Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227

Background

On 7 February 1997, Mr Ross entered into a contract to purchase the Property. In late 2007, Mr Ross corresponded with the Office of State Revenue (“OSR”) requesting that an undated executed transfer for the Property, from the Taxpayer to him, be chargeable to nominal duty pursuant to s. 55 of the Duties Act 1997 (“Duties Act”). In support of his claim, Mr Ross indicated that the Property was not purchased in the name of the Taxpayer and that she did not pay stamp duty.

The Chief Commissioner did not accept that Mr Ross was entitled to a concession. Mr Ross’ objection to this decision was disallowed. Mr Ross responded on 2 May 2008, seeking a review on the basis of further submissions and documents. The Chief Commissioner found that he was not entitled to a concession under s. 55 of the Duties Act.

On 28 July 2008, the Chief Commissioner informed Mr Ross that the Declaration of Trust dated 21 March 2008 was liable to ad valorem duty because, on the evidence, the Chief Commissioner was not satisfied that all the purchase money had been provided by Mr Ross. Further, it was not established that the Taxpayer was to hold the Property as trustee at the time of entering into the contract. An objection was received with respect to the Assessment, which was subsequently disallowed.

On 13 December 2012 and 21 November 2013, the Chief Commissioner issued legal notices for payment of the stamp duty. Due to a lack of response, the Chief Commissioner garnisheed the Taxpayer’s bank account pursuant to s. 46 of the Taxation Administration Act 1996 (“TAA”).

On 5 May 2014 the Taxpayer lodged an objection to the Assessment. On 27 August 2014, the Chief Commissioner accepted the late objection and partly allowed it by remitting the interest component. It was also noted by the Chief Commissioner that “as ad valorem duty has now been paid on the Declaration of Trust, a transfer of the Naremburn property for no consideration from you to Mr Ross will be eligible for concessional duty of $50 under s. 57 of the Duties Act.”

In related proceedings, Mr Ross also lodged an objection on 11 February 2008, regarding the Chief Commissioner’s decision not to grant him concessional duty of $10 under s. 55(1)(b) of the Duties Act in respect of the undated transfer of the Property from the Taxpayer to him.

In the first instance, in Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 51, the Tribunal found that the evidence did not establish conclusively that Mr Ross provided the money for the purchase of the dutiable property. The Tribunal also held that the Taxpayer was not the “apparent purchaser” of the Property. On appeal, the Appeal Panel in Ross v Chief Commissioner of State Revenue NSWADTAP 74 upheld the decision of the Tribunal.

Submissions

The Taxpayer submitted that the Tribunal should infer from the evidence that Mr Ross paid the purchase price of the Property pursuant to loans made by family members. Mr Ross submitted, on behalf of the Taxpayer, that the Assessment was based on an arbitrary photocopy of a declaration of Trust which was never tendered for assessment, but which was collectively tendered in relation to the acquisition of the property around 2008.¹ He also submitted that in Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 5 the Chief Commissioner did not permit him to rely on the unstamped document.² Further, that the case was largely based on a finding that the Property was purchased by Mr Ross on trust for Ms Amanda N. Ross. ³ Mr Ross submitted that Ms Ross is a “non-existent person” in respect of which there has been no claim.

Mr Ross submitted that the Declaration of Trust did “not involve a separate dutiable transaction” and should only be subject to a nominal duty under the Second Schedule of the Stamp Duties Act as an “instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase money therefor”.⁴

The Chief Commissioner submitted that, pursuant to s. 73D of the Stamp Duties Act, he is empowered “to assess duty on and stamp a copy of the Trust Deed”. There were seven grounds advanced to support the Assessment, as follows:

1. the original Trust Deed was liable to ad valorem duty under paragraph 2(a) of the heading “Declaration of Trust” in the Second Schedule of the Stamp Duties Act as an instrument declaring that any property vested or to be vested in the person executing the instrument is or shall be held in trust for the person mentioned therein;
2. the Taxpayer was liable to pay the stamp duty on the original Trust and lodge it with the Chief Commissioner pursuant to s. 25 of the Stamp Duties Act; the Taxpayer did not do so;
3. the Chief Commissioner was satisfied that the matter contained in the original executed Trust Deed was wholly or substantially reproduced in the instrument, and was therefore a “copy”, as defined in s. 73C of the Stamp Duties Act;
4. since the original Trust Deed or a copy had not been previously duly stamped, the “copy” of the Trust Deed was chargeable under s. 73D(1) of the Stamp Duties Act;
5. the application of s. 73D(1) did not depend upon how the copy came into the possession of the Chief Commissioner or whether it was a copy of a copy;
6. even though there were multiple versions of the Trust Deed, each of which were liable to ad valorem duty, unless they had been stamped for duty, they did not affect the liability of the original or copy of the Trust Deed; and
7. the Assessment was issued in accordance with s. 73D and based on the purchase price of the property under the contract for sale executed on 7 February 1997.

Decision

The Tribunal acknowledged that the central issue for determination was whether the Chief Commissioner was entitled to assess stamp duty on merely sighting a copy of the Trust Deed under the Act.

However, Senior Member Verick found that there was a core issue that needed to be addressed. This was that the Assessment subject to this review was issued to Raymond Ross, and “no assessment has been issued to the Taxpayer, giving rise to any liability under the Stamp Duties Act or the Duties Act.”⁵

The Tribunal determined that the Taxpayer was correct in claiming that the decision in Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 51 was somewhat at odds with the decision made by the Chief Commissioner in these current proceedings. That is, in the previous proceedings the Declaration of Trust was not allowed to be admitted, and subsequently was subject to the imposition of ad valorem duty.

The Tribunal referred to the Objection Determination Report dated 14 August 2014 which stated that the Assessment was issued under Mr Ross’ name because it is “OSR’s practice to issue a notice of assessment to the lodging party instead of the person primarily liable.”⁶ In this situation Mr Ross lodged the Declaration of Trust.

Despite s. 14 of the TAA, which gives the Chief Commissioner the authority to issue a notice of assessment showing the amount of the assessment “in a form approved by the Chief Commissioner”, the Tribunal concluded that the assessment is “required to be made against the party liable to the duty and the process is only complete if the notice is served on that party.”⁷ As such, without an assessment, there is no basis for the Tribunal to conduct a review.

The Tribunal remitted the matter to the Chief Commissioner to reconsider the position. The Tribunal stated that the Chief Commissioner would need to consider whether the debt was owed by the Taxpayer or payable by Mr Ross. This consideration “ought to be done against the factual background of the outcome in Ross, in particular the Chief Commissioner’s position taken on the facts in that matter.”⁸

It was noted by the Tribunal that Mr Ross had not been truthful as to the facts in this matter.⁹ He also did not register the original transfer, made changes to the transfer instrument without proper process and failed to inform the Tribunal and the Appeal Panel in his own matter that an ad valorem duty assessment had been issued to him.

Orders

The matter is remitted to the Chief Commissioner for reconsideration as advised.

Link to decision

Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227

Footnotes

1. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [33].
2. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [34].
3. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [35].
4. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [36].
5. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [58].
6. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [59].
7. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [60].
8. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [69].
9. ^ Macedo v Chief Commissioner of State Revenue (No.2) [2015] NSWCATAD 227, [71].