Two recent decisions by the Victorian Civil and Administrative Tribunal (Tribunal) have provided some useful insight into the application of the principal place of residence (PPR) or main residence exemption for land tax purposes.

The cases also serve as a reminder for those whose circumstances have changed since the exemption was claimed and a tax payer may no longer be eligible for the exemption.

Issue 1 - Commissioner relies on information obtained from external agencies and organisations

In one of these decisions the Taxpayer objected to reassessments of land tax in respect of a property at Sandringham for the period from 2011 to 2014.

The taxpayer lived in the property at Sandringham on weekdays but lived in a property at Balnarring on weekends.

The taxpayer argued that the Sandringham property was her address for the purposes of income tax, Medicare and her driver’s licence. She argued that, if the Tribunal found she was not entitled to the exemption for the Sandringham property, she would be entitled to it in respect of the Balnarring property.

In relation to the Sandringham property, the Tribunal relied on water and electricity usage data for the property provided by the Commissioner which showed that no water usage was recorded for several billing quarters. This in itself was inconsistent with the taxpayer’s contention that the occupation of the property was on a permanent basis. As such, the Tribunal found it was not her principal place of residence.

In relation to the Balnarring property, the Tribunal indicated that no evidence was presented in favour of the property being the PPR during the applicable time period.

Additionally, the Tribunal had regard to section 52(2) of the Land Tax Act 2005 (Vic) which stipulates that none of a person’s several residences may satisfy the criteria for the PPR exemption. Consequently, the Tribunal did not accept the taxpayer’s argument that a Balnarring PPR must be found if the Sandringham PPR is denied.

Issue 2 - Periods of absence can impact on eligibility

A taxpayer objected to an assessment for land tax claiming he was entitled to the principal place of residence exemption despite living overseas for extended periods of time.

The taxpayer admitted that he had never spent more than 160 days in Australia a year between 2010 and 2014.

Pursuant to section 56 of the Land Tax Act 2005 (Vic) the property is taken to be used as the PPR despite a taxpayer being absent if the Commissioner is satisfied that the absence is ‘temporary’ in nature and that the taxpayer intends to resume use of the principal place of residence following the absence.

The taxpayer was a semi/retired architect with three children and eight grandchildren. He had been married twice and his second wife lived in Canada with a disabled child. The taxpayer has always intended on returning to his home in Victoria despite circumstances preventing him from doing so.

In coming to a decision, the Tribunal considered a number of factors:

  • the property is where the taxpayer kept all of his belonging and was situated close to his family, friends and the associates he was involved in;
  • the taxpayer had been occupying the property since 2003 and was consequentially a long established place of residence; and
  • in acting as a caretaker for his disabled child, there were clear reasons as to why the taxpayer was absent for extended periods of time.

The Tribunal concluded that the taxpayer satisfied the exemption under the Land Tax Act 2005 (Vic) and the assessments were set aside.

Application to Queensland properties

Queensland has a similar legislative framework under the Land Tax Act 2010 (Qld) and there have been recent Queensland cases on other exemptions under the Queensland Act.

These cases demonstrate the various Commissioners’ intention to target those who have claimed exemptions but either were not eligible for the exemption in the first instance or are no longer eligible for the exemption due to changed circumstances.

If you have clients who claim exemptions, whether it be primary production, principal place of residence/main residence or charitable institutions, it is recommended that regular reviews of the conditions for the relevant exemption and your client’s eligibility for the exemption be undertaken.

Key Takeaways

When claiming an exemption for land tax (or duty), you should be mindful that the Commissioner has ability to access information and evidence from third parties which could bring into question the taxpayer’s eligibility for the exemption.