Rayek v Chief Commissioner of State Revenue [2015] NSWCATAD 40

Summary

The Applicant, Wissam Ibrahim Rayek, sought review of the Chief Commissioner’s assessment requiring the Applicant to repay the first home owners grant and stamp duty concession on a residential property in Greenacre (“the subject property”).  The Chief Commissioner had determined that the applicant did not meet the residency requirements.

The Tribunal found that the Applicant failed to prove that he had met the residence requirement, and also determined that the Applicant did not advance any "good reasons" as to why he should be exempt from the residence requirement.  The Tribunal applied principles endorsed by the Appeal Panel in earlier cases in upholding the Chief Commissioner’s decisions to impose penalties in relation to both the grant and duty, and in refusing to remit both the market and premium rates of interest imposed under the Taxation Administration Act.

Background

In 2010, the Applicant exchanged contracts for the purchase of the subject property and received a first home plus stamp duty concession. In January 2011 the Applicants first home owner grant application was successful and he was paid $7000.

At the time of completion of the purchase, caveats were registered on the subject property. As a result, the Applicant could not become the registered proprietor until the caveats were removed. On 21 May 2012 the subject property was registered in the Applicant’s name.

In June 2012, the Chief Commissioner commenced an investigation into whether the applicant satisfied the ‘residency requirement’. Upon being notified of the delay in registration, the Chief Commissioner deferred the investigation. The Applicant was informed that he needed to start occupying the property by no later than June 2013.

The Chief Commissioner resumed the compliance investigation in February 2014 and determined the Applicant was not entitled to the first home owner grant, nor the stamp duty concession. Accordingly, assessments were issued to the Applicant requiring repayment of the first home owner grant and the stamp duty concession, together with penalties and interest. A penalty of 60% was imposed on the first home owner grant assessment. The penalty on the duties assessment was increased from the default position of 25% to 30% being an uplift of 20%.Those assessments were objected to by the Applicant and the objection disallowed.

During the investigation the Chief Commissioner’s officers found that the applicant had sold the subject property in November 2013. Enquiries with AGL indicated that the Applicant had never been recorded on the account at the subject property. Insufficient evidence was provided by the Applicant to show that he resided at the subject property.

Decision

1. Application of PPR exemption

   The Tribunal found that the version of events given by the Applicant in oral evidence at the hearing, as to when and how he occupied the property, was "quite implausible" (at [31]). The Applicant’s oral evidence differed from, and was inconsistent with, what he had previously stated in his notice of objection and his written submissions to the Tribunal. Accordingly, the Tribunal found that the Applicant failed to prove that he had met the residence requirement so as to receive the first home owners grant and stamp duty concession (at [34]). Nor, in the Tribunal’s view, did the Applicant advance any "good reasons" as to why he should be exempt from the residence requirement (at [35]).

2. Penalties

   The Tribunal upheld the penalty of 60 per cent of the grant imposed by the Chief Commissioner. The Tribunal noted the Appeal Panel in Philpot v Chief Commissioner of State Revenue (RD) [2008] NSWADTAP 18 had endorsed, as “a proper approach”, the application of the principles set out in Knight v Chief Commissioner of State Revenue [2008] NSWADT 83 to the imposition of penalty. Those principles are as follows:
   1. the truthfulness of the original statements made by the applicant in his or her application for the grant;
   2. the surrounding circumstance including the intention of the applicant in relation to the occupation and use of the property as his or her principal place of residence at the time when seeking the grant;
   3. the reasons for failure to comply with conditions of the grant;
   4. whether the applicant has occupied the property as his or her principal place of residence;
   5. the candour of the applicant in his or her responses to compliance inquiries; and
   6. whether the grant [has] been refunded.
   The Tribunal also upheld the 30% penalty imposed by the Chief Commissioner in relation to the tax default resulting from the taxpayer incorrectly claiming the First Home Plus Duties concession.  The Tribunal found that there was nothing in the Taxpayer’s submissions, or material before the Tribunal, to indicate the penalty should not be upheld (at [45]).

3. Interest

   The Tribunal considered that, in the circumstances of this case, there was no reason why either the market rate component or the premium rate component of interest should be remitted (at [48]). The Tribunal (at [47]) noted the following principles endorsed by the Appeal Panel in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19:
   • the market rate of interest is intended to compensate the Government for not having the benefit of the tax payment on time;  it should rarely, if ever, be waived, as that would devalue the amount payable and discriminate against taxpayers who meet their obligations on time; to justify any remission it would be necessary to show that in some way the (Chief) Commissioner contributed to the default;
   • the following cumulative criteria are appropriate for the circumstances where the premium component of interest should be remitted:
     1. all principal tax that has been assessed and is not in dispute has been fully paid;
     2. there has been co-operation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;
     3. such co-operation by the taxpayer has occurred prior to any investigation being commenced by the Commissioner (voluntary disclosure) or, at the very least, within reasonable time after requests for information have been made by the Commissioner – i.e. the taxpayer has taken reasonable care; and
     4. there has been no wilful default by the taxpayer in not paying tax on time.

Orders

The Chief Commissioner’s assessments were confirmed.

Link to decision

Rayek v Chief Commissioner of State Revenue [2015] NSWCATAD 40