CITATION: Rayward v Chief Commissioner of State Revenue [2006] NSWADT 30 DIVISION: General Division APPLICANT PARTIES: Catherine Joan Rayward RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 053145 HEARING DATES: 6/12/2005 SUBMISSIONS CLOSED: 12/06/2005 DATE OF DECISION: 02/01/2006 BEFORE: Hole M - Judicial Member CATCHWORDS: first home owners grant - reversal of original decision - First Home Owners Grant Act - first home owners grant - reversal of original decision MATTER FOR DECISION: Principal matter Duties Act 1997 LEGISLATION CITED : First Home Owners Grant Act 2000 Taxation Administration Act 1996 Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158 CASES CITED: Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41 Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278 APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor ORDERS: 1. The application is dismissed. The decision of the Chief Commissioner of State Revenue is affirmed including imposition of a penalty of 20%. REASONS FOR DECISION 1 The applicant has lodged applications for review of a determination made by the Chief Commissioner of State Revenue by letter dated 16 March 2005 in respect of the First Home Owner's Grant (No 053145) and a determination made by the Chief Commissioner of State Revenue by letter dated 16 March 2005 in respect of the First Home Plus Scheme (No. 056118). The determinations of the Chief Commissioner of State Revenue were made following consideration of an objection by the applicant to the assessments of the Chief Commissioner of State Revenue. 2 This Tribunal has jurisdiction to consider the Chief Commissioner's determination relating to the First Home Owners Grant. This Tribunal has jurisdiction to consider the stamp duty concession for the same reasons as set out in the decision therein of His Honour Judge K. P. O'Connor, President in Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278. Circumstances of purchase 3 The applicant purchased a property at South Grafton, the settlement of the purchase of the property took place on 4 April 2003. At the time of purchase the applicant was a school teacher, having completed her studies in Queensland. 4 The evidence of the applicant referred to her undertaking her tertiary studies at the Queensland Institute of Technology in Brisbane. Further that there is a rule concerning teachers' ability to move location of employment in Queensland, that she could apply for a transfer after two (2) years employment in the Queensland Education Department. The applicant believed that this was the rule also in all States of Australia. She later discovered, after purchasing the property at South Grafton, that this was not so; in New South Wales it was necessary to complete three (3) years employment prior to requesting a move. 5 On completion of her studies, the applicant was not able to obtain a permanent teaching position in Queensland and successfully sought one in New South Wales at Pendle Hill, a suburb of Sydney. 6 The applicant intended to seek a transfer, as early as possible, to northern New South Wales to be near to her family, some of whom live in Grafton and others within a three (3) hours drive of Grafton. She believed that she would be able to transfer to Grafton within two (2) years of moving to teach in New South Wales. She thus sought a suitable residence, that she could afford, in Grafton, with the intention that it become her principal place of residence. 7 The applicant secured a home loan through the Commonwealth Bank, the loan officer at the Bank completed the documents for the First Home Plus Scheme concession ("the Concession") and the First Home Owners Grant Scheme ("the Grant"). The applicant received these documents by facsimile, signed the documents where indicated, and returned them to the Bank. The Grant was made and the Concession given. 8 The applicant had, through the Bank's system, made an application for the Grant on 4 April 2003 pursuant to the First Home Owner Grant Act 2000. She had also applied for and received a concession from stamp duty provided by the First Home Plus Scheme provisions of the Duties Act 1997, Part 8 Division 1. 9 Following completion of the purchase, the applicant sought the advice of the Deputy Principal at the school she was teaching at. He advised her of the New South Wales requirements that she could not apply until she had completed three (3) years employment. At that stage she believed she would be eligible for a transfer within four (4) to eight (8) months. She made an application at that time, which was rejected because she needed to complete three (3) years not two (2) years. 10 On 13 October 2004 the applicant signed a statutory declaration that the property was not occupied by her within the twelve (12) months period of settlement as required by the Grant conditions. This declaration was provided to the Chief Commissioner of State Revenue following a letter forwarded to the applicant requiring "Confirmation of Residency". 11 It seems that with the best will in the world, the applicant could not have satisfied the residency requirements to satisfy the grant and concession provisions. Having taken up a teaching position in May 2002, then transferring (if permitted) within two (2) years (not three (3) as required in New South Wales), a move to the property would need to have taken place prior to 4 April 2004 to satisfy the provisions. 12 The applicant expressed her lack of intention to mislead the Chief Commissioner of State Revenue about her situation and her honest belief that she would be able to satisfy the criteria. 13 The entire amount of the Grant has been repaid by the Applicant. A sum of $163.37 of repayment remains outstanding in respect of the Concession. An interest component of $1,400.00 on the Grant has been paid by the Applicant. 14 At present the applicant remains in Sydney. Criteria The Grant 15 The criteria for eligibility to obtain the Grant and the Concession are similar. In this case the relevant criteria is the residence requirement. To be eligible for the Grant the applicant, where an application is made after 1 January 2004 the applicant must occupy the property for six (6) months within the period of twelve (12) months after completion of the purchase (unless otherwise approved by the Chief Commissioner of State Revenue). Where an application is made before 1 January 2004, a short period of occupation could satisfy the requirement as considered in Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41. This case relates to the provisions prior to 1 January 2004. The applicant did not occupy the property at all during the relevant period or since. Penalty on repayment of Grant 16 The applicant had a genuine intention to occupy the property, although taking into consideration her circumstances it was probably unlikely. The Tribunal has considered the repayment penalty on various occasions and the recommendation of the Australian Law Reform Commission as referred to and set out at paragraph 51 of Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158 provides a suitable guidance. In this matter the applicant provided information as to her intentions, although that intent was frustrated by the inability of obtaining a local teaching position due to her misunderstanding of requirements. She was candid and honest with the respondent and the Tribunal. She had the use of the money for two (2) years until the amount was repaid in full in April 2005. It is appropriate that a penalty of 20% was imposed, this has been paid by the applicant. Interest on repayment of Concession 17 The interest rate assessed by the Commissioner payable on the repayment of the Concession at 13.5%, comprising a penalty rate and market rate. Once again it is appropriate that this interest has been assessed as the applicant had the use of the money for a period of 2 years and the respondent has waived part of the interest component. Reasons for decision 18 The applicant must be considered to have known of the residency requirements of the forms that she received and signed prior to settlement of the purchase. She believed she could satisfy the requirements. She did not consider advising the Chief Commissioner of State Revenue as to her not being able to comply as she believed that the officer at the Bank "had things under control". The applicant considers that she became a victim of the system. Although it seems that she tends to make presumptions as to requirements, both those of her employer and of the grants and concessions administered by the Chief Commissioner of State Revenue. She immediately responded to the Confirmation of Residency letter and did not attempt to mislead the Chief Commissioner of State Revenue. 19 The Chief Commissioner of State Revenue has imposed a 20% penalty on the repayment of the Grant and $667.55 on the repayment of the Concession. 20 The applicant did not satisfy the criteria for the First Home Owners Grant or the Concession. 21 The respondent has agreed to waive the outstanding interest on the stamp duty concession, having the effect that interest in the sum of $504.18 has been charged. It is appropriate that interest on the Concession amount be paid as assessed by the Chief Commissioner of State Revenue pursuant to section 45 of the Taxation Administration Act 1996 for the reasons as set out in paragraph 17. ORDER 1. The application is dismissed. The decision of the Chief Commissioner of State Revenue is affirmed including imposition of a penalty of 20%. 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