Wikiversity Law Reports/CPT Custodian v Commissioner of State Revenue

This is a Wikiversity Law Report.

High Court of Australia

TL;DR: A unit holder in a unit trust does not have a right to freehold in land owned by the unit trust (but depending on what the trust deed says).

Facts

• The Land Tax Act 1958 (Vic) imposed land tax on, among others, any person holding an 'estate of freehold in possession' (using the defined term 'owner' for such a person).
• The taxpayers were holders of units in unit trusts, the trustees of which owned land. In one case, a taxpayer owned all of the units in a trust, and in another case a taxpayer owned only 50% of the units in a trust.
• The Commissioner assessed the taxpayers to land tax on the land that they held through unit trusts. The taxpayers objected and their objections were disallowed. They appealed to the Supreme Court of Victoria, which allowed the appeals, finding that the unit holders were not owners of the land. The Commissioner appealed to the Court of Appeal, which found that the unit holders were only owners of land where they held 100% of the units in the unit trust that legally owned the land. This decision was appealed to the High Court.

Held

• The question of what interest a beneficiary has in the assets of a trust are to be answered by reference to the particular terms of the trust in question, not by reference to some general concept of what a 'unit trust' is: 224 CLR 98, 109-110.
• The Act refers to an 'estate of freehold in possession', which is not just any interest, it is specifically an estate of freehold in possession: 224 CLR 98, 113-114.
• A beneficiary does not have an 'estate of freehold in possession' where they merely have an interest in a trust fund that may be invested in land and/or other investments, and their interest is a right of indemnity granted to the trustee and the manager of the trust under the trust deed: 224 CLR 98, 120.
• A unit holder in a unit trust like the ones in this case does not have an 'estate of freehold in possession', equitable or otherwise.
• Even if one person owns all the units in such a trust, they still don't have an estate of freehold in possession.

Other publishers' references

• [2005] HCA 53
• (2005) 224 CLR 98