Perizon Nominees Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAD 84

Background

These proceedings concerned the Chief Commissioner’s decision to assess ad valorem duty in respect of a Real Property Act Transfer Form which was executed by the Taxpayer in relation to a purchase of a property at Vaucluse, New South Wales (“the Property”).

By way of summary of the key facts:

1. On 26 April 2012, Simon Horauf and Lisa Rebecca Dabscheck (as vendors) entered into a contract for the sale of the Property to Angela Perry (as purchaser) (“the Contract”).
2. On 13 June 2012, the Taxpayer (Perizon Nominees Pty Ltd) was registered as an Australian proprietary company.
3. On 23 July 2012, the Perry Family Trust No 2 was settled by execution of a trust deed, with the Taxpayer appointed as trustee of that trust.
4. An undated real property transfer form for the transfer of the Property from Simon Horauf and Lisa Rebecca Dabscheck (as transferors) to the Taxpayer (as transferee) was executed by the transferors and executed on behalf of the Taxpayer (“Transfer”).
5. On 24 July 2012, ad valorem duty (of $112,540) was paid in respect of the Contract, and the Contract was duly stamped.
6. On 27 June 2013, the Chief Commissioner issued an assessment to the Taxpayer for ad valorem duty payable (of $112,540) in respect of the Transfer, and in so doing, determined that the concession in s.18(3) of the Duties Act 1997 did not apply to the Transfer.
7. The Taxpayer objected to that assessment and on 13 May 2015, the Chief Commissioner disallowed that objection.

The Taxpayer (incorrectly) sought a review of the Chief Commissioner’s decision to disallow the objection rather than the decision to issue the assessment in these proceedings.

The Statutory Framework

The key issue in dispute in this matter was whether the Transfer was eligible for the concession in s.18(3) of the Duties Act 1997 - in particular, whether the requirement in s.18(3)(d)(i) was satisfied. That is, at the time the agreement was entered into, and at the completion or settlement of the agreement, were the purchaser under the agreement (ie Mrs Perry) and the transferee under the Transfer (ie the Taxpayer) related persons?¹

Decision

The Tribunal noted that no one appeared at the hearing on behalf of the Taxpayer. In such circumstances, the Tribunal assumed that there was not a power to proceed to hear the matter ex parte, and instead decided to hear the matter on the papers.

In respect of the application of the duties concession contained in s.18(3) of the Duties Act 1997, the Tribunal agreed with the Chief Commissioner’s submission by making the following observations:

1. there were two dutiable transactions, being the Contract and the Transfer, with the result that each transaction independently gave rise to a liability for duty under s.12 of the Duties Act 1997;
2. the s.18(3) concession cannot apply as at the time the Contract was entered into (on 26 April 2012), the purchaser named in the Contract (Mrs Perry) and the transferee under the transfer (the Taxpayer) could not possibly be related persons as the Taxpayer did not then exist, being incorporated only on 13 June 2012;
3. there was no evidence to suggest, as was contended for by the Taxpayer, that the Contract was cancelled or rescinded;
4. notwithstanding the fact that treating both the Contract and the Transfer as dutiable transactions produces an onerous result for the Taxpayer, considerations of harshness or unfairness have little role to play in construing revenue legislation; and
5. the fact the Taxpayer believes it may have a claim in relation to erroneous legal advice does not affect the Chief Commissioner’s exercise of his statutory responsibility of revenue collection in accordance with the Duties Act 1997.

The Tribunal noted that its observations were premised on the assumption that the Taxpayer would apply to amend the application so as to identify the assessment notice, rather than the objection decision, as the decision under review. As the Taxpayer did not appear at the hearing and make such an application, the decision under review was affirmed on that ground alone.

Orders

The decision under review was affirmed.

Link to decision

Perizon Nominees Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAD 84

Footnotes

1. ^ I note that there appears to be a typographical error at paragraph 20 of the judgment, where the Tribunal states, when considering s.18(3)(d) of the Duties Act 1997: “the relevant subparagraph in this case being (ii)”. This would appear to be a typographical error as subparagraph (ii) only applies to situations where the purchaser purchased as a trustee, which was not apparent from the facts in this case. Furthermore, the Tribunal (later in paragraph 20, as well as in paragraphs 21 - 22) applies the test set out in s.18(3)(d)(i) to the facts, rather than the test set out in s.18(3)(d)(ii).