In Polux Pty Ltd as trustee for Iatrou Business Trust No 2 v Commissioner of State Revenue (Review and Regulation) [2018] VCAT 528, the Victorian Civil and Administrative Tribunal (VCAT) dismissed the taxpayer’s objection to the Commissioner of State Revenue (Commissioner)’s assessment imposing the land tax surcharge for trusts on the taxpayer’s Victorian landholdings (pursuant to section 46A of the Land Tax Act 2005). In reaching this view, VCAT relied upon the Commissioner’s version of events and found that the taxpayer had not lodged a Nomination of Beneficiary form (Nomination Form) with the Commissioner prior to 30 September 2006, in respect of the relevant property.

By way of background, in 2005, legislation was introduced to set up a regime for the taxation of trusts, under which a surcharge rate of land tax is payable by trustees subject to various exclusions. In this regard, any trustee that owned Victorian land on or before 31 December 2005 was required to lodge a Notification of Land Held on Trust Form by 31 March 2006.

Trustees of a discretionary trust were given a “once off” opportunity to nominate a beneficiary of the trust by also lodging a Nomination Form by 30 September 2006. If a Nomination Form was received within the required timeframe, the trustee was assessed at the general rate of land tax.  Failure to notify the Commissioner by the required date would result in the surcharge rate of land tax being imposed on the trustee.

Polux Pty Ltd as trustee for Iatrou Business Trust No 2 (Taxpayer) acquired Victorian land in a discretionary trust in 2002 and objected to the Commissioner charging land tax at the surcharge rate for the 2007 – 2017 land tax years.  The Taxpayer successfully lodged its Notification of Land Held on Trust Form by facsimile prior to 31 March 2006. The question in this proceeding is whether the Taxpayer had lodged a Nomination Form prior to 30 September 2006, in order to be assessed at the general rate of land tax.

The Taxpayer ‘maintained that he remembered posting’ it to the Commissioner prior to 30 September 2006, although the Commissioner advised that he did not receive the Nomination Form.

According to section 110 of the TAA, the onus of proof is on the Taxpayer to satisfy that the form was lodged correctly.  VCAT did not accept the Taxpayer’s representations regarding the submission of forms, due to the inconsistencies in the Taxpayer’s version of events. For example, the Taxpayer produced a copy of the completed Nomination Form that appeared to be signed and dated on 23 September 2006 whereas, according to the SRO:

  • the version of that Nomination Form purportedly executed by the Taxpayer on 23 September 2006 was not the version of the form available at that date (it was a version that only became available in 2007) and
  • there was a client reference number on that Nomination Form which was not given to the Taxpayer until 29 June 2007.

Further, according to the SRO, other than the Taxpayer’s Statutory Declaration, there was no contemporaneous evidence to show that the Nomination Form had been lodged and provided.

In particular, the SRO had advised the Taxpayer by letter dated 26 June 2007 that no Nomination Form had been received and the Taxpayer had taken no corrective action.

Taking all of the background facts into account, Senior Member Robert Davis of VCAT did not accept the evidence of the Taxpayer and confirmed the Commissioner’s decision in respect of the assessment.