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Robert Leigh Rampton v Chief Commissioner of State Revenue [2017] NSWCATAD 72

Date of judgement 8 March 2017 Proceeding No. 1510681
Judge(s) NS Isenberg Senior Member
Court or Tribunal New South Wales Civil and Administrative Tribunal
Legislation cited Administrative Decisions Review Act 1997

Building and Construction Industry Security of Payment Act 1999

Civil and Administrative Tribunal Act 2013

Duties Act 1997

Income Taxation Assessment Act 1997

Land Tax Management Act 1956

Taxation Administration Act 1996
Catchwords REVENUE LAW - Duties Act 1997 - New Home Grant Scheme - a new home – multiple homes - vacant land purchase - exclusive occupancy – capacity of person purchasing as trustee.
Cases cited B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187

Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

David Hurst Constructions Pty Ltd v Shorten [2008] NSWSC 164

Federal Commissioner of Taxation v Galland 4 FLR 566

Provident Capital Limited v Zone Developments Pty Ltd [2001] NSWSC 843

Seovic Engineering Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCA 242

Background

The Applicant entered into an agreement (“the Property Agreement”) to purchase vacant land in Goulburn (“Property 1”). On the same date the Applicant, as trustee for the Rampton Family Trust (“the Trust”), entered into another agreement (“the Trust Property Agreement”) to purchase another block of vacant land in Goulburn (“Property 2”).

On 18 September 2014, the Applicant, by separate applications, successfully applied for $5,000 grants under the Scheme in respect of each of the agreements.

On 28 April 2015, following internal investigations, the Chief Commissioner informed the Applicant that he was entitled to the grant in respect of the purchase of Property 2 but was not entitled to the grant in respect of the purchase of Property 1 because “if a purchaser receives a grant for a transaction which occurred in a financial year, that purchaser will not be eligible for a further grant on another transaction in that financial year”. On the same date the Chief Commissioner issued a Duties Notice of Assessment to  the Applicant to recover the grant made in respect of Property 1.

The Applicant objected to the Assessment and by letter dated 11 September 2015 the objection was disallowed. The Applicant then appealed to the NCAT on the following grounds:

  1. The decision is contrary to the provisions of the Act.

  2. The decision fails to give proper weight to the definition of “Transferee”.

  3. The decision fails to distinguish between the two capacities of the Applicant.

  4. The intention of Parliament is not served by the decision as so claimed.

The Statutory Framework

  • The Act provides for the imposition of duty on certain transactions concerning dutiable property, including transfers of dutiable property and agreements for the sale or transfer of dutiable property, s 8;

  • Dutiable property includes land in New South Wales, s 11; and

  • The transferee is the person liable to pay the duty, s 13.

  • The Act is to be read together with the TA Act, s 5.

  • Chapter 2 of the Act relates to transactions concerning dutiable property and includes at ss 81 to 87G, Division 1A headed “New Home Grant Scheme”. Section 81 provides that the Scheme is intended to provide conditional assistance in the purchase or construction of a new home and s 82 provides for a conditional $5,000 grant under the Scheme. Section 85A provides that there is a maximum of one eligible transaction per financial year.

Submissions

Trust and Transferee

The parties agreed that a trust could be a transferee under the Act. However the Applicant submitted that section 85A does not disqualify a trustee of a trust from acquiring property on behalf of the trust in a separate capacity. The Applicant submitted that “the grant is to the Trust and accordingly the transferee is the Trust”. The Applicant further submitted that the “the trust will be assessed for Land Tax” without any supporting authority.

The Chief Commissioner submitted that as the Act did not provide otherwise, trustees did not act in a distinct legal capacity as trusts are not entities with legal personality. While the Applicant accepted this as strictly true, it submitted that trusts were legal institutions often classified as an entity.

Multiple Homes

Another issue before the Tribunal was whether the construction of multiple homes on Property 1 was a ‘new home’ for the purposes of s 83(4) and s 87G of the Act. In this case the Applicant had constructed two semi-detached dwellings (duplex) on Property 1 in anticipation of subdivision. The Chief Commissioner submitted that a question to be determined was whether there was an intention to use Property 1 as the site of a new home rather than as a site for the construction of multiple homes. The Chief Commissioner also submitted that the relevant agreement was not for that part of the land which was an exclusive occupancy.

The Applicant submitted that according to the Chief Commissioner, a home was a building affixed to land that may be lawfully used as a place of residence and is a suitable place for residence in the Chief Commissioner’s opinion.

The Applicant submitted that separate lots were not created until the registration of the subdivision on 24 April 2015 at the Land Titles Office and included the Final Occupancy Certificate to show that the duplex was able to be used as a residence. The Applicant submitted that the duplex satisfied the definition of a new home for the purposes of the Act.

The Chief Commissioner submitted that it was clearly the intention of the legislation that a grant under the Scheme was available only to land having an exclusive occupancy, that is, a single home. Since Property 1 was purchased with the intention of constructing multiple dwellings the Property Agreement fell foul of s 83(5) and therefore was not an eligible agreement or transfer under the scheme.

The Chief Commissioner, relying on the reasoning of Nicholas J in David Hurst Constructions Pty Ltd v Shorten [2008] NSWSC 164 in interpreting the Construction Industry Security of Payment Act 1999, submitted that “s 83(4) and s 87G of the Act must be taken to refer to a single and distinct new home.”

Decision

The Tribunal Member quoted, inter alia, an address given by Justice Paul Brereton in 2010 where he said:

“Unlike a company, a trust – including a discretionary trust – is not a separate legal entity. In law, a trustee is not recognised as having an additional or qualified personality. although trusts are often spoken of as if they were separate legal entities, this is misconceived. Accounting practice has contributed to this misguided view.”

Furthermore the Tribunal Member observed that the LTM Act relevantly provides at section 24 that trustees vested with land will be assessed in respect of land tax as if they were beneficially entitled to the land. It was held that while the land may form part of the trust fund and not the trustee’s personal estate, it does not follow that the trust is itself the transferee and this submission was rejected. The Applicant is a natural person who is a legal entity and the trust is not a legal entity. The Tribunal was not satisfied that the Applicant in his personal capacity and the Applicant purchasing on behalf of the trust were different entities under law and therefore the two properties where held to be transferred to the one transferee.

The Tribunal Member was satisfied on the available evidence that the Applicant always intended to build multiple dwellings on property 1, even at the date of purchase of both properties. Having regard to s 83(5) he found that a relevant eligible agreement must be for the whole of a parcel of land if it is intended to be the site of the “a new home”, or if two or more dwellings are being built, that the purchase is for “the part of the land that is an exclusive occupancy” and not the whole of the parcel of land.

The Tribunal was not satisfied that there was at any relevant time any intention to build ‘a home’ on Property 1 and that the Applicant at all relevant times was to build ‘2 or more homes’. The Applicant submitted that multiple homes were effectively a single home, however no authority was provided for this and that submission was rejected.

The Applicant had appealed the decision on the grounds that the ‘intention of Parliament is not served by the decision’, however no evidence was submitted on this point and the Tribunal did not feel it was appropriate to make assumptions regarding Parliament’s intentions.

Orders

The Tribunal confirmed the Duties Assessment in respect of Property 1.

Link to decision

Robert Leigh Rampton v Chief Commissioner of State Revenue [2017] NSWCATAD 72

Last updated: 28 March 2017