. The consideration on the Transfer was $205,000. Duty of $8,500 was duly

paid and the Transfer was stamped.

The consideration for the Property was financed in part by a $35,000 bank loan to the Parents (Bank

West Loan). The balance of the funds was paid directly by the Parents. Bank statements in the name

of the Parents show monthly repayments of the Bank West Loan.

The Parents transferred the fee simple in the Property to the Applicants by Transfer of Land dated 10

October 2011. The stated consideration was “Entitlement in equity”. The Commissioner issued a

Notice of Assessment (Assessment) for duty of $37,070 in respect of this Transfer.

The Applicants objected to the Assessment. On 13 May 2013, the Commissioner disallowed the

Applicants’ objection and gave notice of his reasons for doing so. Subsequently, on 12 July 2013, the

Applicants requested a referral from the Commissioner to the VCAT.

The Applicants relied on, amongst other documents, various bank statements which showed debits

made by cheque. The words “31 MAC” were written next to some debits, which allegedly signified

they were payments made in respect of the Property. However, no bank statements showed

payments made from the Applicants to the Parents accounts.



17.3 Legislation

Sections 34 and 36 of the DA Vic relevantly provide:

34 Property vested in an apparent purchaser

(1) No duty is chargeable under this Chapter in respect of –

(c) a declaration of trust made by an apparent purchaser in respect of identified dutiable

property or marketable securities referred to in section 10(2)—

a. vested in the apparent purchaser upon trust for the real purchaser who provided the

money for the purchase of the dutiable property or marketable securities; or

b. to be vested in the apparent purchaser upon trust for the real purchaser, if the

Commissioner is satisfied that the money for the purchase of the dutiable property or

marketable securities has been or will be provided by the real purchaser; or

(d) a transfer of dutiable property or marketable securities referred to in section 10(2) from an

apparent purchaser to the real purchaser in a case where dutiable property or marketable

securities are vested in an apparent purchaser upon trust for the real purchaser who

provided the money for the purchase of the dutiable property or marketable securities.

(2A) In this section, a reference to a real purchaser who provided the money for the purchase of

the dutiable property includes a person on whose behalf the money for the purchase of the

dutiable property was provided.

36 Property passing to beneficiaries of fixed trusts

(1) No duty is chargeable under this Chapter in respect of a transfer of dutiable property that is

subject to a fixed trust (the principal trust) to a beneficiary of the trust if—

(a) the duty (if any) charged by this Act in respect of the dutiable transaction that resulted in

the dutiable property becoming subject to the principal trust has been paid or the

Commissioner is satisfied that the duty will be paid; and

(b) the beneficiary was a beneficiary at the relevant time; and

(c) the transfer is—

(i) to the beneficiary absolutely; or

(d) the dutiable value of the property transferred does not exceed the value of the

beneficiary's interest in the principal trust; and

(e) the Commissioner is satisfied that the transfer is not part of a sale or other arrangement

under which there exists any consideration for the transfer.

(3) Nothing in this section limits the application of the exemption in section 34.

(4) A reference in this section to dutiable property becoming or first becoming subject to a trust

includes a reference to property from which that dutiable property was derived, by subdivision or

consolidation of titles, becoming or first becoming subject to the trust at a time when the

transferee was a beneficiary of the trust.

(5) In this section—

fixed trust means a trust other than—

(a) a discretionary trust (within the meaning of section 36A); or

(b) a trust to which a unit trust scheme relates; or

(c) a superannuation fund (within the meaning of section 41A);



relevant time in relation to dutiable property that is subject to the principal trust, means the time at which the property first became subject to the principal trust.

17.4 Issues

The issue was whether a trust was created on or before the date of the Property transfer from the

Parents to the Applicants.

In respect of section 34, the question was whether the Property vested in the Parents as apparent

purchasers on trust for the Applicants as the real purchasers, who provided, or on whose behalf was

provided, the money for the purchase of the land.

In respect of section 36, the question was whether the Property transfer was from trustee to

beneficiary of a trust other than a discretionary trust, unit trust scheme or superannuation fund.

17.5 Decision

The Applicants were unsuccessful before the VCAT and the Commissioner’s decision was affirmed.

The VCAT agreed with the Commissioner that:

There is no certainty of intention. The objective evidence is more consistent with an

intention that the Parents own the Property, allowing the Applicants to live in it; and

There is no certainty of object. To the extent that banking records have been produced, it

could not be construed that any repayments of the loans in respect of the Property were

made on behalf of the Applicants.

There were no witness statements provided by either Applicant, nor were they called to give evidence,

for the purpose of the review hearing.

The evidence established that the Parents purchased the Property as to nearly 90% with their own

money. The balance was paid with a small loan that was refinanced over time. Until the Property was

transferred to the Applicants, the repayments on the loans were made by the Parents.

In relation to the application of section 34, the VCAT found that the lack of objective evidence from

when the Property was purchased was fatal. Specifically, there was:

No Trust Deed or any other contemporaneous document which evidenced the creation of

a trust

No objective evidence that the Parents did not hold the Property beneficially

No evidence to show that the Applicants provided any part of the initial purchase price for

the Property.

In relation to the application of section 36, while the Applicants say a fixed trust was created orally, as

mentioned above, there was no credible or conclusive evidence to support the creation of a fixed trust

when the Property was first purchased. Therefore, section 36 could not apply.



18 Commissioner of State Revenue v Konann

Pty Ltd [2015] VSCA 278

18.1 Summary

The Victorian Court of Appeal determined that a transfer of property was for the purposes of affecting

the change of trustee of a resulting trust and accordingly the change of trustee exemption applied.

The primary production exemption for land tax was also applied.

18.2 Facts

A property in Victoria was originally acquired in 1994 and registered in the names of two brothers,

Peter and Garry White.

Peter and Garry White were trustees of a discretionary trust, the Peter White Family Trust (the Family

Trust).

The purchase price had been paid by a company, Annacott Pty Ltd (Annacott). Annacott was a

corporate beneficiary of the PWFT. Annacott expended monies on improvements to the land and

conducted a farming business on the land.

The documentation at the time of the purchase was mixed as to whether Peter and Garry White were

holding the property on behalf of the Family Trust or were holding it for Annacott. This may have

resulted from differences in views between the accountants and lawyers acting for the family:

An unstamped declaration of trust in favour of Annacott was executed in September 1994

(on the advice of the accountants); however

A memorandum from the conveyancing solicitor in November 1994 set out that the

property had been purchased as trustees of the Family Trust – partly based on

instructions from the client from September 1994.

2004 transactions

In 2004, Garry White became ill and requested that he be removed from the title to the land.

The earlier confusion as to the ultimate ownership of the property now carried forward to the removal

of the individual trustees.

In November 2004, the lawyer prepared a transfer of land from Peter and Garry White to Annacott,

pursuant to its “entitlement in equity”. Peter White referred to the September 1994 declaration of trust

in a statutory declaration at the time and the position that the title holders were trustees for Annacott

as beneficial owner.



This was lodged for stamping as exempt under the apparent purchaser provision. Ultimately the SRO

did not process it due to the lack of specified documentary evidence showing that Annacott was the

real purchaser of the land. The SRO impounded the document pursuant to section 275.

2006 transactions

In 2006, now operating on the belief that the property was held in trust for the Family Trust, the

applicant, Konann Pty Ltd (Konann) received a transfer of land from Peter and Garry White and a

Deed of Appointment/Retirement of trustees was executed for Konann to assume the trusteeship of

the Family Trust.

The transfer was lodged for stamping (under the change of trustee exemption) on the basis that it was

“solely as the result of the appointment of Konann as trustee” of the Family Trust.

During the course of the lodgement and investigation process, Peter White made a statutory

declaration that he believed the property was originally held as trustee for Annacott, the 2006

transactions were mistaken and based on mistaken legal advice.

Assessments of duty on the transfer of land and land tax assessments were issued, on the basis that

there was a change in ownership of the property and that the primary production land tax exemption

was not available (as that required Annacott to be the ultimate owner of the property).

18.3 Legislation

Section 33 of the Duties Act 2000 (Vic) (DA Vic) relevant provides:

Change in trustees

(1) In this section —

…

New trustee means a trustee appointed in substitution for a trustee or trustees or a

trustee appointed in addition to a trustee or trustees;

…

(3) No duty is chargeable … in respect of a transfer of dutiable property to a person .. if the

Commissioner is satisfied that the transfer is made solely –

(a) because of the retirement of a trustee or the appointment of a new trustee, or

other change in trustees;

(b) in order to vest the property in the trustees for the time being entitled to hold it.

Section 67 of the Land Tax Act 2005 (Vic) (LTA Vic) relevantly provides (emphasis added):

Exemption of primary production land in an urban zone in greater Melbourne

(1) Land is exempt land if the Commissioner determines that —



(a) the land comprises one parcel that is —

(i) wholly or partly in greater Melbourne; and

(ii) wholly or partly in an urban zone; and

(iii) used solely or primarily for the business of primary production; and

(b) the owner of the land is a person specified in subsection (2).

(2) The owner of the land must be —

…

(b) a proprietary company (not acting in the capacity of trustee of a trust) —

(i) in which all the shares are beneficially owned by natural persons; and

(ii) the principal business of which is primary production of the type carried on

on the land; or

…

(6) For the purposes of this section —

(b) a reference to an owner of land does not include a reference to a beneficiary of a

trust or a unitholder in a unit trust scheme to which the land is subject.

18.4 Issues

There were three key issues:

Does the exemption under section 33(3) of the DA Vic apply.

Does Konann hold the property for the same beneficial owner for whom it was held prior

to the transfer.

Does section 67 of the LTA Vic require the registered proprietor to be the relevant primary

producer.

18.5 Decision

Change of trustee exemption

Hansen JA gave the majority judgement, with which Tate JA concurred. Robson AJA also concurred,

but added additional remarks in relation to the beneficial interest in the property being, at all times,

held for Annacott.



The court determined that Konann took the property subject to a resulting trust in favour of the original

beneficial owner, Annacott. On that basis, what occurred was a change of trustee only and the

exemption in section 33 applied.

Hansen JA (at paragraph 60) stated that the broad policy behind the exemption on change of trustee

is to “save from duty transfers of land ‘solely because of’ a change in trustee”.

Hansen JA rejected the Commissioner’s argument that there was any requirement that the trustee

already be appointed as trustee prior to the change in trustee.

In determining whether the property had always been held for Annacott on a resulting trust arising

from the payment of the purchase price, Hansen JA approved of taking a “broad inquiry” over the

whole of the evidence (paragraph 73). Hansen JA approved of the finding of the trial judge, that

Annacott remained the beneficial owner of the property – and that the sole intention of the parties was

to change the trustee, not to change the beneficial ownership (at paragraph 77 and 78).

The confusion around the nature of the beneficial ownership (as evidenced by the 2004 transfers) did

not impact this finding and was explicable.

In light of the decision on the exemption, Hansen JA declined to reach a conclusion on the issue of

what the dutiable value would be, if the transaction was not exempt – would it have been reduced by

the value of Annacott’s equitable interest in the property, or would it be the full market value of the

land? This was left open for future consideration in more relevant cases.

Section 67 – primary production land tax exemption

The only issue in relation to land tax was whether Annacott was an “owner” of the land. This is

because Annacott would otherwise satisfy the exemption (being the person engaged in primary

production), but Konann would not.

The Commissioner had argued that, as section 67 excluded beneficiaries of trusts from being

“owners”, Annacott could not be an owner. However, section 3 of the LTA Vic provides that a “trust”

does not include any implied or constructive trust, except where expressly provided.

An “owner” has been interpreted as including a person who has a present right of beneficial

enjoyment of the land.

Hansen JA, having determined that Annacott was the beneficial owner of the land, and therefore

having the required right to beneficial enjoyment of the land, was an “owner” of the land and therefore

the exemption should apply.



19 Liu v Commissioner of State Revenue

(Review and Regulation) [2016] VCAT 87

19.1 Summary

The Tribunal held that the distribution of real property from the trustee of a discretionary trust to a

beneficiary as trustee of a receiving trust was not exempt from duty under section 36A of the Duties

Act 2000 (Vic) (DA Vic) because the beneficiaries of the receiving trust were not beneficiaries of the

receiving trust when the real property was first acquired by the principal trust.

19.2 Facts

The Zou Family Trust (Principal Trust) was established in 2011. Between August 2012 and April

2013, the Principal Trust acquired various apartments in Melbourne.

In July 2013, three further trusts were established (Receiving Trusts).

Ms Liu acted as trustee of the Principal Trust and the Receiving Trusts. In September 2013 Ms Liu

executed deeds to distribute the apartments from the Principal Trust to the Receiving Trusts. The

beneficiaries under the Principal Trust were largely the same (but not identical) as those under the

Receiving Trust.

In December 2013 the Commissioner assessed the distributions to duty, having concluded that

neither section 36A nor any other exemption under the DA Vic applied. Ms Liu’s objections against

the assessments were subsequently disallowed.

19.3 Legislation

Relevantly, the transfer of dutiable property the subject of a discretionary trust (the principal trust) is

exempt under paragraph 36A(1)(c)(ii) of the DA Vic if the transfer is to a beneficiary as trustee of

another trust of which all the beneficiaries are ‘relevant beneficiaries’.

Under subsection 36A(3) of the DA Vic, a ‘relevant beneficiary’ is a natural person who was a

beneficiary of that trust at the ‘relevant time’ and the ‘relevant time’ is the time when the dutiable

property became subject to the principal trust.

19.4 Issues

Whether the exemption under section 36A of the DA Vic applied to exempt the distribution of the

apartments from the Principal Trust to the Receiving Trusts from transfer duty.



19.5 Decision

Member Glover decided this matter in favour of the Commissioner and affirmed the Commissioner’s

assessments.

Member Glover held that the reference to ‘that trust’ in the definition of ‘relevant beneficiary’ under

paragraph 36A(3)(a)(ii) of the DA Vic, was a reference to the Receiving Trust and that the policy intent

behind section 36A of the DA Vic was to establish the continuity of the beneficiaries of the Principal

Trust.

Consequently, the exemption required the beneficiaries of the Receiving Trust to be beneficiaries of

the Receiving Trust when the apartments were first acquired by the Principal Trust. As each of the

Receiving Trusts was established after the Principal Trust acquired the apartments, it was impossible

for this requirement to be satisfied.

In dismissing Ms Liu’s contentions, including that there was no change of ‘beneficial ownership’ of the

apartments, the Tribunal referred to the amendments made to the DA Vic following the decision in

Trust Company of Australia Ltd v Commissioner of State Revenue [2007] 19 VR 111 as confirming

that the definitions of ‘beneficial ownership’ and ‘change in beneficial ownership’ in the DA Vic

override the general law sense of those terms.



20 Law Institute of Victoria v Commissioner of

State Revenue

[2015] VSC 604

20.1 Summary

The Law Institute of Victoria (LIV) sought an exemption from payroll tax, under section 48 under the

Payroll Tax Act 2007 (Vic) (PTA Vic), as ‘a non-profit organisation having as its sole or dominant

purpose a charitable purpose’ i.e. the maintenance and sustenance of the law.

20.2 Facts

The LIV is an association for lawyers practising in Victoria, which has a number of activities –

including delegated regulatory authority, education, advocacy, referral and similar functions.

It sought an exemption from payroll tax, on the basis that its dominant purpose was a charitable

purpose, and a refund for tax paid in the years from 1 July 2008 to 30 June 2013.

20.3 Legislation

Section 48 of the PTA Vic provides:

48 Non-profit organisations

(1) Wages are exempt wages if the Commissioner is satisfied that the wages are paid or

payable—

(a) by any of the following—

(i) a religious institution; or

(ii) a public benevolent institution (but not including an instrumentality of the

State); or

(iii) a non-profit organisation having as its whole or dominant purpose a

charitable, benevolent, philanthropic or patriotic purpose (but not including a

school, an educational institution, an educational company or an

instrumentality of the State); and

(b) to a person engaged exclusively in work of a religious, charitable, benevolent,

philanthropic or patriotic nature for the institution or non-profit organisation.



Prior to the changes on 1 July 2012, the old version of section 48 provided:

48 Non-profit organisations

(1) Subject to subsection (2), wages are exempt wages if they are paid or payable by any of

the following—

…

(c) a non-profit organisation having as its sole or dominant purpose a charitable,

benevolent, philanthropic or patriotic purpose (but not including a school, an

educational institution, an educational company or an instrumentality of the State).

(2) the wages must be paid or payable –

(a) for work of a kind ordinarily performed in connection with the religious, charitable,

benevolent, philanthropic or patriotic purposes of the institution or body; and

(b) to a person engaged exclusively in that kind of work.

20.4 Issues

Was the LIV exempt from payroll tax, on the basis that its dominant purpose was a charitable purpose.

20.5 Decision

The Supreme Court held that the LIV was not exempt under the charity provision – as it could not be

satisfied that the LIV had a charitable purpose as its dominant purpose.

Digby J concluded:

“348 I consider that the nature and scale of the LIV’s membership activities and the above

highlighted degree of focus on membership activities, services and incentives strongly

militates against the conclusion that those aspects are incidental or subservient or ancillary to

the LIV's main charitable purposes.

349 I consider that both the LIV’s very numerous activities to service, promote and attract

members, and its very substantial area of operation in relation to regulatory delegations,

constitute independent activities, lawfully pursued pursuant to the LIV’s objects, but do not

constitute activities pursued for the purpose of promoting the LIV’s charitable objects, or only

to enable those charitable objects to be pursued.

350 For the above reasons I am not satisfied that the LIV has established that the LIV

pursues its membership activities, to the major extent that it does, in order to enable it directly

or indirectly to promote its charitable purposes.”



In coming to that conclusion, the judge determined that to ascertain whether an entity is an

organisation having as its dominant purpose a charitable purpose, it is necessary to have regard the

objects, purposes and activities of the subject entity (paragraph 173).

The starting point for this was the objects as listed in the constitution of the LIV (paragraph 174).

On this point, there were a number of different objects of the LIV in its constitution: -

Some went to the maintenance and sustenance of the law, which was a charitable

purpose undertaken by the LIV (see paragraph 181 and paragraph 132).

The LIV’s regulatory activities, and the relevant constitutional objects under which they

occurred, were independent non-charitable objects and activities (see paragraphs 182

and 145).

The promotion of the status and dignity of the legal profession and providing protection

and advantages to those in the profession were not charitable purposes (see paragraphs

183 and 133)

Given the different purposes or objects in the constitution, the judge was unable to determine which

was the dominant purpose (paragraph 186) – so it was necessary to look the holistic evidence,

including primarily the activities and revenue of the LIV.

As set out above, in the circumstances, there were considerable activities and revenue from non-

charitable activities (such as the book shop, legal referral service, member services etc.). This

prevented the dominant purpose of the LIV from being a charitable purpose.

Accordingly, the payroll tax exemption was denied.



21 Macedo v Chief Commissioner of State

Revenue [2015] NSWCATAD 227

21.1 Summary

The New South Wales Civil and Administrative Tribunal remitted the matter to the Commissioner for

reconsideration as the Tribunal was not empowered to determine the liability of the applicant, Ms

Macedo, given no assessment had been issued to her.

Further, the factual background was at odds with the outcome in related proceedings in Ross v Chief

Commissioner of State revenue (No.2) [2010] NSWADT 51 and Ross v Chief Commissioner of State

Revenue (No.2) [2010] NSWADTAP 74.

21.2 Facts

The matter has a lengthy history and a number of related proceedings.

On 7 February 1997 Mr Raymond Ross entered into a contract to purchase a property located in

Naremburn (Naremburn Property). The Naremburn Property was never transferred to Mr Ross.

Instead on 21 March 1997 the applicant executed a declaration of trust (Trust Deed) over the

Naremburn Property as trustee of a trust in favour of Mr Ross and the Naremburn Trust was

transferred to the applicant. However, the Trust Deed was not lodged with the Commissioner for

stamping.

In 2008, Mr Ross sought to have the Naremburn Property transferred to him from the applicant

claiming the “apparent purchaser” exemption under section 55 of the Duties Act 1997 (NSW) (DA

NSW). Mr Ross claimed he was the real purchaser and that the applicant had held the property on his

behalf under a purchase price resulting trust as evidenced by a copy of the Trust Deed which he then

lodged with the Commissioner. The Commissioner denied the exemption and assessed Mr Ross on

the transfer, this decision being later affirmed by the Tribunal and Appeal Panel (see Ross v Chief

Commissioner of State revenue (No.2)[2010] NSWADT 51; Ross v Chief Commissioner of State

Revenue NSWADTAP 74).

On 28 July 2008 the Commissioner issued Mr Ross with an assessment of duty and interest in the

amount of $24,460 in respect of the declaration of trust over the Naremburn Property under the Trust

Deed (Assessment). The revenue office’s practice was to issue assessments in respect of trust

deeds to the lodging party rather than the party liable (ordinarily the trustee, which was the applicant).

Mr Ross’ objection against the Assessment was subsequently denied.

Following unsuccessful attempts to collect the amount due under the Assessment from the applicant,

in or around 2013, the Commissioner sought to satisfy the debt by garnishment of the applicant’s



bank account at which point the applicant became aware of the Assessment. The applicant’s out-of-

time objection was only partially allowed by the Commissioner (as to interest only) on 27 August 2014.

21.3 Legislation

Broadly, section 73D of the Stamp Duties Act 1920 (NSW) (SDA NSW) provides that a copy of an

original instrument was chargeable with duty if the original was executed on or after 20 October 1982,

provided the original or another copy had not already been stamped and once a copy was stamped

the original was also deemed to be stamped.

The Second Schedule to the SDA NSW relevantly provides that a declaration of trust over dutiable

property was subject to duty on the value of the dutiable property and the person primarily liable for

the duty was the person declaring the trust.

Under the Taxation Administration Act 1997 (NSW)(TAA NSW)the Commissioner is empowered to

make an assessment of the tax liability of a taxpayer (section 8) and gives the Commissioner the

power to issue a notice of assessment showing the amount of assessment “in a form approved by the

Chief Commissioner” (section 14).

21.4 Issues

Whether the Commissioner was entitled to assess duty on merely citing a copy of the Trust Deed

under the SDA.

21.5 Decision

Senior Member Verick remitted the matter to the Commissioner for reconsideration. As the

Assessment had not been issued to the applicant (the liable party) but instead to Mr Ross, the

Tribunal was not empowered to review the liability of the applicant to duty in respect of the Trust Deed.

Following the decision in Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184, the

Senior Member noted that it was the Assessment which the Tribunal was empowered to review under

section 96 of the TAA NSW. Under the SDA NSW the applicant would be the liable party in respect of

the Trust Deed. However, the Commissioner had assessed Mr Ross in respect of the Trust Deed not

the applicant.

Senior Member Verick also noted that a reconsideration of the factual background needed to be

undertaken in relation to the related proceedings since assessing ad valorem duty on the initial

declaration of trust over the Naremburn Property in favour of Mr Ross seemed inconsistent with also

assessing ad valorem duty on the subsequent transfer of the Naremburn Property from the applicant

as trustee of the trust to Mr Ross given the Trust Deed had now been duly stamped.



22 Metricon Qld Pty Ltd v

Chief Commissioner of State Revenue (No. 2)

[2016] NSWSC 332

22.1 Summary

The taxpayer successfully sought the primary production land tax exemption for the years from 2009-

2013 in relation to land that was being both used for primary production and also held for future

residential development. The Court held that it was the current use or uses of the land that were

relevant, not any intended future use of the land.

22.2 Facts

The land in question is located in the Tweed Valley and was purchased by the taxpayer in 2008 and

2009. Cattle grazing operations were conducted on the land by a partnership of individuals under an

agreement with Metricon Qld Pty Ltd (Metricon).

By the time of the hearing the Commissioner accepted that the primary production use of the land had

the required significant and substantial commercial purpose and was engaged in for the purpose of

profit on a continuous or repetitive basis.

The land was bought for around $60 million and had become zoned for residential use. In the land tax

years in question, Metricon paid consultancy fees of approximately $2.2 million.

One component of the land comprised a number of lots. Due to planning requirements, while a

project application had been made by 2009, it was not approved until 30 May 2014 after an extensive

range of plans and reports had been submitted. By 27 March 2015, a construction certificate for the

phase 1 bulk earthworks had not been issued – but a temporary sales office was constructed in

2013/14 on part of the land.

The other components of the land were held for future development without applications for

development approval being made at the relevant times.

For the other components of the land, a small number of houses were rented with curtilages occupied

by tenants – these were fenced off from the main grazing areas.

As the last land tax year in question was the 2013 year (i.e. considering the use as at 31 December

2012) – the approval and construction of the sales office occurred after the relevant time.



22.3 Legislation

Section 10AA of the Land Tax Management Act 1956 (NSW) (LTA NSW) sets out the requirements

for exemption for primary production land and states that:

(1) Land that is rural land is exempt from taxation if it is land used for primary production.

(2) Land that is not rural land is exempt from taxation if it is land used for primary production and

that use of the land:

(a) has a significant and substantial commercial purpose or character, and

(b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not

a profit is actually made).

(3) For the purposes of this section, land used for primary production means land the dominant

use of which is for:

…

(b) the maintenance of animals (including birds), whether wild or domesticated, for the

purpose of selling them or their natural increase or bodily produce, or

…

(4) For the purposes of this section, land is rural land if:

(a) the land is zoned rural, rural residential, non-urban or large lot residential under a

planning instrument, or

(b) the land has another zoning under a planning instrument, and the zone is a type of rural

zone under the standard instrument prescribed under section 33A (1) of the

Environmental Planning and Assessment Act 1979, or

(c) the land is not within a zone under a planning instrument but the Chief Commissioner is

satisfied the land is rural land.

22.4 Issues

Was primary production the ‘dominant use’ of the land?

22.5 Decision

The Chief Commissioner did not dispute that the land was used for primary production. However, the

Chief Commissioner argued that the primary production use was not the dominant use of the land.

The parties agreed that the primary production exemption was to be determined in respect of each of

the five areas of land separately (see paragraph 10 and based on Ferella v Chief Commissioner of

State Revenue [2014] NSWCA 378).

The primary production use of the land was for the maintenance of cattle for sale. However, the Chief

Commissioner alleged that the dominant use was not for the maintenance of cattle when compared

with other, competing uses, being:

Use as a land bank by Metricon;



Alternatively, the rent and residential use of dwellings on some of the properties;

Alternatively, the use of rental for agistment of cattle; or

Alternatively, for commercial land development.

Metricon argued that the term “used” for primary production means only the physical use of the land.

It was common ground that Metricon acquired the land for future residential development, but also

that no development works had commenced on the land in the relevant land tax years (cf Leda

Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366 (Leda

Manorstead)). In the Leda Manorstead case, it was held that the dominant use was for commercial

land development, rather than primary production. The main distinction between the situation in

Metricon and Leda Manorstead (see paragraph 21) is that here:

no development approval had been granted;

development approval had only been sought for a component of the land; and

no bulk excavation works or other works had commenced on the land.

The judge confirmed that the decision between competing uses should compare only the other

present uses of the land, not any future use of the land (see paragraph 22 and Leda Manorstead at

paragraphs 18, 19 and 24), confirming that the land in Leda Manorstead had been used for

commercial land development because substantial earthworks were being undertaken in furtherance

of the developing the land for residential subdivision (paragraph 22).

However, the Judge did say that the required comparison between competing uses to determine

which use is the dominant use is not confined to other physical uses or activities (paragraphs 24, 48,

60 and 70).

At paragraph 70:

“I see no reason to read down s 10AA(3) to require that a competing use against which the

primary production use is to be measured must be a physical use. As noted earlier in these

reasons, “use” has more than one ordinary meaning. An ordinary meaning of “use” includes

employing land for a purpose, putting it in service or turning it to account. This need not be a

physical use. To this extent, I agree with the decision of the Appeal Panel of the

Administrative Decisions Tribunal in Re Ashleigh Developments Pty Ltd v Chief

Commissioner of State Revenue [2012] NSWADTAP 25; (2012) 88 ATR 200 at [36]. But “use”

does require doing something with the land, whether it be using it physically or by putting it to

advantage, for example, by letting it.”

The use for the purposes of the exemption must be a current use and not an intended future use (at

paragraph 71). The holding of land as part of Metricon’s stock-in-trade was not a current use. For

developers of land, a use for stock-in-trade may occur when it is sold, displayed for sale or when used

for obtaining necessary approvals – but only to the extent that surveyors or other parties go onto the

land to survey it (see paragraph 72).



The Judge determined that the consultancy reports and associated expenses were only a use of the

land to the extent that the land was physically used in carrying out the activities required to obtain the

approvals (see paragraph 72).

However, otherwise the expenses were incurred in relation to obtaining those reports and the

approval were incurred in connection to a future use (see paragraph 24).

The claiming of a tax deduction for a drop in value of the land as stock in trade or the claiming of

deductions for borrowing expenses was not an intangible use of the land (paragraph 81).

The holding the land for trading stock purposes was not a competing use of the land for the purposes

of the exemption (paragraph 82).

Likewise, the judge mostly rejected the argument that the lands were used for commercial land

development because the ongoing expenses exceeded the financial outlay and return from primary

production. This was only accepted to the limited extent that the lands were being physically used for

the carrying out the preliminary activities for future residential use. This limited physical use was not

of a character or intensity that would mean that the primary production use was not the dominant use

(paragraph 125).

Lastly, while there was some use of the land for agistment purposes and this was a competing use, it

was not the dominant use of the land as it was minor in nature (see paragraphs 126 and 127).

Likewise the renting of houses and curtilages on small portions of the land was a competing use–

however, the Court concluded that the primary production use was greater in scale and intensity and

was the dominant use of the land (paragraph 153).



23 Robert John Mould (as trustee for the estate

of Gwenda Meryl Mould) v Commissioner of

State Revenue

[2015] VSCA 285

23.1 Summary

The Supreme Court of Victoria Court of Appeal dismissed the appeal made by the appellant (Robert

John Mould) in respect of a previous unsuccessful appeal brought before the Supreme Court relating

to a land tax assessment issued by the Commissioner on 26 August 2010, for the land at 155

Dandenong-Hastings Road, Lyndhurst (the Lyndhurst Land).

23.2 Facts

Following the death of Gwenda Meryl Mould on 17 February 2006, the appellant (her son, and one of

the beneficiaries of the Estate) was appointed the sole executor of the Estate by grant of probate

dated 11 July 2006.

As at 31 December 2009, the appellant owned the Lyndhurst Land (at the time under contract of sale

ultimately settling on 29 January 2010). A special condition in the sale allowed the appellant to

continue to use the land for farming purposes on an ongoing basis.

Prior to 26 March 2009, the Lyndhurst Land was not in an “urban zone”. However, rezoning of the

Lyndhurst Land occurred and this resulted in it becoming land in an urban zone.

The appellant conducted a cattle farming business on the Lyndhurst Land (and other properties). The

business was the continuation of that which the Mould family had been running for many years. Other

residential properties held by the Estate were rented out to tenants to generate rental income.

On 26 August 2010, the Commissioner issued a land tax assessment notice (the Assessment) to the

appellant. The Assessment assessed the Lyndhurst Land to land tax in the amount of $1,089,898.60

for the 2010 tax year.

On 25 October 2010, the appellant objected to the Assessment, asserting that the Lyndhurst Land

was exempt land under section 67 of the Land Tax Act 2005 (Vic) (LTA Vic). The objection was

subsequently disallowed by the Commissioner on 1 September 2011.

On 19 October 2011, the appellant requested that the Commissioner treat the objection as an appeal

and cause it to be heard by the Supreme Court of Victoria. The appeal was heard and subsequently

dismissed by the judge on 12 June 2014.



23.3 Legislation

As at 31 December 2009, the primary production exemption under section 67 of the LTA Vic involved

both land and owner requirements.

Section 67 of the LTA Vic relevantly provides:

67 Exemption of primary production land in an urban zone in greater Melbourne (1) Land is exempt land if the Commissioner determines that –

(a) the land comprises one parcel that is – (i) wholly or partly in greater Melbourne; and (ii) wholly or partly in an urban zone; and (iii) used solely or primarily for the business of primary production; and

(b) the owner of the land is a person specified in subsection (2). (2) The owner of the land must be –

(a) …; or (b) …; or (c) a trustee of a trust of which –

(i) the sole business is primary production of the type carried on on the land; (ii) each beneficiary is a natural person who is entitled under the trust deed to an

annual distribution of the trust income; and (iii) at least one of the beneficiaries, or a relative of at least one of the beneficiaries, is

normally engaged in a substantially full-time capacity in the business of primary production of the type carried on on the land.

23.4 Issues

The Commissioner accepted that the requirements of paragraph 67(1)(a) of the LTA Vic were met in

respect of the Lyndhurst Land, including that the land was used primarily for the business of primary

production.

The key issue for the court’s determination was whether the appellant satisfied the requirements of

paragraph 67(2)(c)(i) of the LTA Vic, that is, whether he was a trustee of a trust the sole business of

which is primary production of the type carried on on the land.

23.5 Decision

The hearing

At the hearing before the trial judge, there was no dispute that the Lyndhurst Land was used primarily

for primary production. The question before his Honour was whether that was the sole business of the

trust which owned the land, for the purposes of paragraph 67(2)(c)(i) of the LTA Vic, given that the

Estate also rented out the residential properties for the purposes of generating income.

His Honour held that the Estate also conducted a business of leasing residential properties,

separately from its primary production business. On this basis, it was held that the Estate’s primary

production business was not its sole business, and as such, the trial judge dismissed the appeal.

The appellant’s submissions



The appellant appealed the trial judge’s decision on a number of grounds, with the principal

submission being that the mere holding of residential properties for lease could not, without more,

constitute a “business” for the purposes of section 67 of the LTA Vic. The appellant submitted that in

the absence of a statutory definition of “business” in the LTA Vic, the term business under section 67

should take its meaning from common law. Subsequently relying upon the decisions in the cases of

Spriggs and McDonald, distinguishing the rent from the residential properties as “passive” income,

rather than as a business (generating active income), given that no ancillary services were provided

beyond the landlord’s obligation to maintain the properties, and that the changes in tenants were

infrequent.

The Commissioner’s submissions

The Commissioner contended that the estate owned a large portfolio of residential properties which

had been rented on a continuous basis for the purpose of deriving a profit. The letting of the

properties was managed through agents, although it also required some involvement by the appellant.

The management of the rental properties involved business-like activities and repetition both in

entering tenancy agreements and receiving rental income. The scale of the activities was substantial,

comprising 23 properties. The rental of the residential properties produced most of the income of the

Estate.

The Commissioner submitted that it was open for the Commissioner to find that the Estate had

multiple sources of business income, including income derived from operating a rental property

business. The Commissioner contended that the activities of renting a portfolio of properties

amounted to a business other than that of primary production. This followed from a consideration of

factors, such as the pursuit of profits, the scale and commercial character of the activities, their

system or organisation, and how continuous and repetitious the activities were. The Commissioner

relied on authorities to establish that activities associated with leasing residential properties were

capable of amounting to a business.

The Commissioner further contended that there was no legal error in the Commissioner’s

determination in respect of the land tax assessment.

Judges’ determination

The judges were of the view that the concept of “business” should be considered to have a broad

meaning.

The judges agreed with the application of the concept of “business” by the Commissioner (and

applied by the primary judge), in that it should be determined by the proper construction of that term in

its particular statutory context, rather than being determined by common law.

The judges asserted that the issue in this case does not concern the income derived from the buying

or selling of property, or the character of the receipt of income from any particular source or activity,

but rather whether or not the appellant’s sole business is that of primary production.

There was no dispute as to the income of the Estate that was generated from the rental of the

residential properties. The relevant question was whether that income arose from carrying on a

business.



The application of Spriggs by the primary judge, which neither party contested, led to his Honour

concluding that in the land tax assessment year of 2010, the trust conducted a business of renting

properties, and this was affirmed by the judges.

The judges agreed with the primary judge in respect of there being no fixed rule that purchasing and

then renting property cannot, in itself, amount to carrying on a business. Further, in general, there is

no clear cut factor which is decisive of the issue as to whether or not an entity is carrying on a

business.

The judges found no error in the primary judge’s decision that the extensive rental portfolio of

residential properties constituted a significant commercial activity and was in the nature of carrying on

a business.

Accordingly, the appeal was dismissed by the Supreme Court of Victoria Court of Appeal



24 Pascu & Ors v Commissioner of State

Revenue [2016] VCAT 668

24.1 Summary

In Pascu v Commissioner of State Revenue (Review and Regulation) [2016] VCAT 668, the Victorian

Civil and Administrative Tribunal (VCAT) dismissed the application by the taxpayers for an amended

assessment in respect of transfers of land, and found in favour of the Commissioner of State Revenue.

24.2 Facts

On 23 May 2007, Gary Pascu, James Karambelas, Peter & Rita Lambrineas, and GJP Developments

Pty Ltd (GJPD) (collectively, the Applicants) entered into a Joint Venture Agreement for the

development of 8 units, which were either to be sold to third parties or transferred to the JV members

upon completion. Under the JV Agreement, GJPD held the JV Assets on behalf of the JV members

according to their JV interests, i.e. Gary Pascu (50%), James Karambelas (25%), Peter & Rita

Lambrineas (25%).

On 1 June 2007, GJPD (as transferee and manager of the JV) executed a land transfer notice in

respect of the property located at 39-41 and 43-45 Johnston Street, Port Melbourne (the Property).

Duty was paid on the transaction, and the transfer instrument was stamped accordingly on 15 June

2007.

In April 2009, Gary Pascu decided to divest 50% of his share (i.e. 25%) in the Property to GJP

Investments Pty Ltd (GJPI). Pursuant to the newly drafted 2009 Joint Venture Agreement (2009 JV

Agreement) and as a result of this divestment, GJPI also became a JV member.

In October 2009, GJPD transferred 6 of the lots to the other members of the JV.

On 11 November 2009, the Commissioner issued an assessment in respect of the transfer of the 6

lots.

On 17 November 2009, the Accountant for GJPD made submissions to the Commissioner around the

circumstances of the transfer of the units. As a result of the submissions, the Commissioner cancelled

the assessment on 18 November 2009, and each transfer of land was stamped as ‘exempt from duty’

pursuant to section 34 of the Duties Act 2000 (Vic) (DA Vic).

Subsequently, an investigation by the Commissioner was conducted, and a fresh assessment was

issued in respect of the transfer of the 6 lots.



24.3 Legislation

Pursuant to Chapter 2 of the DA Vic, the relevant exemptions to duty considered in these proceedings

are contained in the following sections:

34 Property vested in an apparent purchaser

(1) No duty is chargeable under this Chapter in respect of –

…

(b) a transfer of dutiable property or marketable securities referred to in section 10(2)

from an apparent purchaser to the real purchaser in a case where dutiable property

or marketable securities are vested in an apparent purchaser upon trust for the real

purchaser who provided the money for the purchase of the dutiable property or

marketable securities.

36 Property passing to beneficiaries of fixed trusts

(1) No duty is chargeable under this Chapter in respect of a transfer of dutiable property that

is subject to a fixed trust (the principal trust) to a beneficiary of the trust if –

(a) the duty (if any) charged by this Act in respect of the dutiable transaction that

resulted in the dutiable property becoming subject to the principal trust has been paid

or the Commissioner is satisfied that the duty will be paid; and

(b) the beneficiary was a beneficiary at the relevant time; and

…

(5) In this section –

fixed trust means a trust other than –

(a) a discretionary trust (within the meaning of section 36A); or

(b) a trust to which a unit trust scheme relates; or

(c) a superannuation fund (within the meaning of section 41A);

relevant time in relation to dutiable property that is subject to the principal trust,

means the time at which the property first became subject to the principal trust.

36B Property passing to unitholders in unit trust schemes

(1) No duty is chargeable under this Chapter in respect of a transfer of dutiable property that

is subject to a unit trust scheme (the principal scheme) to a unitholder in the scheme if –

(a) the duty (if any) charged by this Act in respect of the dutiable transaction that

resulted in the dutiable transaction becoming subject to the principal scheme has

been paid or the Commissioner is satisfied that the duty will be paid; and



(b) the unitholder was the unitholder at the relevant time; and

…

(5) In this section –

relevant beneficiary of a discretionary trust means a natural person who –

(a) was a beneficiary of that trust at the relevant time; or

(b) became a beneficiary of that trust after the relevant time by reason of –

(i) becoming a spouse of domestic partner of a beneficiary within a class of

beneficiary described in the discretionary trust; or

(ii) becoming an adopted child or step child of, or being a lineal descendant of,

a beneficiary within a class of beneficiary described in the discretionary trust;

or

(iii) being an adopted child, step child or lineal descendant of a person

referred to in subparagraph (i);

relevant time in relation to dutiable property that is subject to the principal scheme, means

the time at which the property first became subject to the principal scheme;

24.4 Issues

The Tribunal considered two issues.

Firstly, whether contributions made by the Applicants in respect of the purchase of the Property and

development of the units were contributions by way of payment of purchase price and payment in

relation to the development of the JV project, or were loans to GJPD in order to purchase the Property

and develop the JV project.

Secondly, whether the 2009 JV Agreement cancelled the previous JV Agreement, and any trust that

may have existed thereunder. If this was the case, it would follow that any trust created by the 2009

JV Agreement has not paid duty on the property.

24.5 Decision

The Tribunal found in favour of the Commissioner, and dismissed the Applicants’ application for an

amended duties assessment in respect of the transfers of land. As such, it was held that duty was

payable in this case as a new trust was formed by the 2009 JV Agreement.

First issue

In regards to the first issue in the case, the Tribunal held that the amount paid by the Applicants to

GJPD (in financing the JV project) was a loan and not a contribution to the purchase price. As such, it



was held that the Applicants had not contributed to the purchase of the land or development of the

units, so the apparent purchaser exemption under section 34 of the DA Vic did not apply.

The Tribunal was not satisfied that the Applicants had discharged the onus of proving that the

relevant contributions made by the Applicants were mistakenly marked as loans (rather than equity) in

the financial statements and tax returns of GJPD. It was asserted by the Tribunal that the Applicants

had not taken any steps to correct these mistakes, and had failed to call the accountant as a witness

to give evidence on the issue.

Second issue

On the second issue, the Tribunal also found in favour of the Commissioner and held that the 2009 JV

Agreement effectively cancelled the previously formed 2007 JV Agreement, and resettled a new trust.

The Tribunal held that Clause 22 of the 2009 JV Agreement was sufficient and clear to cancel and

render void the 2007 JV Agreement, and as such the trust under the 2007 JV Agreement was brought

to an end. Therefore, the relevant exemptions sought (under sections 36 or 36B of the DA Vic) by the

Applicants could not be relied upon as the property transferred was dutiable property of the 2009 trust

and no duty had been paid on that transaction.



25 Perrone v Commissioner for State Revenue

[2015] VCAT 1722

25.1 Summary

The Victorian Civil and Administrative Tribunal held that the exemption under section 34 of the Duties

Act 2000 (Vic) (DA Vic) did not apply to the transfer of an interest in real property to the applicant

from his brother, not being satisfied that it was the intention of the brothers at the time of purchase

that the brother should hold his interest in the Property on Trust for the applicant, the real purchaser.

25.2 Facts

In March 1993 the property located at 45 Munro Street, Kew (Property) was purchased by two

brothers, Mr Livio Perrone and the applicant, Mr Santo Perrone, for a total consideration of $210,000.

By transfer of land instrument dated 20 July 1993 the property was transferred to the brothers as joint

tenants. The applicant provided the $21,000 deposit for the purchase of the Property. It was

contended by the applicant that Mr Livio Perrone provided the balance of the purchase monies by

way of a loan of $189,500 to the applicant on the condition that he also be registered on title.

In 1996 the brothers changed their holding in the Property to that of tenants-in-common in equal

shares.

By transfer of land instrument dated 3 February 2014, the interest held by Mr Livio Perrone in the

Property was transferred to the applicant. The applicant claimed the exemption under section 34 of

the DA Vic in respect of this transfer.

The applicant contended he repaid his brother’s loan of $189,500 by cheques totalling $153,000

($29,000 in 1995 and $124,000 in 2013) and by doing work to his brother’s other property with a total

value of $36,500.

25.3 Legislation

Relevantly, paragraph 34(1)(b) of the DA Vic provides an exemption from duty on the transfer of

dutiable property from an apparent purchaser to a real purchaser, where the apparent purchaser

holds the property upon trust for the real purchaser who provided the money for the purchase of the

property.

Under subsection 34(2A) of the DA Vic, a reference to a real purchaser who provided the money for

the purchase of the property includes a person on whose behalf the money for the purchase of the

dutiable property was provided.



25.4 Issues

Whether the transfer of the interest in the Property to the applicant from his brother was exempt from

duty under section 34 of the DA Vic.

25.5 Decision

Senior Member Robert Davis held that the exemption did not apply because based on the evidence

he was not satisfied that at the time of the purchase it was the intention of the brothers that Mr Livio

Perrone should hold his interest in the Property on Trust for his brother, the real purchaser. The

Senior Member noted a number of factors pointing to the conclusion that at the time of purchase the

brothers intended they should hold the property as tenants-in-common in equal shares. These factors

included the recent change in holding from joint tenants to tenants-in-common, the fact that the

applicant only repaid $124,000 to his brother in 2013 (20 years after the Property was first purchased)

inconsistencies in the brothers’ statutory declarations which suggested the figures presented were a

“recent invention” and the absence of any loan documentation or invoices for work undertaken by the

applicant at the brother’s other property.



26 Placer Dome Inc (now an amalgamated

entity named Barrick Gold Corporation) and

Commissioner of State Revenue [2015]

WASAT 141

26.1 Summary

Barrick Gold Corporation (Barrick) acquired a controlling interest in Placer Dome Inc (Placer Dome)

in 2006. The Tribunal accepted the Commissioner’s assessment that Placer Dome was land rich

under the old land rich duty rules.

The taxpayer attempted to use a DCF analysis based on the expected future life of the asset and

future gold prices to arrive at the value of the land. The difference in value between the acquisition

price and asset value was attributed to “goodwill”.

The Commissioner contended the correct method was to take the purchase price and back out the

value of identifiable non-land assets to arrive at the land value. As a check the Commissioner applied

the same DCF analysis, but with longer life for the asset and higher future gold prices.

26.2 Facts

Placer Dome and Barrick were Canadian goldminers. Barrick Gold Corporation made a takeover offer

for Placer Dome in October 2005. By February 2006, acceptances had reached 90% of the shares

on issue and Barrick became the sole shareholder of Placer Dome in March 2006. The companies

were amalgamated in May 2006.

As Placer Dome held substantial mining interests in Western Australia and elsewhere – Western

Australian land rich duty was relevant and, in April 2006, a request was lodged with the Commissioner

to determine if a dutiable statement was required to be lodged.

In 2013, the Commissioner determined that Placer Dome was a listed landholder corporation and that

the amount of duty payable was $54.85m based on land and chattels in WA of $1.02b.



26.3 Legislation

Under the now repealed Stamp Act 1921 (WA) (Stamp Act), section 33 set out the valuation

principles:

33. Valuation of land or other property

(1) When determining the value of any land or other property for the purpose of [this Act]

(a) the existence of any overriding power of revocation or reconveyance is to be disregarded;

(b) the value of an undivided share in the land or other property, whether held jointly or in common, is to be ascertained by multiplying the total value of the land or other property by the share expressed as a fraction; and

(c) when applying the ordinary principles of valuation

(i) it is to be assumed that a hypothetical purchaser would, when negotiating the price of the land or other property, have knowledge of all existing information relating to the land or other property; and

(ii) no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to the land or other property.

Section 76 provided definitions for the land rich duty provisions, including relevantly:

76. Terms used in this Part

(1) In this Part, unless the contrary intention appears

acquire, in relation to an interest in a WA company or a corporation, means to acquire beneficially in any manner or by any means …

chattels means goods, wares or merchandise other than

…

and includes an estate or interest in them;

…

entitled means beneficially entitled, and entitlement has a corresponding meaning;

land includes a mining tenement, and also includes

(a) any estate or interest in land; and



(b) anything fixed to the land including anything that is, or purports to be, the subject of an entitlement separate from the ownership of the land;

minerals means naturally occurring substances obtained or obtainable from the earth;

mining tenement means

(a) a mining tenement held under the Mining Act 1978 being a mining tenement within the meaning of that Act or the Mining Act 1904 2;

(b) a mining tenement or right of occupancy continued in force by section 5 of the Mining Act 1978; and

(c) a tenement, right or interest that is

(i) similar to a tenement or right referred to in paragraph (a) or (b); and

(ii) held under the law of another State, a Territory, the Commonwealth or another jurisdiction;

Section 76ATI defined when a listed company was a land rich landholder:

76ATI. Meaning of 'listed landholder corporation'

(1) In this Division a corporation is a listed landholder corporation if

(a) it is

(i) a body corporate that is taken to be registered outside Western Australia (for the purposes of the Corporations Act) or that is otherwise formed or incorporated outside Western Australia, …

and

(b) it is a landholder within the meaning in subsection (2) and is listed on a recognised financial market.

(2) A corporation is a landholder for the purposes of this Division if at the time of an acquisition of a controlling interest

(a) it is entitled to land situated in Western Australia and the unencumbered value of the land is not less than $1 000 000, or it is entitled to land situated in Western Australia as a coowner of the freehold or of a lesser estate in the land and the value of the whole of the freehold or lesser estate is not less than $1 000 000; and

(b) the value of all land to which the corporation is entitled, whether situated in Western Australia or elsewhere, is 60% or more of the value of all property to which it is entitled, other than property directed to be excluded by subsection (4),



26.4 Issues

Was Placer Dome ‘land rich’, on the basis that land comprised 60% or more of its total worldwide

asset value. To determine this, the Tribunal had to decide between two competing valuation

methodologies.

26.5 Decision

The Tribunal needed to consider the entire worldwide assets of Placer Dome and considerable expert

witnesses and valuation material were placed before the Tribunal.

The key issue between the parties was not the total value of all assets of the group – while it was not

necessarily agreed, the Commissioner accepted a figure of $12 billion for the total worldwide assets

(being the transaction price, grossed up for assumed liabilities and reduced by statutorily excluded

property).

The issue was, instead, whether the value of the worldwide land assets of the group was enough to

mean that Placer Dome’s land assets were worth 60% or more of its total asset value.

The taxpayer contended that its land assets had a value of less than $6 billion and it had goodwill of

more than $6 billion. However, the Commissioner contended that Placer Dome had no material

goodwill and the value of its land was in excess of $10 billion.

In determining the correct methodology to use to determine the land value, the Tribunal (at

paragraphs 261 and following) stated:

“261 In fact, in every case which has been brought to my attention, including

Nischu [Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437], to establish

whether a corporation is a landholder, both the starting and end points are the value of the

total property, including the land assets. In particular, the sum of the value of the individual

assets which make up the total is invariably reconciled with the total value of the property.

262 To argue that there is no requirement to do so, and that the value of the land

should be arrived at without regard to the price paid for all of the property, is, in my opinion,

incorrect.

…

265 In my view, the correct approach, having valued the component assets

making up the total property, is to then subtract from that the value of the 'nonland' assets.

That would leave a value which can be attributed to land assets and a simple arithmetical

calculation will establish whether the balance is 60% or more of the total.

266 The principles for determining the value of the various assets are the ordinary

principles of valuation, with full knowledge of all existing information relating to the property

and with no account being taken of any amount that a hypothetical purchaser would have to

expend to reproduce, or otherwise acquire, a permanent right of access to and use of existing

information relating to the land or other property.



267 The sum of the values of the total property must be crosschecked with the

acquisition price, which the valuers have all agreed is the best evidence of the value of the

total property.”

Initially, the Tribunal considered the various inputs that needed to be used in the discount cash flow

(DCF) model – and preferred the Commissioner’s approach to future gold prices and production

assumptions.

This resulted in a high total asset value. From this value, the identifiable non-land assets had to be

taken away, in order to arrive at a land value.

It therefore became necessary to determine whether goodwill was an identifiable non-land asset that

was to be subtracted from the value of the total assets.

The Commissioner’s expert witness made a statement that “it is generally conceptually illogical that a

mining company will have material goodwill” (at paragraph 355). However, the Tribunal did not find it

necessary to determine whether a mining company will have any material goodwill (at paragraph 378).

This was because no evidence was led to show the value of goodwill as a separate item and no

valuations had been undertaken (paragraph 377). Implicitly, the Tribunal rejected the approach of

using goodwill as a term for a balancing adjustment between overall purchase price or asset value

and the material identifiable assets.

Once the Commissioner’s valuation methodology was accepted, Placer Dome was land rich and duty

was applied to the WA land and chattel values.



27 Regis Mutual Management Pty Ltd v Chief

Commissioner of State Revenue [2015]

NSWCATAD 213

27.1 Summary

The New South Wales Court of Appeal held that that the applicant was grouped with Capricorn

Society Limited (CSL) and discretionary degrouping for payroll tax was not available.

27.2 Facts

The applicant was established in 2008 as a special purpose vehicle for joint venture between Regis

Mutual Management Ltd (Regis Ltd) and CSL. The JV traded from 1 June 2008 to 31 December

2011.

The applicant was owned at the relevant times as to 50% by Regis Mutual Management Australia Pty

Ltd (Regis Australia), a subsidiary of Regis Ltd and 50% by Capricorn Society Financial Services Pty

Ltd, a subsidiary of CSL.

CSL employees provided services to the applicant under a Service Agreement, covering IT, finance

(i.e. accounting) and HR services.

CSL had applied for degrouping in June 2012 – but this was disallowed and the applicant, Regis

Australia and CLS were grouped.

The applicant objected on the basis that the degrouping power in section 79 of the Payroll Tax Act

2007 (NSW) (PTA NSW) should have been applied, but this was disallowed by the Commissioner.

27.3 Legislation

Section 71 of the PTA NSW relevantly provides:

71 Groups arising from the use of common employees

…

(3) If one or more employees of an employer perform duties for or in connection with one or

more businesses carried on by one or more other persons, being duties performed in

connection with, or in fulfilment of the employer’s obligation under, an agreement,

arrangement or undertaking for the provision of services to any one or more of those other

persons in connection with that business or those businesses, the employer and each of

those other persons constitute a group.



(4) Subsection (3) applies to an agreement, arrangement or undertaking:

(a) whether the agreement, arrangement or undertaking is formal or informal, express

or implied, and

(b) whether or not the agreement, arrangement or undertaking provides for duties to

be performed by the employees or specifies the duties to be performed by them.

Section 79 of the PTA NSW provides the Chief Commissioner may exclude a person from a group:

‘only if … satisfied, having regard to the nature and degree of ownership and control of the

businesses, the nature of the businesses and any other matters the Chief Commissioner

considers relevant, that a business carried on by the person, is carried on independently of,

and is not connected with the carrying on of a business by any other member of the group.’

27.4 Issues

Were the relevant entities members of the same group under subsection 71(3), and if so, should they

be degrouped under section 79.

27.5 Decision

The applicant was unsuccessful before Senior Member Isenberg.

For the grouping decision under subsection 71(3) of the PTA NSW - while the evidence was that the

services provided by CSL to the applicant occupied a fraction of the time worked by CSL employees

overall, this was not relevant for subsection 71(3) (cf subsection 71(2)). On the facts, the

determination was that one or more employees of CSL did perform duties in connection with the

business conducted by the applicant (paragraph 44). It was held not to matter that there was no

dedicated or identifiable group of employees who performed the work.

For the degrouping decision under section 79 - the following factors were considered as to whether

the business carried on by the applicant was independent of and not connected to the business of

CSL:

Nature and degree of ownership and control of the businesses

On this point, CSL through its subsidiary owned 50% of the applicant, was entitled to exercise 50% of

the votes at meetings of the members of the applicant and could appoint 2 out of 4 voting directors (a

fifth non-voting director was the COO). At paragraph 60, it was considered significant that CSL

effectively held a veto at board meetings, even if it did not have control.

Nature of the businesses

CSL’s business was the operation of an automotive parts and accessories buying company along

cooperative principles. The business of the applicant was in the specialist development of

discretionary mutuals and other alternative risk transfer mechanisms, and their management.

However, during 2011, CSL and the applicant became to actively compete against each other in the



mutual management business. This was said to lessen the submission that the two businesses are

fundamentally different. It was also held that this consideration was no determinative – i.e. it is not

the case that there can be never be grouping if the businesses are different in nature.

Other factors

Other factors that were considered included:

The services provided by CSL to the applicant were approximately 0.24% of the total CSL

employee days and the fee of $200,000 p.a. was 0.34% of the group’s revenue. This was

considered at paragraph 74 to be less relevant that the importance that the services had

in relation to the applicant’s business. It was also relevant that the fee was between 13%

and 14.9% of the annual personnel expense of the applicant and between 5.6% and 6%

of the total non-depreciation expense of the applicant.

The services agreement was not signed until 18 July 2011, despite operating from 1 June

2008. Also there was no evidence that the applicant considered obtaining the services

from providers other than CSL, until the JV was terminated. This was a factor showing

that the transactions may not have been on arm’s length.

CSL provided $300,000 start-up capital to the applicant.

CSL provided guarantees as rental security and guarantees under two leases of motor

vehicles relating to the applicant – this was considered relevant to the independence of

the businesses carried on by the applicant and CSL.

The use of the same bank branch and same engagement partner at the same office was

not held, by themselves, to be significant.

Ultimately, the above factors led to the conclusion that the degrouping provisions should not have

been exercised and therefore the Chief Commissioner’s decision was affirmed.



28 Seovic Engineering Pty Ltd v Chief


[2015] NSWCA 242

28.1 Summary

The New South Wales Court of Appeal held that discretionary degrouping for payroll tax was not

available.

28.2 Facts

The applicants, Seovic Civil Engineering Pty Ltd, Seovic Engineering Pty Ltd and Exell Management

Pty Ltd were grouped for payroll tax purposes in NSW for the years 2007-2011.

Seovic Civil Engineering Pty Ltd (Civil) specialised in concrete slip forming, Seovic Engineering Pty

Ltd (Engineering) was a mechanical engineering business repairing and maintaining mining

equipment and Exell Management Pty Ltd (Exell) provided contract workers to the other two entities.

The Chief Commissioner had originally grouped the following:

Engineering and Exell were grouped under subsection 71(2) of the PTA NSW (employees

solely or mainly employed to perform duties for another business);

Civil and Exell were grouped for the same reasons; and

As Exell were a common member of both groups, all 3 companies formed a group under

the common member provision in subsection 74(1).

The original application was a review of the Chief Commissioner’s decision to disallow an objection

requesting the exercise his discretion under subsection 79(1) of the Payroll Tax Act 2007 (NSW) (PTA

NSW) to exclude one or more of the applicants from the 2 smaller groups formed under subsection

71(2).

This review was successful in the NSWCAT, which held that Exell ought to have been excluded from

both smaller groups. Before the NSWCAT Appeal Panel, it was accepted that the Chief

Commissioner could not have been satisfied under subsection 79(1) to exclude Exell from both

smaller groups. However, the applicants sought to support the decision on the basis that Civil and/or

Engineering should have been excluded from the smaller groups. The Appeal Panel rejected that

application and allowed the Chief Commissioner’s appeal.



28.3 Legislation

Subsections 71(2) of the Payroll Tax Act 1971 (NSW) (PTA NSW) provides that if one or more

employees of an employer are employed solely or mainly to perform duties for another business, the

employer and the other business constitute a group.

Section 74(1) of the PTA NSW provides that if a person is a member of 2 groups, the members of

both groups together constitute a group.

Section 79 of the PTA NSW provides that the Chief Commissioner may exclude a person from a

group, ‘only if … satisfied, having regard to the nature and degree of ownership and control of the

businesses, the nature of the businesses and any other matters the Chief Commissioner considers

relevant, that a business carried on by the person, is carried on independently of, and is not

connected with the carrying on of a business by any other member of the group.’

28.4 Issues

Should the Chief Commissioner issue an exclusion order, removing the applicants from the payroll tax

group.

In particular, whether the Appeal Panel had erred in not interpreting section 79 of the PTA NSW as

conferring a broad discretion to exclude where it is “just and reasonable in order to alleviate otherwise

harsh consequences of the group provisions”.

Further, was the Appeal Panel obliged to take into account as mandatory relevant considerations:

the presence or absence of artificial or contrived arrangements to avoid duty

the splitting of existing businesses or other stratagems

the commercial arm’s length terms of the dealings between group members

Finally, had the Appeal Panel erred in failing to consider the “nature and degree of ownership and

control of the businesses” of two of the group members as a mandatory relevant consideration.

28.5 Decision

Meagher, JA delivered the main judgement, with which Beazley P and MacFarlan JA agreed.

Issue 1 – did section 79 confer a broad discretion?

The applicant argued that the Chief Commissioner had erred in not interpreting section 79 of the PTA

NSW as conferring a broad discretion to exclude where it is “just and reasonable in order to alleviate

otherwise harsh consequences of the group provisions”.

Meagher J at paragraph 20 held that section 79 does not confer a broad discretion to degroup where

it would not be just or reasonable to group the businesses. Instead, it must be read in context of

subsection 79(2) – in particular that the businesses must be carried on independently and not

connected with other businesses.



Issue 2 –were there mandatory relevant considerations?

The applicant argued that the Chief Commissioner was obliged to take into account as mandatory

relevant considerations:




At paragraph 24, Meagher J stated that only one of the considerations was a specific fact – that the

dealings were on commercial, arm’s length terms. Further, that this was the only one that was

specifically relevant to the question of whether the businesses were carried on independently and not

connected with each other (see paragraph 26) – and this had been taken into account in the earlier

decisions (paragraph 27). However, the other two factors could be relevant, depending on the

circumstances of particular cases.

Issue 3 – nature and degree of ownership and control

The applicants argued the Chief Commissioner had erred in failing to consider the “nature and degree

of ownership and control of the businesses” of two of the group members as a mandatory relevant

consideration.

Meagher J held that the Appel Panel had taken into account this consideration. In fact, there was no

common ownership or control (at paragraph 32) between either Exell and Engineering or Exell and

Civil. However, as the test in subsection 79(2) looked at both the ownership and the connection

between the businesses, a lack of common ownership and control by itself is not sufficient.

In the circumstances, as Engineering and Civil were the only two customers of Exell, and Exell

supplied the day to day management and administration staff of both other businesses, the

connection and influence over the various businesses (in both directions) was sufficient to mean that

there was no grounds for degrouping the various applicants.

Meagher, JA delivered the main judgement, with which Beazley P and MacFarlan JA agreed.

Issue 1 – did section 79 confer a broad discretion?

The applicant argued that the Chief Commissioner had erred in not interpreting section 79 of the PTA

NSW as conferring a broad discretion to exclude where it is “just and reasonable in order to alleviate

otherwise harsh consequences of the group provisions”.

Meagher J at paragraph 20held that section 79 does not confer a broad discretion to degroup where it

would not be just or reasonable to group the businesses. Instead, it must be read in context of

subsection 79(2) – in particular that the businesses must be carried on independently and not

connected with other businesses.

Issue 2 –were there mandatory relevant considerations?

The applicant argued that the Chief Commissioner was obliged to take into account as mandatory

relevant considerations:






At paragraph 24, Meagher J stated that only one of the considerations was a specific fact – that the

dealings were on commercial, arm’s length terms. Further, that this was the only one that was

specifically relevant to the question of whether the businesses were carried on independently and not

connected with each other (see paragraph 26) – and this had been taken into account in the earlier

decisions (paragraph 27). However, the other two factors could be relevant, depending on the

circumstances of particular cases.

Issue 3 – nature and degree of ownership and control

The applicants argued the Chief Commissioner had erred in failing to consider the “nature and degree

of ownership and control of the businesses” of two of the group members as a mandatory relevant

consideration.

Meagher J held that the Appel Panel had taken into account this consideration. In fact, there was no

common ownership or control (at paragraph 32) between either Exell and Engineering or Exell and

Civil. However, as the test in subsection 79(2) looked at both the ownership and the connection

between the businesses, a lack of common ownership and control by itself is not sufficient.

In the circumstances, as Engineering and Civil were the only two customers of Exell, and Exell

supplied the day to day management and administration staff of both other businesses, the

connection and influence over the various businesses (in both directions) was sufficient to mean that

there was no grounds for degrouping the various applicants.



29 Styling Australia Pty Ltd v Commissioner of

State Revenue [2015] VCAT 1792

29.1 Summary

The VCAT senior member held that the applicant was liable to payroll tax as the workers provided by

the applicant for hosting promotional events were employees at common law and received wages.

Alternatively, an employment agency relationship was created.

29.2 Facts

The applicant, Styling Australia Pty Ltd (Styling) provided hosting and promotional staff for events,

function, carnivals and marketing campaigns. The business ran from the home of its director and

there was one full-time employee and a casual employee was retained at peak times of the year.

The business supplied promotional hosts to clients around Australia, in particular to marketing

companies that required people to host and manage events, campaigns or carnivals. Many of the

staff that were sent to host events were aspiring models, actors and others looking to break into the

entertainment industry.

The applicant paid each staff member a particular hourly rate that was set by the applicant after

negotiation with the client. The applicant made the particular staff member aware of the location,

times, dress code, hours, work required and client’s expectations. Any equipment was provided by

the staff, except for specific uniforms which were hired to the staff by the applicant. This included

public address systems, costumes, clothing, swimwear, props etc. The staff member was not obliged

to work unless they accepted a particular job.

All arrangements were subject to an overarching contract entered into between the applicant and the

staff member that set up what was said to be an independent contractor arrangement – leaving the

staff member responsible for public liability insurance, transport, all forms of leave and

superannuation.

The application was a review of the Commissioner’s assessment for the years 1 July 2010-30 June

2013 imposing payroll tax on the payments made to the staff members on the basis that they were

wages under subsection 13(1) of the Payroll Tax Act 2007 (Vic) (PTA Vic) or alternatively, were taken

to be wages under Division 8 of Part 3 of the PTA Vic.

29.3 Legislation

Section 13 of the PTA Vic relevant provides:

What are wages?



(1) For the purposes of this Act, wages mean wages, remuneration, salary, commission,

bonuses or allowances paid or payable to an employee, including—

…

(e) an amount that is included as or taken to be wages by any other provision of this

Act.

…

(3) This Act applies in respect of wages referred to in subsections (1)(a) to (e) that are paid or

payable to or in relation to a person who is not an employee in the same way as it applies to

wages paid or payable to an employee (as if a reference in this Act to an employee included a

reference to any such person).

Included in the category of deemed wages under paragraph 13(1)(e) are amounts paid under

employment agency relationships covered by Division 8 of Part 3 of the PTA Vic:

Section 37 sets out the definitions:

Definitions

(1) For the purposes of this Act, an employment agency contract is a contract, whether

formal or informal and whether express or implied, under which a person (an employment

agent) procures the services of another person (a service provider) for a client of the

employment agent.

(2) However, a contract is not an employment agency contract for the purposes of this Act if it

is, or results in the creation of, a contract of employment between the service provider and the

client.

(3) In this section—

"contract" includes agreement, arrangement and undertaking.

Section 38 provides:

Persons taken to be employers

For the purposes of this Act, the employment agent under an employment agency contract is

taken to be an employer.

Section 39 is the converse of section 38:

Persons taken to be employees

For the purposes of this Act, the person who performs work for or in relation to which services

are supplied to the client under an employment agency contract is taken to be an employee of

the employment agent.

Section 40 relevantly provides:

Amounts taken to be wages



(1) For the purposes of this Act, the following are taken to be wages paid or payable by the

employment agent under an employment agency contract—

(a) any amount paid or payable to or in relation to the service provider in respect of the

provision of services in connection with the employment agency contract;

(b) the value of any benefit provided for or in relation to the provision of services in connection

with the employment agency contract that would be a fringe benefit if provided to a person in

the capacity of an employee;

(c) any payment made in relation to the service provider that would be a superannuation

contribution if made in relation to a person in the capacity of an employee.

…

29.4 Issues

There were three issues:

(1) Are the promotional staff employees at common law and the payments made to them, wages for

the purposes of subsection 13(1) of the PTA Vic.

(2) Alternatively, were the payments deemed to be wages under the Employment as Agents

provisions in Division 8 of Part 3 of the PTA Vic.

(3) Was the Commissioner precluded from issuing an assessment, having previously determined for

the year ending 30 June 2010 that the payments were not subject to payroll tax?

29.5 Decision

Davis SM held that the amounts paid to the staff were wages paid to employees. Alternatively, that

an employment agent relationship was established. Finally, that while an earlier decision of the

Commissioner had held no payroll tax applied to the arrangements, this did not preclude the

Commissioner coming to a different decision for later years.

On the first issue, the senior member referred favourably to the Commissioner’s revenue ruling PTA

38 (at paragraph 26 and 27) – which provides guidelines in determining whether an employee

relationship exists at common law. In respect of the factors considered, what was significant was:

The control that the client had over the staff was because of the control the applicant had

over the staff (at paragraph 31). There was no subcontracting available. The applicant

had control over when and how the staff presented themselves to the client and what the

staff could do after the end of a function and could prevent the staff from being employed

by a client for 12 months after a function.

The contractual relationship required the staff member to work (paragraph 32).



The contract did not look to produce a specific result, but required the specific details of

the labour required and applied throughout the relationship between the staff member and

the applicant, not just the one-off particular function (paragraph 33).

While the staff member may have been required to have an ABN, the staff members on

the facts were not conducting their own business but were used in the applicant’s

business (paragraph 34).

There was no power to delegate or subcontract the work (paragraph 35).

All risk lay with the applicant, rather than the worker – in that the worker was guaranteed

to be paid the hourly rate regardless of the quality of workmanship or whether the

applicant was paid (paragraph 36).

Some tools and equipment were provided by the staff, however these were largely

personal items (paragraph 37).

While no leave was paid, the staff member was described as having a loading to

compensate for this (paragraph 38).

On this basis, the totality of the evidence was that the staff were common law employees.

Despite that conclusion, at paragraphs 46-54, Davis SM also concluded that, if there was no

employment relationship in place, there still was an ‘employment agency relationship’ in place that

would result in the same outcome for payroll tax purposes. In this respect, it was significant that the

applicant obtains the workers for the client, negotiates a fee with the client and then pays the staff an

hourly wage, taking a booking fee and/or commission from the amount paid by the client.

For the issue of estoppel, the decision was clear that the earlier investigation into the years 2005-

2010 did not preclude a different finding on a later investigation (at paragraph 56). Particularly, this

was so where it was not clear that the same material had been presented at both occasions.



30 Commissioner of State Taxation v

T & S Liapis Pty Ltd

[2015] SASCFC 151

30.1 Summary

The South Australian Full Court of the Supreme Court dismissed an appeal by the Commissioner

against a decision that the taxpayer was entitled to a primary production exemption for land tax.

30.2 Facts

The Liapis family had acquired 5 hectares of land in 1966. The taxpayer, T & S Liapis Pty Ltd (T & S

Liapis) had acquired the land by 1994. In 1991 a first subdivision and sale of portions of the land had

occurred. By 2001, a further subdivision occurred into 19 residential lots and 2 lots of 1.5 ha in total,

on which olive trees were located. All but one residential lot had been sold by 30 June 2006.

Substantial proceeds had been derived from residential lot sales over the years to 2006.

The olive trees had been planted for some time, and improvements had been made over time – such

as a sprinkler irrigation system in 1996, grafts of greater oil producing varieties and construction of

terraces on portions of the land in 2005. Olives were sold from 2001 and olive oil was sold from 2005.

In the earlier Supreme Court decision (reported in the 2015 paper) – substantial evidence had been

led about the time spent by the principal family members, the work expended to improve the olive

grove, the revenue from primary production (which was between $3,000 to $6,500 per year), yield of

the trees and that standard horticultural practice was being followed. The judge also decided that

there would be a reasonable chance of profit in the future.

30.3 Legislation

Subparagraph 5(10)(g)(vi)(A) of the Land Tax Act 1936 (SA) (LTA SA) exempts primary production

land where:

(g) land used for primary production that is situated within a defined rural area may be wholly

exempted from land tax if—

…

(vi) the land is owned by a company and 1 of the following conditions is satisfied:



(A) a natural person owns a majority of the issued shares of the company

and is engaged on a substantially full-time basis (either on his or her own

behalf or as an employee) in a relevant business;

Subsection 2(1) of the LTA SA states:

"business of primary production" means the business of agriculture, pasturage,

horticulture, viticulture, apiculture, poultry farming, dairy farming, forestry or any other

business consisting of the cultivation of soils, the gathering in of crops, the rearing of

livestock or the propagation and harvesting of fish or other aquatic organisms and

including the intensive agistment of declared livestock;

30.4 Issues

Did the primary production land tax exemption apply?

30.5 Decision

The full court upheld the trial judge’s view that the primary production exemption applied.

This was on the basis that:

(a) The business of the olive growing and processing operations was properly characterised as a

business.

(b) Thomas Liapis, the owner of the majority of the issued shares in T & S Liapis, was engaged

on substantially full time basis in a relevant business.

The Court said at paragraph 36 that:

“The Judge correctly identified that the question of whether an activity amounts to a business

is a question of fact and degree. Relevant factors include: a purpose of making a profit;

repetition and continuity; the activity being conducted in an organised, businesslike or

systematic manner; the size of the operation; and the activity being conducted in the same

manner as recognised businesses. It is to be noted that the authorities cited by the Judge do

not support the proposition that the “prospect” of making a profit is an indicia of a business. …”

Relevantly, the Court also concluded that although the business was not particularly successful, this

was not relevant to whether it was conducting a business of primary production.

The Commissioner had argued that it was necessary to conclude that the olive growing operations

was the main business of the taxpayer for the relevant 2006 and 2007 financial years - although this

was determined to be the case, the exemption would have applied regardless (see paragraphs 39, 45

and 46).



31 Terick Pty Ltd v Commissioner of State

Revenue [2015] VCAT 1901

31.1 Summary

The VCAT member held that discretionary degrouping for payroll tax was not available.

31.2 Facts

The applicant, Terick Pty Ltd (Terick), was grouped for payroll tax purposes in Victoria for the years

ending 30 June 2008-2011 with three other companies.

The applicant sought to be excluded from the group pursuant to section 79 of the Payroll Tax Act

2007 (Vic) (PTA Vic).

Two persons, Mr Driscoll and Mr Sexton were the directors of all 4 companies. Further, the two

individuals, their holding companies or wives were the shareholders of the companies at the relevant

times.

Terick’s business included road construction, repair, sealing, inspections and maintenance. The other

businesses were in various industries, including the supply of precast structural concrete products for

freeways and bridges etc.

There were ‘considerable’ inter-company loans between the group members, which made up 50% of

the applicant’s assets. Half of the applicant’s income came from hiring staff to other group members.

The applicant operated from an office in Ballarat that was rented by another group member,

Australian Road Barriers Pty Ltd (ARB) that was leased from the Driscoll Superannuation Fund.

While the premises were leased to ARB, there was no documentation for the use of the premises by

the applicant.

The same accountant was used by all businesses, and the two principals were signatories to all 4

group member’s separate bank accounts (together with the relevant manager to the particular

business). There were also cross-guarantees and shared trade accounts and substantial shared

employees.

The Commissioner had originally degrouped the applicant in 2007, but then on review in 2012

determined to overturn that decision and group from 2007 onwards.

The applicant objected on the basis that the degrouping power in section 79 of the PTA Vic should

have been applied.



31.3 Legislation

Section 79 of the PTA Vic provides that the Commissioner may exclude a person from a group, if

satisfied:

‘having regard to the nature and degree of ownership and control of the businesses, the

nature of the businesses and any other matters the Commissioner considers relevant, that a

business carried on by the person, is carried on independently of, and is not connected with

the carrying on of a business by any other member of the group.’

31.4 Issues

Should the Commissioner issue an exclusion order removing the applicant from the payroll tax group.

31.5 Decision

Davis SM interpreted the provision as meaning (at paragraph 23) the Applicant must establish:

a lack of both dependence and connection; and

the lack of dependence and connection must apply for all or any of the three members of

the group (see Port Augusta Medical Centre Pty Ltd v Commissioner of State Taxation

(SA) [2011] SASC 31).

While day-to-day operations were management was separate – the Senior Member determined that it

was the overall control of the businesses that was the more important factor (at paragraph 24). As

this was shared with the other members of the group, this factor weighed against degrouping.

Other relevant factors were:

While the businesses were in separate industries, there were complimentary to the other

(paragraph 25);

A large proportion of the applicant’s business was hiring out staff and equipment to the

other three businesses (paragraph 26) and a large proportion of the assets were in loans

to the other businesses.

Each business also had the same accountant, signatories to its bank accounts, there

were cross guarantees, shared premises and a lack of formality to inter-group

documentation (paragraph 28).

Accordingly, the decision was that the applicant had failed to discharge the onus to allow it to be

degrouped.



32 Webeck v Chief Commissioner of State

Revenue [2015] NSWCATAD 165,

Chief Commissioner of State Revenue v

Webeck [2015] NSWCATAP 279

32.1 Summary

The Appeal Panel of the NSW Civil and Administrative Tribunal determined that the Tribunal in the

first instance incorrectly held there to be a ‘partition’ for the purpose of subsection 30(1) of the Duties

Act 1997 (NSW) (DA NSW). In ruling in favour of the Chief Commissioner, the Appeal Panel held that

a ‘partition’ (in the case of a tenancy in common) could not occur unless there was a division of land –

otherwise it was simply a transfer of one party’s undivided interest to another co-tenant.

32.2 Facts

Following the distribution of the estate after the death of family members, the remaining family

members (being John, Judith, George, Clinton and Tanya) entered into transfers in 2011 in

accordance with a Deed of Partition (the 2011 Deed) (the 2011 transfers). In 2014, the same family

members entered into other transactions involving the two properties with a Deed of Family

Arrangement (the Family Deed) and transfers (the 2014 transfers). The relevant transfers and the

change of ownership is set out in the table below:

Date Event Ownership of Newport Ownership of Turramurra

15/4/2011 Transmission applications from Robert’s estate Judith 25%

Clinton 8.33%

George 8.33%

Tanya 8.33%

John 50%

Judith 25%

Clinton 8.33%

George 8.33%

Tanya 8.33%

John as executor of Eric’s estate 50%

23/7/2011 Transfer pursuant to“Deed of Partition:

Turramurra – Clinton, George and Tanya’s shares to Judith

Newport – 21/360th share from Judith to each of Clinton, George and Tanya

Judith 7.51%

Clinton 14.163%

George 14.163%

Tanya 14.163%

John 50%

Judith 50%

John as executor of Eric’s estate 50%

12/9/2011 Transmission of Turramurra interest from Eric’s

estate to John

N/A Judith 50%

John 50%

24/6/2014 Transfers pursuant to the Family Deed: John 100% Judith 70%

Clinton 10%



Turramurra – from John, 20% to Judith and 10% to each of Clinton, George and Tanya

Newport – the whole of Judith, Clinton, George and Tania’s interests to John

George 10%

Tanya 10%

The 2011 transfers were assessed and stamped for nominal duty as a partition, but the 2014 transfers

were held not to qualify.

32.3 Legislation

Section 30 of the DA NSW provides:

30 Partitions

(1) What is a partition? For the purposes of this section, a partition occurs when

dutiable property comprised of land in NSW that is held by persons jointly (as joint tenants or

tenants in common) is transferred or agreed to be transferred to one or more of those

persons.

(2) Single dutiable transaction For the purposes of this section and sections 16 and 18,

a partition is taken to be a single dutiable transaction.

(3) Dutiable value The dutiable value of a partition is the greater of:

(a) the sum of the amounts by which the unencumbered value of the dutiable

property transferred, or agreed to be transferred, to a person by the partition exceeds

the unencumbered value of the interest held by the person in the dutiable property

transferred, or agreed to be transferred, to each person by the partition immediately

before the partition, and

(b) the sum of any consideration for the partition paid by any of the parties.

(4) Minimum duty The minimum duty chargeable on a transaction that effects a partition

is $50…

32.4 Issues

Was there a partition for the purposes of section 30 of the DA NSW?

32.5 Decision

At first instance, the principal issue was whether the Family Deed and the 2014 transfers could be

amalgamated with the earlier transfers previously entered into and be considered ‘partition’ under

section 30 of the DA NSW as a whole. The Applicant argued that section 30 should apply having

regard to what was achieved throughout the years because:

Despite the multiple transactions that the Applicant and other family members had

entered into over the years, it was always the parties’ ultimate intention that the Applicant



acquire 100% ownership of the Newport, with Judith in turn acquiring most of the

Turramurra property (as to 70%).

The intended end result could have been achieved by one single transaction (which did

not happen due to some misunderstanding of the parties), in respect of which section 30

should have applied.

The Tribunal found that the Newport property transfer (made pursuant to the Family Deed) satisfied

the requirements of section 30 and that it should be considered a ‘partition’ under the DA NSW (this

reasoning was flawed and was later overturned by the Appeal Panel – see below).

This was on the basis that the Applicant held the property jointly with the transferor prior to the

transfer. The Tribunal looked at the interest in the whole Newport property when looking at the

wording of subsection 30(1), and not just the interest being transferred. The notice of assessment in

relation to the Newport transfer was therefore set aside and remitted to the Chief Commissioner.

The Turramurra transfer, on the other hand, was held not to be partition under subsection 30(1) as the

transferees did not all hold the property jointly with the transferor prior to the transfer.

On Appeal

The Chief Commissioner contended that the orders made by the Tribunal in connection with Newport

transfer be set aside and the original assessment of duty affirmed. It was argued that section 30 did

not apply as the interests in the Newport property transferred was held by Judith, George, Clinton and

Tanya, but was not transferred to one or more of those persons. Instead, it was transferred to John

(not being a person who held the interest transferred, but who happened to own the remaining 50%

interest of the Newport property as tenant in common).

The Appeal Panel considered whether subsection 30(1) was correctly interpreted and applied by the

tribunal. The Appeal Panel rejected the Chief Commissioner’s contention that section 30 requires the

transferee to also be (one of the) transferor(s).

However, it held that a partition requires the division of land, not simply the disposition of one party’s

interest in the whole of the land to another co-tenant. Where there is only one parcel in question, a

partition can occur by dividing the parcel into separate lots. On this basis, a partition could not be held

to occur where there is a transfer of a co-tenant’s undivided share or interest in the whole of a single

block of land to other co-tenants (as was the case with the Newport transfer).

The Tribunal in the first instance was therefore held to be in error, and the appeal was allowed.



33 Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015]

QSC 216

33.1 Summary

The Supreme Court of Queensland held that the respondent tenant was liable to pay to the landlord

the land tax levied on the applicant landlord under the Land Tax Act 2010 (Qld) (LTA Qld) in relation

to the land the subject of the lease between the parties. The lease was granted at a time when the

land tax legislation contained a provision stating that a clause in a lease requiring a lessee to

reimburse the lessor for land tax is unenforceable.

33.2 Facts

The respondent tenant leased land from the applicant – the lease was entered into pre-2009.

The lease contained clause 11.2 which required the tenant to pay all rates, taxes, assessments,

duties, levies, impositions and other outgoings in relation to the leased land whether payable by the

owner or occupier.

The respondent argued that it was not liable to pay land tax levied on the leased land, due to the

provision under section 44A of the now repealed Land Tax Act 1915 (Qld) (LTA 1915 Qld) which

made such a clause unenforceable.

Amendments to the 1915 Act were made in June 2009 (the Amended Act). These amendments

repealed section 44A of the 1915 Act. However, the Amended Act contained transitional provisions

which meant that section 44A continued to apply to leases entered into before 30 June 2009.

In June 2010, the Amended Act was repealed and replaced with the LTA Qld. The transitional

provisions did not contain a provision which specifically continued the operation of section 44A of the

LTA 1915 Qld.

The applicant asked the court for a declaration that the respondent was liable in terms of clause 11.2

from the date of the operation of the 2010 Act. However, due to an apparent forgiveness of liability for

the financial years ended 2011 and 2012, it was conceded that the declaration was sought only in

relation to the position from 1 July 2012.

33.3 Legislation

Section 44A of the LTA 1915 Qld stated:

44A Provision to pay land tax etc. unenforceable



(1) A provision in a lease entered into after 1 January 1992 requiring a lessee to—

(a) pay land tax; or

(b) reimburse the lessor for land tax;

is unenforceable.

The Amended Act contained the following provisions:

76 Application of previous s 44A

(1) This section applies to—

(a) a lease (the pre-existing lease) to which previous section 44A applied immediately

before the commencement; and

(b) a lease that arises from—

(i) a renewal under an option to renew contained in the pre-existing lease; or

(ii) an assignment or transfer of the pre-existing lease.

(2) Previous section 44A applies to the pre-existing lease and a lease mentioned in subsection

(1)(b) despite its repeal by the amending Act, section 19.

69 Application of previous provisions to particular liabilities etc.

Subject to section 72, despite their amendment or repeal by the amending Act, the previous

provisions of this Act continue to apply in relation to—

(a) a pre-commencement liability; and

(b) a pre-commencement act or omission.

The 2010 LTA Qld contained the following provision:

89 Continued application of repealed Act

Despite its repeal, the repealed Act continues to apply to —

(a) a pre-commencement liability; and

(b) an act or omission done or omitted to be done for the repealed Act before 30 June 2010.

33.4 Issues

Whether the respondent is liable to pay land tax levied on the applicant in respect of the land the

subject of lease entered into pre-2009. In particular, did the bar on enforceability of clause 11.2 of the

lease agreement, under section 44A of the LTA 1915 Qld, continue to operate after introduction of the

2010 Act.

33.5 Decision

The Court declared that, from 1 July 2012, the respondent is liable to pay land tax levied on the

applicant in respect of the land the subject of the lease.

The Court held that paragraph 89(b) of the LTA Qld could not be read to include the entry into the

lease by the tenant as an act done for the purposes of the LTA 1915 Qld.



The respondent also relied on paragraphs 20(2)(b) and (c) of the Acts Interpretation Act 1954 (Qld) to

argue that the repeal of the LTA 1915 Qld did not affect the operation of section 44A of that Act.

However, the Court noted that the legislature failed to include a specific provision that continued the

operation of section 44A of the LTA Qld 1915 in the new LTA Qld. Given that just the previous year

they had included such a provision in the Amended Act, this was enough to demonstrate that the

legislature’s clear intention was for section 44A of the LTA 1915 Qld to no longer apply.

Therefore, the effect of the 2010 Act was to remove the bar on enforceability of clause 11.2 of the

lease.

The respondent also argued that alternatively the applicant was estopped from enforcing its right

under clause 11.2 of the lease because the respondent asserted that the applicant had verbally

agreed that land tax was not payable. However, the Court held that estoppel claim must fail, as the

Court was not persuaded that this conversation had occurred.

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