Background
These proceedings concerned the review of a decision of the Chief Commissioner of State Revenue to deny the Applicant the benefit of concessional duty of $50 under s. 55 of the Duties Act 1997 (NSW) (“the Act”) in respect of the transfer of land for nil consideration by an instrument dated 19 July 2021. The transfer was from the Applicant’s son to the Applicant, the son having purchased the land under a contract of sale contract dated 21 February 2017 (“the Contract”).
Section 55 relevantly provides:
- Duty of $50 is chargeable in respect of:
- a transfer of dutiable property from an apparent purchaser to the real purchaser if—
- the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and
- the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.
For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.
The Applicant declared that her son had contributed no money of his own towards the purchase of the property (“the Property”) or towards the payment of outgoings, and that her intention at the time of the purchase, and at all times thereafter, was that she would hold the beneficial interest in the Property. The Applicant’s son likewise declared that his intention had been, and remained at all relevant times, to hold the Property on trust for the Applicant and to transfer title to her upon her request.
Based on these circumstances, the Applicant sought the Chief Commissioner’s confirmation that the transfer would be liable only to concessional duty under s. 55(1)(b) of the Duties Act. The Chief Commissioner subsequently issued a determination denying the Applicant the benefit of that concession. The Applicant commenced proceedings for review of the decision.
Issues
Senior Member Currie set out the following material issues (at [25]):
- whether all of the purchase money for the purchase of the Property was, or could be deemed to have been, provided by the Applicant, and
- whether the dutiable property, namely the Property, was vested in the Applicant’s son as an apparent purchaser upon trust for the Applicant, as the real purchaser.
The Senior Member stated at [27] that, if the first question were to be answered in the negative, the Application must fail because the two conditions for the s.55 concession are expressed cumulatively in s. 55(1) of the Duties Act.
Submissions
Issue 1 : whether all of the purchase money was provided by the Applicant
The Tribunal found (at [35]), consistent with the Chief Commissioner’s submission, that the Applicant did not satisfy her onus of proving that she paid all the purchase money and associated costs. The Tribunal found that to be the case because the money that was used to pay the purchase price was not owned by the Applicant, but by a company of which she was the sole director and shareholder (“the Company”. Notwithstanding her ownership and control of the company, the Applicant failed to persuade the Tribunal that she was entitled to use the Company’s money. While the Applicant contended that the money had been lent to her by the Company, the Applicant’s written evidence did not establish the existence of any relevant loan.
The Tribunal considered whether the word “provided” as used in s. 55(1)(b)(ii) must be interpreted as having a broader meaning such that her control of the Company whose funds were used to purchase the Property would suffice for the purposes of that provision. The Tribunal found that it had, in recent cases, rejected such a construction, and accordingly the Applicant was not entitled to the concessional rate under s. 55(1) alone. Further, the Tribunal found that the concessional rate was also not available under s. 55(1A) because the Company and not the Applicant herself had provided the deposit. As such, she did not provide all the purchase money.
Issue 2: whether the dutiable property was vested in the Applicant’s son as an apparent purchaser upon trust for the Applicant, as the real purchaser.
Given the Tribunal’s conclusion as to Issue 1, it was not necessary to resolve Issue 2. In any event, the Senior Member drew an inference from the conduct and intention of the parties that the son did not take beneficial title to the Property, and that a resulting trust arose. It was found that the Property was vested in the Applicant’s son as apparent purchaser, who was found to have held it on trust for the Applicant as the real purchaser.
However, the Application failed because of the Tribunal’s conclusions as to Issue 1. The Tribunal found that the decision under review was the correct and preferable one and the Application must fail [83].
Accordingly, the Tribunal affirmed the Chief Commissioner’s decision under review under s. 63(3) of the Administrative Decisions Review Act 1997 (NSW) (“ADR Act”).
High Court decision in Bosanac v Commissioner of Taxation [2022] HCA 34
It should be noted that the High Court’s decision in Bosanac v Commissioner of Taxation [2022] HCA 34 was published on 12 October 2022, namely 8 days before the hearing of this matter. Given the timing, in this matter the Tribunal did not rely on the High Court’s reasons for, or the result in the Bosanac case. The Senior Member noted that the decision in Bosanac “is of considerable significance to the development of the law relating to resulting trusts and hence to apparent purchaser cases which may come before the Revenue List of this Tribunal” [76].
Orders
The decision of the Chief Commissioner of 22 July 2021 that the duty concession available under s. 55 of the Duties Act is not applicable to the transfer of land the subject of these proceedings is affirmed under s. 63(3) of the ADR Act and confirmed under s.101 of the Taxation Administration Act 1996 (NSW).
Issues for Determination
Senior Member Perrignon stated the material issues to be:
- Whether the Applicants fell within the definition of ‘foreign persons’ in each relevant tax year.
- In respect of the First Applicant, whether she used and occupied the Property as her principal place of residence in 2021 and satisfied the 200-day requirement in section 5B.
- In respect of the Second Applicant:
- In respect of the 2017 tax year, whether any exemption was afforded by the legislation and, if so, whether he satisfied the criteria for eligibility.
- In respect of the 2018 and later tax years, whether he used and occupied the Property as his principal place of residence, satisfying the 200-day requirement in section 5B.
Link to the decision
