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Wilkins v Chief Commissioner of State Revenue [2014] NSWCATAD 70

Date of judgement 26 May 2014 Proceeding No. 136066
Judge(s) A Verick, Senior Member
Court or Tribunal NSW Civil and Administrative Tribunal
Legislation cited Acts Interpretation Act 1901 (Cth)

Administrative Decisions Review Act 1997

Administrative Decisions Tribunal Act 1997

Civil and Administrative Tribunal Act 2013

Duties Act 1997

Interpretation Act 1987

Stamp Duties Act 1920

Superannuation Industry (Supervision) Act 1993 (Cth)

Taxation Administration Act 1996
Catchwords TAXES AND DUTIES - Transfers in conformity with contract - Nominal Duty payable - purchase of property by trustee of superannuation fund - Duties Act 1997, s 18
Cases cited Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262

Vickery v Woods (1951) 85 CLR 336

DKLR Holding Co (No.2) Proprietary Limited v The Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431

Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6

Summary

The taxpayers, Mr & Mrs Wilkins, sought a review of the Chief Commissioner’s decision to assess ad valorem duty in respect of a Real Property Act Transfer Form.  The Chief Commissioner decided that ad valorem duty was payable on the Transfer on the basis that neither s 18(2) nor s 18(3) of the Duties Act 1997 applied.

The Tribunal held that the concession in 18(3) did not apply, but that the concession in s 18(2) did apply to exempt the taxpayers.  The Tribunal’s decision was based on its finding that the ultimate beneficial owners of the Property were Mr and Mrs Wilkins.

Background

On 15 May 1992 the Teamcard Superannuation Fund (the “Fund”), a trust regulated by the Superannuation Industry (Supervision) Act 1993, was settled.  The Trustee of the Fund was Teamcard Pty Limited (“Teamcard”).  Mr and Mrs Wilkins (the taxpayers) are beneficiaries of the Fund.

By a contract of sale dated 30 November 2012 (the “Contract”), Teamcard (as Trustee for the Fund), agreed to purchase, amongst other properties, Lots 3 and 4 Deposited Plan 536479 (the “Property”) from Davocsh Pty Limited.  Ad valorem duty was paid on the Contract.

On 8 January 2013 Custodian Trust Deeds were settled in respect to the interests in the Property held by Teamcard by reason of the Contract (“Custodian Deeds”).  By the Custodian Deeds Mr and Mrs Wilkins held those interests as bare trustees for Teamcard. 

By registration of a transfer dated 10 January 2013 (the “Transfer”) the Property was transferred to Mr and Mrs Wilkins. 

The Chief Commissioner decided that ad valorem duty was payable on the Transfer because neither s 18(2) nor s 18(3) of the Duties Act 1997 applied.

Decision

The Tribunal held that the concession in 18(3) did not apply, but that the concession in s 18(2) did apply to exempt Mr and Mrs Wilkins from ad valorem duty on the Transfer.  The Tribunal’s decision was based on its finding that the ultimate beneficial owners of the Property were Mr and Mrs Wilkins: see at [73]-[75].  

The relevant provisions considered by Senior Member Verick were s 18(2) and s 18(3) of the Duties Act 1997, which provided:

  1. The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty chargeable in respect of the agreement has been paid.

  2. The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if:

    1. the duty chargeable in respect of the agreement has been paid, and

    2. the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and

    3. the transfer occurs at the same time as, or proximately with the completion or settlement of the agreement, and

    4. at the time the agreement was entered into, and at the completion or settlement of the agreement:

      1. the purchaser under the agreement and the transferee under the transfer are related persons, except as provided by subparagraph (ii), or

      2. if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons.

Section 18(3)

The Chief Commissioner conceded that the taxpayers satisfied the requirements of s 18(3)(a), (b) and (c), but submitted that the taxpayers failed to satisfy s 18(3)(d) on the basis that the transferee and the beneficiary were not related persons.

The Tribunal agreed with the Chief Commissioner’s submission that the words in s 18(3)(d)(ii) “if the purchaser purchased as a trustee” did not confine the operation of s 18(3)(d)(ii) to resulting trusts only, and that the section had a wider application to trusts.  In this regard, Senior Member Verick noted that the Tribunal in Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6 had incorrectly relied on extrinsic material in construing the meaning of s 18(3)(d)(ii). 

The taxpayer submitted that, in the event the Tribunal found s 18(3)(d) had a wider application to trusts (and not just resulting trusts), the relationship between transferee and beneficiary for the purpose of s 18(3)(d)(ii) should be determined at the moment of the transfer, not the moment after transfer at which the property made the subject of the transfer was impressed with a trust. This submission was made on the basis of the following reasoning of Gibbs CJ in D.K.L.R Holding Co (No. 2) Proprietary Limited v The Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431(“DKLR”) at 443:

“It (is) only when the (anterior) declaration of trust took effect, which is of course after the transfer, that there was a severance of the legal and equitable interests.”

In relation to this issue the Tribunal agreed with the Chief Commissioner’s submission that an earlier passage from Gibbs JC in DKLR (at 443) established that the transferees, Mr and Mrs Wilkins, did not hold the estate in fee simple in the Property except as trustees.  The key part of that earlier passage from Gibbs CJ (at 443) was:

“The fact that on the very instant when the transfer took effect the declaration of trust became effective does not mean that the real effect of the transfer was any different from its apparent effect.”

Accordingly, the Tribunal found that the taxpayers were trustees for the purposes of s 18(3)(d)(ii) of the Duties Act 1997.

Section 18(2)

The Tribunal then considered the taxpayers’ alternative argument that the transfer to the taxpayers as trustees was in conformity with the Contract, and so the concession in s 18(2) should apply.

The Chief Commissioner's submission in this regard was that the taxpayers, as transferees of the Property, were different from Teamcard Pty Ltd, the purchaser named in the Contract, and accordingly the Transfer is not in conformity with the Contract and s 18(2) does not apply.

The Tribunal found that the Transfer was in conformity with the Contract, based on the following reasoning:

  1. the observations made by Dixon J in Vickery v Woods (1951) 85 CLR 336 suggest that a much wider approach ought to be taken when considering the s 18(2) concession, as a “rigid approach only leads to fairly harsh and unwarranted outcomes”;

  2. the ultimate owner was and is the taxpayers' superannuation fund, and no stranger has acquired any beneficial interest in the Property; and

  3. the expression “made in conformity with an agreement” simply means that the transfer must be made in accordance with the agreed arrangements between the parties to the contract.

Orders

The Tribunal set aside the assessment under review and remitted the matter back to the Chief Commissioner of State Revenue to assess the appropriate duty payable in accordance with s 18(2) of the Duties Act 1997.

Link to decision

Wilkins v Chief Commissioner of State Revenue [2014] NSWCATAD 70

Last updated: 18 May 2016