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Gupta v Chief Commissioner of State Revenue [2023] NSWCATAD 303

Date of judgment 1 December 2023
Proceeding No. 2023/00176797
Judge(s) Senior Member Boxall
Court or Tribunal NSW Civil and Administrative Tribunal

Legislation cited

Administrative Decisions Review Act 1997 ss 58, 63
Duties Act 1997 ss 8, 9, 11, 12, 74, 76, 76A, 78, 78A and 79
Property Tax (First Home Buyer Choice) Act 2022 ss 5, 11, 12 and 13
Taxation Administration Act 1996 ss 4, 89, 96, 99, 100, 101

Catchwords

TAXES AND DUTIES — Dutiable transactions — Exemptions – First Home Buyer Assistance Scheme
TAXES AND DUTIES – Property tax – Eligibility

Cases cited

B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481
Commissioner of Taxation v Ryan (2000) 201 CLR 109

Background

The facts, briefly stated, were as follows:

  1. On 9 August 2021, the Applicants entered into an agreement for the purchase of the Cooranbong Property.
  2. The Applicants successfully applied for an exemption under the First Home Buyers Assistance Scheme, (FHBAS), in respect of the Cooranbong Property on the basis it was vacant residential land. The duty assessed on the agreement was $601.51.
  3. On 1 December 2022, the Applicants entered into an agreement for the purchase of the Melrose Park Property and lived there as their principal place of residence. The duty assessed on the agreement was $42,360.
  4. On 17 February, the Applicants sought the proposed reassessment to which the Decision relates. On 21 February 2023, the Respondent issued the Decision declining their request.
  5. On 14 March 2023, the Applicants were registered as proprietors of the Cooranbong Property.
  6. On 27 March 2023, the Applicants lodged an objection (“Objection”) which was disallowed by the Respondent on 5 April 2023.
  7. On 2 June 2023, the Applicants sought review of the Decision under s. 96 Taxation Administration Act 1996 (“TAA”).

The Applicants submitted that the “residence requirement” under s. 76 Duties Act is not satisfied as the Cooranbong Property remains vacant land, and that it would be unjust not to treat the Melrose Park Property as their first home by denying the FHBAS concession to it.

The Respondent submitted that it was sufficient, in relation to vacant land, that the Applicants clearly demonstrated an intention to use the Cooranbong Property as their principal place of residence to satisfy the residence requirement under s. 76: s. 76(3) Duties Act. The FHBAS concession was therefore properly applied to the Cooranbong Property and, as such, there was no basis to reassess the duty under s. 79 Duties Act. The Applicants were both parties to the application under the FHBAS and therefore were not “eligible transferees” within the meaning of s. 13 Property Tax Act as they were no longer first home buyers. They were thus not eligible to opt for the property tax regime in relation to the Melrose Park Property.

Decision

The Tribunal’s analysis of the s. 76 residence requirement for duty exemption or concessional treatment under the FHBAS was as follows:

  1. The residence requirement is primarily the requirement in s. 76(1) that the relevant property be occupied by the first home owner for a continuous period of 6 months, commencing within 12 months of completion of the agreement or transfer under which the property is acquired by the first home owner.
  2. Completion is defined in s. 76(5) as being when the first home owner obtains possession of the home and, if the purchaser’s interest in land is registrable, when it is so registered.
  3. S. 76(3), however, provides a different test for a vacant block of residential land, such as the Cooranbong Property. This is that the “... Chief Commissioner is satisfied that the vacant block is intended to be used as the site of a home to be occupied by the first home owner or one of the first home owners who is acquiring it as a principal place of residence”.

The Tribunal held that in the case of a vacant block of residential land, the test in s. 76(3) is to prevail over the test in s. 76(1). In the Tribunal’s view, this is clear from the use in s. 76(3) of the words “…it is sufficient that” which introduces the words “the Chief Commissioner is satisfied…” The statement that the Respondent’s satisfaction is sufficient necessarily means that the other tests in s. 76 need neither be considered nor met once the Respondent reaches satisfaction in terms of s. 76(3).

Applying this to the facts, both the Applicants indicated that the Cooranbong Property was vacant land intended to be used as the site of a home to be occupied by the first home owners as their principal place of residence. They disclosed this in their respective Purchaser/Transferee Declarations and applications under the FHABS dated 13 August 2021 for the purchase of the Cooranbong Property.

Hence, the Tribunal found that:

  1. the Applicants were not registered as proprietors of the Cooranbong Property until 14 March 2023, or
  2. their access to the Cooranbong Property for purposes of beginning construction of a residence may have been delayed because of Covid 19,
  3. can have no relevance in determining whether the Respondent correctly concluded that he was satisfied under s. 76(3) that the Cooranbong Property “... is intended to be used as the site of a home to be occupied by the first home owner or one of the first home owners who is acquiring it as a principal place of residence”.

Whilst the test under s. 76(3) is discretionary in nature, the Tribunal held that the basis on which the Respondent reached his conclusion was reasonably open to him by applying the provisions of s. 76(3). Although the Applicants clearly did not pursue their original intention to use the Cooranbong Property as their principal place or residence, they did not demonstrate to the necessary standard that the Respondent’s decision (i.e., that the s. 76(3) test was satisfied) was incorrect. Therefore, the Tribunal confirmed the Respondent’s Decision and held that there was no basis to reassess the duty chargeable on the Cooranbong Property under s. 79.

Further, the Tribunal confirmed the second element of the Decision regarding the refusal of the Applicants’ request to opt to pay property tax rather than stamp duty in relation to the Melrose Park Property. The effect of s. 13(1)(a) and (b) Property Tax Act is that each Applicant must be an eligible first home buyer in order to be an eligible transferee for the purposes of s. 12 Property Tax Act. The Tribunal held that the Applicants did not satisfy the test for first home buyers in s. 5 Property Tax Act and therefore could not apply for the Melrose Park Property to be subject to property tax rather than stamp duty.

The Tribunal rejected the Applicants suggestion that their family responsibilities and the effect of Covid 19 on their accommodation choices meant the Decision operated unjustly and should be set aside. Citing the High Court decision in Federal Commissioner of Taxation v Ryan (2000), the Tribunal confirmed that general notions of fairness or justice do not allow the adjustment of tax liabilities.

Orders

The Tribunal confirmed the Respondent’s Decision dated 21 February 2023.

Read the full decision