Allam v Chief Commissioner of State Revenue

[2005] NSWADT 172

Set aside by Appeal: Set aside by Appeal on 23/09/2005

CITATION:	Allam v Chief Commissioner of State Revenue [2005] NSWADT 172
DIVISION:	General Division
PARTIES:	APPLICANT: Mahmoud Allam RESPONDENT: Chief Commissioner of State Revenue
FILE NUMBER:	043413
HEARING DATES:	04/07/2005
SUBMISSIONS CLOSED:	07/04/2005
DATE OF DECISION:	08/01/2005
BEFORE:	Hole M - Judicial Member
APPLICATION:	first home owners grant - reversal of original decision - First Home Owners Grant Act - first home owners grant - reversal of original decision
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	First Home Owners Grant Act 2000 Taxation Administration Act 1996
CASES CITED:	Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158 Tarak Adasi v Chief Commissioner of State Revenue [2004] NSW ADT -043208 Marcus v Chief Commissioner of State Revenue [2005] NSW ADT 97 Zebedee Clifford Madex c Office of State Revenue [2005] NSW ADT 043269 Ansari v Chief Commissioner of State Revenue [2005] NSW ADT 98 Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37 Pundir v Chief Commissioner of State Revenue [2005] NSW ADT 108 Bates v Chief Commissioner of State Revenue [2004] NSWADT 13
REPRESENTATION:	APPLICANT In person RESPONDENT B Baker, solicitor
ORDERS:	1. The imposition of the 20% interest payable on the First Home Owners Grant is affirmed.

1 The Applicant has applied for a review of the decision of the Chief Commissioner of State Revenue of the imposition of a 20% penalty interest as a result of the requirement to refund the First Home Owners Grant.

Background

2 On 18 September 2002 the Applicant purchased a property at 57/18 Facey Street, Lurnea. On 18 August 2002 the Applicant signed an application for the First Home Owners Grant. This Grant was approved and paid to the Applicant on 18 September 2002. Settlement of the purchase of the property occurred on 23 September 2002.

3 On 1 November 2002 the Applicant commenced leasing the property and it has been continuously leased since that date. The Applicant has not resided in the property.

4 On 29 July 2004 the Office of State Revenue wrote to the Applicant advising him that under Section 45(1) of the First Home Owners Grant the Chief Commissioner of State Revenue was authorised to require an applicant to repay the amount granted if:

i) the amount was paid in error

ii) the Chief Commissioner of State Revenue reverses the decision under which the amount was paid for any other reason.

5 The Applicant was advised by the Office of State Revenue that based on his reply to the 'Confirmation of Residency' letter he was obliged to repay the Chief Commissioner of State Revenue $7,000 for the repayment of the grant. In addition he was required to pay 20% interest ($1,400.00). The reasons given were:

i) he had failed to advise the Office of State Revenue that he would not reside in the property within the required period of time; and

ii) he had failed to repay the grant to the Office of State Revenue within 14 days, following the expiry of the 12 months residency requirement period.

6 The Applicant does not dispute the repayment of the $7,000 First Home Owners Grant. He has lodged the application to review the 20% interest assessed. The Applicant submitted that he had every intention of moving into the property but due to financial difficulties was unable to do so and felt it necessary to lease the property. He is also looking into undertaking further studies. The Applicant has repaid $500.00 as a gesture of good faith and asked that his payments be made periodically over a 12 to 18 month period. The Applicant would seem not to have had dishonest intent in his contravention of Section 12 of the provisions of the First Home Owners Act which provides:

"12 (1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant's principle place of residence within 12 months after completion or a longer period approved by the Chief Commissioner of State Revenue."

7 Section 21 of the Taxation Administration Act 1996 provides:

"21 (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.

(2) Interest is payable under this section in respect of a tax default that consists of a failure to pay penalty tax under Division 2 but is not payable in respect of any failure to pay interest under this Division."

8 The Applicant submitted an executed declaration at the time of the purchase of the property to the Office of State Revenue. He gave evidence that he did not read the declaration prior to signing it. The form sets out that if the circumstances of the applicant change as e.g. "where the residency requirement is not met," then the applicant should notify the Chief Commissioner of State Revenue in writing.

9 The Applicant is attempting to improve his position and is seeking further education to that end. He embarked on an ambitious project to commence a business and purchase his home at the same time. He did not seek assistance from a professional for his tax requirements. He fell behind with various commitments and the business failed.

10 The Applicant had intended to move into the house. Circumstances, financially and personally, precluded him from doing so. Initially he intended to lease the house only for the first 9 months although the lease was for 6 months. He stated on the declaration that he expected to occupy the house on 27 September 2002.

11 The Applicant encountered financial difficulties and as noted the business venture was unsuccessful. When he received the notice to repay he indicated to the Office of State Revenue that he would lodge an objection to the assessment of penalty tax and interest. He also sought agreement to repay by instalments and made an initial repayment of $500.00 on 30 August 2004. The balance of the repayments remain outstanding.

12 The objection to the assessment of interest resulted in the interest being assessed by the Chief Commissioner of State Revenue at 20%.

13 The Respondent made submissions regarding the assessment of interest and drew attention to the sequence of cases which have provided guidance as to the imposition of interest. The various cases have taken into consideration the following issues:-

(a) intention of the Applicant to move into the property;

(b) did the Applicant move in;

(c) reason for failure to occupy;

(d) candour of the Applicant; and

(e) how long was the grant retained.

In this matter the responses to these issues are, according to the Respondent:
(a) intended to move in;

(b) has not occupied the property;

(c) financial, business failure and personal reasons;

(d) no evidence of dishonest intent; and

(e) apart from the instalment of $500.00 repayment remains outstanding.

14 The various cases that provide guidance in relation to situations where a First Home Owner Grant are required to be repaid are:
Calcaro v Chief Commissioner of State Revenue [2004] NSW ADT 158

Tarak Adasi v Chief Commissioner of State Revenue [2004] NSW ADT -043208

Marcus v Chief Commissioner of State Revenue [2005] NSW ADT 97

Zebedee Clifford Madex v Office of State Revenue [2005] NSW ADT 043269

Ansari v Chief Commissioner of State Revenue [2005] NSW ADT 98

Tomasian v Chief Commissioner of State Revenue [2004] NSW ADT 37

Pundir v Chief Commissioner of State Revenue [2005] NSW ADT 108

Bates v Chief Commissioner of State Revenue [2004] NSW ADT 13

In each of these matters the answers to the five questions referred to in paragraph 13 above disclose that where the person was honest, had an initial intention to move in then did not do so for discrete reasons, had retained the grant for approximately two years and arranged to repay the grant then a penalty interest of 20% was a suitable impost.
15 I find that:
The imposition of the 20% interest payable on the First Home Owners Grant is affirmed.