Bo v Chief Commissioner of State Revenue

[2024] NSWCATAD 219

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Bo v Chief Commissioner of State Revenue [2024] NSWCATAD 219

Hearing dates:

9 July 2024

Date of orders:

06 August 2024

Decision date:

06 August 2024

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S Dunn, Senior Member

Decision:

The Assessment is revoked.

Catchwords:

TAXES AND DUTIES – transfer of dutiable property – exemption for transfer of residential land where dwelling used as principal place of residence of married couple

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Duties Act 1997 (NSW)

Land Tax Management Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41

Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11

City of Newcastle v Royal Newcastle Hospital [1957] HCA 15; (1957) 96 CLR 493

Commissioner of Taxation v Miller (1946) 73 CLR 93

Commissioner of Taxation v Ryan (2000) 201 CLR 109

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Galle v Chief Commissioner of State Revenue [2022] NSWCATAD 285

Metricon Qld Pty Limited v Chief Commissioner of State Revenue (No. 2) [2016] NSWSC 332

Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160

Texts Cited:

None Cited

Category:

Principal judgment

Parties:

Yujuan Bo (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
Daniel Reynolds (Respondent)

Solicitors:
Beazley Lawyers (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2023/00439937

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This is an application to the Tribunal under s 55 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act) for a review of an assessment of transfer duty, penalty tax and interest issued on 16 August 2023 (Assessment) in respect of the transfer on 11 June 2021 of residential property at Killara (Property) from the Applicant’s husband, Mr Faxiang Ying, to himself and the Applicant, Yujuan Bo, as joint tenants, for no monetary consideration.

2. It is not in dispute that the transfer of the Property was a transfer of dutiable property in respect of which duty is charged under s 8(1)(a) of the Duties Act 1997 (NSW) (Duties Act). However, the Applicant claims that the transfer is exempt from duty under s 104B of the Duties Act which relates to transfers between married couples.

3. The Respondent’s case is that the transfer is not exempt from duty under s 104B of the Duties Act because when the transfer occurred the Property was not used as the principal place of residence of the married couple because at that time only Ms Bo was residing at the Property. Mr Ying was living in China and had been living in China for over twelve months.

4. The Applicant objected to the Assessment and the Respondent disallowed that objection by notice dated 21 September 2023.

5. The Assessment is administratively reviewable by the Tribunal by virtue of s 96 of the Taxation Administration Act 1996 (NSW) (TAA).

6. In conducting the review, the Tribunal is required to determine the correct and preferable decision having regard to the material before it and the applicable law: s 63 of the ADR Act.

7. The Applicant has the onus of proving her case: s 100 (3) TAA. That means she must prove on the balance of probabilities all matters necessary for the Tribunal to answer the statutory questions in her favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36].

8. For the reasons which follow I have concluded that the transfer is exempt from duty under s 104B of the Duties Act so that the Assessment should be revoked. As a result, it is not necessary for me to deal with the issues of penalty tax or interest.

Materials before the Tribunal

9. The Applicant relied upon an affidavit made by her on 5 March 2024, an affidavit of Mr Ying made on 28 February 2024, submissions dated 12 March 2024 and submissions in reply dated 7 May 2024.

10. Ms Bo was cross-examined at length with the assistance of a Mandarin interpreter.

11. The Respondent had indicated that he also wished to cross-examine Mr Ying at the hearing. Mr Ying experienced difficulties joining the hearing by audio visual link as intended and there were also difficulties securing a Mandarin interpreter to interpret his evidence (ultimately proposed to be given by phone) on the afternoon of the hearing. In light of these difficulties, the Tribunal proposed that the hearing be adjourned part heard and set down for hearing on another date to enable Mr Ying to appear by AVL and an interpreter to be secured. The Respondent indicated, however, that he was content, in the circumstances, not to cross-examine Mr Ying so that the hearing could be completed that day.

12. The Respondent relied upon a bundle of documents filed with the Tribunal in accordance with s 58 of the ADR Act, a tender bundle filed on 9 April 2024 and written submissions dated 9 April 2024.

Relevant Legislative Provisions

Duties Act

13. Chapter 2 of the Duties Act contains the following provisions relevant to this matter.

14. Section 8(1) charges duty on a transfer of “dutiable property”.

15. Section 11 defines “dutiable property” to include land in New South Wales.

16. Section 12 provides that liability for duty arises when a transfer of dutiable property occurs.

17. Section 13 provides that duty is payable by the transferee.

18. Section 104B of the Duties Act provides as follows:

104B Exemption—transfer of residential land

(1) No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or transfer, of residential land if—

(a) as a result of the transfer or agreement, the property is or will be held by a married couple or de facto partners as joint tenants or as tenants in common in equal shares, and

(b) the residential land—

(i) is land on which there is a dwelling that, when the transfer of dutiable property occurs, is used as the principal place of residence of the married couple or de facto partners, or

(ii) is a parcel of vacant land, or land on which there is a building under construction, and the married couple or de facto partners intend to use the residential land as the site of a dwelling to be used as their principal place of residence, and

(c) the residential land is used solely for residential purposes and not for any other purpose (such as a commercial, industrial or professional purpose), and

(d) both the transferor and the transferee are the married couple or one of them or the de facto partners or one of them and no other person is a party to the transfer, and

(e) in the case of de facto partners, the parties to the relationship have lived in the relationship for at least 2 years before the date of the transfer.

TAA

19. The TAA applies in respect of “taxation laws” which are defined in s 4 of the TAA to include the Duties Act.

20. Section 100 of the TAA provides that the Applicant’s and Respondent’s cases on an application for review are not limited to the grounds of the objection. As already mentioned, s100(3) provides that the Applicant has the onus of proving her case in an application for review.

21. Section 101 of the TAA sets out the powers of the Tribunal in dealing with an application for review and provides that the Tribunal may, amongst other things, confirm or revoke the assessment or other decision to which the application relates, make an assessment or other decision in place of the assessment or decision to which the application relates or remit the matter to the Respondent for determination in accordance with its finding or decision.

Facts

22. The following facts emerge from the evidence.

23. The Applicant, Ms Bo, was born in China on 1 February 1972.

24. Ms Bo married her husband, Mr Ying, who was also born in China, on 19 March 1997. They were married at the time of the transfer of the Property and they remain married. They have two children, a son born in 2007 and a daughter born in 2008.

25. Mr Ying is the chairman and part shareholder of a company which is based in Jiangsu Province in China which produces LCD screens for electronic products (Company).

26. On 18 June 2016 Mr Ying purchased the Property in his own name.

27. Shortly after that time, Ms Bo and her family came to Australia in 2016. Both she and Mr Ying say it was their intention at the time for the family to live in Australia permanently. Ms Bo and Mr Ying enrolled their son and daughter at schools located near the Property and the children have attended schools located near the Property since that time.

28. Ms Bo has lived in the 5 bedroom house at the Property with the children since moving to Australia in 2016.

29. In 2021, Ms Bo, Mr Ying and the children became permanent residents of Australia. In 2023 Ms Bo and the children became Australian citizens.

30. Mr Ying and Ms Bo each say that since Ms Bo moved to Australia in 2016, Mr Ying has also lived with Ms Bo and the children in the house at the Property whenever he has been in Australia.

31. Mr Ying relied upon the following material to evidence the fact that he lived at the Property when in Australia: a driver’s licence which identifies the Property as his address, a Bupa health care card which lists Ms Bo, Mr Ying and their children as being covered, a Medicare card which also lists Ms Bo, Mr Ying and their children as being covered and a rates notice and various utility bills addressed to Mr Ying at the Property.

32. None of these documents actually evidence Mr Ying’s residence at the Property as at the date of the transfer. The driver’s licence is undated, the Bupa and Medicare cards do not show an address and the rates and utilities notices evidence ownership but do not evidence Mr Ying’s residence at the Property.

33. Nevertheless, Ms Bo’s evidence was that since the time she moved to Australia in 2016, Mr Ying has always lived with her and the children at the Property whenever he is in Australia. Under cross-examination she was asked whether Mr Ying had ever resided at other properties in Australia which they also jointly own, and her evidence, which I accept, was that he had not, and nor had she. Her evidence was that since she moved to Australia in 2016 whenever Mr Ying is in Australia, he always lives with her and the family at the Property. There was no evidence before the Tribunal which suggested that Mr Ying lived anywhere else and I accept her evidence in this regard.

34. As already mentioned, the Respondent did not cross-examine Mr Ying.

35. I therefore accept Ms Bo’s and Mr Ying’s evidence that since Ms Bo moved to Australia in 2016, whenever Mr Ying has been in Australia he has lived with her and the children at the Property as a family.

36. Mr Ying travels to China frequently and sometimes for lengthy periods of time to work at the Company. From 2016 to 2018, when he was in China, Mr Ying stayed at a property in Nanjing which he and Ms Bo owned and had previously lived in together from about 2007. Since 2018, when in China, Mr Ying has spent the majority of his time in a 3 bedroom apartment which is on the premises of a factory owned by the Company in Jiangsu Province. He also travels for business and stays at hotels when this is the case.

37. According to the Department of Home Affairs Movement Summary, Mr Ying spent the following periods of time in Australia: 204 days in 2017, 164 days in 2018, 152 days in 2019, 130 days in 2020 (from 1 February 2020 to 10 June 2020), 126 days in 2021 (from 13 August 2021 to 17 December 2021) and 161 days in 2022 (over a number of different periods including from 30 March 2022 to 26 June 2022 and from 12 July 2022 to 6 September 2022).

38. Ms Bo and the children sometimes visit Mr Ying and other family in China also. Before 2018, when they did so, Ms Bo, Mr Ying and the children stayed at the Nanjing property. Since 2018 when they are together in China they sometimes stay at Mr Ying’s parents’ home and sometimes stay at the Company apartment.

39. Mr Ying travelled from Sydney to China on 10 June 2020.

40. Ms Bo and the children joined Mr Ying in China in December 2020 for Christmas but were required to remain in China until April 2021 due to travel restrictions as a result of the covid pandemic. During this time the children attended school on-line and the family lived at the Company apartment.

41. Ms Bo and the children returned to Sydney in April 2021. However, Mr Ying did not return to Sydney until 13 August 2021. This was the first time he had returned to Australia since leaving in June 2020. Mr Ying then remained in Australia until 17 December 2021.

42. On 17 May 2021 Ms Bo signed a “Purchaser/Transferee Declaration Form” declaring that she had entered into a transaction that resulted in the acquisition by her of an interest in land in New South Wales, namely the Property. In this form her address was stated as being an address in China but it is accepted by the Respondent, and I find that this was an error on the form introduced by her solicitor and she was in fact residing at the Property at this time.

43. On 17 May 2021 Mr Ying also signed an “Exemption From Duty – Transfers between Married Couples and De Facto Partners Form” on which a box was ticked declaring that the Property was “land that has erected on it a dwelling which at the time of transfer was used as [his and Ms Bo’s] principal place of residence”. On that form Mr Ying’s address was given as an address in Jiangsu China. Mr Ying’s evidence is that the property at that address is an investment property which he owns in China which is rented out and was the address he had previously used to receive mail in China prior to coming to Australia. His evidence was that at the time he signed this form he was living at the Company apartment in China. I do not think anything turns on the use of a different address on the form.

44. Ms Bo and Mr Ying speak and understand little English. These forms were provided to Ms Bo and Mr Ying by their solicitors to sign to effect the transfer of the Property into their joint names. They had been filled out by the solicitors and were sent to Ms Bo and Mr Ying respectively for signature. Both were unable to read or understand the forms and relied upon their solicitor as to their accuracy.

45. A notice of transfer of the Property from Mr Ying to Mr Ying and Ms Bo as joint tenants was registered on 11 June 2021. That form indicated that the Property was transferred with “an existing tenant”. Ms Bo said, under cross-examination, that that was a mistake made by her solicitor and that she had never leased the Property from her husband, they had always regarded the Property as their family home. I again accept her evidence in this regard.

46. When the transaction was assessed, an exemption from duty was granted under s 104B of the Duties Act and no transfer duty was paid.

47. Sometime later, the Property was then transferred by Mr Ying and Ms Bo into Ms Bo’s name alone. Transfer duty was paid on the transfer of 50% of the Property at that time to Ms Bo.

48. Under cross-examination, Ms Bo explained that she and Mr Ying had wished to transfer the Property into her name alone because while the Property was in Mr Ying’s name he was liable to surcharge land tax because of the amount of time he spent out of Australia whereas if the Property was owned by Ms Bo she would not be liable to pay surcharge land tax. She said they sought advice from their lawyers who advised them that if Mr Ying first transferred 50% of the Property to her no transfer duty would be payable on that transaction but that the second transfer of the remaining 50% would attract transfer duty.

49. Following an investigation in 2023 the Respondent issued the Assessment to Ms Bo in the amount of $320,188.42 comprising transfer duty of $242,990, penalty tax of $31,112 and interest of $46,086.42.

50. In the covering letter enclosing the Assessment the Respondent stated:

Based on the records and information obtained by Revenue NSW, the Chief Commissioner was able to determine that the requirements for exemption under section 104B of the Duties Act were not met. The Chief Commissioner was not satisfied that the property was the principal place of residence of the married couple at the time the transfer occurred. The records reviewed indicate that:

• Faxiang Yin was residing overseas at the time the transfer occurred.

• Faxiang Yin’s principal place of residence was in China at the relevant date.

Therefore, this transaction was found to be liable for Transfer Duty, calculated on the 50% interest in the property transferred to Yujuan Bo.

The issue to be determined

51. Under s 104B of the Duties Act no duty is chargeable on a transfer of residential land if, relevantly:

1. As a result of the transfer the property is (or will be) held by a married couple as joint tenants or as tenants in common in equal shares: s 104B(1)(a);

2. The residential land is land on which there is a dwelling that, when the transfer of dutiable property occurs, is used as the principal place of residence of the married couple: s 104B(1)(b);

3. The residential land is used solely for residential purposes and not for any other purpose: s 104B(1)(c); and

4. Both the transferor and the transferee are the married couple or one of them and no other person is a party to the transfer.

52. The Respondent accepts and I find on the evidence that paragraphs (a), (c) and (d) of s 104B(1) of the Duties Act are satisfied. The Property was residential land, Ms Bo and Mr Ying were a married couple, the transfer resulted in the Property being held by the married couple as joint tenants, the Property was used solely for residential purposes and the transferor and the transferee were the married couple.

53. It is also clear on the evidence that the Property was residential land on which there was a dwelling, namely the 5 bedroom house the family lived in. Accordingly, the issue I must determine is whether s 104B(1)(b) is otherwise satisfied, that is whether the dwelling on the Property was, when the transfer occurred, namely in June 2021, “used as the principal place of residence of the married couple”.

The parties’ submissions

54. The Respondent submits that this requirement was not satisfied.

55. The Respondent submits that the reference in s 104B(1)(b) to the principal place of residence of the “married couple” is a reference to the principal place of residence of both spouses and it is not sufficient for the dwelling to be the principal place of residence of only one member of the married couple.

56. The Respondent submits that, as Mr Ying was not in Australia and had not lived in Australia for almost a year at the time of the transfer of the Property, the Property could not be said to be Mr Ying’s principal place of residence at the time of the transfer. As such, the Respondent submits, nor could the Property be said to be the principal place of residence of the married couple at the time of the transfer.

57. The Applicant contends for a different construction of s 104B(1) of the Duties Act. The Applicant submits:

1. Provided the transferee and the transferor are married and the property is the transferee's principal place of residence, the transferee should “have the benefit of” s 104B of the Duties Act.

2. Ms Bo, the transferee, is the taxpayer. It was to her that the Notice of Assessment is addressed. She was a resident of Australia at the time of the transfer. The Property has been her home since 2016. She has been married to the transferor since 1997. She is entitled to receive the benefit of half of the property as a joint tenant.

3. The length of time a husband and wife spend apart is not a relevant consideration under s 104B of the Duties Act. Nor is it determinative of whether a property is a principal place of residence of a married couple.

4. The Respondent’s “test in relation to the living arrangements of the transferor is not part of s 104B” and says that this can be tested by asking:

Is an Australian Qantas pilot who flies internationally, who has a wife and children living in a property in Sydney denied the right to transfer his family home to his spouse as joint tenants because he spends half the year in a plane or other residence overseas?

Is an Australian diplomat who travels around the world for work or a Federal politician who spends time in Canberra, or a member of the Australian Armed forces deployed overseas, who have a spouse living in a property in Sydney, denied the right to transfer the family home to their spouse as joint tenants, because work requires they spend significant time apart during the year?

5. “If an individual husband lives in property "A" by himself sometimes for work, but the married couple co-habituate in a residential property together being property "B" when they are together, then property "B" falls within 104B(1)(b)(i)”.

6. A principal place of residence is “a state of mind as much as a factual matter of the length of time it is occupied”.

7. At the time Mr Ying acquired the Property, he and Ms Bo were already married. Properly advised at the time of the purchase, the Property could have been purchased by them as joint tenants. The same transfer duty would have been paid as Mr Ying had paid on the purchase. There would have been no loss to the Revenue.

8. The Property was the only property in NSW which Ms Bo and Mr Ying used as their primary residence as at the date of the transfer.

9. It is unfair that Ms Bo herself complies with the requirements of s104B, but is denied its benefit.

Consideration

58. The question I must determine is whether, at the time of the transfer of the Property, the dwelling on the Property was used as the principal place of residence of the married couple, Ms Bo and Mr Ying.

Principal place of residence

59. The Duties Act does not provide any definition of the expression “principal place of residence” and accordingly, the expression has its ordinary meaning. Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 at [19].

60. It is necessary to use an objective test and the conclusion is to determined by considering the extent and quality of the use of the residence: Yen-Cheng Chuang at [20].

61. In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 at [42] the Appeal Panel of the Administrative Decisions Tribunal identified the following general principles to be applied in considering what is a person’s principal place of residence (internal citations omitted):

First, the words “principal place of residence” should be given their ordinary meaning in the context in which they appear. … Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling: … Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue: … Fourthly, 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 is occupation for some other purpose: … Fifthly, the short length of a person’s residence, while relevant, is not determinative of the issue: ... This is so since a recipient’s occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible … Sixthly, the reasons for a person’s departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances… that there are circumstances, peculiar to the individual concerned, which may, objectively viewed, adequately and reasonably explain a person’s decision to move out of a property, but which are not entirely out of the person’s control.

used

62. Section 104B(1)(b) of the Duties Act requires that the dwelling on the Property was being "used" as the principal place of residence of the married couple at the time of the dutiable transfer. That does not, in my view, impose a requirement that the Property was actually being physically occupied by both (or indeed either) of them at that time, as long as, at that time, the Property was being “used” as their principal place of residence. It is to be noted that the principal place of residence exemption contained in other unrelated provisions of the Duties Act (for example s 49A(1A) in respect of off the plan purchases and s 104ZKA(2) in respect of exemptions for certain permanent residents) requires use and occupation of the relevant land. So too the Land Tax Management Act 1956 (NSW) requires land to be "used and occupied" as a principal place of residence for certain exemptions to apply. In some contexts, there is a requirement that a property be used and occupied for a continuous period of a certain number of days for a relevant exemption to apply. There is no such requirement in s 104B(1)(b) of the Duties Act.

63. As Taylor J observed in Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15; (1957) 96 CLR 493 at 515:

The word "used" is, of course, a word of wide import and its meaning in any particular case will depend to a great extent upon the context in which it is employed. The uses to which property of any description may be put are manifold and what will constitute "use" will depend to a great extent upon the purpose for which it has been acquired or created. Land, it may be said, is no exception and S. 132 itself shows plainly enough that the "use" of land will vary with the purpose for which it has been acquired and to which it has been devoted.

Used as the principal place of residence of the married couple

64. For s 104B(1)(b) to be satisfied, the dwelling must be used as the principal place of residence of the married couple.

65. The Respondent submitted that the dwelling was not used as the principal place of residence of the married couple, because, while it was Ms Bo’s principal place of residence, it was not (or at least the Applicant had not established that it was) Mr Ying’s principal place of residence. However, the question under s 104B(1)(b) is not: was the dwelling the principal place of residence of each of Ms Bo and Mr Ying considered individually, but whether it was used as the principal place of residence of the “married couple”.

66. The Respondent submitted that “couple” refers to two persons, not one, and that is plainly correct. I agree with the Respondent that to satisfy s 104B(1)(b) it is not sufficient that the dwelling is the principal place of residence of either member of the couple. However, in my view, “couple” refers to two people considered together. In my view it is clear from the legislation that the "married couple" is to be considered as a unit, rather than two individuals separately. Otherwise, the legislation would have referred to “each member of the married couple” rather than “the married couple”. Accordingly, it is not necessary, in my view, that the dwelling is used as the principal place of residence of each member of the married couple individually, as the Respondent submits. It is necessary that the dwelling is used as the principal place of residence of the couple considered together as a whole.

67. The Respondent took the Tribunal to Commissioner of Taxation v Miller (1946) 73 CLR 93 where the High Court held that a husband who lived and worked overseas did not reside in Australia for the purposes of the Income Tax Assessment Act 1936(Cth) merely because he had “left his wife here”. However, the question before the Court in that case was where the husband resided, not whether the married couple used a property as their principal place of residence and in my view the case is, accordingly, of no assistance.

68. In my view, if one of the members of the married couple is not present at the time of the transfer, it does not necessarily follow that the dwelling is not being used at that time as the principal place of residence of the couple.

69. The Respondent accepted in submissions that there may be instances where one spouse may be absent from the property but the property nonetheless could be characterised as the principal place of residence of the couple. The “best example” the Respondent submitted was the example given by the Applicant of the pilot who flies internationally leaving a wife and children in Sydney. The Respondent submitted, however, that the difference between the pilot in that example and Mr Ying in the present case is that the pilot would be staying in hotels overseas and would not have a fixed abode overseas. He says that differentiates the position from Mr Ying’s where Mr Ying has had, since 2018, a fixed abode in China at the Company’s apartment, and before that in Nanjing. However, again, in my view, that is to concentrate on Mr Ying’s individual permanent place of residence rather than the permanent place of residence of the married couple.

70. I do not find that Mr Ying used the Property at the time of the transfer as his individual principal place of residence, but nor am I required to.

71. As I have said, nor is it sufficient that it is the principal place of residence of one only of the couple, Ms Bo, as the Applicant submits. I reject the Applicant’s submission that it is sufficient that Ms Bo and Mr Ying were married and the Property was Ms Bo’s principal place of residence at the time of the transfer for s 104B(1)(b) to be satisfied.

When the transfer of dutiable property occurs

72. The dwelling must be used by the married couple as their principal place of residence at the time the transfer of dutiable property occurs. However, in my view, it is both appropriate and necessary to look not solely at the date of the transfer, but back for a period of time and forward for a period of time to determine the use of the Property at that date.

73. I see the position as being similar to determining the use of a property for land tax purposes, which is to be determined as at midnight on 31 December in the year preceding the relevant land tax year.

74. White J (as his Honour then was) said in Metricon Qld Pty Limited v Chief Commissioner of State Revenue (No. 2) [2016] NSWSC 332 at [132]-[133]:

[132] Liability for land tax arises as at midnight on 31 December immediately preceding a calendar land tax year. In Longford Investments Pty Ltd v Chief Commissioner of Land Tax [(1978) 8 ATR 656)], Sheppard J said (at 660-661) that although the liability for land tax arises as at midnight on 31 December, the question of whether land was used primarily for primary production was to be considered having regard to the facts spanning “some few months” before and after that date. In Leda Manorstead [v Chief Commissioner [2010] NSWSC 867], Gzell J applied this reasoning and said that in the circumstances of that case a reasonable period for inquiry was six months before and after the relevant date (at [4]). …

[133] This approach recognises that the question of the dominance of a particular use, or whether a primary production use has a significant and substantial commercial purpose or character, requires examination not of a single event but of a state of affairs that exists as a continuum. Experience before and after 31 December that is part of that continuum can throw light on the position as it existed at that date. …

(emphasis added)

75. Similarly, in the Court of Appeal in Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11 Barrett AJA (with whom Macfarlan and Ward JJA agreed) said at [46]:

Furthermore, past activity may be indicative of present use even if the activity is for the time being not continuing.

76. In my view the use of the dwelling on the Property as at the date of the transfer also requires an examination of the state of affairs that existed before and after the date of transfer as a continuum.

77. The Respondent accepted in submissions that events prior to the transfer date could have a bearing on the position at the date of transfer, but submitted, in effect, that to look back a period of 12 months was “too long”.

78. In my view, in the circumstances of this case, including where Mr Ying returned to live at the Property approximately two months after the date of the transfer, Mr Ying’s absence from the Property at the time of the transfer even for a period of twelve months, does not necessarily negate or diminish the status of the Property as the principal place of residence of the married couple.

Conclusion – s 104B(1)(b)

79. I consider that the Applicant has established that the dwelling on the Property was used as the principal place of residence of the married couple at the time of the transfer.

80. There is no question that at the time of the transfer Ms Bo and Mr Ying were married and had been for many years. The Property was purchased to serve as their family home in Australia and that was the purpose to which it had been devoted. That is the “use” which was made of it, and it was not used for any other purpose.

81. Ms Bo had lived with her children at the Property as their family home since 2016. I have found on the evidence that whenever Mr Ying was in Australia, he and Ms Bo lived together at the Property with their children as a family and nowhere else. They had done so consistently since 2016.

82. There was nowhere else which could be characterised as the principal place of residence of the couple. While Ms Bo and the children visited Mr Ying in China from time to time the Company apartment could not be said to be their principal place of residence.

83. I accept the Respondent’s submission that there may be circumstances where a married couple does not have a principal place of residence. However, I do not think that this is such a case.

84. I do not accept the Applicant’s submission that the length of time a husband and wife spend apart is “not relevant”. Nor do I accept the submission that: "If an individual husband lives in property "A" by himself sometimes for work, but the married couple co-habituate in a residential property together being property "B" when they are together, then property "B" falls within 104B(1)(b)(i)". I do not think it is sufficient that the couple “co-habituate”. The married couple must use the property as their principal place of residence.

85. Nor do I accept the Applicant’s submission that a principal place of residence is a “state of mind”, although intention gauged objectively is relevant.

86. However, in this case, viewed objectively, the extent and quality of the use by this married couple of the Property clearly establishes it as their principal place of residence. Their occupation of the home together had in my view the requisite degree of permanence to it in the Ferrington sense to establish it as their principal place of residence.

87. When Mr Ying was in Australia it was generally for relatively significant periods of time. They had lived there together as a family as recently as June 2020 for a period of over four months. When Mr Ying left in June 2020 I find that it was his intention to return to live with his family again at the Property and he in fact did so again as early as August 2021 (only two months after the transfer) also for a period of approximately four months and again for further periods of time in 2022. When Mr Ying was living overseas in the intervening periods it was because he was working in China which I consider to be a reasonable and adequate explanation for the couple not living together at the Property during those times.

88. In my view Ms Bo has established on the balance of probabilities that the dwelling on the Property was at the date of the transfer in June 2021 being used as the principal place of residence of the married couple notwithstanding that Mr Ying was not physically present at that time and had not been present for a period of approximately 12 months.

89. The Respondent submitted that if I were to find that the Property was used as the principal place of residence of this married couple it would follow that “married couples who had separated” might still have the benefit of the exemption. However, I do not agree that follows. Married persons who have separated but have not yet divorced may still be described as being married but, in my view, would not fit the description of being a “married couple” because they are no longer “together”.

90. The Respondent also submitted that if I were to find that the Property was used as the principal place of residence of this married couple it would follow that a married couple who had lived apart for eight years and where the husband came home for one weekend and left again, could also qualify for the exemption. However, again I disagree. That is far removed from the facts of this case and I do not think it likely that persons in those circumstances would be able to establish that they used the relevant land as their principal place of residence at the relevant time.

The Applicant’s alternative arguments

91. Given the conclusion I have reached it is not necessary for me to address the Applicant’s alternative submissions however, I note that, as already indicated, I reject the submission that it is sufficient that the Property was Ms Bo’s principal place of residence and I reject the submission that it is sufficient for s 104B(1)(b)to be satisfied that the parties to the transfer were married and the Property was the transferee’s principal place of residence.

92. Further, to the extent that the Applicant sought to rely on notions of “fairness” (either because Ms Bo could have purchased the Property in her name alone from the outset or because she herself complies with the principal place of residence exemption requirement) arguments based on notions of “fairness” and “justice” cannot succeed in the absence of any foundation in the legislation: Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 123. Questions of unfairness are not relevant. The Respondent is required to administer the law in accordance with its terms: Galle v Chief Commissioner of State Revenue [2022] NSWCATAD 285 at [26]–[28].

Conclusion

93. It follows that I find that the transfer of the Property was exempt under s 104B of the Duties Act and the Assessment should be revoked. As such, there is no need for me to consider the issues of interest or penalty.

94. I was informed at the hearing that the duty, interest and penalty amounts have all been paid by the Applicant. I note that, if that is the case, subject to the outcome of any appeal, it will follow from the revocation of the Assessment that the Respondent will be required under s 104 of the TAA to refund the amounts paid to the Applicant or to offset them against any other liability the Applicant may have.

Orders

1. The Assessment is revoked.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 06 August 2024