Choudhury & Anor v Chief Commissioner of State Revenue [2007] NSWADT 150

CITATION: Choudhury & Anor v Chief Commissioner of State Revenue [2007] NSWADT 150

DIVISION: Revenue Division

APPLICANTS Ashraf Ali Choudhury PARTIES: Rokeya Gouhar Akhand RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 076032

HEARING DATES: 28 June 2007

SUBMISSIONS CLOSED: 28 June 2007

DATE OF DECISION: 25 July 2007

BEFORE: Handley R - Acting Deputy President

CATCHWORDS: Duties Act - First Home Plus Scheme- eligible agreements or transfers

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Duties Act 1997 Taxation Administration Act 1996

BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 CASES CITED: Commissioner of Taxation v Ryan (2000) 201 CLR 109 McTackett v Chief Commissioner of State Revenue [2003] NSWADT 154 Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271

APPLICANTS In person REPRESENTATION: RESPONDENT H El-Hage, solicitor advocate

ORDERS: The decision of the Chief Commissioner of State Revenue dated 31 January 2007 is affirmed.

REASONS FOR DECISION 1 Mr Choudhury and Ms Akhand ('the Applicants') seek the review of a decision made by the Chief Commissioner of State Revenue ('the Commissioner') reversing a decision to grant a First Home Plus Scheme ('FHPS') concession under the Duties Act 1997 ('the Act'), and requiring them to pay stamp duty of $5,492. Background 2 On 15 February 2003, the Applicants contracted to purchase a property at 7 Warwick Street, Minto as joint tenants. On 6 March 2003, the Applicants applied for a FHPS concession in respect of the payment of duty on the transfer of the property. In the application form, Mr Choudhury deleted the printed statement "I have not previously received an exemption or concession under the scheme". Both Applicants declared that they would occupy the property as their principal private residence. The Applicants were granted the FHPS concession and, on 17 March 2003, the Deed of Transfer for the property was stamped "No duty payable". 3 By letter dated 20 September 2006, the Commissioner wrote to the Applicants asking for confirmation that they met the eligibility requirements for the concession. Mr Choudhury provided a statutory declaration sworn on 3 October 2006 stating that he had previously received a FHPS concession for a property he had purchased in his sole name at 1/36-38 Minto Road, Minto, but that his wife, Ms Akhand, had never previously owned any residential property and had never applied for or been granted a FHPS concession. Mr Choudhury also stated that prior to completing the application for the FHPS concession for the transfer of the property at Warwick Street, he had contacted the Office of State Revenue ('OSR'), had explained his and his wife's situation, and had been advised that they were eligible for a concession because his wife had never previously owned a property. 4 On 21 October 2006, the Commissioner reversed the decision to grant the FHPS concession to the Applicants and required repayment of "the full dutiable amount of $8,014.94", including interest of $2,522.94. By letter dated 14 November 2006, Mr Choudhury objected to the Commissioner's decision. He re-iterated that during the purchase of the Warwick Road property, he had been advised by the OSR that he and his wife were eligible for the FHPS concession. 5 On 19 January 2007, the Commissioner disallowed the Applicants' objection on the ground that Mr Choudhury had previously received the FHPS concession for his purchase of the Minto Road property and, therefore, the Applicants were not entitled to the concession for the purchase of the Warwick Road property. Following further representations from Mr Choudhury by phone, the Commissioner agreed to remit the interest payable on the duty. By letter dated 31 January 2007, the Commissioner confirmed the remission of the interest but required the Applicants to pay the duty of $5,492. 6 On 20 February 2007, the Applicants filed an application with the Tribunal for review of the Commissioner's decision together with an application for an urgent stay of the decision. A stay was granted on 23 February 2007, with an order that the Commissioner not take any action for the recovery of the duty outstanding until the application for review had been heard and determined. Relevant Legislation 7 The Act requires the payment of duty on the transfer of dutiable property - in this matter, the Warwick Road property purchased by the Applicants. Part 8, Div 1 of the Act provides for the FHPS concession. Section 69 provides that the FHPS concession from the payment of duty is to assist people acquiring their first home. Section 71 sets out restrictions on eligibility for the concession and stated at the relevant time in March 2003: 71(1) A purchaser or transferee under an agreement or transfer may apply under the scheme, but will be eligible only if the purchaser or transferee has not at any time owned residential property in Australia (either solely or with someone else) that he or she occupied as his or her principal place of residence. (2) If there is more than one purchaser or transferee under an agreement or transfer, they may apply under the scheme, but will be eligible only if at least one of them has not at any time owned residential property in Australia (either solely or with someone else) that he or she occupied as his or her principal place of residence. 8 At the relevant time in March 2003, persons who were "ineligible" to receive the FHPS concession included the following, set out in s 73: 73(3) A purchaser or transferee under an agreement or transfer is not eligible if the purchaser or transferee has previously been a party to an application under the scheme and the application was approved by the Chief Commissioner. (4) If there is more than one purchaser or transferee under the agreement or transfer, the purchasers or transferees are not eligible if any one of them has previously been a party to an application under the scheme and the application was approved by the Chief Commissioner. (5) Despite subsection (4), the Chief Commissioner may determine that the purchasers are eligible if the Chief Commissioner is satisfied that the purchaser who has previously been a party to an application under the scheme that was approved is acquiring an interest in the property that is the subject of the current application solely for the purpose of assisting the other purchaser or purchasers in financing the acquisition. 9 Section 9 of the Taxation Administration Act 1996 permitted the Commissioner to reassess the Applicants' liability for the payment of duty. The Applicants' Submissions 10 Mr Choudhury disputed that the FHPS concession was granted to him and his wife in error. He said that prior to purchasing the Warwick Street property in 2003, he had a discussion with an officer of the OSR in Sydney and was advised that notwithstanding that he had previously owned a property and received a FHPS concession, because his wife had not previously owned any property and had never applied for or received a FHPS concession, they were eligible for the FHPS concession for the purchase of the Warwick Street property. 11 Mr Choudhury said that as a result of the restrictions imposed pursuant to the grant of the concession, he and his wife were required to occupy the property as their principal residence. Had there not been this requirement, they might have treated the property as an investment and let it, and themselves have rented accommodation nearer Mr Choudhury's place of work, with consequent financial benefits. He said the Commissioner has failed to consider the loss of such benefits and the stress that this matter has caused them. 12 Mr Choudhury acknowledged that s 73(5) is not applicable in his and his wife's case, but submitted that s 71(2) and s 73(4) of the Act appear to be contradictory and contended that the Commissioner should have exercised his power under s 71(2) to determine that they were eligible for the concession. He said that given the advice that he received from the OSR, the Commissioner's decision to require payment of the duty was unfair. If he had known that his wife would qualify for the concession were the property to be purchased in her sole name, they might have purchased the property differently. The Commissioner's Submissions 13 Mr El-Hage, for the Commissioner, said there is no dispute that Mr Choudhury had previously received the FHPS concession for the purchase of a property in Minto Road. Therefore, at the time of the Applicants' purchase of the Warwick Road property in March 2003, s 73(4) precluded payment of the FHPS concession to the Applicants. Section 71(2) should not be read in isolation: it must be read in conjunction with s 73. Neither the Commissioner, nor the Tribunal standing in the shoes of the Commissioner, has a discretion to dispense with s 73(4). Section 73(5) does not apply in the Applicants' case because they purchased the property as their own home. 14 Mr El-Hage said the Commissioner does not dispute that, in 2003, the concession was granted to the Applicants in error, and acknowledges the honesty of the Applicants. However, the Commissioner cannot be estopped from administering the Act in accordance with its terms: McTackett v Chief Commissioner of State Revenue [2003] NSWADT 154 ('McTackett'), at par 22 to par 23; see also BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003, at par 111, Commissioner of Taxation v Ryan (2000) 201 CLR 109, at 124, and Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271, at par 11 to par 12. The Commissioner is required by the Act to apply the preclusion contained in s 73(4). 15 Mr El-Hage submitted that the Applicants have failed to demonstrate that the Commissioner has made a mistake of fact or law (McTackett, at par 18) and, therefore, their application must be dismissed. Discussion 16 The issue in this case is whether the Commissioner's decision to require payment of the applicable duty on the Applicants' purchase of their property in Warwick Road, Minto is the correct and preferable decision. As Mr El-Hage pointed out, the Applicants bear the onus of proving their case on the balance of probabilities, and must demonstrate a mistake of fact or law. 17 The Commissioner has acknowledged that Mr Choudhury was given the wrong advice by the OSR when he enquired about his and his wife's eligibility for a FHPS concession in respect of the purchase of their property in Warwick Road. In recognition of this, the Commissioner has waived the payment of interest on the applicable duty. 18 The Commissioner is empowered by s 9 of the Taxation Administration Act 1996 to make a reassessment of a taxpayer's tax liability. In the Applicants' case, the Commissioner reassessed their liability to duty on the purchase of their property after receiving a statutory declaration from Mr Choudhury stating that he had previously owned another property in Minto in respect of which he had received a FHPS concession. The Commissioner determined that the Applicants were ineligible for the FHPS concession pursuant to s 73(4) of the Act. 19 I agree with the Commissioner's submission that s 71(2) must be read in conjunction with s 73(4). The provisions of legislation must be interpreted in the context in which they operate and should not be viewed in isolation. Thus, while I am sympathetic to the Applicants' predicament in being faced with payment of duty of $5,492, and noting that they acted and relied on advice received from the OSR, the Applicants were undoubtedly ineligible from receiving the FHPS concession by reason of Mr Choudhury's prior ownership of another property and receipt of the FHPS concession in respect of the purchase of that property. It is also clear from the previous decisions cited by Mr El-Hage and referred to in par 14 above, that the Commissioner cannot be estopped from administering the Act in accordance with its terms and from reversing the previous assessment of the Applicants' liability to duty on the purchase of their Warwick Road property. 20 Thus, the Applicants have been unable to demonstrate any basis in law for overturning the Commissioner's decision, which must, therefore, be affirmed. I note that it is open to the Applicants to apply to the Commissioner for the payment of the applicable duty by instalments. In the particular circumstances of this case, where the Applicants' honesty in their dealings with the OSR has not in any way been impugned, such an application to the Commissioner is likely to be received sympathetically. Decision 21 The decision of the Chief Commissioner of State Revenue dated 31 January 2007 is affirmed.