|Date of judgement||4 July 2019|
|Judge(s)||R L Hamilton SC, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal|
taxes and duties – stamp duty – refund application – cancelled agreement – time limit for making refund claim – what is an ‘initial assessment’
The applicants, Jill Kranias and Stephen King, were former de facto partners who entered into a contract for the purchase of an off-the-plan unit in Maitland, NSW. The contract was dated 14 May 2019. Stamp duty was paid and the contract was stamped on 25 July 2013 (“the first stamp”).
On 21 September 2015, the vendor and the applicants entered into a deed of variation which increased the purchase price of the unit and extended the date for the completion of the contract. The deed and contract were then submitted to the Chief Commissioner for stamping. On 7 December 2015, the contract was stamped again to reflect the higher amount of duty payable given the increase to the purchase price (“the second stamp”) and the first stamp was marked “Duty Cancelled”. The duty payable on the contract was increased by application of s. 31 of the Duties Act 1997 (NSW) (“the Duties Act”).
On 22 February 2017, the vendor rescinded the contract and returned the deposit to the applicants due to delays with the development of the unit.
On 14 August 2018, the applicants lodged an application with the Chief Commissioner for a refund of the duty they had paid on the rescinded contract (“the refund application”). The Chief Commissioner refused the refund application on the basis that it was lodged outside of the time permitted by s. 50 of the Duties Act.
The refund application was made pursuant to s. 50 of the Duties Act, which provides:
“50 Cancelled agreements
(1) An agreement for the sale or transfer of dutiable property that is cancelled is not liable to duty under this Chapter if the Chief Commissioner is satisfied:
(a) that the agreement was not cancelled to give effect to a subsale, or
(b) that the purchaser or transferee under the agreement is a promoter of a named company proposed to be incorporated and that the company is the purchaser or transferee of the dutiable property under a subsequent agreement, or
(c) that the purchaser or transferee under the agreement and the purchaser or transferee under a subsequent agreement relating to the same dutiable property were related persons when the agreement that is cancelled was entered into.
(2) If duty has been paid on an agreement that is not liable to duty under this Chapter because of this section, the Chief Commissioner must reassess and refund the duty if an application for a refund is made within:
(a) 5 years of the initial assessment, or
(b) 12 months after the agreement is cancelled,
whichever is the later.
(3) In this section, cancelled means rescinded, annulled or otherwise terminated without completion.”
There was no dispute that the contract met the requirements of s. 50(1). It was also accepted that the refund application was made later than 12 months after the agreement was cancelled, being the time limit imposed by s. 50(2)(b).
Accordingly, the dispute before the Tribunal was whether the refund application had been made within five years of the initial assessment, being the time limit imposed by s. 50(2)(a).
The applicants submitted that the assessment resulting from the first stamp had been made void when the Chief Commissioner marked that stamp “Duty Cancelled”. They relied on s. 31 of the Duties Act, which provides that the Chief Commissioner must assessor reassess the stamp duty liability on an agreement where the price for the transfer of dutiable property is increased. According to the applicants, the value of stamp duty had been assessed anew by the second stamp and the first stamp had been voided. This left no assessment other than the assessment resulting from the second stamp, meaning that only it could be the initial assessment.
Senior Member Hamilton SC found that the assessment resulting from the first stamp had not been withdrawn by the words “Duty Cancelled” being stamped over the first stamp (at ), agreeing with the Chief Commissioner’s submission on this point.
However, Senior Member Hamilton SC did not agree that this resulted the assessment resulting from the first stamp being considered the initial assessment for the purposes of s. 50(2)(a).
Senior Member Hamilton SC held that the correct approach was to look to the meaning of “initial assessment” by reference to the text, context and purpose of s. 50 of the Duties Act. In doing so, Senior Member Hamilton SC found that the context “is one in which we look at the assessment of duty … which is the subject of the claim for refund” (at ). In the present matter, the assessment resulting from the second stamp was the assessment the subject of the refund application (at ).
Having made this conclusion, Senior Member Hamilton then went on to hold that “the refund application was lodged within the 5-year limitation period from the date of the second stamping.
The Chief Commissioner’s decision is set aside and the matter is remitted to him for reassessment in accordance with these reasons.