Abadier v Chief Commissioner of State Revenue [2008] NSWADT 16

CITATION: Abadier v Chief Commissioner of State Revenue [2008] NSWADT 16

DIVISION: Revenue Division

APPLICANT PARTIES: Adil Asrail Abadier RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 076082

HEARING DATES: 14/12/2007

SUBMISSIONS CLOSED: 14 December 2007

DATE OF DECISION: 9 January 2008

BEFORE: Block J - ADCJ (Judicial Member)

CATCHWORDS: Duties Act - First Home Plus Scheme - residence requirement - First Home Owners grant - reversal by administrator

MATTER FOR DECISION: Principal matter

Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Duties Act 1997 First Home Owner Grant 2000

Giris Pty Limited v The Commissioner of Taxation of the Commonwealth of Australia (1968) 119 CLR 365 CASES CITED: Federal Commissioner of Taxation v G.M. Swift and others 89 ATC 101 Gomes-Martinez v Chief Commissioner of State Revenue [2007] NSWADT 251 Cullen v Chief Commissioner of State Reveune [2007] NSWADT 121

E White, solicitor REPRESENTATION: M Twohill, solicitor

ORDERS: The decisions under review are affirmed

Part A - Introduction 1 The Applicant, Adil Asrail Abadir, seeks the review of a decision of the Chief Commissioner of State Revenue ("Chief Commissioner" or "Respondent") requiring him to repay a First Home Owner Grant of $7,000.00 (the "Grant") issued under the First Home Owner Grant Act 2000 (NSW) ("FHOG Act''), together with a penalty of 20 percent ($1400.00). 2 The Applicant also seeks the review of a decision of the Chief Commissioner to revoke the stamp duty exemption granted to him in accordance with the First Home Plus Concession Scheme ("FHP Concession") under the Duties Act 1997 (NSW) ("Duties Act''). 3 The Grant and the FHP Concession relate to a residential property at 4A Salter Road, Bossley Park ("the Salter Road Property" or "the property"). 4 The essential issue in dispute is whether the Applicant is entitled to an exemption from the residence requirement under the FHOG Act and the Duties Act. 5 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997. It received written submissions by the Applicant dated 12 November 2007, ("AS"), written submissions by the Respondent dated 10 December 2007 ("RS") and written submissions in reply by the Applicant dated 14 December 2007 ("ASR"). The Tribunal also accepted the tender of exhibits as follows: Exhibit A1: a statutory declaration by the Applicant dated 13 November 2007; Exhibit A2: a document prepared by the Applicant entitled "Chronology". Exhibit R1: contract in respect of the purchase of the property by the Applicant. Exhibit R2: a rental bond referable to the property and dated 18 June 2006 Exhibit R3: 8 trust ledger account referable to the property. 6 Exhibit A1, a statutory declaration by the Applicant, was submitted in addition to a statutory declaration dated 8 December 2006 by the Applicant which is contained in tab 13 of the s. 58 documents; the latter statutory declaration ("the tab 13 statutory declaration") was executed, so the Tribunal was informed, in order to correct a statutory declaration dated 27 June 2006 which is contained in tab 3 of the section 58 documents and in which the Applicant falsely stated that he occupied the property as his principal place of residence in September 2004 and continued to reside in it thereafter. The statutory declaration dated 27 June 2006 ("the false statutory declaration") was executed in point of time after the Applicant had rented out the property; it was rented out in June 2006 and has been rented out ever since. The statutory declaration in Tab 13 does not in its terms contain any admission as to the untruthfulness of the false statutory declaration. Moreover the last paragraph of the tab 13 statutory declaration is in some respects inaccurate; it reads as follows: But/for my mother's illness and then my relationship breakdown, my absences from 4A Salter Road would not have occurred. It was intended to be and is my primary residence. 1 returned and maintained it during my absence. My living arrangements were not planned and I did what in my view a caring son would do for his parent. The circumstances were beyond my control and I ask the Commissioner to approve my objection. 7 It will be noted that the Tab 13 statutory declaration speaks of the Applicant's absences from the property; in fact the Applicant did not ever reside in it and so that to speak of absences from it cannot be correct. 8 The Applicant gave evidence briefly, and during the course of which he admitted the untruthfulness of the false statutory declaration. As he put it, he "did a mistake". He said that having received the relevant form from the Respondent he executed it in a manner which was false because he "was scared". There was no cross-examination of the Applicant. 9 Exhibit A2, and being chronology prepared by the Applicant is itself not altogether complete. It reads (in part) as follows: 4.4.04 Amendment to s76 of Duties Act by operation of s76(2) provides Commissioner with discretion to exempt residence requirement. 12.7.04 Applicant enters into Contract to purchase 4A Salter Road Bossley Park, (the property) 27.8.04 Applicant settles purchase, 'eligible settlement date'. Oct 2004 Applicant's mother admitted to hospital Nov 2004 Applicant's mother undergoes cervical laminectomy, 1.12.04 Applicant's mother discharged from rehabilitation. Feb 2005 Applicant's mother confined to rollator frame for movement. 24.3.05 Applicant's mother undergoes further lumbar laminectomy for spinal canal stenosis. 1.4.05 Applicant's mother in rehabilitation. 21.4.05 Applicant's mother discharged from rehabilitation, mobility improved to walking with stick. June 2005 Applicant's mother able to return to household duties but uses walking stick. Dec 2005 Applicant purchases second property, 268 Prairie Vale Road, Prairiewood, deferred settlement to June 2006. June 2006 Applicant completes settlement of Prairie Vale Road Property and moves into Prairie Vale Road Property with parents. June 2006 Applicant rents out the property. June 2006 Applicant executes the 27 June Declaration. 10 From the bar table, Mr White informed the Tribunal that during the relevant period, another property in Prairie Vale Road (and not the property referred to in exhibit A2 as the "second property" and which was purchased by the Applicant in December 2005) was occupied by the Applicant and his parents. At the time when the property was purchased the Applicant was living with his parents in Fairfield. With them, he moved to rented accommodation in Prairie Vale Road (and being the additional property referred to in this clause 10), and with them and in June 2006, he moved into the second property. . Part B - Factual background. 11 It is convenient by way of commencement to draw on RS under this head, more particularly as they are not disputed by the Applicant; (see clause 5 of ASR); they are contained in clauses 3 to 16 of the Respondents submissions which (without footnotes) are included as follows. 3. The general background to this matter may be summarised as follows. 4. On 2 July 2004, the Applicant entered into a contract to purchase the Salter Road Property. Settlement occurred on 30 August 2004. 5. On 20 August 2004, the Grant was paid to the Applicant. In turn, he was granted the FHP Concession and the Transfer was stamped as being exempt from the payment of duty. 6. On 21 July 2005, the Applicant entered into a contract for the purchase of the property at 268 Prairie Vale Road, Prairiewood ("Prairie Vale Road Property"). 7. The Applicant and his parents have resided at the Prairie Vale Road Property since July 2006. It appears that, previously, the Applicant was residing at 8/22 York Street, Fairfield.' 8. The Applicant has never occupied the Salter Road Property as his principal place of residence. The property has been leased since June 2006. A rental bond was lodged in respect of the property on 18 June 2006. The tenants commenced paying rent on the same date. The property has also been managed by a real estate agent since 17 June 2006. 9. On 27 June 2006, the Applicant lodged a statutory declaration with the Chief Commissioner declaring that he commenced occupying the Salter Road Property as his principal place of residence on 1 September 2004 and continued to reside at the property at the time of making the declaration. 10. Subsequent enquiries made on behalf of the Chief Commissioner revealed that, contrary to the Applicant's First Statutory Declaration, he had not occupied the Salter Road Property as his principal place of residence after purchase. 11. On 21 October 2006, the Chief Commissioner reversed the earlier decision to pay the Grant to the Applicant and imposed a 20% penalty ($1,400.00) as a result of the Applicant's failure to fulfil the residence requirement. The Chief Commissioner also reversed the decision to issue-the FHP Concession and required the Applicant to pay duty and interest. 12. On 8 December 2006, the Applicant, through his solicitor, lodged an objection to the Chief Commissioner's decisions. 13. Under cover of letter dated 29 January 2007, the Applicant's solicitor provided the Chief Commissioner with additional documents in support of the Applicant's objection. The letter was sent in response to the request in the letter from the Chief Commissioner dated 4 January 2007. 14. On 14 March 2007, the Chief Commissioner disallowed the Applicant's objection to the decisions to recall the Grant and to revoke the FHP Concession (although the full amount of interest imposed with respect to duty payable was remitted). 15. On 15 June 2007, the Applicant filed an application for review in the Tribunal. The Applicant seeks an extension of time within which to file the application for review. The Chief Commissioner does not consent or object to the application for an extension of time. 16. In accordance with s. 28(3) of the FHOG Act, the onus is on the Applicant to establish that the Chief Commissioner's decision to recall the Grant should not be affirmed. In accordance with s. 100(3) of the Taxation Administration Act 9996 (NSW) ("TA Act), the onus is on the Applicant to establish that the Chief Commissioner's decision to revoke the FHP Concession should not be affirmed. 12 It will be noted that the "Factual Background" contained in RS does not refer to the other property in Prairie Vale Road (referred to in clause 10) in which the Applicant and his parents resided for a period, and of which the Tribunal and the Respondent were first informed at the hearing. Part C - The medical evidence in respect of the Applicant's mother 13 Tab 13 of the s. 58 documents contains a number of documents and medical certificates by doctors, in respect of the Applicant's mother. Exhibit A2 indicates that the Applicant's mother was admitted to hospital in October 2004 and underwent a cervical laminectomy in November 2004. The medical documents commence with a certificate from Dr Gias Swid which refers to medical complaints and surgery dating back to 1999. It states in part: hypertension and IHD after CABG surgery in 1999 lower back spinal stenosis L 3/4 and L4/5 disc lesions cervical canal stenosis 2 disc lesions she was engaged in surgery - laminectomy and cervical decompression during 2005. 14 Dr Swid in referring to a laminectomy in 2005 presumably intended to refer to the operation which took place in November 2004. Dr. Swid's certificate makes it clear that the Applicant other underwent operative treatment prior to the laminectomy 15 Tab 13 also includes certificate by Dr A Georgy of Hope Healthcare addressed to Dr. Swid dated 24 February 2006; the last three paragraphs read as follows; I understand from Mrs Agaibi today that she is due for a lower back operation regarding her lumbar canal stenosis very soon. Mrs Agaibi stated that she is independent with her shower using adapted equipment. She mobilises with a rollator frame independently for short distances. She is unable to walk for long distances because of the pain in her lower back. On examination today, she was alert. Her power graded 4+/5 bilaterally in both upper and lower limbs. She had bilateral leg oedema for which I advised her to see her Cardiologist, Dr Nashed, to review her. Mrs Agaibi was seen by our Occupational Therapist, Physiotherapist and Dietician in the Day Hospital and we are happy to see her again after her laminectomy if required. I will review her again in our Outpatient Clinic in 6 months time. 16 Tab 13 also includes a certificate dated 6 December 2005 by Dr John Estell of Hope Healthcare addressed to Dr. Swid; the second and third paragraphs read as follows: This lady had a lumbar laminectomy for spinal canal stenosis on the 24th March 2005 performed by Dr Mark Sheridan at Liverpool Hospital. She came across to inpatient rehabilitation at Braeside Hospital from the 1st to the 21stt April 2005 and since discharge, she has attended the physiotherapy as an outpatient. She has continued to improve in her mobility such that she is now mobilising independently using a single point walking stick. She has returned to many of the usual household duties and in view of the fact that she has made such good progress, I will be discharging her from the Rehabilitation Medical follow up at Braeside. 17 The medical evidence indicates firstly that the Applicant's mother required significant medical treatment prior to November 2004 and dating back to 1999. It also indicates that she had recovered to some extent such that she became able to resume some of her normal household duties. It follows that contentions by the Applicant to the effect that he could not move into the property after its purchase because it was necessary for him to care for his mother and to continue caring for her are of doubtful validity. It seems likely that the operation in November 2004 has been fixed on as a convenient date, but that operation was merely one of a number of medical procedures dating back before the purchase of the property and occurring after the property was purchased. It is much more likely that the Applicant elected to live with his parents and after his father's death, his mother, as he had done for many years previously, because he preferred to do so. Part D - The legislation 18 Here too it is convenient to draw on the RS which are particularly comprehensive under this head and are contained in clauses 17 to 32 of RS reading as follows; The FHOG Act 17. The purpose of the FHOG Act is set out in the Long Title, which provides as follows: "An Act to encourage and assist home ownership, and to offset the effect of the Goods and Services Tax on the acquisition of a first home, by establishing a scheme for the payment of grants to first home owners; to amend the Stamp Duties Act 1920 to exempt such grants from financial institutions duty; and for other purposes." 18. The circumstances in which an Applicant is entitled to a First Home Owner Grant are set out in s. 7 of the FHOG Act. Section 7 provides (and provided at the relevant time): "7. Entitlement to grant (1) A first home owner grant is payable on an application under this Act if: (a) the Applicant or, if there are 2 or more of them, each of the Applicants complies with the eligibility criteria, and (b) the transaction for which the grant is sought: (i) is an eligible transaction, and (ii) has been completed. (2) Despite sub-section (1)(a), an Applicant need not comply with the eligibility criteria to the extent the Applicant is exempted from compliance by section 8A(2), 9(2) or 12(2). (3) Despite subsection (1)(b), a first home owner grant is payable before completion of the relevant eligible transaction, as authorised by section 20. (4) Only one first home owner grant is payable for the same eligible transaction." 19. In the Applicant's case, the "eligible transaction" was a contract for the purchase of a home in New South Wales (see s. 13(1)(a)). An eligible transaction is taken to be completed when the purchaser becomes entitled to possession of the home under the contract and the purchaser's interest in the land comprised in the contract is registered (s. 13(5)(a)). 20. For present purposes, the relevant eligibility criterion is the fifth criterion set out in s. 12(1) of the FHOG Act. At the relevant time, s. 12 provided as follows: "12. Criterion 5—Residence requirement (1) An Applicant for a first homeowner grant must occupy the home to which the application relates as the Applicant's principal place of residence for a continuous period of at least 6 months. (1A) However, if the Chief Commissioner is satisfied there are good reasons to do so, the Chief Commissioner may: (a) approve a shorter period, or (b) exempt the Applicant from the requirement to comply with subsection (1). (1B) The period of occupation required under subsection (1), or the shorter period approved under subsection (1A)(a), must start within 12 months after completion of the eligible transaction or a longer period approved by the Chief Commissioner. (2) If an application is made by joint Applicants and at least one (but not all) of the Applicants complies with the residence requirement, the non-complying Applicant or Applicants are exempted from compliance with the residence requirement." 21. In this case, the Grant was paid in accordance with s. 20 of the FHOG Act . Section 20(1)(b) provided at the relevant time that the Chief Commissioner may authorise the payment of a grant in anticipation of compliance with the residence requirement if the Chief Commissioner is satisfied that the Applicant who is required to comply, but has not complied, with the residence requirement, intends to occupy the home as his or her principal place of residence for a continuous period of at least 6 months commencing within twelve months after completion of the eligible transaction or a longer period approved by the Chief Commissioner. That is, under this provision, the Chief Commissioner is given power to issue a grant prior to an Applicant occupying the property as his or her principal place of residence. 22. Sub-section 20(3) of the FHOG Act provided at the relevant time that where a grant is paid in anticipation of compliance with the "residence requirement" "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." (emphasis added) 23. The term "residence requirement" is defined in s. 3 of the FHOG Act in similar terms to s. 12(1). A failure to comply with the condition in s. 20(3) constitutes an offence, which is punishable by a maximum penalty of 50 penalty units: s. 20(4). 24. Section 23 of the FHOG Act provides the Chief Commissioner with power to vary or reverse a decision he has made in respect of an application for a grant where he is later satisfied that the decision is incorrect. 25. Section 44 of the FHOG Act provides (and provided at the relevant time "44. Knowingly giving false or misleading information (1) A person must not: (a) make a statement, orally or in writing, to an authorised officer, or (b) give information, orally or in writing, to an authorised officer, knowing that it is false or misleading in a material particular. Maximum penalty: 100 penalty units. (2) A person must not, in or in relation to an application for a first home owner grant, make a statement or give any information knowing that it is false or misleading in a material particular. Maximum penalty: 100 penalty units." 26. Section 45 of the FHOG Act provides (and provided at the relevant time): "45. Power to require repayment and impose penalty (1) The Chief Commissioner may, by written notice, require an Applicant (or former Applicant) for a first home owner grant to repay an amount paid on the application if: (a) the amount was paid in error, or (b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason. (2) If, as a result of an Applicant's dishonesty, an amount is paid by way of a first home owner grant, the Chief Commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty not exceeding the amount the Applicant is required to repay. (3) If an Applicant (or former Applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the Chief Commissioner may, by written notice, impose a penalty not exceeding the amount the Applicant is required to repay. (4) If an amount is paid in error on an application for a first home owner grant to a third party, the Chief Commissioner may, by written notice, require the third party to repay the amount to the Chief Commissioner." 27. The Tribunal has jurisdiction to determine this application by the operation of ss. 28(1) and 25 of the FHOG Act and s. 38 of the Administrative Decisions Tribunal 1997 (NSW). The Duties Act 28. Under the FHP Concession scheme, an Applicant who satisfies the relevant criteria is entitled to an exemption from liability for duty in respect of certain "eligible agreements or transfers": see s. 80 of the Duties Act. 29. At the relevant time, ss. 69 and 70 of the Duties Act provided as follows: "69. The nature of the scheme This scheme is intended to help people who are acquiring their first home. Under the scheme, the acquisition and any mortgage given to assist the financing of the acquisition is subject to a concession or exemption from duty. 70. Commencement The following transactions and instruments are eligible for consideration under the scheme: (a) agreements for sale or transfer entered into on or after 4 April 2004, (b) transfers that occur on or after 4 April 2004 (other than transfers made in conformity with an agreement for sale or transfer entered into before 4 April 2004), (c ) mortgages over land the subject of those agreements or transfers." 30. Relevantly, s. 74 dealt with eligible agreements or transfers 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. The agreement or transfer must be for the whole of the property. The dutiable value of the dutiable property that is the subject of the agreement or transfer must be less than: (a) $600,000 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: the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and (a) the unencumbered value of the dutiable property." 31. An Applicant under the FHP Concession scheme must comply with s. 76 of the FHOG Act, which, at the relevant time, provided as follows: "76. Residence requirement (1) The home must be occupied by the person or persons who are acquiring it as a principal place of residence for a continuous period of at least 6 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. (2) The Chief Commissioner may, if satisfied there are good reasons to do so in a particular case: (a) modify the residence requirement by approving a shorter period of occupation by the person or persons, or (b) exempt the person or persons from the requirement to comply with the residence requirement. (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 person or persons who are acquiring it as their principal place of residence. (4) The residence requirement does not apply to a person who acquires an interest in the property concerned solely for the purpose of assisting the eligible persons under the scheme in financing the acquisition. (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. (6) However, an agreement or transfer of a vacant block of residential land is not completed until the home intended to be built on the land is ready for occupation as a place of residence." 32. The FHP Concession in this case was approved by the Chief Commissioner in accordance with the provisions in s. 76A, which provided as follows at the relevant time: "76A. Approval of application in advance of satisfaction of residence requirement (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 6 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. (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: (a) give written notice of that fact to the Chief Commissioner, and (b) pay the relevant duty to the Chief Commissioner. (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. (4) person who fails to comply with the condition prescribed by this section is guilty of an offence. Maximum penalty: 50 penalty units." Part E -Analysis 19 It is clear that the Tribunal has jurisdiction to review the Chief Commissioner's decision to revoke the FHP Concession: see Snow v. Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278; see also Scurry v Chief Commissioner of State Revenue [2006] NSWADT 28, at para. [11] 20 There is one aspect of this matter which although mentioned in the documentation before the Tribunal was never mentioned in the hearing. It would seem that the Applicant's application for review was late; the Respondent in RS indicated that he neither consented to nor refused an extension of time. There was no formal application for an extension and the hearing proceeded as if and on the basis that this was not an issue. I have dealt with this matter on the basis that there is no issue in this regard and as if therefore an extension of time had been granted. 21 Mr White referred at some considerable length to my decision in Gomez-Martinez v Chief Commissioner of State Revenue [2007] NSWADT 251 ("Gomez-Martinez "). He sought to distinguish the facts in this matter in particular because in Gomez-Martinez, the relevant property was rented out from the time of its acquisition (and was thus a rental properties from inception) while in this case the property was not rented out until the expiry of nearly 2 years after its acquisition. 22 It must be remembered that the taxpayer in Gomez-Martinez contended that he intended to reside in the property but that he was prevented from doing so by difficulties associated with Miss V (with whom he was involved) and because of driving offences which prevented him from driving. Gomez-Martinez also executed a false statutory declaration to the effect that he occupied the property in question and resided in it; he too referred to his false statutory declaration as "a mistake". Gomez-Martinez also failed after the expiry of the statutory period of a year to advise the Respondent that he had not taken up residence in the property in question. A comparison of the facts in this case with the facts in Gomez-Martinez indicate some similarities and some differences but where the similarities are more significant 23 Mr El Hage contended (correctly in my view) that in determining whether this is a case in which discretionary relief should be granted it is necessary to have regard to all of the facts and circumstances from the time of the Grant and that to have regard to certain periods in isolation only would not be appropriate. In this case the Applicant applied for and received the Grant and the FHP Concession and in his application stated that he would be occupying the property as his principal place of residence. The Applicant did not ever take occupation of the property and contentions by him in his evidence as to absences from the property cannot be accepted as truthful. Tab 7 of the section 58 documents establishes that the electrical connection was not transferred from the previous owner to the Applicant until November 2005. As to why the Applicant allowed the property to remain unoccupied for so long is not clear but the fact is that the property became a rental property in June 2006 and has remained a rental property ever since. The Applicant was, as I have noted, obliged at the end of the statutory year to notify the Respondent. He did not do so and in June 2006 and after the property had become a rental property executed the false statutory declaration, and for the purpose of deceiving the Respondent. The property remains a rental property. His evidence as to his mother's health is, as I have noted, of dubious validity. It is likely that the reason why he remains with his mother (his father having died in 2007) is quite simply because he prefers to do so. Part F - case law and findings 24 In Gomez-Martinez I referred to certain relevant case law as to the exercise of a discretion, in clauses 33 to 36, as follows: 33. In Federal Commissioner of Taxation v G.M. Swift and others 89 ATC 5101 French J made it clear (in relation to a discretion of a similar nature) that the dispensing power is incidental and ancillary to the primary object of the legislation; he noted also that there will be a threshold beyond which the primary object of the legislation would be defeated; see page 5116 as follows: The dispensing power is incidental and ancillary to the primary object of the legislation. On the spectrum of cases in which it could conceivably be exercised, there will be a threshold beyond which it would defeat the primary object of the legislation. It is unnecessary to define that threshold for present purposes. The discretion cannot, however, be limited to the case where a person has not in any way benefited from the evasion giving rise to the recoupment tax liability. And in this respect ground 4(c) of the grounds of appeal was rightly abandoned. The absence of such a simply expressed limitation from the language of sub-section 5(4) is indicative of the absence of any such legislative intention. That is not to say that it is not open to consider whether a person claiming dispensation under the sub-section benefited from the sale of shares in the subject company. But, it is not, as a general rule, conclusive. 34. See also French J in Swift's case at page 5118 as follows: It may be said that the Tribunal's exercise of its discretion has undermined the objectives of the Act. If that be so, then it is for the legislature to consider confining the dispensing power. But the conflict between the primary purpose of collecting evaded company tax and the ancillary function of dispensation has not risen here to such a level that the primary purpose is defeated. Any dispensation under sub-section 5(4) will necessarily undermine the primary purpose, for tax which might have been collected will not be collected. That is an inescapable consequence of the operation of sub-section 5(4). Its invocation by the Tribunal in this case has not, in my opinion, involved the crossing of that threshold beyond which the exercise of the discretion falls outside the scope and objects of the Act. 35. One of the leading cases in this area is Giris Pty Limited v The Commissioner of Taxation of the Commonwealth of Australia (1968) 119 CLR365. At pages 380 and 381 Menzies J noted that discretions of this nature can be difficult to exercise: The section does confer an extraordinary responsibility upon the Commissioner of Taxation. It requires him, in every case where there is income of a trust estate in a particular year of income, to consider whether it is unreasonable "that this section should apply in relation to that trust estate in relation to that year of income". Unless he forms such an opinion the section applies. The section directs the Commissioner in forming his opinion to have regard to certain facts and circumstances but gives no guidance upon what significance should be given to the presence or absence of the facts or circumstances as specified. Moreover, there appears to be no common principle underlying the various matters specified so as to give the Commissioner a lead to other matters to which he might have regard. Accordingly, whether or not the section is to apply to a particular trust estate has been made to depend upon an opinion which the Commissioner may form, after the close of the year of income, and with no legislative guidance other than that he is to have regard to a medley of facts and circumstances. The enactment of such a provision can only be regarded as an acknowledgment by the legislature of its inability to make laws laying down prospectively what will give rise to a particular taxation liability. It leaves, as a problem for the Commissioner to decide, retrospectively and in the light of what has happened, whether the particular provision should not apply to a particular trust estate in respect of a year that has passed. 36. And at page 384 of Giris Windeyer J said: The Commissioner is to ask himself whether it would be unreasonable that s. 99A should apply to any particular trust estate. But the idea of reasonableness seems to be here amorphous. It is, of course, true that, as a measure in fact of time, space, quantity and conduct, reasonableness is a concept deeply rooted in the common law: and so, in such cases, is the power of a court to say whether a particular decision of that fact is or is not within the bounds of reason. But, in cases of that kind, the circumstances in which the question arises provide criteria for its solution. Here the Commissioner's discretion is apparently at large. It does not clearly emerge from the Act in respect of what matter - or whose interest, that of the taxpayer or of the revenue - he is to consider whether it would be reasonable or unreasonable to apply s. 99A in the case of any particular trust estate. He is to have regard to certain stated matters; but what weight or influence each is to have is not made clear. Moreover, the Act requires that he "shall have regard to such other matters, if any, as he thinks fit". However I assume that he is to be guided and controlled by the policy and purpose of the enactment, so far as that is manifest in it. That would exclude from his consideration and matter which it would be unlawful for him to take as a criterion 25 If only for the sake of completeness I refer to other case authority cited by the Respondent in RS (and correctly cited and with which I agree); clauses 38 and 39 of RS read as follows: 38. In the absence of any express conditions for the exercise of the discretion in s. 12(1A)(b) and s. 76(2)(b), the decision-maker (that is, the Tribunal) must be guided by the underlying purpose and policy of the FHOG Act and Duties Act respectively "...so far as that is manifested in" the relevant Act: see Girls v Federal Commissioner of Taxation (1969) 119 CLR 365, at 384. Thus, the circumstances which would constitute "good reasons" and, therefore, the scope of the discretionary power, must be determined in the context of the FHOG Act and the Duties Act: see for example K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 60 ALR 509, at 514; see also CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384, at 408. As Spigelman CJ stated in Deputy Commissioner of Taxation v Clark [2003] NSWCA 91 ("Clark'), at para. [115]: "Parliament has chosen to use words of great generality in the phrase `other good reason' in the various statutory provisions in which it appears. A phrase of this character must take its colour from its surroundings. The contemporary approach to statutory interpretation is literal but not literalistic and requires words to be construed in their total context." (citations omitted) 39. The discretionary power in each of those sections must be exercised in a manner which does not "defeat the fundamental legislative objectives of the scheme of regulation within which the dispensing power is located": see Chief Commissioner of State Revenue v Pacific General Securities Ltd & Finmore Holdings Pty Ltd (No 2) (RD) [2005] NSWADTAP 54. Thus, the discretionary power must not be exercised in a manner which would be inconsistent with other fundamental provisions of the FHOG Act and the Duties Act including those which give effect to the objectives of the relevant Act: see generally Chikonga v Minister for Immigration and Multicultural Affairs (1997) 47 ALD 49, at 51 and Ross v R (1979) 141 CLR 432, at 440. As French J noted in Federal Commissioner of Taxation v Swift (1989) 18 ALD 679 in relation to the dispensing power available to the Commissioner in that case (at 696): "The dispensing power is incidental and ancillary to the primary object of the legislation. On the spectrum of cases in which it could conceivably be exercised, there will be a threshold beyond which it would defeat the primary object of the legislation." 26 Mr White for the Applicant referred to the decision of this Tribunal in Cullen v Chief Commissioner of State Revenue [2007] NSWADT 121 even though the decision in that case went against the taxpayer in order to distinguish the facts in this case. In Cullen the taxpayer failed because he was unable to establish that there were altered circumstances referable to a hoped-for posting. Mr White contended that in this case there were changed circumstances and being the operation to the Applicant's mother in November 2004, I do not think that Cullen is relevantly distinguishable; in the first place the evidence before the Tribunal demonstrates that the operation in question was one medical procedure among many. Moreover the medical evidence indicates that the Applicant's mother made a considerable recovery after the operation in question and so that even if the Applicant was precluded from occupying the Property for a time that preclusion did not endure; the letting out of the property in June 2006 even apart from the false statutory declaration indicates a lack of intention to occupy it at all. 27 Mr White contended that for the Applicant to succeed he must overcome two hurdles. He must in the first instance establish that he purchased the property in order to live in it but was precluded from doing so by circumstances beyond his control and in this instance the operation in November 2006. Having overcome the first hurdle the Applicant must, so Mr White contended, overcome the second hurdle and being the fact that he executed the false statutory declaration. I do not think that these contentions are well-founded, more particularly since they seek to confine the issues to a narrow and confined time frame only. I do not think that it is correct to regard the false statutory declaration as a second and somehow different hurdle. The false statutory declaration was of course serious; in executing it the Applicant committed a serious offence and for which he could be prosecuted. That he did so was reprehensible but in my view the execution of the false statutory declaration did not do more than exacerbate (to a considerable extent) an already untenable situation. The situation became untenable in particular in this context when the property was let out in June 2006. Even assuming that Mr White's analysis was correct (and I do not think it was) the Applicant would not even on that basis overcome the first hurdle. 28 This then is a case in which the grant of discretionary relief would (as was the case in Gomez-Martinez) transgress the boundary to which French J. referred in Swift's case. The penalty of 20 percent imposed is in all the circumstances, if anything, generous and should not be disturbed. (In Gomez-Martinez the penalty which was affirmed was 30 percent). As regards the FHP Concession the Respondent remitted the interest charge which had been imposed, and that act of remission of the interest was also generous. But there is no basis for any alteration to the decision as regards the FHP Concession proper. 29 Accordingly the decisions under review are affirmed.