Background
On 29 August 2015, the Applicant entered into a contract to purchase a property in Zetland ("the Property") from its developer ("Vendor") for the sum of $1,295,000. The Contract contained a provision for completion of the purchase once the relevant strata plan had been registered, and an occupation certificate issued.
On 21 December 2016, the Chief Commissioner assessed the Applicant as liable for duty in the amount of $56,735 plus interest which was paid by the Applicant on 24 December 2016.
On 21 May 2019, the Vendor’s solicitors, Denton’s, notified the Applicant that the strata plan for the Property had been registered and that an occupation certificate had been issued. The notification also informed the Applicant’s solicitors that completion of the Contract "…must now take place in accordance with the time frames set out in the contract."
On 27 August 2019, the Vendor issued a notice of termination to the Applicant for failing to proceed with completion of the Contract in accordance with its terms, following earlier correspondence including the issue of a notice to complete.
On 7 July 2021, the Vendor transferred the Property to another purchaser.
On 21 April 2022, the Applicant lodged an Application for Reassessment and Refund ("Refund Application") with the Chief Commissioner seeking a refund of the duty paid in respect of the Contract.
On 13 May 2022, the Chief Commissioner rejected the Refund Application as it was not lodged within five years of the initial assessment date or one year from the date the Contract was cancelled.
On 25 May 2022, the Applicant lodged an objection.
On 19 December 2022, the Chief Commissioner disallowed the Applicant’s objection.
On 15 February 2023, the Applicant lodged and Administrative Review Application with the Tribunal.
Legal Issues
The determinative issues were:
- Whether the Refund Application was lodged within the statutory time limits specified under the section 50(2) of the Act; and
- Whether the Chief Commissioner had discretion to extend the time to lodge the application for a refund.
The Statutory Framework
Pursuant to s.100(3) of the Taxation Administration Act 1996 (NSW), the Applicant was required to establish she was entitled to a refund of duty, having regard to the relevant statutory criteria, and prove all matters necessary to enable the Tribunal to answer the statutory question(s) in her favour. In the absence of that evidence the decision was to prevail as correct.
Section 50 of the Act provides that an agreement for the sale or transfer of dutiable property that has been rescinded or annulled is not liable to duty in certain circumstances, and that any duty paid must be refunded.
Clause 50(2) provides that when duty has been paid on an agreement under s. 50(1) of the Act, the Chief Commissioner must reassess and refund the duty if an application for a refund is made within 12 months after the agreement is cancelled.
Submissions
The Applicant claimed the purported cancellation of the Contract on 27 August 2019 was not effective because she had never received the occupational certificate and the Vendor’s solicitors changed during the period (i.e. there were different solicitors to those on the Contract). The Applicant claimed the Contract was terminated on 1 December 2021 as this is when the Applicant allegedly became aware of the cancellation. The Applicant’s Refund Application was made on the 21 April 2022, which was within 12 months after the Contract’s termination (1 December 2021) as required under section 50(2) of the Act. In addition, the Applicant claimed that retaining the duty paid in these circumstances would amount to unjust enrichment of the Chief Commissioner.
The Chief Commissioner argued that there was no reason to conclude that the purported cancellation of the Contract in August 2019 was not effective in accordance with the terms of the Contract and the notices sent under it. There was no evidence to indicate that the Contract was terminated in December 2021. As the Refund Application was made on 21 April 2022, this was after both the fifth anniversary of the execution of the Contract and the expiry of 12 months from the date of termination of the Contract. Thus, the Chief Commissioner held that it was made after the expiry of the statutory time limit for making such an application under section 50(2) of the Act. In addition, the Chief Commissioner claimed the concept of unjust enrichment had no application.
Decision
The Tribunal concluded that:
- the Contract was terminated on 27 August 2019;
- the Applicant’s argument that the Contract was not terminated on that date was unconvincing on the basis that the documentary evidence provided was consistent with that having occurred;
- the Applicant did not demonstrate on the balance of probabilities any defect in the content or mechanics of delivery of the relevant completion and termination notices such as to impeach the apparent termination of the Contract on 27 August 2019;
- there were no consequences of the change in the Vendor’s solicitors without any formal notice to the Applicant;
- the vendor’s new solicitor acted under the vendor’s authority, and this extended to giving notices to complete and notices of termination to defaulting purchasers;
- the Applicant did not demonstrate any formal deficiencies in the notices or any defects in the processes by which they were given such as to impeach the termination of the Contract on 27 August 2019.
The Tribunal also concluded that Chief Commissioner has no discretion in relation to refunds. Section 50 of the Act clearly states that a reassessment and refund are only available if the Application is made within the time limits specified under section 50(2). Additionally, there is no statutory provision that allows the Chief Commissioner to vary or disregard these provisions, nor does the Chief Commissioner have a statutory discretion to waive or vary tax liabilities. In the absence of any legislative provision or court or tribunal decision that confers or recognises any discretion, the Chief Commissioner and the Tribunal did not have the ability to refund the duty if the statutory criteria are not met.
Orders
The Tribunal confirmed the Chief Commissioner’s decision.
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