Commissioner's practice note: Powers of Attorney
Background
Under the Duties Act 1997 (“the Act”) there are a number of exemptions and concessions that require a declaration in an approved form to be completed by the taxpayer, including a Purchaser/Transferee declaration(which must be completed on all transfers of land in New South Wales). These declarations must be completed by the person or persons entering into a transaction.
Example 1
In certain circumstances, a person gives another person the authority to do a number of things on their behalf. A power of attorney appoints a person, the attorney, to act for the principal, in certain circumstances .
Section 9 of the Powers of Attorney Act 2003 states that a prescribed power of attorney confers on an attorney the authority to do on behalf of the principal anything that the principal may lawfully authorise an attorney to do, subject to compliance with any conditions or limitations specified in the instrument creating the power.
A power of attorney is a legal document that allows the principal to nominate one or more persons (referred to as attorneys) to act on the principal’s behalf. A power of attorney gives the attorney the authority to manage the principal’s legal and financial affairs, including buying and selling real estate, shares and other assets, operating bank accounts, and spending money on the principal’s behalf. An attorney acting under a power of attorney cannot make decisions about lifestyle or health. These decisions can only be made by a guardian (whether an enduring guardian appointed by the person or a guardian appointed by the Civil and Administrative Tribunal or the Supreme Court[1])
Commissioner’s Practice Note
Corporations
A declaration would usually be provided by a director or secretary of the corporation on behalf of the corporation[2]. However, it is recognised that corporations often grant a power of attorney to a particular corporate officer or solicitor to enable them to act on behalf of the corporation.
Under section 198D of the Corporations Act 2001 (Cth), unless the company’s constitution provides otherwise, a company may delegate any of its powers to directors, an employee of the company or any other person. The exercise of the power by the delegatee is as effective as if the director had exercised it and provided it comes within the scope of the attorney’s authority.
Where a person (other than an actual officer employed by the entity) makes a declaration in the form, the form will be accepted as having been validly executed, subject to the person furnishing Revenue NSW with evidence showing that:
- the person is acting under a specific power of attorney for the corporation, and/or
- the person is acting for the entity as legal advisor in respect of the particular transaction(s), and
- the person has express authorisation to execute the declaration required.
Example 1:
A Pty Ltd is the owner of a shopping centre. Every year there is a turnover of tenants and a number of leases are surrendered.
Surrender of a lease is liable to duty. A Pty Ltd (the lessor) the liable party must complete a purchaser declaration for each transaction.
A Pty Ltd has delegated the power to make a declaration to John (an employee).
As the employee is acting under a power of attorney for company A Pty Ltd, the declaration is acceptable provided signing the declaration falls within the scope of the attorney’s authority.
Example 2:
B Pty Ltd is the purchaser of an industrial complex in Sydney. At the time of making a declaration, the directors were overseas. The accountant completed the purchaser declaration and declared that he is authorised to make a declaration on behalf of the corporation.
As there was no evidence to prove that the accountant had authority to make a declaration on behalf of the corporation, the declaration is not acceptable.
Individuals
The Act does not require declarations to be made by the taxpayer personally. A person can delegate the making of a declaration to another person under a power of attorney. The question arises as to whether the information in the declaration is of a personal nature and if so whether a person under a power of attorney is able to swear that the information in the form is accurate.
Note: Under Part 8 of the Taxation Administration Act 1996, it is an offence to give false and misleading information, deliberately omitting information or falsifying or concealing identity.
In Clauss v Pir [1987] 2 All ER 752, it was held that where an act is required to be done by a party personally, it cannot be done by an agent or attorney on that party’s behalf. The case concerned the question of whether a party to proceedings could authorise his attorney (by power of attorney) to swear an affidavit verifying a list of documents. The Court held that he could not, because the rules of court imposed a personal duty on the party due to the personal knowledge required to give the affidavit.
An attorney cannot make a declaration where a considerable amount of personal detail is required to be disclosed which, by its nature, would not be available to an attorney. Where questions require the disclosure of material that could only be in the mind of the debtor, an attorney’s answers could not suffice[3].
Accordingly, the making of a declaration as to accuracy of the information in the form, in connection with the administration of the Act, by a person under a power of attorney for an individual is not generally acceptable.
Example 3:
Mark Brown, a foreign person, entered into an agreement to purchase residential property in NSW. Mark Brown authorised Steve by a power of attorney to deal with all things relating to the purchase to the property including completing the purchaser declaration form.
Steve cannot declare that the personal information that is requested is true and correct.
This power cannot be delegated, and the declaration is not acceptable.
Example 4:
Alison entered into an agreement to purchase a home for $600,000. Alison may be eligible for an exemption under the First Home Buyers Assistance Scheme if she meets the eligibility criteria. Alison needs to complete a declaration in an approved form. However, Alison is overseas, and the declaration was signed by Clare under a power of attorney.
The information in the declaration, including information as to Alison’s intention, is within the personal knowledge of Alison rather than an attorney. This power cannot be delegated, and the declaration is not acceptable.
Note: For both the above examples, the purchaser can complete an online declaration and declare that the information is true and correct.
In the case of legal disability, the declaration may be provided by an attorney on behalf of an individual. The Chief Commissioner may accept the making of a declaration by a person under a power of attorney on behalf of an individual if the individual is:
- a minor – a person under 18 years of age;
- intellectually disabled;
- in prison;
- mentally incapacitated.
In these cases, a declaration signed on behalf of an individual is acceptable, subject to the person providing Revenue NSW with a copy of the power of attorney and/or other evidence such as a court appointed guardian (court orders), legal guardian etc and a declaration by the attorney that the principal is unable to make the declaration. In the case of severe physical disabilities that result in a person being unable to personally sign a declaration (either physically or online), signature on behalf of the individual may also be acceptable.
Note: For all other categories, evidence must be forwarded to Revenue NSW and will be dealt with on a case by case basis.
Footnotes
- ^ Schedule 2 of the Power of Attorney Regulation 2016
- ^ Will also apply to partnerships
- ^ In Orix Australia Corporation Limited v McCormick [2005] FCA 1032