Kozman v Chief Commissioner of State Revenue [2013] NSWADT 143

Date of judgement 19 June 2013 Proceeding No. 126076
Judge(s) N S Isenberg, Judicial Member
Court or Tribunal Administrative Decisions Tribunal
Legislation cited Administrative Decisions Tribunal Act 1997

Duties Act 1997

First Home Owner Grant Act 2000

State Revenue Legislation Further Amendment Act 2005

Taxation Administration Act 1996
Catchwords First Home Owners Grant - First Home Plus Scheme - residence requirement - reversal by administrator - penalty and interest
Cases cited Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP 50

Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41

Chief Commissioner of State Revenue -v- Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19

Cullen v The Chief Commissioner of State Revenue [2007] NSWADT 121

Deputy Commissioner of Taxation v Clark [2003] NSWCA 91

Knight and anor v Chief Commissioner of State Revenue [2008] NSWADT 83

Larsson v Chief Commissioner of State Revenue [2008] NSWADT 208

O'Hara v Chief Commissioner of State Revenue [2011] NSWADT 289

Philpott v Chief Commissioner of State Revenue [2008] NSWADTAP 18

Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21

Summary

The Applicant sought review of a decision of the Chief Commissioner of State Revenue (the Chief Commissioner) requiring him to repay a First Home Owner Grant paid under the First Home Owner Grant Act 2000, together with a penalty of 20%. The Applicant also sought review of a decision of the Chief Commissioner to revoke the duties exemption granted to him in accordance with the First Home Plus Scheme under the Duties Act 1997 (the Duties Concession).

The Applicant entered into a tenancy agreement with the vendors of the property for a period of 10 months, commencing 2 days after completion of the purchase, and entered into a second tenancy agreement with another tenant after the vendor vacated the property. During the first tenancy, the Applicant claimed to have lived in the property with the vendor’s family in order to fulfil the respective statutory requirements.

Judicial Member Isenberg confirmed the Chief Commissioner’s decisions to recall the First Home Owner Grant and charge a 20% penalty. Judicial Member Isenberg also upheld the Chief Commissioner’s decision to revoke the Duties Concession and to charge both the market and premium rates of interest on the duty payable.

Background

On 4 November 2009, the Applicant purchased a residential property in Minchinbury (“the property”). The Applicant applied for and received the First Home Owner Grant (“the Grant”) of $14,000 and a Duties Concession of $13,500 in relation to the property on the basis of fulfilling the statutory residence requirements under s.12 of the First Home Owners Grant Act 2000 and s.76 of the Duties Act 1997.

The Applicant entered into a tenancy agreement with the vendors of the property for a period of 10 months (commencing on 6 November 2009) and commenced a second tenancy agreement with another tenant on 19 January 2011 after the vendor vacated the property. During the first tenancy, the Applicant claims to have lived in the property with the vendor’s family in order to fulfil the respective statutory requirements.

The Chief Commissioner contended that the Applicant failed to meet the statutory residency requirement, which provides that the Applicant must commence occupation of the residence within 12 months of settlement and occupy the home for a continuous period of at least 6 months. As such, the Chief Commissioner sought repayment of the Grant and the concession.

Tribunal's consideration of the issues

  1. The residence requirements

    Judicial Member Isenberg applied the principles in Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41 to determine that while the Applicant resided in a part of the house, at no time did he occupy or use the whole or even a substantial part of the property. In arriving at this decision, Judicial Member Isenberg considered that the Applicant did not ‘occupy’ the premises as he did not have immediate supervision and control of the property. The Applicant’s failure to notify statutory authorities of his change of address and the minimal furnishing of the property proved that there was no ‘degree of permanence’ in the Applicant’s occupation of the property.

  2. Discretion to vary the residence requirement or exempt the Applicant from the residency requirement

    The Chief Commissioner has discretion to exempt the Applicant from the residence requirements for “good reasons” under s.12(3) - (5) of the First Home Owner Grant Act 2000 and s.76(2) of the Duties Act 1997. In this regard, Judicial Member Isenberg considered the decision in Cullen v The Chief Commissioner of State Revenue which cited the Second Reading Speech of the relevant legislation which explained that the discretions are intended to be used in ‘circumstances where the Applicant genuinely intended to occupy the home.’

    Judicial Member Isenberg found that the Applicant did not genuinely intend to occupy the home as even after the vendors vacated the property 10 months after the Applicant purchased the property, the Applicant let the property to another tenant.

  3. Penalty tax and interest

    Judicial Member Isenberg affirmed the Chief Commissioner’s decision to impose 20% penalty tax on the amount of the Grant, noting that the Applicant had the benefit of the Grant for over three years and had leased the property for market value over that period. Further, interest at both the market and premium rate imposed by the Chief Commissioner on the unpaid stamp duty was also confirmed as no ‘exceptional circumstances’ existed to justify remission of the interest as required in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19.

Decision

Judicial Member Isenberg confirmed the Chief Commissioner’s decisions to recall the First Home Owner Grant and charge a 20% penalty. The Tribunal also upheld the Chief Commissioner’s decision to revoke the Duties Concession and to charge both the market and premium rates of interest.

Link to decision

Kozman v Chief Commissioner of State Revenue [2013] NSWADT 143

Last updated: 17 May 2016