Zhang v CCSR [2023] NSWCATAD 181
Background
On 11 December 2014, the Applicant entered into a contract with Greenland (Sydney) Bathurst Street Development Pty Ltd (“Vendor”) to purchase a proposed strata lot for a retail shop in Bathurst Street, Sydney. On 30 June 2016, a duties notice of assessment was issued in respect of the contract for sale, and the Applicant paid the assessed duty. On 30 January 2019, the Applicant and Vendor entered into a deed of rescission, effectively cancelling the initial contract and creating a new contract with a trust company.
On 15 October 2021, the Applicant's solicitor completed an Electronic Duties Returns Assessment and applied for a refund of the duty paid for the contract. However, the refund application was rejected by the Chief Commissioner as it was lodged more than 5 years after the Assessment.
The Applicant then lodged a notice of objection, objecting to both the Assessment and Refund Decisions. Although the objection was submitted outside of the required 60-day period, the Chief Commissioner permitted it to be lodged under s.90 of the Taxation Administration Act (TAA). On 12 May 2022, the Chief Commissioner disallowed the objection.
The Applicant sought administrative review of the Assessment and Refund decisions under s. 96 of the TAA and the Administrative Decisions Review Act 1997 (NSW) (“ADR Act”), but subsequently withdrew the application for review of the Refund Decision.
The Contract was subject to stamp duty under s. 8 of the Duties Act. Both parties agreed that the facts outlined in paragraphs [1] to [10] were not in dispute, and that the Assessment was valid when issued.
Issues
The two main issues were:
- whether the Contract qualified as a "cancelled agreement" under s. 50(1), and if so, if one or more of the subparagraphs (a), (b), or (c) of s. 50(1) apply; and
- if s. 50(1) applied and relieved the Applicant from liability for duty on the Contract, whether the Assessment could be deemed excessive and subject to objection under the TAA.
The Statutory Framework
Senior Member Dunn summarised the relevant legislation at paragraphs [15] to [27] of the decision, including Section 8 of the Duties Act imposing duty on certain transactions, Chapter 2 of the Duties Act including s. 50 which relates to “cancelled agreements”, and s.9 of the TAA relating to reassessments.
Submissions
The parties' submissions are addressed in paragraphs [28] to [35] of the decision.
Issue 1 cancelled contract
The Applicant argued that the Contract qualified as a "cancelled agreement" under s. 50(1) because of the execution of the Deed of Rescission. He further contended that one or more of the subparagraphs (a), (b), or (c) to s. 50(1) applied, which absolved him from duty (paragraphs (a) (b) and (c) require that the Contract was not cancelled to give effect to a subsale, or the Applicant was a promoter of a named company proposed to be incorporated and the company is the purchaser of the dutiable property under the Second Contract, or the Applicant and the purchaser under the Second Contract were related persons when the Contract was entered into).
The Chief Commissioner accepted the Contract could be classified as a "cancelled agreement" under s. 50(1) but disagreed with the Applicant's assertion that subparagraphs (a), (b), or (c) applied.
The Chief Commissioner emphasised that the Applicant bore the onus of proof and additionally argued that s. 50(2) was the relevant provision, requiring compliance with specific time limits for seeking a refund.
Issue 2 excessive contract
The Applicant claimed that s. 50(1) operated to render the original assessment excessive after the execution of the Deed of Rescission. The Applicant urged the Tribunal to consider the subsequent events and the effect of s. 50(1) when reviewing the Assessment.
The Chief Commissioner contended that the Tribunal's role was to assess the original decision's correctness at the time it was made, without considering events that occurred afterwards. The Chief Commissioner highlighted that s. 50(2) provided a mechanism for seeking a refund in cases where a contract is rescinded; and the Applicant failed to comply with the time limits stipulated in s. 50(2), rendering the original Assessment valid.
Tribunal's jurisdiction
After the hearing, the parties were directed to file further written submissions addressing the question of whether the Tribunal has jurisdiction to decide whether the Assessment was excessive, considering a factor that could not have been taken into account or made by the Chief Commissioner at the time the Assessment was made.
The Applicant submitted that the Tribunal does have jurisdiction and referred to two authorities: YWCA Australia v Chief Commissioner of State Revenue [2020] NSWSC 1798 and Salvation Army (NSW) Property Trust v Chief Commissioner of State Revenue (2018) 96 NSWLR 119 where, in deciding if the taxpayers were “exempt charitable or benevolent bodies” at the time of the assessments, the NSW Supreme Court took into account their expenditure that post-dated the assessments.
The Chief Commissioner submitted that, in reviewing the Assessment, the Tribunal could take account of facts and circumstances which were not before the Chief Commissioner at the time of the Assessment. However, this does not involve reassessing a contract assessed to duty and subsequently rescinded as not liable to duty other than under s.50 of the Duties Act.
In his submissions in reply, the Applicant submitted that the Chief Commissioner conceded that conditions in subparagraphs (a), (b) or (c) of s. 50(1) are satisfied so that the only issue before the Tribunal was if “a valid objection to an assessment the [Chief Commissioner] concedes is excessive by reason of the operation of s. 50(1) should be allowed”.
Senior Member Dunn found that the Chief Commissioner did not concede that the Assessment was excessive but, in light of her decision, she found that ultimately nothing turned on this.
Decision
The Senior Member Dunn concluded that the Applicant's application lacked sufficient evidence to support his position. Consequently, the Senior Member dismissed the application for review.
Senior Member Dunn also addressed the question of whether the Assessment was excessive under s.51(1), noting that at the time the Deed of Rescission was entered into the Assessment had been issued and the duty had already been paid. Member Dunn noted that the Tribunal’s role was to assess the correctness of the original decision at the time it was made and not to consider events occurring afterwards.
The Senior Member emphasised that s. 50(2) of the Duties Act provides the appropriate mechanism to seek a refund in cases where a contract is rescinded. Since the Applicant had failed to satisfy the time limits stipulated in s. 50(2), the Assessment remained valid, consistent with the Tribunal decision of Li v Chief Commissioner of State Revenue [2023] NSWCATAD 81 at [21].
Ultimately, Senior Member Dunn reasoned that the Applicant’s application for review of the Assessment failed because the evidence before the Tribunal proved that the Assessment was correct at the time it was made.
Orders
The Tribunal made the following orders:
- The decision under review (the Assessment) is confirmed.
- The Application for Review is dismissed.
Decision
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