Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Mohamed v Chief Commissioner of State Revenue [2012] NSWADT 169 Hearing dates: 11 and 12 April 2012; final submissions received 4 May 2012 Decision date: 15 August 2012 Jurisdiction: Revenue Division Before: S Frost, Judicial Member Decision: Respondent's decisions, seeking to recover first home owner grant and additional duty, are revoked. Catchwords: First home owner grant - First Home Plus Concession Scheme - residence requirement - property occupied as principal place of residence Legislation Cited: First Home Owner Grant Act 2000 Duties Act 1997 Taxation Administration Act 1996 Category: Principal judgment Parties: Shaden Mohamed (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Applicant in person Mr A Stafford (Respondent) Mr A Musgrave, Crown Solicitor's Office (Respondent) File Number(s): 116046 Reasons for decision 1REVENUE DIVISION (S FROST, JUDICIAL MEMBER): The Applicant, Shaden Mohamed, purchased a home in the Sydney suburb of Hurstville in 2005. It was her first home. She received a first home owner grant (FHOG) of $7,000. She also received the benefit of a duty reduction under the First Home Plus Concession Scheme provided to first home buyers by the Duties Act 1997. 2There is a residence requirement under both schemes. The requirement is that the home must be occupied as the purchaser's principal place of residence for a continuous period of at least six months, and that period of occupation must start within 12 months after completion of the purchase. 3Ms Mohamed completed the purchase of the home in October 2005. Therefore, to retain her FHOG and the continuing benefit of the duty reduction, she had to start to occupy the home as her principal place of residence by October 2006. The latest date on which she could finish her six months of continuous qualifying occupation was April 2007. 4But it was very much later than that - in July 2010 - that the Commissioner notified Ms Mohamed that he was commencing an investigation into whether she had complied with the residence requirement. He was not satisfied with what he found in that investigation. In August 2010 he decided that she had not satisfied the residence requirement, and he took action to claw back the FHOG, plus interest, and to have her pay the additional duty. She objected, but the Commissioner disallowed her objection. 5It is now for the Tribunal to decide whether she can retain the FHOG, and whether she is liable to pay the additional duty. The legislation and its consequences 6The residence requirement is found in s 12(1) and (1B) of the First Home Owner Grant Act 2000 and s 76(1) of the Duties Act 1997. I will not set out the provisions. I have already described what they say: see [2] above. There is nothing difficult or ambiguous about the language. There is no dispute about the need for Ms Mohamed to satisfy the requirement. The only dispute is whether she did so. She says she did; the Commissioner disagrees. 7If the Commissioner is right, then Ms Mohamed should have notified the Commissioner of her failure to satisfy the requirement, repaid the grant, and paid the additional duty. In default of that, the Commissioner is empowered to require her to repay the grant, plus penalty: s 45 of the FHOG Act. She will also have to pay the additional duty. 8If Ms Mohamed is right, then the status quo will be preserved, and the decisions of the Commissioner will be revoked. The onus of proof 9Section 28(3) of the First Home Owner Grant Act 2000 and s 100(3) of the Taxation Administration Act 1996provide that Ms Mohamed has the onus of proving her case. Ms Mohamed's version of events 10When she bought the property, Ms Mohamed was living in the family home in the nearby suburb of Blakehurst. She was engaged to be married, and she wanted to move out of the family home to set up for marriage. 11She claims that she moved into the property on about 1 December 2005, a few weeks after settlement, and lived there until 5 July 2006. 12About two weeks after moving in, she travelled overseas. She was overseas for about two months, from 17 December 2005 to 18 February 2006. The purpose of the trip was to visit her fiance and to settle things in preparation for their marriage. It seems that things did not work out and so the engagement was terminated. 13When she came back to Australia she resumed her previous full-time employment with her father. At the same time she was working on her writing skills. She was writing a book, and she spent much of her spare time in that activity. 14She explained that, although the property was her principal place of residence, she did not spend very much time there. She would get up in the morning and travel to her workplace, where she would spend the whole working day. Sometimes in the morning she would go for a run, either around the area where she lived, or around the park opposite where she worked. She would be one of the last workers to leave of an evening, and then she would come home. 15She spent a lot of her time in the evening at the nearby restaurant of a fast food chain. This is where she would do a lot of her writing. 16She did not eat at home very often, or if she did, the food that she ate was not food that she had prepared. She would buy a lot of takeaway food, she would eat out, and sometimes her sister would bring meals to her at work. 17She had a minimal amount of furniture in the home, and she hardly ever entertained friends or family. Her sister, who gave oral evidence, said that she visited the house from time to time but she did not enjoy going there because it was somewhat rundown and there was nothing to do. There was no television and no radio. 18Ms Mohamed would often spend Sundays at the family home for a barbecue. She would also sometimes sleep there, but most nights she spent at her own home. 19The house was about 50 years old when Ms Mohamed bought it. She freely admits that it was in poorer condition than she had originally thought. She had been accustomed to living in a family home which was well appointed and, no doubt, well maintained. It seems that she found her transition to living alone in an older property that was of a far inferior standard particularly difficult. 20The house had "serious" plumbing problems. The bathroom had extensive mould. Ms Mohamed sometimes showered at home, with cold water, but that became unviable as the weather turned cooler. She preferred to shower at work, after running in the park. 21She told the Tribunal that the pipes in the house were rusty and so she did not drink water from them. Instead she drank bottled or filtered water. 22She was given a washing machine but she did not have it installed because of the state of the plumbing. She would take her washing home to be done, or else her sister would sometimes do it for her. She had a fridge but it was not switched on. She did not need to turn it on because she did not cook. She had no need to store dairy products because she is lactose intolerant. 23The house had no air conditioning, no heating and no hot water. Ms Mohamed did not have an electric blanket. She had some small electrical appliances, including a rice cooker and a sandwich press, but she did not use them. Eventually she gave them away. 24In summary, Ms Mohamed paints a picture of ownership and occupation of a property but with a lifestyle that barely makes any physical impact on the property. Nevertheless, she says that it was, from about 1 December 2005 to 5 July 2006, her principal place of residence and that she is entitled to retain the FHOG and to continue to enjoy the duty reduction. The Commissioner's case 25The Commissioner bases his case significantly on a submission that Ms Mohamed's consumption of electricity and water during her claimed period of occupation of the property was so low as to render her version of events highly improbable. In addition, other indicators such as her enrolment on the electoral roll, her address recorded at the Roads and Traffic Authority and her Medicare address records do not support her case. 26The Commissioner points to electricity accounts that show consumption of only 53 kilowatt hours of power over the period 9 December 2005 to 30 June 2006 (roughly congruent with Ms Mohamed's claimed period of occupation of the property), and to water accounts showing that only 2 kilolitres of water were consumed from 16 November 2005 to 21 August 2006. He says that these figures are inconsistent with Ms Mohamed's claimed (albeit modest) usage of the property, and the levels of consumption that must have occurred during her occupation. 27He also notes that Ms Mohamed does not appear ever to have had her residential address recorded as Hurstville with either the electoral authorities or with Medicare. In addition, he draws attention to the fact that in April 2006 she changed her address with the RTA - not to the Hurstville address but to the address of the family home in Blakehurst. While the failure to update the electoral and Medicare address status might be dismissed as a simple lack of diligence, he submits that Ms Mohamed has given "no credible explanation" as to why she would inform the RTA that she was living at an address that she says was not her place of residence at the time. Analysis 28One of the problems with this case is that the Commissioner's review of Ms Mohamed's FHOG and duty reduction status was undertaken so long after the event. It was a full four and a half years after the date on which she claims to have moved into the property, when the Commissioner commenced his review of her entitlements. 29By that time Ms Mohamed was living in Cairo, having relocated there in 2009. It is not at all surprising that there will be some shortcomings in her recollection, or that her attempts to reconcile the electricity and water consumption figures will contain some imperfections. 30Both Ms Mohamed and her sister gave sworn evidence that she occupied the Hurstville property as her principal place of residence from December 2005 to July 2006. They explained her lifestyle. They explained how uninviting the property was. They explained that there were few appliances that would have consumed electricity. They explained how, with no hot water, Ms Mohamed's use of the bathroom for showering was infrequent. 31Ms Mohamed herself explained how little time she actually spent in the property. But she also emphasised that she slept there most nights. It was her home. I believe her, and I believe her sister. 32However, despite believing them, I would reject Ms Mohamed's claim if the objective evidence cast sufficient doubt on their version of events as to make it implausible. It does not. 33The electricity consumption is consistent with the lifestyle she has described, in a property with no air conditioning, no heating and no hot water. And as far as the water consumption is concerned, once it is accepted that accounts disclosing 2 kilolitres of water consumption (initial meter reading of 659; final reading of 661) may actually reflect use of virtually 3 kilolitres (if the final reading represents 661.99 and the initial reading represents 659.01), the objective evidence does not undermine Ms Mohamed's claims. The water usage is extremely low, but so it should be, in the circumstances she has described. 34The spreadsheets Ms Mohamed produced to analyse the electricity and water consumption need to be seen for what they are - attempts to demonstrate how her claimed use of the property could fit within the consumption levels, rather than precise, minute-by-minute tracking of flushing the toilet, and filling and boiling the kettle. 35Other discrepancies such as the statement Ms Mohamed made to the bank, when she was planning the purchase of the property, that it would be tenanted rather than owner-occupied, are of no consequence, given that: * she did not appoint a managing agent to arrange for the lease of the property until 5 July 2006, with the first tenancy agreement executed on 19 August 2006; and * the claiming of expenses in relation to the property in the 2006 tax return was an error, a result of a misunderstanding by her tax agent as to the status of the property, subsequently acknowledged by the tax agent (Exhibit R4) and corrected. 36Finally, her failure to update her address to reflect where she was living carries far more significance for the Commissioner than it does for me. It is not sufficient to displace my finding that the Hurstville address was the property she occupied, as her principal place of residence, continuously between December 2005 and July 2006. 37For completeness, I have taken into account the fact that, within Ms Mohamed's period of occupation of the property of a little over seven months, she was overseas for two. The Commissioner, properly, did not base his case on a proposition that such an absence was in itself enough to cause her to fail to meet the residence requirements, but did submit that it was a factor relevant in the overall determination. I agree, but do not regard the length and nature of her absence as negating her entitlement. Conclusion and decision 38For the reasons set out above, the decisions of the Commissioner, seeking to reclaim the FHOG and to recover extra duty, are revoked. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 August 2012