CITATION: Deverich v Chief Commissioner of State Revenue [2010] NSWADT 268 DIVISION: Revenue Division APPLICANT James Deverich PARTIES: RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 096125 HEARING DATES: 18 October 2010 SUBMISSIONS CLOSED: 18 October 2010 DATE OF DECISION: 11 November 2010 BEFORE: Verick A - Judicial Member CATCHWORDS: First Home Grant – residence requirement First Home Owner Grant Act 2000 LEGISLATION CITED : Duties Act 1997 Administrative Decisions Tribunal Act 1997 Taxation Administration Act 1996 Simpson v Chief Commissioner of State Revenue [2009] NSWADT 55 Greig v Chief Commissioner of State Revenue [2006] NSWADT 20 Cameron v Chief Commissioner of State Revenue [2009] NSWADT 64 Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26 Sobhani v Chief Commissioner of State Revenue [2009] NSWADT 198 Giris v Federal Commissioner of Taxation (1969) 119 CLR 365 CASES CITED: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 60 ALR 509 CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384 Deputy Commissioner of Taxation v Clark [2003] NSWCA 91 Chief Commissioner of State Revenue v Pacific General Securities Ltd & Finmore Holdings Pty Ltd (No 2) (RD) [2005] NSWADTAP 54 Federal Commissioner of Taxation v Swift (1989) 18 ALD 679 Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3KB 699 Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 Trust Co of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21 APPLICANT In person REPRESENTATION: RESPONDENT A Gerrard, solicitor ORDERS: (1)The decision made by the Chief Commissioner on 10 July 2009 to reverse his decision to make the First Home Owner Grant and issue an assessment requiring the repayment of the First Home Grant is affirmed. The penalty of $1,400 included in the assessment is fully remitted (2)The decision made by the Chief Commissioner on 10 July 2009 to re-assess the applicant to mortgage and transfer duty with interest is affirmed. REASONS FOR DECISION Introduction 1 The applicant is the registered proprietor of a home unit situated at Marsfield, New South Wales ("the property"). He purchased the property on 17 November 2007 and settlement occurred on 28 November 2007. 2 The applicant applied for and received a $7,000 first home grant under the First Home Owner Grant Act 2000 ("the FHOG Act") to assist him to purchase the property. By virtue of the First Home Plus Concession scheme ("the FHP Concession") under the Duties Act 1997 ("the Duties Act"), no duty was paid by the applicant on the transfer or mortgage of the property. 3 On 10 July 2009, following an investigation, the respondent formed the view that the applicant had failed to comply with the "residence requirement" under both the FHOG and Duties Acts. 4 On 10 July 2009, the respondent proceeded to recall the grant under s 45 of the FHOG Act and issued an assessment to recover the $7,000 grant (with a penalty of $1,400). The respondent also proceeded to reverse his decision to offer the applicant the FHP Concession and issued on 10 July 2009 under s 9 of the Taxation Administration Act 1996 ("the TA Act") an assessment to recover the duties ($12,592) payable on the transfer and the mortgage of the property with interest of $1,119.49 at the market plus premium rates. The respondent made the decisions on the basis that the applicant did not comply with the "residence requirement" under the FHOG and Duties Acts to occupy the property as his principal place of residence for a continuous period of at least 6 months starting within 12 months after completion of the agreement to purchase the property. 5 On 18 August 2009, the applicant objected to both the assessments. 6 On 12 October 2009, the respondent disallowed the applicant's objection. 7 On 9 December 2009, the applicant filed an application at the Tribunal for a review of the decisions made by the respondent on 10 July 2009. Factual Background 8 The general facts were not in dispute and were as follows. 9 At the time the applicant purchased the property, the property was the subject of a tenancy lease. The tenant was paying $340 per week rent. 10 The tenancy lease expired on 25 August 2008. Between the 25 August 2008 and 27 April 2009, the tenant continued to stay at the property but under special arrangements that allowed the applicant to use one room. Under the arrangements the tenant was only required to pay half the rent during the period. 11 On 28 March 2009, the tenant entered into a new residential tenancy agreement (lease) with the applicant, which commenced on 27 April 2009 at a weekly rent of $350. 12 The property has remained rented to the tenant. Evidence 13 In addition to the documents produced under s 58 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act"), the respondent also produced a bundle of other documents as evidence. The bundle included the application for the grant, relevant documents produced under summons by the applicant's employer and documents produced under summons by the Department of Immigration and Citizenship as to the applicant's arrival and departure details. 14 The applicant gave evidence and was cross-examined by counsel for the respondent. 15 The applicant's evidence was that he began his career in the hotel industry in 2002 and, until 2005, he was the front desk manager of a leading international hotel in Sydney. In 2006, he was given a further two-year contract as a manager but with additional duties requiring him to travel to help new hotels in the group he was employed by to set up front desk management and the necessary software to deal with the management. In 2007, he was promoted as regional systems manager and employed on a permanent basis. His duties required extensive travel: 4-6 weeks away at a time with a week back in Australia. Between 11 August 2008 and 29 March 2009, he was in Australia for 38 days and 215 days overseas at work destinations. 16 In cross examination the applicant admitted that on 1 July 2009, he sent an email to an officer working for the respondent in which he indicated that he had not physically resided at the property. 17 The applicant confirmed that he had not placed any furniture or personal belongings at the property at any time including the period 25 August 2008 to 27 April 2009. The applicant also confirmed that he might have stayed at the property in total some 6 days and when he stayed at the property he slept on the floor. 18 The applicant also produced a friend and a former work colleague, In Yong Jee, as a witness. His evidence was that he had given the applicant a lift in his car on two occasions to the property. He could not remember the exact dates. Relevant Legislative Provisions FHOG ACT 19 Historically, the FHOG Act was introduced to encourage and assist home ownership and to offset the effect of the Goods and Services Tax on the acquisition of a first home. The scheme has been continued to assist first home buyers to purchase or build their first homes. 20 The entitlement requirements for a grant are set out in s 7 (1) of the FHOG Act. At the relevant time s 7 was as follows: " 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." 21 In the applicant's case, the "eligible transaction" was the contract for the purchase of the property in terms of s 13(1)(a) and was completed under s 13(5)(a) of the FHOG Act when the applicant was entitled to possession of the property. 22 The eligibility criteria is set out in Division 2 of Part 2 of the FHOG Act, which requires an applicant to satisfy 5 "Eligibility Criteria" to obtain a grant. For the present purposes, the relevant eligibility criterion at issue was the fifth criterion set out in s 12(1) of the FHOG Act. There are various historical versions of this provision, the version that applies in this matter is as follows: "12 Criterion 5—Residence requirement (1) An applicant for a first home owner grant must; (a) commence occupation of the home to which the application relates as the applicant's principal place of residence within 12 months after completion of the eligible transaction or the period approved by the Chief Commissioner under this section, and (b) occupy the home as a principal place of residence for a continuous period of at least 6 months or the period approved by the Chief Commissioner under this section. (2) This requirement is referred to in this Act as the residence requirement . (3) The Chief Commissioner may, if satisfied there are good reasons to do so, do either or both of the following: (a) approve the commencement of occupation by the applicant of the home to which the application relates as a principal place of residence more than 12 months after completion of the eligible transaction, (b) approve the occupation of the home as a principal place of residence for a period of less than 6 months. (4) The Chief Commissioner may, if satisfied there are good reasons to do so, exempt an applicant from the residence requirement. (5) An approval or exemption under this section may be given by the Chief Commissioner at any time, even if the period of 12 months after completion of the eligible transaction has already expired or the applicant's occupation of the home as a principal place of residence has already ceased. (6) 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." 23 Subject to certain conditions, a grant can be paid under s 20 of the FHOG Act in advance in anticipation of the residence requirement. 24 Section 23 of the FHOG Act gives the Chief Commissioner power to vary or reverse a decision made in respect of an application for a grant where he is later satisfied that the decision is incorrect. Power to require repayment and impose penalties is given to the Chief Commissioner under s 45 of the FHOG Act. DUTIES ACT 25 In tandem with the grant scheme, the government also introduced the First Home Plus Concession scheme under the Duties Act. Section 69 of the Duties Act sets out the scheme 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." 26 Under s 70 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. 27 Section 74 deals with eligible agreements of transfers and restricts the concession to agreements or transfers for the acquisition of a first home or the acquisition of a vacant land intended to be used as the site of the first home. Under s 80 of the Duties Act, no duty is chargeable on an agreement or transfer of a dwelling valued up to $500,000 or $300,000 in the case of a vacant block of residential land if the application concerning an eligible agreement or transfer is approved by the Chief Commissioner. 28 An applicant under the First Home Plus Concession scheme must comply with s 76 of the Duties 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. (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 other purchaser or purchasers 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) (Repealed)" TA ACT 29 In reversing his decision to offer the applicant the First Home Plus concession under the Duties Act, the respondent included in the assessment interest at the market plus premium rates under the Taxation Administration Act 1996 ("the TA Act"). 30 The relevant interest provisions are as follows: " 21 Interest in respect of tax defaults (1) If a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate from time to time applying under this Division. … 22 Interest rate (1) The interest rate is the sum of: (a) the market rate component, and (b) the premium component. (2) The market rate component is: (a) unless an order is in force under paragraph (b), the Bank Accepted Bill rate rounded to the second decimal place (rounding 0.005 upwards), or (b) the rate specified for the time being by order of the Minister published in the Gazette. (3) The premium component is 8% per annum. (4) In this section, the Bank Accepted Bill rate in respect of any day is the yield rate for 90-day Bank Accepted Bills published by the Reserve Bank for the month of May in the financial year preceding the financial year in which the day occurs. … 25 Remission of interest The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount." Submissions 31 The applicant's case as set out in his written submissions was that: "The travel dates from the department of immigration show I was unable to physically reside at the property until October 2 nd 2008. Majority of the trips out were work related and one trip was partially a holiday. Out of the above times I returned to Australia I was only able to use the property 3 times. 2-October > 7 October 2008 26-October > 2-Nov 2008 20-Dec 2008 > 22-Dec 2008 Each of the periods in October I spent some time at least 50% visiting with family as is natural when you consider the time I spend away for work and in December I spent close to 10 days in Wagga over Christmas with family. Added together that time spent in the apartment would be less than 12 days in the 6 month period in question. Seems a small number but as holidays and business trips are not mentioned in the grant the period of occupation should be considered as from 25/08/08 the date the tenancy agreement was terminated with the Tennant ( sic ) … this is well within the timeframe ( sic ) occupy the property and meet the residence requirement of the grant." 32 The applicant also placed reliance on the decisions in Simpson v Chief Commissioner of State Revenue [2009] NSWADT and Greig v Chief Commissioner of State Revenue [2006] NSWADT 20. The applicant distinguished his case from the decision in Simpson on the grounds that, unlike Simpson, he did not establish a permanent place of residence anywhere else. And that the applicant's case was different from Greig because there was evidence which supported his assertion that he had occupied the grant property. 33 Mr Gerard for the respondent in his submissions first directed the Tribunal's attention to the inconsistency in the applicant's factual case. It was submitted that in the applicant's email sent to an officer on 1 July 2009 the applicant stated "that he never physically resided in the grant property". Before the Tribunal in his evidence and submissions the applicant claimed that he spent some days ranging from 6 to less than 12 as "physically residing in the property". 34 It was further submitted that, notwithstanding the claim by the applicant of spending a few days at the grant property, "the Tribunal, on the evidence, could not be satisfied to the required standard that the applicant ever physically occupied and resided in the grant property as his principal place of residence". Mr Gerard pointed to various matters that suggested that the applicant did not treat the grant property as his principal place of residence. Records produced by the Department of Immigration and Citizenship reveal that the applicant completed "Incoming Passenger Card" on four occasions during the period 25 August 2008 and 27 April 2009 in which he declared his intended address whilst in Australia as his mother's address in Turramurra. In addition, in the Roads and Traffic Authority records since June 2007 to the present, in his income tax returns for the 2008 and 2009 tax years and in the lease with the tenant, the Turramurra address was given as his address. 35 Further, it was submitted that the applicant did not, in any case, satisfy the required "continuous 6 month occupation of the grant property as his principal place of residence as required by s. 12(1) of the FHOG Act and s.76(1) of the Duties Act" - "58 The Chief Commissioner submits that even if the Tribunal accepts that the applicant physically resided in the grant property for 'less than 12 days' in the period 25 August 2008 to 27 April 2009, the applicant nevertheless does not satisfy the requirements of ss.12(1) and 76(1). 59 Section 12(1) and s.76(1) require the applicant to establish that he physically resided in the grant property for a continuous period of at least 6 months. Additionally those sections require the applicant to establish that the property was occupied during the period as his PPR: see Cameron v Chief Commissioner of State Revenue [2009] NSWADT 64 at [41] (" Cameron "). 60 The Chief Commissioner submits that the applicant's occupation of the property, firstly, was not physical occupation/residency for a continuous period of 6 months as required and secondly, the nature, extent and circumstances of this occupation (if accepted) was such that it is not sufficient to be considered occupation as a PPR. 61 Properly characterised, the applicant's occupation of the grant property was of a transient and temporary nature and did not have any requisite degree of permanence to it such it could be considered his PPR." 36 Finally, it was submitted by Mr Gerard that, in the circumstances of this case, there are no grounds to exercise "the discretionary power in both Acts to approve a shorter period of occupation (s.12(3)(b) FHOG Act & s.76(2)(a) Duties Act) or exempt the applicant from the residence requirement (s.12(4) FHOG Act & s.76(2)(b) Duties Act)". This submission was expanded as follows: "84 Section 12(3)(b) and s.12(4) of the FHOG Act and s.76(2)(a) and (b) of the Duties Act confer on the Chief Commissioner a discretion to exempt the applicant from the residence requirement or approve a shorter period of occupation if the Chief Commissioner (ie, the Tribunal) is satisfied that "there are good reasons to do so". 85 The applicant has not directly sought the exercise of the discretion, or outlined the "good reasons" that would go to the exercise of the discretions. … 89 In Sobhani v Chief Commissioner of State Revenue [2009] NSWADT 198 (" Sobhani ") Judicial Member Verick stated, in the context of the relevant discretions, the following: "The discretion is intended to allow the grant to be retained under the FHOG Act and the FHP Concession to apply under the Duties Act in circumstances where the applicant had a real bona fide intention to occupy and use the home as his or her principal place of residence, but failed to do so due to a change in circumstances after the purchase of the home. Generally speaking, an acceptable circumstance would be one outside the control of the applicant. " 90 In the Chief Commissioner's submission the discretions may be exercised in favour of an applicant, where a change in circumstances after the purchase of the home or application for the grant prevented, in a causal sense, the applicant from meeting the mandatory residence requirements. The discretions are a relieving power designed to assist applicants who have genuinely been caught out by a circumstance that arose after their purchase of the home/application for the grants and one, which was beyond their personal control. 91 It is the case though that the FHOG Act and Duties Act do not set out any express criteria, which specify what may constitute 'good reasons' for the purposes of the discretionary power. In the absence of any express conditions governing the exercise of the discretion in s. 12 and s. 76, the decision-maker (ie, 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 Giris v Federal Commissioner of Taxation (1969) 119 CLR 365, at 384; 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 see also Spigelman CJ stated in Deputy Commissioner of Taxation v Clark [2003] NSWCA 91 ("Clark"), at para [115]. 92 The discretionary powers in s. 12 and s. 76 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. 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 threshold beyond which it would defeat the primary object of the legislation." 93 In the context, the discretionary power in s. 12 and s. 76 is incidental to the overriding objective of the FHOG Act and Duties Act and the requirements stipulated in the legislation which give effect to that objective, in particular, the residence requirement in s. 12(1) and s. 76(1)." Reasons and Decision 37 The essential issue in dispute was whether the applicant satisfied the residence requirement under s 2(1) of the FHOG Act and s 76 of the Duties Act. Under both Acts, the applicant was required to occupy the grant property as his principal place of residence for a continuous period of 6 months, commencing within 12 months after the settlement date. A further issue was whether the Tribunal should exercise the discretion under s 12(3)(b) and s12(4) of the FHOG Act and s 76(2)(a) of the Duties Act to modify the residence requirement by approving a shorter period of occupation or to exempt the applicant from the requirement to comply with the residence requirement. 38 The FHOG Act and the Duties Act do not provide any technical or legal meaning for the expression "principal place of residence" and, accordingly, the expression has its ordinary meaning. A person's place of residence is usually understood as "the place where he eats, drinks and sleeps" (per Ridley J in Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706). The use of the term "principal" in the expression suggests that a person may use and occupy more than one residence but that the exemption is only available for the principal place of residence of the person. 39 In ascertaining whether a particular residence of a person is the principal place of residence of that person, it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of use and occupation of the residence in each case. The onus to establish one's principal place of residence is usually discharged on the basis of various matters. It is important to note, as observed by the Victorian Civil and Administrative Tribunal in Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 that: "… while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters …One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house… Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases…" 40 Other indicia of matters would include evidence of an applicant's use of the address of the property as the residential address for purposes of his or her mail, driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills. 41 In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 the Appeal Panel of the Tribunal agreed that "to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor occupation for any other reason". The Appeal Panel also held that "the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue". (Also see Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26). 42 The FHOG and Duties Acts require more than just acquisition of a property and using the property as a place to sleep on a few occasions during the period of six months. The onus is on the applicant to demonstrate that the grant property is acquired and occupied as the applicant's principal place of residence. 43 The applicant only used the place to sleep on about six occasions during the period and all matters that are performed to make a place a residence were carried out elsewhere. His own evidence was that he did not place any furniture or personal belongings at the grant property and that on the occasions he slept there, he slept on the floor. His absences on work related trips would have been viewed differently if, in fact, he had established the grant property as his principal place of residence during the period he was required to do so. The evidence is clear that he attempted to satisfy the residence requirement in a peculiar manner. He entered into an arrangement with the tenant to allow him to use a room during the relevant period. He did not have control of the whole grant property at any time and during the relevant period the tenant continued to occupy and use the property as her place of residence. 44 It seems to me that the applicant did not do enough to establish that the property was his principal place of residence during the period to bring himself within the terms of the two Acts. As observed by the Appeal Panel in Ferrington "a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor occupation for any other reason". In this matter the occupation of a room at the grant property on about six occasions was an attempt to artificially satisfy the residence requirement. 45 The relevant provisions also require that, to satisfy the residence test, an applicant has to occupy the grant property for a continuous period of six months. This issue was fully considered by the Tribunal in Cameron and requires the applicant to physically occupy the grant property during the period of six months. In this matter, the evidence is clear that the applicant merely occupied the property for a few days. The applicant also fails on this ground to retain the grant and the First Home Plus Concession. 46 Under those circumstances, the respondent was entitled to recall the grant and also withdraw the concession given to the applicant pursuant to the First Home Plus scheme. 47 The issue that remains is whether, against the factual background, the applicant was entitled under s 12(3)(b) and s 12(4) of the FHOG Act and s 76(2) of the Duties Act, respectively, to a shorter period of occupation to comply with the residence requirement or exemption from the residence requirement. These provisions give the respondent discretion, if satisfied there are good reasons to do so, to do either or both of the above. 48 The application of the discretion under these provisions has been fully considered by the respondent in his submissions. The Tribunal agrees with those submissions. In this matter the applicant did not seek to establish the required "good reasons" for the discretion to be exercised in this matter. I think the discretion should be considered in cases where there is a bona fide attempt by an applicant to establish his or her first home and some impediment beyond the control of the applicant prevents the occupation of the property for a continuous period of six months. The discretion can be exercised at any time. But the Tribunal is entitled to consider the actual use and occupation of the property during the period of ownership. In this matter, the applicant was aware at the time he made the application for the grant that he would not, because of the nature of his employment, satisfy the required residence test. He has never occupied the property as his principal place of residence. It has been and remains let. The only inference that can be made is that he purchased the grant property as an investment property to earn rental income and acquire real estate. 49 The applicant failed to establish any "good reasons" for the discretion to be exercised. The Tribunal is also unable to find any "good reasons" to exercise the discretion in favour of the applicant. 50 In those circumstances, the respondent was entitled to refuse to exercise the discretion to exempt or reduce the required period. If, on the other hand, the discretionary relief had been given, the respondent would have clearly "transgressed" the threshold fixed to achieve the primary objective of the relevant legislation. The primary objective of the relevant provisions is to assist applicants resident in New South Wales to acquire their first home and not to purchase their first investment property. The "residence requirement" ensures that the property is used and occupied as the principal place of residence by an applicant getting a grant and the First Home Plus scheme duty concession. In this matter, when the grant was sought it was not for a first home but an investment property. 51 As the applicant failed to comply with the residence requirement, s 20(3)(b) of the FHOG Act required the applicant to repay the grant to the respondent within 14 days from 10 July 2009. Further, as the respondent reversed the decision under which the grant was made, the respondent, pursuant to the powers found in s 45(1)(b) of the FHOG Act, was entitled to demand repayment of the grant. In this matter, the respondent has issued an assessment. In addition, the respondent had the power under s 45(3) to impose a penalty for failure to comply with the residence requirement up to the full amount of the grant. The respondent imposed a penalty of 20 percent in this matter. At the hearing, the respondent agreed that there was some confusion in the correspondence to the applicant as to the date when the grant had to be repaid. The respondent also indicated that in those circumstances there were grounds for the remission of the penalty in this matter. Accordingly, the 20 percent penalty is remitted in this matter. 52 The matter that remains is the imposition of interest in the assessment to recover duty payable on the transfer and mortgage of the property. 53 Section 21(1) in Part 5 of the TA Act provides that if a "tax default" occurs, the taxpayer is liable to pay interest on the amount of tax unpaid calculated on a daily basis from the end of the last day when the payment was due until the day upon which the outstanding tax is paid. In this matter, the failure by the applicant to pay the relevant duty on the transfer and mortgage within 14 days after the end of the period the applicant was allowed to comply with the residence requirement was a "tax default" in terms of the definition of "tax default" found in s 3 of the TA Act. The term "tax" is defined in s 3 of the TA Act to include any duty payable under a taxation law. 54 The applicable interest rate consists of a variable market rate component and a premium rate component. The market rate component fluctuates and is connected to an external rate, the Reserve Bank's Accepted Bill rate. The premium rate component is fixed by s 22(3) of the TA Act at 8 per cent. In this matter, the respondent included both the market rate interest component and the premium rate component in the assessment issued to the applicant to recover the duty payable on the relevant transfer and mortgage. 55 The market rate component, as was pointed out by the Appeal Panel of the Tribunal in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19, "is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due … otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time". 56 The Chief Commissioner is given discretion by s 25 of the TA Act, "in such circumstances as the Chief Commissioner considers appropriate", to remit the market rate component or the premium rate component or both by any amount. 57 In Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21, the Tribunal indicated in what circumstances the discretion should be exercised to remit the market rate interest component as follows: "27 In cases where an amount of interest is imposed by the application of the market rate, only exceptional circumstances would justify any remission. The narrow category of circumstances would include cases where the 'tax default' is entirely due to a fault of the Chief Commissioner. Other circumstances would include situations completely out of the control of the taxpayer, such as postal strikes, serious illness of the taxpayer and natural disasters (bush fires, floods and earthquakes)." 58 In this matter, there were no special circumstances before the Tribunal to warrant remission of the market rate component. 59 In the case of the premium rate component, it would depend on the level of culpability and general behaviour of the taxpayer. In this matter, the applicant did not occupy the grant property as his principal place of residence, did not inform the respondent that he had not complied with the residence requirement, made some inconsistent statements and has used the property as an investment property. When all the circumstances are taken into account, it would seem to me that the respondent was entitled to include the premium component of interest in the assessment issued to the applicant to recover the outstanding duties. 60 Accordingly, the decisions requiring the applicant to repay the grant and to revoke the First Home Plus Concession are affirmed. Order (1) The decision made by the Chief Commissioner on 10 July 2009 to reverse his decision to make the First Home Owner Grant and issue an assessment requiring the repayment of the First Home Owner Grant is affirmed. The penalty of $1,400 included in the assessment is fully remitted. (2) The decision made by the Chief Commissioner on 10 July 2009 to re-assess the applicant to mortgage and transfer duty with interest is affirmed. 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.