Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Aparekka v Chief Commissioner of State Revenue [2022] NSWCATAD 333 Hearing dates: 12 September 2022 Date of orders: 13 October 2022 Decision date: 13 October 2022 Jurisdiction: Administrative and Equal Opportunity Division Before: S Higgins, Senior Member Decision: The 24 August 2021 surcharge purchaser duty assessment of the respondent is confirmed. Catchwords: TAXES AND DUTIES – surcharge purchaser duty – purchase of a residential property by a husband and wife where the husband is an Australian citizen and the wife is the holder of a Subclass 482 visa and a 'foreign person' – whether the husband is liable to pay the surcharge purchaser duty Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Duties Act 1997 (NSW) Duties Act 2001 (Tas) Foreign Acquisitions and Takeovers Act 1975 (Cth) Taxation Administration Act 1996 (NSW) Cases Cited: Commissioner of Taxation v Ryan [2000] HCA 4; (2000) 201 CLR 109 Cornish Investments Pty Ltd v Chief Commissioner of State Revenue (RD) [2013] NSWCATAP 25 Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614 Levitch Design Associates Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 215 Li v So [2021] VSC 515 Street v Queensland Bar Association [1989] HCA 53; (1989) 168 CLR 461 Putland v R (2004) 218 CLR 174 Texts Cited: None Category: Principal judgment Parties: Dananjaya Aparekka (Applicant) Divya Singh (Applicant) Representation: Solicitors: Applicants (Self-represented) Crown Solicitor (Respondent) File Number(s): 2022/00175863 Publication restriction: None reasons for decision 1. The applicants, Dananjaya Aparekka (Mr Aparekka) and Divya Singh (Dr Singh) seek administrative review of the surcharge purchaser duty assessment (the Assessment) of the respondent, the Chief Commissioner of State Revenue, in respect of Dr Singh's 50% interest in the residential property she and Mr Aparekka purchased, in 2020, as joint tenants, in Thornton in New South Wales. 2. Chapter 2 of the Duties Act 1997 (NSW) (Duties Act) makes provision for the charge of duty on an agreement for the sale or transfer of dutiable property (i.e. land). Chapter 2A of that Act makes provision for an additional charge of duty on a transaction of this kind where the agreement for sale or transfer are, or are taken to be, a sale or transfer of residential land to a 'foreign person': Duties Act s 104G and 104L. 3. In this case, the respondent found that, at the time Dr Sing and Mr Aparekka executed the agreement for the sale of the Thornton property, Dr Sing was 'foreign person' under s 104J of the Duties Act and liable for surcharge purchaser duty. 4. In their application for administrative review, the applicants, who were married two months prior to their purchase of Thornton property, contended that: 1. the law was contradictory in that the liability for the surcharge purchaser duty was in effect a liability borne by both applicants, including Mr Aparekka, an Australian citizen, who is not otherwise liable for surcharge purchaser duty under that Act; 2. the law was discriminatory in that the provisions of the Duties Act discriminated against their family because Mr Aparekka is financially worse off having chosen to marry a foreigner; and 3. to the extent that the surcharge purchaser duty provisions of the Duties Act apply to their family, they are contrary to s 117 of the Australian Constitution. 1. The applicants' application was heard, by AVL, on 12 September 2022. 2. At the hearing the applicants did not dispute that, at the time liability for purchaser duty arose concerning their purchase of the property at Thornton, Dr Singh was a 'foreign person' as defined in 104L of the Duties Act 1997. Nor did the applicants press their discriminatory or constitutional ground. However, they did press their contradictory ground, which Mr Aparekka asserted could not have been the intention of Parliament. 3. Given the late abandonment of the other grounds and for completeness, I have dealt with each of the grounds relied on by the applicants. Jurisdiction of the Tribunal 1. For the reasons set out below, the assessment the subject of this application is an assessment the respondent made concerning Dr Singh's liability for surcharge purchaser duty under Chapter 2A of the Duties Act. Mr Aparekka has not been assessed as liable for that duty. Nevertheless, given Mr Aparekka's contention that he, in a practical sense, is also liable for that duty it was he who made the objection application under s 86 of the Taxation Administration Act 1996 (NSW) (TA Act) and this application for external review by the Tribunal. 2. In these proceedings, Dr Singh was subsequently added as a party and appropriately so. 3. While nothing turns on it in this application, Mr Aparekka's status as an applicant is unclear as he is not the 'taxpayer' who was assessed by the respondent as being liable for the surcharge purchaser duty (Taxation Administration Act 1996 (NSW) (TA Act) s 3(1) and 96(1)(a)). 4. In any event, there is no dispute that the assessment of the respondent the subject of this application is an administratively reviewable decision, and the Tribunal has jurisdiction to hear and determine this application: Civil and Administrative Tribunal Act 2013 (NSW) s30, Administrative Decisions Review Act 1997 (NSW) (ADR Act) Act s 9 and TA Act s 96(1). 5. The role of the Tribunal on administrative review is to determine the correct and preferable decision having regard to the material before it, including the relevant factual material and the applicable written and unwritten law: ADR Act, s 63(1). For this purpose, the Tribunal may exercise all the functions conferred or imposed on the respondent by any relevant legislation in making the decision he made: ADR Act, s 63(2). Onus 1. In this application the onus is on the applicants to prove their case on the balance of probabilities: TA Act s 100(3). In other words, the onus is on the applicants to establish that, in their particular circumstances, Dr Singh is not liable to be charged surcharge purchaser duty, having regard to the relevant statutory criteria. In the absence of doing discharging their onus, the assessment of the respondent will prevail as correct: Cornish Investments Pty Ltd v Chief Commissioner of State Revenue (RD) [2013] NSWCATAP 25 at [30] and [36] and Federal Commissioner of Taxation v Dalco [1990] HCA 3 at [14]; (1990) 168 CLR 614. That is, there is no onus on the respondent to show that the assessment was correctly made: Levitch Design Associates Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 215 at [27]. Relevant legislation Duties Act Chapter 2 1. Chapter 2 of the Duties Act contains provisions relating to transactions concerning dutiable property. There is no dispute that the property in Thornton is dutiable property under s 11 of the Duties Act. 2. Section 8 of the Duties Act sets out the transactions concerning dutiable property for which duty is imposed under Chapter 2 of that Act. Included in these transactions is an agreement for the sale or transfer of dutiable property: Duties Act s 8(1)(b)(i). 3. Section 9(2) of the Duties Act provides that, for the purpose of duty charged by Chapter 2, a dutiable transaction that is an agreement for the sale or transfer of dutiable property (i.e. s 8(1)(b)(i)), the 'property transferred' is the property agreed to be sold or transferred; 'transferee' of the property transferred is the purchaser or transferee and the 'transfer occurs' when the agreement is entered into. 4. Section 12 of the Duties Act provides that a liability for duty arises when a transfer of dutiable property occurs. Duties Act Chapter 2A 1. Chapter 2A of the Duties Act contains provisions concerning purchaser surcharge duty. Section 104G, in Part 1 of this chapter contains the following introduction and overview of the provisions in this Part: 104G Introduction and overview (1) This Chapter charges duty on certain dutiable transactions in respect of residential land that are, or are taken to be, transfers to foreign persons. (2) The duty charged by this Chapter is additional to any duty charged by Chapter 2. (3) The duty charged by this Chapter is referred to as surcharge purchaser duty. 1. Section 104H provides that 'Except as provided by this Chapter or Chapter 2, Chapter 2 does not apply in relation to duty charged by this Chapter.' 2. Section 104L(1)(a) of Part 1 of Chapter 2A provides that surcharge purchaser duty is chargeable on 'a transfer of residential-related property to a foreign person'. 3. Section 104K defines what is meant by the term 'residential-related property' and includes 'residential land in New South Wales': Duties Act s 104K(a). Again, there is no dispute that the property in Thornton is residential-related land within NSW. 4. The term 'foreign person' is defined in s 104J of the Duties Act. That section relevantly provides as follows: 104J Meanings of "foreign person" and "foreign trustee" (1) In this Chapter— foreign person means a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section. … (2) The definition of foreign person in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth is modified as follows— (a) an Australian citizen is taken to be ordinarily resident in Australia, whether or not the person is ordinarily resident in Australia under that definition, … 1. Section 4(1) of the Foreign Acquisitions and Takeovers Act 1975 (Cth) defines the term 'foreign person' to include an individual not 'ordinarily resident' in Australia. The term 'ordinarily resident' is defined in s 5 of that Act. That section relevantly provides as follows: 5 Meaning of ordinarily resident (1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if: (a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time, and (b) at that time— (i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law, or (ii) … 1. In Li v So [2021] VSC 515 at [95]-[96] the Victorian Supreme Court held that even where a person who is not an Australian citizen and has been in Australia for the requisite 200 days that person remains a 'foreign person' if that person is the holder of a temporary visa permitting them to remain in Australia during a specified period. This is because, the person's continued presence in Australia is subject to a limitation. That is, that person would not satisfy s 5(b)(i) of the Foreign Acquisitions and Takeovers Act 1975 (Cth). 2. Section 104J(3) provides that: 'For the purposes of charging surcharge purchaser duty on a surcharge duty transaction, a person is taken to be a foreign person if the person is a foreign person when a liability for duty charged by Chapter 2 on the transaction arises …' 3. Section 104N of the Duties Act provides that, in respect of a surcharge purchaser duty transaction that is an agreement for sale or transfer of property agreed to be sold or transferred to a foreign person who is a purchaser or transferee, the transfer occurs when the agreement is entered into. 4. Section 104Q provides that s 12 applies in respect of surcharge purchaser duty in the same way as it applies in respect of duty charged by Chapter 2 of the Duties Act. 5. Section 104ZKA of the Duties Act contains an exemption from surcharge purchaser duty for certain permanent residents in respect of a principal place of residence. That section relevantly provides as follows: 104ZKA Exemption for certain permanent residents in respect of principal place of residence (1) No surcharge purchaser duty is chargeable on a transfer, or an agreement for the sale or transfer, of residential-related property if each transferee under the transfer or agreement who would otherwise be liable to pay that duty is an exempt permanent resident. (2) A transferee under a transfer or agreement is an exempt permanent resident if— (a) the transferee is a permanent resident when a liability for duty charged by Chapter 2 on the transfer or agreement arises (or would arise but for a concession or exemption from duty under that Chapter), and (b) the Chief Commissioner is satisfied that the transferee intends to use and occupy the residential land to which the residential-related property relates as a principal place of residence in accordance with the residence requirement. (3) … (4) The residential land must be used and occupied by the exempt permanent resident as his or her principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date. This requirement is referred to as the residence requirement. 1. As noted above, liability for duty and surcharge purchaser duty arises at the date on which the contract for sale of land is executed: Duties Act s 8(1)(b), 9, 12(2) and 104Q(1). Material before the Tribunal 1. In support of their case, the applicants relied on their application and the material they had provided to the respondent in support of their objection. 2. In support of his case, the respondent relied on the documents filed pursuant to s 58 of the ADR Act, which included a copy of the relevant Notices, the Purchaser Declaration form, Investigation Reports, Mr Aparekka's objection, the Objection Determination Notice and the communications between Revenue NSW and the applicants and their lawyer. 3. The respondent also provided detailed written submissions dated 19 August 2022. Background 1. The factual background to this application is not disputed. 2. Mr Aparekka and Dr Singh married in August 2020. 3. As I have already noted, on 28 October 2020, the applicants executed the contract for sale of the Thornton property. In her 'Purchaser/Transferee Declaration – Individual' form, Dr Singh said that her country of citizenship was India and that she was the holder of a Subclass 482 visa that was due to expire in February 2022. In response to the question whether she was a 'foreign' purchaser/transferee she answered 'yes'. She also answered 'yes' to the question as to whether she was an 'exempt permanent resident' who will occupy the property as her principal place of residence for a continuous period of 200 days within the first 12 months after the date of the contract for sale. 4. The applicants' contract for sale was assessed for stamp duty under Chapter 2 of the Duties Act. The amount assessed was paid by the applicants and it is not disputed that they occupied the property as their principal place of residence. 5. Subsequently, in June 2021, the respondent issued the applicants with a Notice of Investigation, under Part 9 of the TA Act, to determine whether they were liable for surcharge purchaser duty. 6. Shortly thereafter, the applicants' solicitor emailed the office of the respondent (Revenue NSW) to say that Dr Singh had understood that she was an exempt permanent resident by reason of her marital status and that she would have paid additional duty at the time of purchase if she had been aware she was not exempt. The applicants' solicitor went on to request that any penalty tax and interest be waived. 7. On 24 August 2021, the respondent informed the applicants that the investigation was completed and issued the Notice of Assessment that is the subject of this application. That Notice expressly stated that Dr Singh was liable for surcharge purchaser duty and amounts for penalty tax and interest were also included. 8. Being dissatisfied with the Notice of Assessment, on 20 September 2021, Mr Aparekka lodged an objection to the duty, penalty tax and interest: TA Act, s 86. Mr Aparekka's grounds for objection included the following: 1. they had informed their lawyer and the bank that Dr Singh was the holder of a Subclass 482 visa; 2. they had followed the instructions of their lawyer and bank; 3. charging surcharge purchaser duty on the transaction eroded the benefit of the first home buyer stamp duty exemption; 4. Dr Singh was issued a bridging visa by 15 November 2020; 5. if they had been informed by Revenue NSW that they were liable for surcharge purchaser duty at the time of the transaction they would have purchased the property under Mr Aparekka's name or deferred to transfer until Dr Singh's partner visa was lodged; and 6. as Dr Singh's spouse, Mr Aparekka is also liable for the duty despite being a citizen, as the duty will be paid from their combined funds 1. On 20 October 2021, Dr Singh was granted a partner provisional sub class 820 visa. It is not disputed that by reason of the grant of a partner provisional sub class visa having been issued before the expiry of her Subclass 482 visa, Dr Singh's bridging visa never became active. 2. The applicants completed making all outstanding payments of surcharge duty on 17 March 2022. On this day the respondent remitted the entire amount of interest paid on the unpaid duty and the market interest component on the penalty tax. 3. On 6 May 2022, the respondent disallowed the object lodged by Mr Aparekka. 4. On 17 June 2022, Mr Aparekka lodged this application with the Tribunal for administrative review. On 12 July 2022, at a directions hearing, Dr Singh was joined as a party to these proceedings by consent. 5. The applicants now reside in Tasmania. Dr Singh's liability for surcharge purchaser duty 1. While it is not disputed that Dr Singh was a 'foreign person' at the relevant time, it is convenient to briefly set out why this is so. 2. First, Dr Sing is not an Australian citizen. At the time of contract (28 October 2020) and settlement (27 November 2020) of the Thornton property Dr Singh was not 'ordinarily resident' in Australia and hence a 'foreign person' under s 4(1) of the Cth Foreign Acquisitions and Takeovers Act and s 104J of the Duties Act. She was not ordinarily resident in Australia because, at that time, Dr Singh's temporary Subclass 482 visa imposed a time limit on her lawful presence in Australia. As explained above, that visa was due to expire on 13 February 2022. Although Dr Singh's visa status changed in 2021, at the time of contract and settlement of the Thornton property she was a 'foreign person' within the meaning of that term in s 4 of the Cth Foreign Acquisitions and Takeovers Act as her then visa status did not satisfy the requirement of s 5 of the Cth Foreign Acquisitions and Takeovers Act, because her visa was limited. Hence, at the time of contract and settlement, Dr Sing was a 'foreign person' for the purpose of s 104J of the Duties Act and prima facie liable for surcharge purchaser duty. 3. As noted in the written submissions of the respondent, as Dr Singh was not a permanent resident at the time of contract and settlement, the s 104ZKA Duties Act exemption did not apply. Ground 1 of the applicants' case – contradiction of law 1. The applicants contend that even though Australian citizens are not liable to be charged surcharge purchaser duty, in this instance the liability is in effect imposed on them both. This they say is contradictory in that the Duties Act provides that an Australian citizen is taken to be ordinarily resident in Australia and not liable to be charged surcharge purchaser duty on the purchase of residential property in NSW. Yet, a family, consisting of an Australian citizen and a foreign person, who purchase residential property in NSW, will have imposed on them, as a family, the liability to pay surcharge purchaser duty. In this regard the applicant's assert that they purchased the Thornton property as a family and so the liability to pay that duty is also imposed on them as a family. The applicants also point to correspondence from the respondent, which is addressed to them both, including the correspondence which they assert to state that if the duty is not paid a debt collection process will commence against them both. 2. It is not disputed that the applicants purchased the Thornton property to be their family home. 3. However, as pointed out by the respondent, under s 104R(2) of the Duties Act, 'only transferees who are foreign persons are liable to pay surcharge purchaser duty'. In this case, only Dr Singh was assessed as being liable to pay surcharge purchaser duty and her liability was assessed on her 50% share of the Thornton property, in accordance with s 14 and 104V of the Duties Act. 4. While the respondent's 24 August 2021 Duties Notice of Assessment is addressed to both applicants, it does expressly identify Dr Singh as being the 'Surcharge liable party'. As noted by the respondent, all relevant correspondence to the applicants clearly said that only Dr Singh was a foreign person at the relevant time and that surcharge purchaser duty was chargeable on her 50% share of the Thornton property in accordance with s 104U of the Duties Act. 5. How the surcharge purchaser duty is or was paid is a matter for the applicants. As noted by the respondent, the fact that the applicants drew on shared family finances to pay that debt does not affect Dr Singh's legal liability under Chapter 2A of the Duties Act. Nor does it make Mr Aparekka liable for surcharge purchaser duty. However, what the Duties Act does contemplate is that surcharge purchaser duty will be charged in situations where not all transferees are foreign persons, by providing that duty will only be charged on the dutiable value of the property that reflects the foreign person's share in the property. 6. Accordingly, the applicants have not established that there is a contradiction in the Duties Act. Ground 2 and 3 1. As I have already noted, grounds 2 and 3 were not pressed by the applicants at the hearing. Nevertheless, for completeness I have dealt with them briefly as they are contentions made along similar lines to the abovementioned ground. 2 – Discrimination based on choice of marriage 1. In their application, Mr Aparekka asserted that the law discriminated against his family because an Australian citizen who married another Australian citizen would not have to pay the surcharge purchaser duty. Hence, he was financially worse off than someone who married a fellow Australian citizen. 2. As pointed out by the respondent in his written submissions, there are no constitutional or other statutory requirement of equal treatment of married couples based on their citizen status. Nor did the applicants point to any such requirements. I accept that this ground can be seen as an argument based on 'fairness' and 'justice' in that it is not fair that a married couple who are Australian citizens or permanent resident are not liable to surcharge purchaser duty, yet a married couple where only one person is an Australian citizen or permanent resident purchase surcharge purchaser duty will be charged. 3. In Commissioner of Taxation v Ryan [2000] HCA 4; (2000) 201 CLR 109 at 123 the High Court held that an argument based on 'fairness' and 'justice' cannot succeed in the absence of an express or clear foundation for it in the legislation. In this case, the legislative provisions of the Duties Act do not give the respondent or the Tribunal a discretionary power to exempt a foreign person from surcharge purchaser duty where the statutory criteria giving rise to such a liability arises. In this case, the applicants accept that Dr Singh is a foreign person and liable for surcharge purchaser duty. 4. Hence, had this ground been pressed at the hearing it would not have succeeded. 3 – s 117 of the Constitution 1. In their application for review, the applicants said: The Surcharge Duty law in NSW is contravening the Australian Constitution Section 117 which states that a person cannot be subjected to any discrimination because of a law that exists in one State but not another. 1. In this regard, the applicants noted that the equivalent surcharge purchase duty provisions under the Tasmanian Duties Act 2001 (Tas), exempt a married couple in their same situation they were in from being charged a surcharge purchaser duty. 2. While the applicants are correct that the purchase of a residential property in Tasmania, by a married couple like them, would be exempt under s 30J of the Duties Act 2001 (Tas), their constitutional argument is misconceived. 3. Section 117 of the Australian Constitution 1900 (Cth) provides as follows: 117. Rights of residents in States A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State. 1. In Street v Queensland Bar Association [1989] HCA 53 at [23]; (1989) 168 CLR 461 at 559, Toohey J held that s 117 of the Australian Constitution 1900 (Cth) operates to protect an interstate resident who is an Australian citizen from the operation of a law 'wherever the effect of a law is to subject an interstate resident to a disability or discrimination to which that person would not be subject as an intrastate resident.' 2. At [23] (512), Brennan J held that s 117: … [affords] protection to individuals when the individual is subject to a disability or discrimination which would not be "equally applicable to him" if he were an in-State resident. 1. In this case, a person's liability for surcharge purchaser duty under Chapter 2A of the Duties Act does not contravene s 117 because that liability is not based on the person's state of residence. Instead, it is based on whether the person is a 'foreign person' at the relevant time. That is, even if applicants were residents of Tasmania at the time of their 2020 purchase of the Thornton property, Dr Singh's liability for surcharge purchaser duty would be the same as if she were a resident of NSW. 2. Nor is it a question as to whether Dr Singh would have to pay surcharge purchaser duty if she and Mr Aparekka had bought a property in Tasmania. The fact that the Tasmanian legislative scheme includes an exemption that is not included in the NSW legislative scheme does no more than demonstrate a slight difference in policy, which is not uncommon. As explained by Gleeson CJ in Putland v R (2004) 218 CLR 174 at [25]: 'if State and Territory laws were all necessarily the same, there would be little point in having State and Territory legislatures.' 3. Hence, had this ground been pressed at the hearing it would not have succeeded. Conclusion and Orders 1. For the reasons set out above, I am not satisfied that the applicants have discharged their ouns that there is a contradiction in the law, in particular - a contradiction in the application of Chapter 2A of the Duties Act. Accordingly, I find that the 24 August 2021 Assessment of the respondent that Dr Singh was liable for surcharge purchaser duty under Chapter 2A of the Duties Act is the correct and preferred decision and should be confirmed. 1. Based on my findings above, I make the following order: 1. The 24 August 2021 surcharge purchaser duty assessment of the respondent is confirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 October 2022