Mohamed v Chief Commissioner of State Revenue  NSWADT 169
|Date of judgement||15 August 2012||Proceeding No.||116046|
|Judge(s)||Judicial Member S Frost|
|Court or Tribunal||Administrative Decisions Tribunal|
|Legislation cited||First Home Owner Grant Act 2000
Duties Act 1997
Taxation Administration Act 1996
|Catchwords||First home owner grant - First Home Plus Concession Scheme - residence requirement - property occupied as principal place of residence|
This matter involved an application by Ms Shaden Mohamed (“the Taxpayer”) for a review by the Administrative Decisions Tribunal (“the Tribunal”) of a decision by the Chief Commissioner of State Revenue (“the Chief Commissioner”) in 2010 to require repayment by the Taxpayer of the First Home Owner Grant (“the FHOG”) and the stamp duty relief which she received when she purchased her first home at Hurstville in 2005 (“the grant property”). The stamp duty relief consisted of a reduction in the amount of stamp duty payable under the First Home Plus Concession scheme (“FHP Concession”) as it then was in the Duties Act 1997.
Judicial Member Frost revoked the Chief Commissioner’s decision to require repayment of the FHOG and to recover the additional duty remitted under the FHP Concession.
Judicial Member Frost considered a threshold problem was that the recovery action taken by the Chief Commissioner was undertaken four and a half years after the date on which the Taxpayer claimed to have moved into the grant property.
Judicial member Frost accepted the Taxpayer’s and her sister’s sworn evidence and explanation of the very low water and electricity usage at the grant property during the claimed residency period of 1 December 2005 to 5 July 2006. He also did not consider that the objective evidence provided by the Chief Commissioner in relation to this matter cast sufficient doubt on the Taxpayer’s evidence as to make it implausible.
As a first home purchaser, the Taxpayer purchased the grant property in 2005. The Taxpayer received a FHOG of $7,000 as well as the benefit of a duty reduction under the FHP Concession provided to first home owner buyers by the Duties Act 1997.
The Taxpayer completed the purchase of the grant property in October 2005. She was obliged to start to occupy the home as her principal place of residence by October 2006 to retain the FHOG and the FHP Concession. This is because the residency rules under both schemes require that the home must be occupied as the purchaser’s principal place of residence for a continuous period for at least six months and that period of occupation must start within 12 months after completion of the purchase.
In July 2010, the Chief Commissioner notified the Taxpayer of the commencement of an investigation into whether she had complied with the residence requirements of the FHOG and FHP Concession schemes. After that investigation, the Chief Commissioner determined that the Taxpayer had not satisfied the residence requirement, and assessments were issued seeking the repayment of the FHOG, plus interest, and the payment of the additional duty, plus interest, that was remitted under the FHP Concession.
The Taxpayer objected to the assessments and the objections were subsequently disallowed.
The Taxpayer stated that when she purchased the grant property, she was living at the family home in the nearby suburb of Blakehurst. She stated that her intention in buying the grant property was to move out of the family home to set up for marriage since she was engaged to be married. The Taxpayer claimed that she moved into the grant property on or about 1 December 2005, a few weeks after settlement and live there until 5 July 2006.
The Taxpayer submitted that, although the property was her principal place of residence, she did not spend very much time there. She did not maintain a television, radio or computer there. She also did not eat at the home very often, or if she did, the food was not prepared by her. She saw no reason to connect hot water to the Grant Property while she lived there.
The Taxpayer also made a number of other submissions including the following:
The property had serious plumbing problems and the bathroom had extensive mould. She sometimes showered using cold water, but she preferred to shower at work, after running in the park.
She did not drink water from the taps in the house because the pipes in the house were rusty, so she drank bottled or filtered water.
She was given a washing machine but did not have it installed because of the state of the plumbing. She would take her washing to the family home or else her sister would sometimes do it for her.
She had a fridge but it was not switched on since she did not cook. She had no need to store dairy products because she is lactose intolerant.
She had some small electrical appliances, including a rice cooker and a sandwich press, but she did not use them.
In essence, the Taxpayer’s principal submission was her lifestyle at the time coupled with the poor condition of the grant property was such that she only used a negligible amount of water and electricity at the grant property while she occupied it. This explained the low water and electricity usage during her occupation of the house.
Chief Commissioner’s submissions
The Chief Commissioner submitted that the decision to reclaim the FHOG and require the payment of the additional duty remitted under the FHP Concession should be affirmed since:
The Taxpayer’s consumption of electricity and water during her claimed period of residency was so low as to render her version of events highly improbable.
Her electoral roll enrolment address and her address details at the Roads & Traffic Authority and Medicare during the claimed residency period do not support her claim that she occupied the property during the period 1 December 2005 to 5 July 2006.
The Taxpayer claimed the grant property to be rental property in her 2006 income tax return and claimed tax deductions in relation to the property for that year. The taxpayer also disclosed in her home loan application to the bank before she purchased the grant property that she intended the property be occupied by tenants and not by herself.
Judicial Member Frost determined that one of the problems with the case for the Chief Commissioner was the significant delay in the Chief Commissioner undertaking a review of the Taxpayer’s FHOG and FHP Concession eligibility status in respect of the grant property. He noted in this regard that the four and a half year delay in undertaking this investigation inevitably led to the Taxpayer having some shortcomings in her recollections as well as in her attempts to reconcile the electricity and water consumption figures.
Judicial Member Mr Frost accepted the Taxpayer’s and her sister’s sworn evidence explaining the Taxpayer’s lifestyle and the poor condition of the grant property during the claimed period of residence. He accepted their explanation that there were few appliances that would have consumed electricity as well as the Taxpayer’s submission that her use of the bathroom for showering was infrequent on account of the home having no hot water. Mr Frost also remarked that he believed the Taxpayer and her sister in regard to their evidence that the Taxpayer spent little time in the grant property but that she did sleep there most nights.
In the interest of completeness, Judicial Member Frost noted that, despite believing the Taxpayer and her sister, he would object to the Taxpayer’s claim if the objective evidence cast sufficient doubt on her version of events as to make it implausible. He then remarked that the electricity consumption evidence was consistent with the lifestyle that the Taxpayer described, in a property with no air conditioning, no heating and no hot water.
While he acknowledged that the water usage was extremely low at the grant property for the period 1 December 2005 to 5 July 2006 (being only two kilolitres or at most three kilolitres of consumption), this objective evidence did not undermine the Taxpayer’s claims taking account of her lifestyle at the time and the poor condition of the home.
Judicial Member Frost also held that the Taxpayer’s failure to update her address at the then Roads & Traffic Authority, Medicare and the relevant electoral rolls carried far more significance for the Chief Commissioner than it did for him.
Judicial Member Frost finally noted that he had taken into account the fact that, within the claimed residency period of a little over seven months, the Taxpayer was overseas for two of those months.