Vlahos v Chief Commissioner of State Revenue  NSWADT 215
|Date of judgement||02 October 2013||Proceeding No.||136017|
|Judge(s)||Judicial Member, A Verick|
|Court or Tribunal||Administrative Decisions Tribunal|
|Legislation cited||Administrative Decisions Tribunal Act 1997
Duties Act 1997
Interpretation Act 1987
Taxation Administration Act 1996
|Catchwords||STATE REVENUE - Duties Act 1997- transfer 'in partial conformity with' the contract - meaning of "related person" -review on grounds of estoppel and 'fairness'|
|Cases cited||BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue  NSWSC 1003
Commissioners of Inland Revenue v Brooks (1915) AC 478
Federal Commissioner of Taxation v Wade (1951) 84 CLR 105
Lake Victoria Ltd v Commissioner of State Revenue (1949) 49 SR (NSW) 262
Maritime Electric Co. Ltd v General Dairies Ltd (1937) AC 610
R v Inland Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Businesses Ltd  AC 617
R v Inland Revenue Commissioners; Ex parte Preston (1985) AC 835
Vickery v Woods (1951) 85 CLR 336
The taxpayers sought a review of a decision by the Chief Commissioner to issue an Assessment for additional duty pursuant to s.64C of the Duties Act (Transfers made in partial conformity with agreements).
The Tribunal determined that:
the transfer was not liable for concessional ($10) duty under s 18(2) or (3) (No double duty);
the Chief Commissioner had correctly applied s 64C in assessing duty on the “excess proportion”, being 1/6th of the dutiable value of the property;
the Chief Commissioner was not estopped from carrying out statutory duties if contrary oral or written advice is given to a taxpayer who acts upon that advice;
a principle of fairness that a discretion must be exercised in a way that does not discriminate against particular taxpayers did not apply in this case because the assessment did not involve the exercise of a discretion by the Chief Commissioner.
On 26 April 2012, the taxpayers (consisting of 6 individuals including Mr I Chami) entered into a contract to purchase a property at Rozelle (“the property”). The property was “dutiable property” within the provisions of s.11(1)(a) of the Duties Act. Ad valorem duty of $53,435 was paid to the Chief Commissioner.
On 1 June 2012, a transfer of the property was executed to transfer the property to 5 of the 6 individuals who had purchased the property (ie, excluding Mr Chami), and duty of $10 was paid pursuant to s.18(3) of the Duties Act.
On 19 September 2012, the Chief Commissioner notified the taxpayers, in writing, of not being satisfied that s 18(3) applied to the transfer, in that the transfer was ‘not in conformity’ with the contract, due to the removal of Mr Chami from the transfer and that he was not a “related person” in accordance with s 18(3)(d)(i) of the Duties Act and the definition of a “related person” in the Dictionary to the Duties Act.
However, the Chief Commissioner allowed the concession under s 64C of the Duties Act for transfers made in ‘partial conformity’ with agreements, inserted in the Duties Act in 2012 to avoid a taxpayer paying double duty. The Chief Commissioner assessed the taxpayers for extra duty on 1/6th of the dutiable value in accordance with s 64C, in the amount of $5,969.50.
The taxpayers lodged an objection to the Chief Commissioner’s decision with a statutory declaration by the taxpayer’s representative, which included a statement that oral advice had been given by an officer of the Office of State Revenue (“OSR”) that the transfer could be stamped “not in conformity” on the basis of the relationships of the parties to the purchase and transfer.
The issues arising in the proceedings for determination were:
Whether the taxpayers were entitled to the concession under s18 of the Duties Act in respect of the transfer dated 1 June 2012.
If s 18 had no application, to what extent the provisions of s 64C apply in relation to the transfer dated 1 June 2012.
Whether the viva voce advice given by the officer of OSR to a representative of the taxpayers confirming that the provisions of s 18 applied to the transfer supplants the terms of the law.
Whether the taxpayers are entitled to “fairness”.
The Tribunal accepted the submission of the Chief Commissioner that s 18(2) of the Duties Act did not apply to the transfer because it was not made in conformity with the agreement, as one of the parties to the contract, Mr Chami, was excluded from the transfer of the property, citing Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 at 265 per Jordan CJ and Vickery v Woods (1951) 85 CLR 336 at 343-4 per Dixon J. Although the concession is available under s 18(3) where the transfer is not in conformity with the agreement if the conditions in that provision are satisfied, the Tribunal found that Mr Chami and Ms Kondilis were not at the time of settlement “related persons” and found that s 18(3)(d)(i) did not apply.
The Tribunal agreed with the Chief Commissioner’s submission concerning the correct application of s 64C of the Duties Act. An “excess proportion”, as defined in the provision, of dutiable value was transferred (1/6th), which was the share of the property agreed to be transferred to Mr Chami under the contract but ultimately was transferred to the purchasers excluding Mr Chami.
The Tribunal cited the current law as to whether the Chief Commissioner is estopped from carrying out statutory duties in circumstances where contrary oral or written advice is given to a taxpayer who acts upon it – Federal Commissioner of Taxation v Wade  84 CLR, Kitto J at 117 and BBLT Pty Ltd v CCSR  at para 111 per Gzell J, which confirms that no estoppel lies against the Chief Commissioner in the exercise of statutory duties. The Tribunal made the finding that no discretion was available to the Chief Commissioner in respect to the specific statutory provisions under consideration nor is the Tribunal able to override those provisions.
Finally, the Tribunal dealt with the taxpayers’ submission that as they had paid full duty on the contract, it was unfair for them to pay additional duty. The Tribunal cited some English authorities concerning where a taxpayer is entitled to judicial review if a decision is “unfair” because of an obligation on the revenue to treat a taxpayer fairly and not to discriminate between one taxpayer and another (paragraph 34). In Bellinz Pty Ltd v Federal Commissioner of Taxation (1998) 84 FCR 154, the Court found that where a decision-maker has a discretion, a principle of fairness will require that that discretion be exercised in a way that does not discriminate against particular taxpayers. The Tribunal found that the principle of fairness had no application in this matter as the legislative provisions under consideration did not contain a discretionary power.
The Tribunal found that the application for review of the decision made by the Chief Commissioner on 19 September 2012 must be accordingly dismissed.