Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Gupta v Chief Commissioner of State Revenue [2023] NSWCATAD 303 Hearing dates: 7 September 2023 Date of orders: 01 December 2023 Decision date: 01 December 2023 Jurisdiction: Administrative and Equal Opportunity Division Before: AR Boxall, Senior Member Decision: The Respondent's decisions are confirmed. Catchwords: TAXES AND DUTIES — Dutiable transactions — Exemptions – First Home Buyer Assistance Scheme TAXES AND DUTIES – Property tax – Eligibility 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 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 Texts Cited: None cited Category: Principal judgment Parties: Applicant: Pankaj Gupta and Khushbu Malhotra Respondent: Chief Commissioner of State Revenue Representation: Applicant: Self represented Respondent: Counsel: H Morgan, Solicitor Advocate, Crown Solicitor Solicitor: K Smith, Crown Solicitor File Number(s): 2023/00176797 Publication restriction: None REASONS FOR DECISION APPLICATION TO REVIEW A DECISION OF THE CHIEF COMMISSIONER of STATE REVENUE Introduction 1. This is an application for review by the Tribunal of a decision made by the Respondent on 21 February 2023 (the Decision) under which the Respondent decided not to reassess: 1. A concession from duty under the First Home Buyer Assistance Scheme (the FHBAS) granted in relation to Lot 920 in Watagan Park, Stage 3.9, Cooranbong (the Cooranbong Property); and 2. Duty assessed in respect of the purchase of real property at 514/2E Wharf Road, Melrose Park (the Melrose Park Property). 1. In these reasons references to the Section 58 Documents are to the bundle of documents filed by the Respondent with the Tribunal on 20 June 2023 pursuant to section 58 of the Administrative Decisions Review Act 1997 (ADRA). 2. The Duties Act 1997 (Duties Act) and the Property Tax (First Home Buyer Choice) Act 2022 (the Property Tax Act) are both "taxation laws" as defined in section 4 of the Taxation Administration Act 1996 (TAA), to which the objection and review provisions of that Act apply. Procedural history 1. On 17 February 2023, Aman Lawyers representing the Applicants wrote to the Respondent seeking the proposed reassessment to which the Decision relates. 2. On 21 February 2023, the Respondent issued the Decision in response to that request. 3. On 27 March 2023, Aman Lawyers lodged with the Respondent on the Applicants behalf an objection to the Decision (the Objection). This was within the 60-day period allowed for doing so under section 89 of the TAA. 4. The Respondent reviewed the matter and dismissed the Objection by letter dated 5 April 2023. 5. On 2 June 2023, the Applicants lodged with the Tribunal an Administrative Review Application Form, seeking review by the Tribunal of the Decision under section 96 of the TAA. 6. That section permits a taxpayer to apply to the Tribunal for the review of a decision made by the Respondent if: 1. The decision has itself been the subject of an objection lodged by the taxpayer under Division 1 of the TAA; and 2. The taxpayer is dissatisfied with the Respondent's determination of the objection. 3. Both conditions were clearly satisfied. 1. Section 99 of the TAA provides that the application for review must be made no later than 60 days after the date of issue of the notice of the Respondent's determination of the objection. The Administrative Review Application Form was filed within that 60-day period. Factual background 1. There appears to be no disagreement as to the following factual matters as they appear from the evidence: 1. The Applicants are both citizens of the Republic of India and at all material times were (and remain) permanent residents of Australia; they each hold Skilled – Independent (subclass 189) visas allowing them indefinite residence in Australia. 2. On 9 August 2021, the Applicants entered into an agreement (the Cooranbong Agreement) for the purchase by them of the Cooranbong Property. 3. On 13 August 2021, the Applicants completed: 1. A Purchaser/Transferee Declaration in respect of the Cooranbong Property, which was described as vacant residential land; and 2. An application for an exemption from duty under the FHBAS in respect of the Cooranbong Property. 1. On 9 November 2021, the Applicants' solicitors processed the duty payable on the Cooranbong Agreement through the Electronic Duties Return system, and the Cooranbong Agreement was assessed with duty of $601.51; 2. On 1 December 2022, the Applicants entered into an agreement (the Melrose Park Agreement) for the purchase by them of the Melrose Park Property for $1,050,000; 3. On 13 January 2023, the Applicants completed a Purchaser/Transferee Declaration in respect of the Melrose Park Property, which was described as strata – owner occupied; 4. On 17 January 2023, a notice of assessment was issued to the Applicants, assessing the Melrose Park Agreement with duty of $42,360; 5. On 17 February 2023, the Applicants' solicitors wrote to the Respondent, requesting that the Respondent: 1. Disapply the FHBAS concession to the Cooranbong Agreement and reassess the Cooranbong Agreement with duty accordingly; and 2. Apply the FHBAS concession to the Melrose Park Agreement, and permit the Applicants to pay property tax on the Melrose Park Property; 1. On 21 February the Respondent issued the Decision to the Applicants, declining their request; 2. On 14 March 2023, the Applicants were registered as proprietors of the Cooranbong Property; and 3. Thereafter, matters proceeded as outlined in paragraphs [7] to [10] above. Legislative provisions 1. Section 11(1)(a) of the Duties Act defines dutiable property as including land in New South Wales. Section 8(2) of the Duties Act provides that an agreement for the sale of dutiable property is a dutiable transaction, and sections 8(1)(b)(i), 9 and 12 of that Act provide that duty is chargeable on a dutiable transaction in the form of such an agreement. Parts 2 and 3 of the Duties Act make extensive provisions for the calculation and payment of duty in respect of dutiable transactions. 2. Division 1 of Part 8 of Chapter 2 of the Duties Act provides for exemptions and concessions from duty pursuant to the FHBAS. Relevantly: 1. Section 74 provides as follows: 74 Eligible agreements or transfers (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. (2) The agreement or transfer must be for the whole of the property. (3) The dutiable value of the dutiable property that is the subject of the agreement or transfer must be less than— (a) $1,000,000 if the property has a private dwelling built on it, or (b) $450,000 if the property comprises a vacant block of residential land. Note— The dutiable value of dutiable property is the greater of— (a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and (b) the unencumbered value of the dutiable property. (4) Despite subsection (3), in relation to an agreement for sale or transfer or a transfer entered into during the period beginning on 1 August 2020 and ending on 31 July 2021 (other than a transfer made in conformity with an agreement for sale or transfer entered into before 1 August 2020), the dutiable value of the dutiable property that is the subject of the agreement or transfer must be less than— (a) $1,000,000 if the property has a private dwelling that is a new home built on it, or (b) $800,000 if the property has a private dwelling that is not a new home built on it, or (c) $500,000 if the property comprises a vacant block of residential land. (5) In this section, new home has the same meaning as in section 4A of the First Home Owner Grant (New Homes) Act 2000. 1. Section 76 provides as follows: 1. 76 Residence requirement 2. (1) The home must be occupied by the first home owner or one of the first home owners who is acquiring it as a principal place of residence for a continuous period of at least 12 months, with that occupation starting within 12 months (or such longer period as the Chief Commissioner may approve) after completion of the agreement or transfer. This requirement is referred to as the residence requirement. 3. (2) The Chief Commissioner may, if satisfied there are good reasons to do so in a particular case— 4. (a) modify the residence requirement by approving a shorter period of occupation by a first home owner, or 5. (b) exempt a first home owner from the requirement to comply with the residence requirement. 6. (2A) The Chief Commissioner may give an approval or exemption under this section at any time, even if— 7. (a) the period of 12 months after completion of the agreement or transfer has already expired, or 8. (b) the first home owner's occupation of the home as a principal place of residence has already ceased. 9. (3) In the case of an agreement or transfer for the acquisition of a vacant block of residential land, it is sufficient 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. 10. (4) (Repealed) 11. (5) For the purpose of this section, an agreement or transfer is completed when a purchaser or transferee becomes entitled to possession of the home and, if the interest in the land acquired by the purchaser or transferee is registrable under a law of the State, the interest is so registered. 12. (6) The residence requirement does not apply to an application under the scheme if, on the date of the agreement or transfer— 13. (a) the applicant or, if there are 2 or more of them, at least one of the applicants is a member of the Permanent Forces of the Australian Defence Force (within the meaning of the Defence Act 1903 of the Commonwealth), and 14. (b) the applicant or, if there are 2 or more of them, each of the applicants is enrolled to vote in State elections (under the Electoral Act 2017). 1. Section 76A provides as follows: 1. 76A Approval of application in advance of satisfaction of residence requirement 2. (1) The Chief Commissioner may approve an application in anticipation of compliance with the residence requirement under section 76 if the Chief Commissioner is satisfied that each applicant required to comply with the residence requirement intends to occupy the home as his or her principal place of residence for a continuous period of at least 12 months, with that occupation starting within 12 months after completion of the agreement or transfer or within a longer period approved by the Chief Commissioner. 3. (2) If an application is approved in anticipation of compliance with the residence requirement, the approval is given 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— 4. (a) give written notice of that fact to the Chief Commissioner, and 5. (b) pay the relevant duty to the Chief Commissioner. 6. (3) The relevant duty is the difference between the total amount of duty that would have been payable on the transactions and instruments the subject of the application, if they had not been eligible under the scheme, and the total amount of duty (if any) paid in respect of those transactions and instruments. 7. (4) A person who fails to comply with the condition prescribed by this section is guilty of an offence. 8. Maximum penalty—50 penalty units. 9. (5) A failure to comply with the condition prescribed by this section is a tax default for the purposes of the Taxation Administration Act 1996. 1. Section 78 provides for the making of applications for exemption, and section 78A provides an elaborate mechanism for calculating the extent of any duty exemption or concession approved by the Respondent. 2. Section 79 provides for the reassessment of duty where a duty concession was incorrectly granted: 1. 79 Reassessment of duty payable where duty concession wrongly applied 2. (1) The Chief Commissioner may reassess the duty chargeable in respect of an agreement or transfer that is initially approved under the scheme if the Chief Commissioner forms the opinion that the agreement or transfer is not eligible under the scheme (because of failure to comply with the residence requirement or otherwise). 3. (2) The Chief Commissioner may issue a notice of assessment, based on the reassessment, for the duty chargeable in respect of the agreement or transfer. 4. The Property Tax Act provides, in the words of its short title, a regime "to enable first home buyers to opt to pay an annual property tax rather than duty when buying a first home". More particularly: 1. Section 11 provides relevantly as follows: 1. 11 Meaning of "transferee" 2. (1) In this Act— 3. transferee means a person who will be the owner of land as a result of a transfer of— 4. (a) for an exclusive land use entitlement—the interest that gives the entitlement, or 5. (b) for land leased from the Crown in perpetuity by a person other than the Crown—the lease, or 6. (c) otherwise—the fee simple in the land. 1. Section 12 provides relevantly as follows: 1. 12 Basis for making application 2. (1) A transferee may make an application to subject transferred land to property tax if at the time the application is made— 3. (a) the transferee is an eligible transferee, and 4. (b) the transfer is an eligible transfer. 1. Section 13 provides as follows: 1. 13 Eligible transferees 2. (1) A transferee is an eligible transferee if— 3. (a) the transferee is an eligible first home buyer, or 4. (b) the transferee is not an eligible first home buyer but— 5. (i) the transferee is a first home buyer, and 6. (ii) there is more than 1 transferee under the transfer, and 7. (iii) at least 1 other transferee is an eligible first home buyer, or 8. (c) for an approved shared equity scheme where all transferees other than approved equity partners are eligible transferees—the approved equity partners are also eligible transferees. 9. (2) In this section— 10. approved equity partner has the same meaning as in the Duties Act 1997. 11. eligible first home buyer means a person who is— 12. (a) a first home buyer, and 13. (b) an Australian citizen or a permanent resident. 14. permanent resident has the same meaning as in the Duties Act 1997. 1. Section 5 defines first home buyer relevantly as follows: 1. 5 Meaning of "first home buyer" 2. (1) In this Act— 3. first home buyer means a person— 4. (a) who is an individual, and 5. (b) who is 18 years of age or older, and 6. (c) who has not at any time owned residential land in Australia, either solely or with another person, and 7. (d) who has not previously been a party to a relevant application approved by the Chief Commissioner, and 8. (e) if the individual has a spouse—whose spouse— 9. (i) has not at any time owned residential land in Australia, either solely or with another person, and 10. (ii) has not previously been a party to a relevant application approved by the Chief Commissioner. 11. Section 5(6) defines a "relevant application" as follows: 12. (6) In this section— 13. relevant application means an application under— 14. (a) this Act, or 15. (b) provisions of the Duties Act 1997, Chapter 2, Part 8 intended to assist persons to buy a first home, or 16. (c) provisions of an Act prescribed by the regulations. The parties' arguments 1. The Applicants say in summary that: 1. The Cooranbong Property remains vacant land. No residence is built on it, and accordingly the Applicants cannot satisfy the residence requirement under section 76 of the Duties Act in relation to Cooranbong Agreement which remains uncompleted. 2. Moreover, the Respondent's reliance on section 76(3) of the Duties Act to apply the exemption to the Cooranbong Agreement on the basis of the Applicants' intention at the time of the application, to use and occupy a home on the Cooranbong Land as their principal place of residence, is ".. legally untenable". 3. The Applicants' eventual decision to purchase the Melrose Park Property as their principal place of residence and not to build their principal place of residence on the Cooranbong Property was the result of several causes: delays beyond their control in finalising the development of the Cooranbong Property caused by the effect of Covid 19, leading to delay in being able to construct a residence there; the arrival of their second child; and the conclusion that their elder child's education would be better served by her remaining at the Melrose Park primary school where she was enrolled. 4. In the light of these factors and the reality of the Applicants' residential arrangements, it would be unjust not to treat the Melriose Park Property as their first home by denying the FHBAS concession to it. 1. The Respondent says as follows: 1. The Applicants clearly demonstrated an intention to use the Cooranbong Property as their principal place of residence. 2. Since the Cooranbong Property was vacant land, this was sufficient to under section 76(3) of the Duties Act for the Respondent, as it did, to consider them as having satisfied the residence requirement under section 76. 3. The concession available under the FHBAS was therefore properly applied to the Applicants' purchase of the Cooranbong Property. There is thus no basis under section 79 of the Duties Act to reassess the duty paid in relation to the Cooranbong Agreement. 4. The Applicants are not eligible to opt for the property tax regime in relation to the Melrose Park Property, because they are not eligible transferees within the meaning of section 13 of the Property Tax Act. This is because they were both parties to the application under the FHBAS for the Cooranbong property that the Respondent approved, and so could no longer be first home buyers for purposes of the Property Tax Act. The nature of the review 1. The provisions of section 100 of the TAA apply to this review. Notably: 1. sub-section 100(2) of that Act provides that neither the Applicant nor the Respondent is limited in the present application to the grounds of the Objection; and 2. sub-section 100(3) of that Act provides that the Applicant has "… the onus of proving the applicant's case in an application for review", an onus which is discharged by reference to the ordinary civil standard: B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481. 1. Under section 63(1) of the ADRA, in conducting a review the Tribunal ".. is to decide what the correct and preferable decision is having regard to the material then before it, including the following: 1. any relevant factual material, 2. any applicable written or unwritten law". 1. Moreover, under section 63(2) of that Act 1997, in doing so the Tribunal "… may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision". Reasoning 1. The Applicants, in their respective Purchaser/Transferee Declarations – Individual dated 13 August 2021 for the purchase of the Cooranbong Property, both indicate that it was vacant land for the construction of a residence. They did so by ticking the corresponding descriptions for Residential land and Vacant land-residential in the forms. 2. In the Application Form Exemption or Concession from Duty dated 13 August 2021 under the FHABS that each of them signed, they each declared that at least "one of the eligible purchasers intends to occupy a home on the site" – the Cooranbong Property – being "vacant land". 3. These declarations were, in the Tribunal's assessment, an adequate basis for the Respondent to conclude that for purposes of section 76(3) of the Duties Act: 1. The Cooranbong Agreement was for the acquisition of a vacant block of residential land; and 2. The Cooranbong Property was intended to be used as the site of a home to be occupied by one or both of the Applicants who were acquiring it as a principal place of residence. 1. That section establishes a residence requirement for duty exemption or concessional treatment under the FHBAS: 1. This requirement is primarily the requirement in section 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 section 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. Section 76(3), however, provides a different test for a vacant block of residential land, such as the Cooranbong Property. This is that the Respondent "... 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". 1. That this test is to prevail in the case of a vacant block of residential land over the test in section 76(1) is, in the Tribunal's view, clear from the use in section 76(3) of the words "... it is sufficient that ..." by way of introduction to the words "the Chief Commissioner is satisfied ...". The statement that the Respondent's satisfaction is sufficient necessarily means that the other tests in section 76 need neither be considered nor met once the Respondent reaches satisfaction in terms of section 76(3). Since only the section 76(1) test operates by reference to completion as defined in section 76(5), that concept can have no relevance in deciding whether the test under section 76(3) is met. 2. Hence, 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 section 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". 1. That he did so conclude is demonstrated by the Respondent's issue on 9 November 2021 of Duties Assessment Number 10246419-01, which is expressed in a notation included in it to cover "FHBA Vacant Land on Agreement for sale of land and on Transfer". This legend clearly refers to the regime under Division 1 of Part 8 of Chapter 2 of the Duties Act, dealing with the FHBAS. 2. The test under section 76(3), although discretionary in nature, is clear. The Tribunal does not accept the Applicants' argument that the Respondent's application of this test to the Cooranbong Property and the Cooranbong Agreement ".. is legally untenable". This is because the Respondent in issuing the assessment of 9 November 2021 has reached a conclusion that is reasonably open to him by applying the provisions of section 76(3) of the Duties Act to the evidence provided by the Applicants in their respective Purchaser/Transferee Declarations – Individual and Application Form Exemption or Concession from Duty concerning the nature of the Cooranbong Property and their intentions for it to. 3. While it may well be that the Applicants have not pursued their original intention to make the Cooranbong Property their principal place of residence, they have not demonstrated to the necessary standard that the Respondent's decision that the test under section 76(3) had been satisfied was incorrect, for the reasons set out above. There was thus no basis for the Respondent to reassess under section 79 of the Duties Act the duty chargeable on the Cooranbong Agreement. 4. These reasons turn now to the second element of the Decision, the refusal of the Applicants' request to opt to pay property tax rather than stamp duty in connection with the Melrose Park Property. 5. Section 12 of the Property Tax Act is clear, that the acquirer of fee simple in the relevant land – the "transferee" as defined in section 11 – must be an "eligible transferee" in order to apply to subject land to property tax. The Applicants are clearly each a transferee of the Melrose Park Property, but are they eligible transferees? 6. The effect of section 13(1)(a) and (b) is that each of the Applicants must be an eligible first home buyer in order to be an eligible transferee for purposes of section 12. Section 13(2) in turn specifies two necessary characteristics for a person to be an eligible first home buyer: 1. That the person is an Australian citizen or permanent resident; in the case of the Applicants the latter test is satisfied, as noted at paragraph [11(1)] above; and 2. That the person is a first home buyer; this term is defined in section 5. 1. Section 5 is set out above. Its definition is a cumulative one, under which a person must satisfy all of five tests in order to be a first home buyer. These tests include that neither the person who claims to be a first home buyer (section 5(1)(d)) nor his or her spouse (section 5(1)(e)) "... has previously been a party to a relevant application approved by ..." the Respondent. Paragraph (b) of the definition in section 5(6) of relevant application refers to ".. an application under ... provisions of the Duties Act 1997, Chapter 2, Part 8 intended to assist persons to buy a first home". Chapter 2 Part 8 of the Duties Act includes sections 69 to 80A of that Act, which are the provisions dealing with applications under the FHBAS. These are the very provisions under which the Applicants successfully applied for and received from the Respondent an exemption or concession from duty for their acquisition of the Cooranbong Property. 2. The conclusion is that the Applicants are not first home buyers within the meaning of section 5 of the Property Tax Act and cannot for the reasons set out above apply for the Melrose Park Property to be subject to property tax rather than transfer duty. The second element of the Decision was therefore correct. 3. In their submissions, the Applicants suggested that, in view of their family responsibilities and the unfortunate effect of Covid 19 on their accommodation choices, the Decision operated unjustly and should be set aside. The Tribunal notes that general notions or fairness or justice do not allow the adjustment of tax liabilities. The High Court of Australia unambiguously rejected such a proposition in Federal Commissioner of Taxation v Ryan [1] . Orders 1. The Tribunal confirms under section 101(a) of the Taxation Administration Act 1996 the Respondent's Decision dated 21 February 2023. ********** Endnote 1. (2000) 201 CLR 109, at 123 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: 01 December 2023