Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Dyer v Chief Commissioner of State Revenue [2012] NSWADT 262 Hearing dates: 2 November 2012 Decision date: 12 December 2012 Jurisdiction: Revenue Division Before: N S Isenberg, Judicial Member Decision: 1 The decision of the Respondent to reverse his previous decision to make a grant under the First Home Owner Grant Act 2000 is affirmed and his decision to require payment of a penalty of $2,800 being 20% of the grant is affirmed. 2. The decision of the Respondent to re-assess the FHP duty exemption and require payment of interest calculated in accordance with section 22 of the Taxation Administration Act 1996 is affirmed Catchwords: Administrative Decisions Tribunal Act 1997 Duties Act 1997 Federal Commissioner of Taxation v Swift 89 ATC 5101 First Home Owner Grant (New Home) Act 2000 State Revenue Legislation Further Amendment Act 2005 Taxation Administration Act 1996 Legislation Cited: Administrative Decisions Tribunal Act 1997 Duties Act 1997 Federal Commissioner of Taxation v Swift 89 ATC 5101 First Home Owner Grant (New Home) Act 2000 State Revenue Legislation Further Amendment Act 2005 Taxation Administration Act 1996 Cases Cited: Cullen v The Chief Commissioner of State Revenue [2007] NSWADT 121 Deputy Commissioner of Taxation v Clark [2003] NSWCA 91 Knight and anor v Chief Commissioner of State Revenue [2008] NSWADT 83 Philpot v Chief Commissioner of State Revenue [2007] NSWADT 243 Philpot v the Chief Commissioner of State Revenue [2008] NSWADTAP 18 Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21 Zakariya -v- Chief Commissioner Office of State Revenue [2003] NSWADT 26 Category: Principal judgment Parties: Warrick John Dyer (Applicant) Chief Commissioner of State Revenue (Respondent) File Number(s): 116098 REASONS FOR DECISION Background 1On 30 September 2009 Mr Warrick John Dyer ("the Applicant") exchanged contracts to purchase a residential strata unit at Ocean Drive, Lake Cathie ("the property") for the sum of $223,000. The purchase was settled on 16 November 2009. On 20 November 2009 the Applicant signed an Application for First Home Owner Grant ("the Grant Application") which was forwarded to the Respondent by the Applicant's solicitors under cover of a letter dated 19 January 2010. Attached to the Grant Application was a copy of the front page of the relevant purchase contract which page was marked "Duty: Exempt" with a stamp "Office of State Revenue NSW Treasury" in accordance with the First Home Plus scheme referred to at paragraph 18 below. 2In accordance with the Grant Application and in anticipation of the Applicant complying with a statutory requirement to occupy the property as his principal place of residence for a continuous period of at least six months commencing within 12 months of completion of the purchase transaction, the Respondent paid the grant of $14,000 to the Applicant, 3Following an investigation in 2011 the Commissioner decided to reverse both the decision to pay the grant and the decision to give the Applicant the First Home Plus duty exemption on the grounds that the Applicant had not complied with the statutory residence requirement. 4The Respondent issued a Duties Notice of Assessment dated 21 June 2011 requiring payment of the previously exempted stamp duty of $6,305 and interest of $417.77. These amounts were payable by 12 July 2011. 5The Respondent also issued a First Home Owner Grant Assessment Notice dated 21 June 2011 requiring repayment of the $14,000 Grant and payment of a penalty of $2,800, being 20% of the amount of the Grant. These amounts were also payable by 12 July 2011. 6The Applicant does not dispute receipt of the Grant of $14,000 or the Respondent's calculation of stamp duty. 7It is common ground between the parties that at the date of the hearing no repayments or payments have been made by or on behalf of the Applicant in respect of any of the Grant, penalty, stamp duty or interest. 8On about 7 July 2011 the Applicant objected to the above assessments ("the Assessments"). By letter dated 21 October 2011 the Respondent disallowed the objection. Application for review 9The Applicant seeks a review of the Assessments and the disallowance by the Respondent of the objection. Jurisdiction 10Jurisdiction to review the decisions to which objection was made is conferred on the Tribunal by section 28(1) of the First Home Owner Grant Act 2000 ("the Grant Act") and section 96(1) of the Taxation Administration Act 1996 ("the TAA"). Powers of Tribunal on review 11On a review the Tribunal may confirm, vary or reverse the decision of the Respondent and make orders as to costs or otherwise as it thinks fit - section 29(1) of the Grant Act and section 101(1) of the TAA. Onus of proof 12The Applicant has the onus of proving the Applicant's case in a review by the Tribunal -section 28(3) of the Grant Act and section 100 (3) of the TAA. The legislation and its application to the circumstances First Home Owners Grant 13The purpose of the Grant Act is set out in its long title, which at the relevant time, the date of exchange of contracts for the property, was: "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." 14The entitlement to obtain a grant was set out in section 7 which relevantly provided: "7 Entitlement to grant (1) A first home owner grant is payable on an application under this Act if: (a) the Applicant,... 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. (3) Despite subsection (1)(b), a first home owner grant is payable before completion of the relevant eligible transaction, as authorised by section 20." Eligibility criteria 15The eligibility criterion relevant to this dispute is found in section 12 of the Grant Act: "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." Completion of an eligible transaction 16The definition of an eligible transaction and the requirements for completion are set out in section 13 of the Grant Act, the relevant parts of which are: "13 Eligible transactions (1) An eligible transaction is: (a) a contract made on or after 1 July 2000 for the purchase of a home in New South Wales ... (4) The commencement date of an eligible transaction is: (a) in the case of a contract-the date when the contract is made,.. (5) An eligible transaction is completed when: (a) in the case of a contract for the purchase of a home: (i) the purchaser becomes entitled to possession of the home under the contract, and (ii) ...if the purchaser acquires an interest in land under the contract that is registrable under a law of the State-the purchaser's interest is registered under that law, (7) The consideration for an eligible transaction is: (a) in the case of a contract for the purchase of a home-the consideration for the purchase..." Early payment of the grant 17Section 20 of the Grant Act provides that the Respondent may make a conditional payment of the grant prior to compliance with the residence requirement. If the conditions are not met the recipient of the grant must notify the Respondent and repay the grant. Stamp Duty Exemption or Concession 18The purpose of the First Home Plus ("FHP") duty exemption or concession at the relevant date, 30 September 2009, is set out in section 69 of the Duties Act 1997 ("Duties Act"): "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." 19The FHP scheme has a residence requirement in section 76 of the Duties Act which in all relevant respects is identical to the residence requirement for a grant: "76 Residence requirement (1) The home must be occupied by the first home owner... who is 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 a first home owner, or (b) exempt a first home owner from the requirement to comply with the residence requirement. (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." 20It is common ground between the parties that the purchase by the Applicant of the property was an eligible transaction or transfer (for the purpose of both schemes) which was completed shortly after settlement on 16 November 2009 and that if the Applicant had satisfied the residence requirement he would have been eligible for both the Grant and the FHP duty exemption. 21The evidence of the Applicant is that he resided at the property for no more than about 14 days in the period from settlement on 16 November 2009 to 2 November 2012 and for no more than four consecutive days at any one time during that period. It is common ground that the Applicant has not satisfied the residence requirement. Discretion of the Respondent 22Section 12 of the Grant Act provides in part that the Respondent may, if satisfied there are good reasons to do so, vary the residence requirement by either approving the commencement of occupation by the Applicant of the property as a principal place of residence more than 12 months after completion or approve that occupation for a period of less than six months, or exempt an applicant from the residence requirement. 23Similarly, section 76 of the Duties Act provides that the Respondent may, if satisfied there are good reasons to do so, either modify the residence requirement by approving a shorter period of occupation or exempt a first home owner from the requirement to comply with the residence requirement. Issues for the Tribunal 24The substantive issue in dispute is whether or not the Applicant, having failed to comply with the residence requirement, has satisfied the onus of proving that there are good reasons to either vary the residence requirement or to exempt him from complying with the residence requirement. 25If the Applicant does not satisfy the onus, the stamp duty previously exempted is payable and the grant is repayable. In addition it is for the Tribunal to determine the amount, if any, of penalty to be paid by the Applicant in relation to the grant and the interest payable in relation to the unpaid stamp duty. Documents 26The Applicant signed a Bank West document headed "Loan Summary Checklist" dated 1 September 2009 in three places: namely a declaration, item 10 headed "Loan Information", and a page headed "Privacy Statement and Consent to Use Your Information". 27The declaration signed by the Applicant included the words "I/We declare that I/we have read and understood the particulars in this Enquiry and declare that the information provided by me/us is true and correct.." 28The page headed item 10 Loan Information includes a description of the Loan Type as "Home Loan" and the typed words "Loan Purpose" immediately followed by the hand written words "FIRST HOME INVESTMENT". 29The Applicant's given name is misspelled as "Warwick" in several locations in the document including on the line immediately above his signature on the page headed "Privacy Statement and Consent to Use Your Information". 30A second Bank West document headed "Bank West Home Loan Contract" signed by the Applicant and dated 2 October 2009 includes, immediately above the Applicant's signature under the heading Important the words "You should not sign this declaration unless the loan is wholly or predominantly for business or investment purposes." The page immediately before the page containing the Applicant's signature includes the words "PURPOSE OF THE LOAN Personal Investment". 31A third Bank West document headed "Bank West Borrower Bank Copy" containing a declaration signed by the Applicant and dated 2 October 2009 includes in the description of the Applicant's income "Rental" - the address of the property and a gross amount of $10,920 immediately under a description of the Applicant's personal (annual) wages of $39,999. 32The Grant Application signed by the Applicant as sole applicant and dated 20 November 2009 is marked "YES" in relation to the question "Will at least one applicant be occupying the home as their principal place of residence for a continuous period of at least six months commencing within 12 months of completion of the eligible transaction?" 33The Grant Application was forwarded to the Respondent under cover of a letter dated 19 January 2010 by the solicitors acting for the Applicant in relation to the purchase of the property. 34A Medicare history statement dated 23 July 2010 provides details of certain medical services provided to the Applicant's mother. These services include more than 30 medical appointments in 2007, more than 50 appointments in 2008, more than 30 appointments from 1 January 2009 until the date contracts were exchanged on the property on 30 September 2009, more than 10 appointments from 1 October to 31 December 2009 and more than 30 appointments from 1 January to 22 July 2010. 35An Exclusive Management Agency Agreement (Residential) signed by the Applicant on 28 October 2009 as principal / landlord in respect of the property and made with Area 14 Pty Ltd T/As Settlement First National as agent effective from 22 October 2009 authorises the agent to select tenants and enter into tenancy agreements in respect of the property for terms of "26 - 52 weeks" at a weekly rent of $250. At the end of each tenancy agreement the agent is authorised to re-let the property in accordance with the Applicant's instructions. The agreement can be terminated by either party on giving not less than 30 days written notice. 36An Exclusive Management Agency Agreement (Residential) signed by the Applicant on 29 June 2010 as principal / landlord in respect of the property and made with Integrated Solutions Online Pty Ltd T/As Settlement First National as agent effective from 1 July 2010 authorises the agent to select tenants and enter into tenancy agreements in respect of the property for terms of "26 - 52 wk" at a weekly rent of $260. At the end of each tenancy agreement the agent is authorised to re-let the property in accordance with the Applicant's instructions. The agreement can be terminated by either party on giving not less than 30 days written notice. 37Residential tenancy agreements name the Applicant as landlord and various other persons as tenants of the property for the periods: a) 25 November 2009 to 19 May 2010; b) 16 June 2010 to 14 December 2010; and c) 18 December 2010 to 12 June 2011. The Case for the Respondent Repayment of grant and payment of stamp duty 38The grant was paid to the Applicant in accordance with section 20 of the Grant Act. The Applicant failed to occupy the property as his principal place of residence for the required period within the relevant time frame. The Applicant did not notify the Respondent and did not repay the grant within the statutory period. 39The Respondent has a discretionary power in both the Grant Act and the Duties Act to vary the residence requirement or exempt the Applicant from the requirement if satisfied that there are good reasons to do so. 40The phrase "good reasons" is not defined in either Act. Spigelman CJ stated in Deputy Commissioner of Taxation v Clark [2003] NSWCA 91 at [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." 41The Respondent also referred to Cullen v The Chief Commissioner of State Revenue [2007] NSWADT 121 in which JM Seve extracted the following from the Second Reading Speech by the Hon. Michael Costa on the State Revenue Legislation Further Amendment ("SRLFA") Bill 2005 (which became the SRLFA Act 2005) in the NSW Legislative Council on 29 November 2005: ". The bill also clarifies the circumstances in which the Chief Commissioner may exercise certain discretionary powers. Eligibility for the grant includes a residence requirement, which states that the Applicant must occupy the home as his or her principal place of residence for at least six months commencing within 12 months of purchase. The Chief Commissioner is given the power to extend the period of 12 months, to reduce the period of 6 months, or to waive the residence requirement completely. The discretions are intended to allow the grant to be retained in circumstances where the Applicant genuinely intended to occupy 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." 42The Respondent submitted that discretions may be exercised in favour of the Applicant where a change in circumstances after the purchase of the property prevented, in a causal sense, the Applicant from meeting the mandatory residence requirements. The Respondent further submitted that the discretionary power is subject to the overriding legislative objectives (referred to at paragraphs 13 and 18 above). 43The Respondent submitted that the causative reason as to why the Applicant did not meet the residence requirement was his decision to rent the property and this decision was not influenced by any change in his mother's health. 44There are no circumstances, in evidence before the Tribunal which causally prevented the Applicant from meeting the residence requirement and which occurred after the time the Applicant purchased the property and/or applied for the grant and the FHP exemption or concession. Accordingly the Respondent has determined that the circumstances advanced by the Applicant do not constitute "good reasons" sufficient to cause the Respondent to exercise any relevant discretion in favour of the Applicant. Grant Act penalty 45The Respondent submitted that the decision of the Appeal Panel in Philpot v the Chief Commissioner of State Revenue [2008] NSWADTAP 18 ("the Philpot Appeal") at [24] applied principles set out in the decision of Verick JM in Knight and anor v Chief Commissioner of State Revenue [2008] NSWADT 83 to be considered in determining whether a discretionary decision to impose a penalty was the correct and preferable decision. In Knight, the Tribunal stated at [33]: "Another approach to determine the appropriate penalty under section 45 of the FHOG Act is to categorise cases, depending on the level of culpability, where it is relevant for the Commissioner to consider the imposition of penalties. Factors that need to be taken into account to determine the level of culpability would include: (1) the truthfulness of the original statements made by the applicant in his or her application for the grant; (2) the surrounding circumstance including the intention of the applicant in relation to the occupation and use of the property as his or her principal place of residence at the time when seeking the grant; (3) the reasons for failure to comply with conditions of the grant; (4) whether the applicant has occupied the property as his or her principal place of residence; (5) the candour of the applicant in his or her responses to compliance inquiries; and (6) whether the grant been refunded." Imposition of interest 46The Respondent imposed interest on unpaid stamp duty at the aggregate of the market rate and premium rate in accordance with section 22 of the TAA as the failure to pay relevant duty was a tax default as defined in section 3 of the TAA. 47The Respondent submitted that the relevant principle imposing interest at market rate (section 22(2)) was set out in the decision of the Appeal Panel in Chief Commissioner of State Revenue -v- Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 at [60]: "In our view the primary interest rate (the market rate component) 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." In Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21 ("Trust Co of Australia") Judicial Member Verick stated at paragraph 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.", The Respondent submitted that there are no exceptional circumstances involving the Applicant which would justify any remission of the market rate of interest." 48The premium component of the interest rate is a fixed 8% per annum (section 22(3) of the TAA). The Respondent referred to paragraph 25 of Trust Co. of Australia "..the fixed premium rate component is a rate imposed by way of a penalty for the 'tax default' in question. A premium rate of interest is imposed where a 'tax default' is a result of some culpable conduct on the part of the taxpayer.." 49The Respondent submitted it was appropriate to assess the premium rate component interest on the Applicant because: "(1) The Applicant did not comply with the conditions of the FHP Concessions. (2) the Applicant's failure to comply with the residence requirement was as a result of his choice to rent the property out; (3) the Applicant has earned market rent from the property for in excess of 18 months; (4) the Applicant did not inform the Chief Commissioner of his failure to comply with the "residence requirement"; and (5) the tax payable remains outstanding." The case for the Applicant 50The Applicant submits that it was at all relevant times and still is his intention to occupy the property as his principal residence and to obtain employment in the vicinity of the property. The Applicant submits that after he entered into the contract to purchase the property he became aware that his mother's health had substantially deteriorated. He further submits that it was his responsibility to care for his mother and that attending to this responsibility has precluded him occupying the property as his principal residence. Applicant's mother's health 51Early in 2007 the Applicant's mother broke an arm, which was immobilised for over seven months. In November 2008, the arm not having healed adequately, the Applicant's mother was subject to further corrective surgery on the arm which was again immobilised, on this occasion for over six months. 52After each operation the Applicant's mother was reliant on assistance. Nurses helped her and carers visited her 2 to 3 times each week for 1-3 hours. After hours and on weekends both the Applicant and his sister provided extensive assistance to their mother. The Applicant's mother became depressed and over time relied more heavily on assistance from the Applicant and his sister. 53In January 2009 the Applicant's mother was assaulted and by July 2009 her depression increased. She had become fearful for her well-being and sought additional support from the Applicant. 54In November 2009 the Applicant's mother made a statement to the police in relation to the assault and then informed the Applicant and her daughter of details regarding the assault. The Applicant's mother's condition deteriorated further and in January 2010 she was admitted to a medical institution for one month. 55During the first half of 2010 the Applicant's mother's physical and mental condition worsened and her dependence on the Applicant and his sister increased further. 56The Applicant's assistance to his mother, which commenced when he was about 15 years old and has continued to the date of the hearing, included caring for certain of her physical needs, driving her to medical appointments, doing her shopping, cleaning her home, feeding her and being readily available to attend her at her home if she phoned him for support. The assistance increased from early 2007 and after the 2008 operation. The need for assistance intensified in mid 2009 and intensified further in February 2010. 57A significant aspect of the assistance the Applicant provided to his mother was to drive her to medical appointments. The Applicant asserted that his mother was reliant, possibly "heavily reliant", on this assistance as she could not drive herself. The Applicant was unable to assist the Tribunal in relation to the nature of the medical appointments to which he transported his mother nor the number of his mother's numerous medical appointments in which he assisted her. 58The Applicant's first priority for many years has been (and still is) to look after his mother. Nothing was or is more important to the Applicant than this responsibility. 59The Applicant acknowledged that his role as a carer for his mother has always been a challenge. This responsibility has stopped him seeking work near the property and residing there. Employment 60The Applicant was employed at Australian Reptile Park, Gosford from about 2000 until mid 2011 when he obtained employment with Railcorp. The geographical area in which the Applicant works for Railcorp extends from Newcastle to Sutherland and west to Penrith. 61At an unknown date the Applicant sought employment at a Koala Park near the property. The Applicant's evidence was that a position would be available at the Koala Park but it was not available at any particular date and would not become available until the person then employed in the position ceased working at the Koala Park. The Applicant could not assist the Tribunal with any certainty as to when the position may become available. 62The Applicant informed the Tribunal that he could obtain work anywhere (including near the property) but chose not to as his priority was and is to assist his mother. Location of the Applicant and his mother 63During the period from 2000 to the date of the hearing the Applicant lived in several residences including at Wamberal, Castle Cove, Erina, Green Point and Hornsby. 64At all relevant times from 2000 to the date of the hearing the Applicant's mother lived at Hornsby. Appointment of agents and renting the property 65The Applicant stated that the property was rented from 25 November 2009 to 7 June 2010; 16 June 2010 to 14 December 2010; 18 December 2010 to 12 June 2011, and that at the date of the hearing the property was rented. 66The Applicant submitted that the leasing agents for the property were only permitted to rent the property for a term of 26 weeks. Even though the wording of the exclusive agency agreements stated that the agents were permitted to rent the property for a term of 52 weeks the Applicant asserts that the agents had no such power. The Applicant stated that he was very clear on this point. Bank West documents 67The Applicant acknowledged signing the documents referred to in paragraphs 26 to 31 above ("the loan documents"). He stated that the documents were completed by the loan broker to obtain finance for him based on a list of information the finance broker had and assumptions made by the finance broker. 68The Applicant acknowledged that most of the handwritten information in the loan documents in relation to the Applicant's personal affairs and finances was accurate but denied that the content of the documents was based on information provided by the Applicant to the broker. The Applicant stated that the handwriting in the documents, other than his signature, was not his handwriting. 69The Applicant denied that before exchanging contracts to purchase the property he intended to rent the property rather than use it as his own residence. 70The Applicant stated that he did not read all of the loan documents he signed. He was just keen to buy the property. The Applicant did not agree that whenever he signed a document he was asserting that the contents were true unless the document was, in the words of the Applicant, "a statement". He submitted that the detail in the documents was the responsibility of the broker hired to obtain the loan. 71The Applicant submitted that he is 31 years old and it is his turn to "have a life". It was always his intention to move away and to have his mother helped by others. However the assault on his mother and her subsequent increased dependence on him stopped him moving to and residing at the property as he would be too far from his mother to adequately assist her when called on. 72The Applicant submitted that as a result of the crisis suffered by his family, having regard to his mother's medical conditions and his obligation to take care of her, he has good reasons for the relevant discretions to be exercised in his favour so as to exempt him from complying with the residence requirements of both the Grant Act and the Duties Act. Consideration Stamp duty and repayment of the grant 73As the residence requirement was not met the Applicant is required to repay the grant unless the Tribunal reverses the decision of the Respondent not to exercise, in favour of the Applicant, the discretions in section 12(3) of the Grant Act and section 76(2) of the Duties Act. 74The Applicant submitted that his circumstances had changed as a result of changes to his mother's health of which he did not become aware until some time after 5 November 2009, that is, after he had exchanged contracts to purchase the property. He submitted that thereafter his obligation to take care of his mother prevented him occupying the property. 75The Applicant's evidence is that he has been involved in taking care of his mother since at least 2000 and heavily involved since January 2007. It may be that the Applicant's involvement in caring for his mother increased from November 2009. However, the Tribunal finds that any such increase by itself was not so substantial as to be a change in his circumstances preventing him residing in the property. 76Notwithstanding the evidence of the Applicant that he had not read all of the loan documents he signed, the Tribunal cannot disregard the contents of those documents which provide that the purchase of the property was for investment purposes and that from the time the Applicant purchased the property he was relying on the income derived from renting the property at market value in order to meet his financial commitments. The Exclusive Management Agency Agreements entered into by the Applicant both before and after he became aware of the assault on his mother and the subsequent continuous leasing of the property to various tenants for some three years after completion of the purchase cannot be disregarded. This evidence supports the submission of the Respondent that at the time of entering into the contract to buy the property, the Applicant intended to lease the property for at least 12 months rather than occupy it. 77The content of the documents referred to in the previous paragraph and signed by the Applicant and the leasing of the property over time are inconsistent with the declaration made by the Applicant on 20 November 2009, as part of his Grant Application, that he will occupy the property as his "principal place of residence for a continuous period of at least six months commencing within 12 months of completion" of his purchase of the property. 78The Applicant may well have had an intention that at some time others would care for his mother, thus relieving him of the responsibility which he had carried for several years. However no evidence was provided to the effect that any other person or persons was in 2009, or is up to the date of the hearing, three years later, likely to take over the tasks he has undertaken caring for his mother. 79The Applicant stated that he had applied for a job at a Koala Park in the vicinity of the property. However the Applicant acknowledged that no such job was offered to him before he purchased the property and no such job has been offered to him in the succeeding three years. At most the expectation that the Applicant could obtain such a job was a mere possibility. 80In Cullen v Chief Commissioner of State Revenue [2007] NSWADT 121, Seve JM considered a situation in which an applicant for a First Home Owner Grant gave evidence that his intention to occupy the relevant property as his principal residence was thwarted because he could not get a job in the area. 81In finding against an application for the residence requirement to be varied or an exemption made, Seve JM stated at [56]: " Even if the Applicant genuinely (ultimately) intended to occupy the home as his principal place of residence, his failure to do so commencing within 12 months after completion of the purchase was not due to any change in circumstances after the purchase of the home but rather, because of a continuation of the existing circumstances of the Applicant." 82Seve JM referred to a judgment of French J in Federal Commissioner of Taxation v Swift 89 ATC 5101 at 5116, to the effect that a dispensing power such as found in section 12(1A) of the Grant Act, should be pursuant to the objects of the legislation - French J said: "The dispensing power is incidental and ancillary to the primary object of the legislation". 83The Applicant stated that he could obtain a job anywhere, although it may not be in his chosen field of expertise. However the Applicant applied for only one job in the vicinity of the property, that at the Koala Park, and he was aware that the job that would not become available unless and until the incumbent left. 84On his own evidence it has been the Applicant's choice to take care of his mother for several years. While this may be highly commendable and demonstrates a personal sacrifice for his mother's benefit, it does not evidence a change in circumstances, outside his control, after he exchanged contracts to purchase the property. 85The Tribunal finds that the Applicant did have an intention to occupy the property at some time in the future. However a mere subjective intention to occupy the property at some time in the future, without taking up occupancy, is insufficient to satisfy the residence requirement: Zakariya -v- Chief Commissioner Office of State Revenue [2003] NSWADT 26 at [14] and Philpot v Chief Commissioner of State Revenue [2007] NSWADT 243 at [26] ("Philpot"). The Applicant could not fulfil his intention while leasing the property nor while he continued to care for his mother as he had been for several years prior to exchanging contracts to buy the property. 86The discretions are to be exercised in the context of the objects of the relevant legislation, which are to encourage and assist persons acquiring and occupying their first home as their principal residence subject to the conditions referred to above. Conclusion in respect of repayment of the grant and payment of stamp duty 87The Applicant did not satisfy the residence requirement. The Applicant has not discharged the onus of demonstrating why discretions to vary or exempt him from the residence requirement should be made in his favour. Accordingly the Tribunal finds that the Applicant is not entitled to the grant or the duty exemption Grant penalty 88On 21 June 2011 the Respondent issued an assessment requiring repayment of the grant by 12 July 2011 together with a 20% penalty. The grant has not been repaid and the penalty has not been paid. Section 45(3) of the Grant Act provides that if an applicant for a grant fails to make a repayment required under this section the Respondent may impose a penalty not exceeding the amount the Applicant is required to repay. 89The Tribunal has had regard to the reasoning of the Appeal Panel in the Philpot Appeal which stated at paragraph 18 "from a consideration of matters, which come before the Tribunal, the 20 percent penalty is imposed in most circumstances where no fraud is relied on by the Commissioner. 90The Applicant readily admitted that he did not satisfy the residence requirement and sought to explain why in his opinion he could not comply with that requirement. The Applicant has had the benefit of the grant for some three years and has also leased the property for market rent during that period. However the effect on the Applicant's life of caring for his mother for many years is also noted. In the circumstances and having regard to the factors in Knight and the principles enunciated by the Appeal Panel in the Philpot Appeal, the Tribunal will not vary the 20% penalty imposed by the Respondent. Interest for unpaid stamp duty 91By Duties Notice of Assessment dated 21 June 2011 the Respondent required the Applicant to pay $417.70 interest calculated at 12.92% per annum accruing daily. This is the aggregate of the relevant market rate and the fixed premium rate in accordance with section 22 of the TAA. 92The Tribunal has had regard to the submissions of the Respondent set out in paragraphs 47 to 49 above and the decisions of this Tribunal referred to in those paragraphs. 93The Tribunal has also considered the possible imposition of a penalty tax which in accordance with sections 26 to 33 of the TAA may make a taxpayer liable to pay up to 75% of the amount of tax (in this case stamp duty) unpaid in certain circumstances if a tax default occurs. 94The Tribunal notes that the Respondent did not impose any penalty tax. The Tribunal has had regard to the submissions of the Respondent, the principles and factors enunciated in the cases referred to in paragraphs47 and 48 above and the Applicant's submissions in relation to the effect on his life of caring for his mother. The Tribunal concludes that interest calculated in accordance with section 22 of the TAA on the unpaid stamp duty should be paid by the Applicant but that no additional liability for penalty tax shall be payable. Decision 95The correct and preferable decision, having regard to the material before the Tribunal, is to make the orders below. Orders 1 The decision of the Respondent to reverse his previous decision to make a grant under the First Home Owner Grant Act 2000 is affirmed and his decision to require payment of a penalty of $2,800 being 20% of the grant is affirmed. 2. The decision of the Respondent to re-assess the FHP duty exemption and require payment of interest calculated in accordance with section 22 of the Taxation Administration Act 1996 is affirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal. Registrar ********** 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: 12 December 2012