Scurry v Chief Commissioner of State Revenue [2006] NSWADT 28 (31 January 2006)

Last Updated: 31 January 2006

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL GENERAL DIVISION

CITATION: Scurry v Chief Commissioner of State Revenue [2006] NSWADT 28


PARTIES: APPLICANT
Jessica Ann Scurry
RESPONDENT
Chief Commissioner of State Revenue



FILE NUMBERS: 053046

HEARING DATES: 20/06/2005

SUBMISSIONS CLOSED: 24/09/2005



DECISION DATE: 31/01/2006

BEFORE: Hole M - Judicial Member





LEGISLATION CITED: Duties Act 1997
First Home Owners Grant Act 2000
Taxation Administration Act 1996

CASES CITED: Adasi v Chief Commissioner of State Revenue (Unreported, 27 September 2004)
Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158
Dy v Chief Commissioner of State Revenue [2002] NSWADT 259
McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214
Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278
Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36

APPLICATION: First Home Owners Grant Act - first home owners grant - reversal of original decision
first home owners grant - reversal of original decision

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: APPLICANT
In person

RESPONDENT REPRESENTATIVE: RESPONDENT
T Tacadena, solicitor

ORDERS: 1. That the decision of the Chief Commissioner to recall the Grant is affirmed
2. That a penalty of 20% is payable on the repayment of the Grant


Reasons for Decision:

REASONS FOR DECISION

1 The applicant has applied for a review of the determination made by the Chief Commissioner of State Revenue dated 25 January 2005 to reverse the grant of a First Home Owner Grant ("the Grant") pursuant to the First Home Owner Grant Act 2000 and the concession from stamp duty ("the Concession") provided by the First Home Plus Scheme provisions of the Duties Act 1997 Part 8 Division 1.

2 On 23 January 2003 the applicant contracted to purchase a property at Newcastle, the purchase was settled on 28 February 2003. She made an application to the Chief Commissioner of State Revenue for the Grant on 22 January 2003. The applicant also applied for and received the Concession in respect of stamp duty on the purchase. The applicant indicated on the application for the Grant that she would be occupying the home within 12 months of settlement of the purchase, and intended to do so on 20 December 2003.

3 The applicant is a school teacher and, prior to the purchase, had been employed in various towns in New South Wales and Victoria. She hoped to obtain employment as a teacher in the Newcastle area for 2003 and decided to buy her own home there. She did not obtain employment in the area and ultimately obtained a 12 month position in Victoria whilst continuing to seek a position in Newcastle. If she had been successful she would have resigned from the position in Victoria.

4 Following settlement of the purchase, the applicant’s mother organised tenants for the property. She arranged for a young couple to rent the property on the basis that they would move out if asked. The applicant’s mother attested to the arrangement made verbally with the tenants and that she was "going to have a six month lease", however, the tenants asked for a 12 month lease as this would assist the tenants in obtaining rental subsidy as students at TAFE. The tenants verbally agreed with her that if "Jessie" (the applicant) came home then they would be happy to break the agreement. The applicant’s mother’s evidence was candid and forthright and in my opinion reliable. The lease was entered into on 4 March 2003 and was signed by the applicant’s mother.

5 At the end of the contract for employment in Victoria, the applicant accepted a further year’s contract as she needed to secure her income to be able to service her mortgage and she felt obligated to stay at least until the end of the second term. At the time that the applicant applied for the Grant and Concession, she believed that she would be moving back to Newcastle on or before 20 December 2003 (that is on completion of the 2003 teaching year). She kept track of any teaching positions during 2003 and 2004, applying for one in Newcastle unsuccessfully. She returned to Newcastle in July 2004 and in August gave a 60 day notice to the tenants to vacate; occupying the property as her home on 4 October 2004.

6 During the relevant period, 28 February 2003 to 28 February 2004, the applicant attested to that being a difficult time for her, in that she was displaced from her family and friends, she suffered depression for which she received treatment and did not cope well with a number of things including her obligations in respect of the Grant and Concession. Then on the changeover of school years 2003 to 2004 she needed to secure her income to be able to meet her obligations in respect of the mortgage.

7 On 26 August 2004 the respondent forwarded a letter to the applicant seeking "Confirmation of Residency". The applicant responded on 29 September 2004 outlining her circumstances and noting that she "moved" into the property on 4 October 2004, she requested that the circumstances be considered toward her faithful intentions to meet the requirements of the Grant.

8 On 12 November 2004 the respondent advised the applicant that the Grant was reversed and that it was to be repaid together with a penalty of 20%. At the same time, on 12 November 2004, the respondent advised the applicant that the Concession was withdrawn and that the applicant should make arrangements to repay the debt which included (at that time) an interest component of $834.07. The applicant forwarded an objection to the reversal of the Grant and withdrawal of the Concession on 18 November 2004. Following consideration of the material supplied by the applicant the respondent disallowed the applicant’s objection on 25 January 2005. This application was then lodged on 10 February 2005.

9 When the matter came before the Tribunal on Monday 20 June 2005 the respondent’s representative advised that the issue of the Concession, when it was considered on the previous Friday by the legal team, may not be a reviewable decision by the Tribunal in that there was no jurisdiction to do so.

10 The applicant was taken by surprise by this argument and time was allocated until 15 August 2005 ultimately extended to 24 September 2005 to allow the parties to provide submissions on the issue. The representative of the respondent did supply some submissions at the hearing. Both parties supplied further submissions and I sought further submissions from each of them on 29 August 2005 resulting in further supplementary submissions. Since 29 August 2005 the decision of K P O’Connor President in the matter of Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278 has been handed down.

11 By virtue of the decision in Snow and the conclusions of the President, and taking into consideration the submissions made on behalf of both parties, I concur with the reasoning of the President that the Tribunal can look at the merits of the decision of the Chief Commissioner of State Revenue as set out in the assessment dated 15 November 2004.

Requirements for Grant

12 Prior to amendments to the First Home Owner Grant Act 2000 which took effect as and from 1 January 2004, the relevant provision in respect of this matter relating to the residence requirements was:

’12 Criterion 5 – Residence Requirements
(1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after completion or a longer period approved by the Chief Commissioner.’

This suggests that the time may be extended on approval by the Chief Commissioner of State Revenue.
Then subsection 20(3) provided that the Grant is paid in anticipation of compliance with the residence requirements:

‘the payment is made on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the end of the period allowed for compliance:
(a) give written notice of that fact to the Chief Commissioner; and
(b) repay the amount of the grant.’

13 The applicant did not approach the Chief Commissioner of State Revenue to extend the period within which she was to occupy the property until her letter dated 1 January 2005 to the Chief Commissioner of State Revenue being more than a year later than when she was required to occupy the property. The Chief Commissioner of State Revenue can not grant an application to extend the time to comply with the residence requirements when the applicant is in default. This has been considered and commented on in Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36, Dy v Chief Commissioner of State Revenue [2002] NSWADT 259 and Adasi v Chief Commissioner of State Revenue (Unreported, 27 September 2004). More recently in McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 consideration was given to the ability of the Chief Commissioner to extend the time for compliance with the residence requirements after expiry of the 12 months period allowed and the 14 day period for the Chief Commissioner to be informed of non compliance. His Honour O’Connor K – DCJ (President) concluded that this was not possible and that unless the request to extend was made ahead of the expiry of the time period then the Chief Commissioner must apply the rules.

The Concession

14 Section 74(1) of the Duties Act 1997 provides:

‘(1) The agreement or transfer must be for the acquisition of a first home or for the acquisition of a vacant block of residential land intended to be used as the site of a first home.’

and
Section 76(1) provides:

‘(1) The home must be occupied or intended to be occupied by the person or persons who are acquiring it on or before settlement, or within 12 months after settlement, as the principal place of residence.’

Submissions

15 The applicant submitted that the Grant should be made and the Concession given as she had intended to occupy the property and would have done so if she had obtained a position as a teacher in Newcastle. She was unsuccessful and accordingly had to take a position in Victoria and ultimately continue to rent out the property up to November 2004. The applicant gave the tenants a 60 day notice to vacate in August 2004. Further the applicant submitted that the Chief Commissioner of State Revenue should have extended the period for her to comply with the residence requirements. The respondent submitted that the applicant was in default when she applied for an extension of the time to comply with the residence requirements.

16 The respondent submitted that the circumstances of the application are similar to those in Adasi v Chief Commissioner of State Revenue (Unreported, 27 September 2004) and Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36 in that the applicant was unable to occupy the property within the required period as she was unable to obtain a position in Newcastle (or area) which would have allowed her to take up occupation, and financially she needed to maintain her income.

Penalty

17 The respondent submitted that the considerations which the Chief Commissioner of State Revenue may have regard to in imposing a penalty, as set out in Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158, should be taken into account in the same way that those considerations have been taken into account in other matters before the Tribunal. In this case the applicable considerations being:

(a) the need to deter others from not complying with the conditions of grant;
(b) the fact that the applicant provided information as to when she would be occupying the premises in her application for the grant which she was unable to comply with;
(c) the fact that the applicant’s initial intention was to live in the premises as her own home as at the time of the purchase and the lease that was entered into could have been terminated at a time which would have allowed the applicant to take up residence in accordance with the conditions;
(d) the fact that the applicant’s original intention was frustrated by her inability to obtain a position in the Newcastle area at an appropriate time;
(e) the opportunity cost factor;
(f)&(g) the fact that the applicant was candid and honest in her responses to the Chief Commissioner and at the Tribunal;
(h) the applicant’s financial circumstances and the financial impact if she had not continued her employment.

18 Taking into account the above and noting that the applicant intended to move in on 20 December 2003 which would have allowed her to comply with the requirements. I find that she had the actual intention to do so, that her intention was unrealised due to her inability to obtain a position in the area of the property and that she needed to secure her income to enable her to service her mortgage, that the Grant and Concession have been correctly withdrawn and that the penalty of 20% is set at the appropriate level in respect of the Grant. In accordance with the provisions of Sections 21 – 25 of the Taxation Administration Act 1996 interest including market rate and premium component accruing on a daily basis at 13.51%.

19 Both the penalty and interest rate required to be paid are appropriate in the circumstances and taking into account that the applicant has had the use of the money for in excess of two (2) years.

20 Originally the applicant applied only to have the decision by the Chief Commissioner to recall the Grant be reviewed. Subsequently the applicant applied to have the decision by the Chief Commissioner to reverse the Concession to be reviewed. This application was sought by the representative of the respondent to enable the two decisions to be reviewed.

ORDER

1. That the decision of the Chief Commissioner to recall the Grant is affirmed.
2. That a penalty of 20% is payable on the repayment of the Grant.