The vast majority of the decisions we make each year are undisputed by our customers, but inevitably there are situations where litigation is required to resolve an issue.
The following case summaries illustrate some of the types of cases conducted in 2023–24.
Duties Act 2000
Baullo v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 1164
Background
A father and his son (the taxpayers) purchased a property in Pascoe Vale on which they intended to develop 2 units. They established a discretionary trust and the corporate trustee, of which they were the directors and shareholders. The Trustee was nominated to take the transfer and became the registered sole proprietor of the property. Following the development, the company was deregistered, the property was partitioned and the father and son each became the registered proprietor of one of the 2 lots.
Issues
Whether the transfer was exempt from duty under s 36A of the Duties Act 2000 (the Act) on the basis that the property was transferred to the taxpayers as beneficiaries of the trust.
Decision
On 13 October 2023, the Tribunal delivered judgment in favour of the Commissioner, confirming the assessment to duty. The Tribunal found that there must have been an “extinguishment of the loan balance” owed by the trustee to the taxpayers, whether by way of payment, set off, forgiveness or otherwise. Whether this occurred contemporaneously with the transfer or not, it held that it was clear the taxpayers accepted that “once the property had been transferred to [them] … there was no longer any monies owed”.
Beech v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 1363
Background
A husband and wife lived in a property in Thornbury as their family home. The home had been in the wife’s name purportedly for asset protection purposes. They subsequently purchased a home in Ivanhoe, following which the wife transferred the Thornbury home to the husband for no consideration.
Issue
Whether the transfer was exempt under s 43 of the Duties Act 2000 (the Act) as there was ‘good reason’ for the Commissioner to exercise his discretion to vary (reduce) the 12-month residence requirement to 6 weeks.
Decision
On 8 December 2023, the Tribunal handed down its decision in favour of the taxpayer. It found, having regard to all the circumstances, that there was ‘good reason’ to exercise the discretion in s 43B to reduce the 12-month residence requirement to 6 weeks; particularly, as the failure to meet the residency requirement was due to a change in circumstances that was unforeseen at the time the Thornbury property was transferred.
Marchio v Commissioner of State Revenue (Review and Regulation) [2024] VCAT 257
Background
The taxpayers, a husband and wife, purchased a property which was subsequently reassessed for foreign purchaser additional duty (FPAD) under s 28A of the Duties Act 2000 (the Act). The taxpayers did not dispute the wife – who was born in the United Kingdom and migrated to Australia in 2013 – was a foreign purchaser within the meaning of s 3(1) of the Act. But they asked the Tribunal to exercise its discretion not to impose FPAD for reasons including that they were the intended recipients of the partner exemption that was later introduced by Parliament by s 69AJ of the Act, and had they been properly been advised by their conveyancer that they would be liable for FPAD, they would have either delayed or terminated the contract of sale (which was subject to finance).
Issue
Whether the Tribunal, standing in the shoes of the Commissioner, had any discretion to either not make the reassessment to FPAD or to withdraw it.
Decision
By written reasons dated 22 March 2024, the Tribunal delivered judgment substantially in favour of the Commissioner, confirming the decision to impose FPAD. The Tribunal in its reasoning referenced that the Tribunal:
- had determined in 3 previous cases that FPAD applied and there is no discretion to waive or vary the duty in circumstances where one of the taxpayers was in Australia on a temporary partner visa at the time of the relevant transfer
- has consistently determined that it does not have any discretion not to make an assessment or reassessment the subject of the review proceedings
- while it is not bound to strictly follow its own decisions, it should do so for consistency except where the decision is “plainly wrong”.
Richter v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 881
Background
In 2019, the taxpayers – aged in their 70s – both retired. Each holders of a pensioner concession card, they contracted to purchase land in Ascot Vale. On the transfer of this land to them, they applied for and were granted a pensioner concession under s 59 of the Duties Act 2000 (the Act). In 2021, the taxpayers sold the land in Ascot Vale and contracted to purchase land in Rosebud, for which they also applied for the pensioner concession.
Issue
Whether the taxpayers were entitled to the pension concession (again) on the Rosebud property.
Decision
On 28 July 2023, the Tribunal affirmed the Commissioner’s assessment of duty on the Rosebud property ad valorem. The Tribunal found the taxpayers were not eligible pensioners within the meaning of the Act with respect to the acquisition of the Rosebud land because they had previously been granted the pensioner concession such that they could not satisfy s 58(1)(d), which required the taxpayers to have not previously received an exemption under s 59 of the Act.
Woodsman Properties Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 1044
Background
This matter concerned the acquisition of shares in Woods Williams Pty Ltd (the Company) by the taxpayer, Mindbody Assembly Pty Ltd (Mindbody), and Lou Woods Consulting (Woods Consulting).
Issue
Whether the taxpayer was liable for duty in respect of that acquisition by reason of the landholder provisions in the Duties Act 2000 (the Act).
Decision
On 12 September 2023, the Tribunal found substantially in favour of the Commissioner.
The Tribunal considered that:
- the interests acquired by taxpayer in the Company were to be aggregated with the interests acquired by Mindbody, and Woods Consulting, as they were associated persons. As a result, the taxpayer was taken to have acquired a significant interest in the Company (100%), which gave rise to a relevant acquisition
- the acquisition was not an exempt acquisition. s 42 of the Act (the deceased estates exemption) did not apply to the hypothetical transaction under s 89D(a) because the taxpayer was not a beneficiary under the Will at issue and, as such, the transfer of the relevant land could not be made “to a beneficiary” or “under and in conformity with” the Will, or otherwise “in satisfaction of [any] beneficiary’s entitlement” under that Will.
Land Tax Act 2005
Healey Management Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 1009
Background
This matter concerned the lands’ liability for land tax for 2020 land tax year. The lands were claimed to be under construction for a retirement village. However, no building permit had been issued for the lands as at 31 December 2019.
Issue
Whether the exemption in s 78A of the Land Tax Act 2005 (the Act), as land under construction for certain exempt uses (in this case a retirement village) applied to the lands for the 2020 land tax year.
Decision
On 28 August 2023, the Tribunal found in favour of the Commissioner and ordered that the assessment of land tax for the 2020 land tax be confirmed.
In doing so, the Tribunal found that:
- in accordance with s 36 of the Act, and with reference to the Court of Appeal’s decision in Rainn Pty Ltd v Commissioner of State Revenue [2016] VSCA 338, the date for determining whether the subject lands are exempt for the 2020 land tax year is 31 December 2019
- when s 78A is read with s 36, the exemption will only be available for the 2020 land tax year if the construction of the retirement village commenced by no later than 31 December 2019
- with reference to Lifestyle Investments 1 Pty Ltd v Commissioner of State Revenue [2019] VCAT 920, construction commences on the date the building permit is issued, which in this case was not until 23 January 2020.
Liu v Commissioner of State Revenue (Land Valuation) [2023] VCAT 936
Background
The applicant brought an application in the Planning and Environment List of the Tribunal pursuant to s 266(6) of the Water Act 1989 (Vic), seeking review of a decision to refuse to accept an application for the coronavirus land tax relief. The applicant also sought review of land tax notices of reassessment issued to her in respect of the 2019 to 2023 land tax years. No objection was lodged by the applicant with the Commissioner in respect of these grounds.
Issue
Whether the Tribunal had jurisdiction to hear the proceedings as filed by the applicant.
Decision
By written decision made on 11 August 2023, the Tribunal ordered that the application be summarily dismissed pursuant to s 75 of the Victorian Civil and Administrative Act 1998 (Vic) (VCAT Act) because it was misconceived.
s 75 of the VCAT Act provides at any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion is frivolous, vexatious, misconceived or lacking in substance, or is otherwise an abuse of process.
The Tribunal agreed with the Commissioner’s submissions, confirming, among other things, that the Tribunal:
- does not have jurisdiction to consider any decision of the Commissioner with respect to any application for the coronavirus land tax relief, including a decision to refuse to accept a late application, because of the operation of ss 97(2A) and 95D of the Taxation Administration Act 1953 (TAA)
- cannot consider an application for review if the process set out in Part 10 of the TAA is not followed. Under the TAA, the process for objection requires an objection to be in writing to the Commissioner and for a determination on the objection to be made in writing with reasons. If the person who made the objection is not satisfied with the determination of the Commissioner, an application for review can be made with the Tribunal.
Payroll Tax Act 2007
Team Sports Australasia Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 1368
Background
This matter concerned 2 taxpayers:
- Team Sports Pty Ltd, which was incorporated in July 2019 and its business involved the wholesale distribution of Nike-branded teamwear for soccer teams
- Ultra Football Pty Ltd, which was incorporated in July 2015, with a view to establishing Nike teamwear in Sydney.
The taxpayers sought review of the Commissioner’s decision to disallow objections to 4 payroll tax assessments on the basis that Team Sports Australasia Pty Ltd formed a group with Ultra Football Pty Ltd under s 72 of the Payroll Tax Act 2007 (the Act).
Issue
Whether the Tribunal is empowered to (and should) exercise the discretion in s 79 of the Act to treat the Applicants as not being members of a group.
Decision
On 11 December 2023, the Tribunal found in favour of the Commissioner and confirmed the assessments, including penalty tax and interest.
The Tribunal was not satisfied that the taxpayers’ businesses were carried on independently and were not connected with one another and so found that the discretion to degroup the taxpayers was not enlivened.
This was primarily because of the:
- control exercised over both companies
- common ownership of the taxpayers
- the financial interconnectedness between them (including Team Sports affording Ultra Football more favourable credit terms).