Byrne v Commissioner for Act Revenue (Administrative Review)
[2010] ACAT 9
•16 March 2010
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
BYRNE v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2010] ACAT 9
AT 92 of 2009
Catchwords: ADMINISTRATIVE REVIEW – Return – application – date of agreement – conditional contract – Home Buyers Concession Scheme – stamp duty – records matters in relation to which there is or may be a tax liability – “off the plan” purchase.
Legislation:Duties Act 1999 (ACT)
Taxation Administration Act 1999 (ACT)
Legislation Act 2001 (ACT)
Taxation Administration (Amounts payable – Home Buyer Concession Scheme) Determination 2006 (No.2) (ACT)
Case Law:Fitzpatrick v Commissioner of ACT Revenue [2008] ACTAAT 21
Australian Communist Party v The Commonwealth [1951] 83 CLR 1
Tribunal: Mr A. O’Neil, Senior Member
Date of Orders: 16 March 2010
Date of Reasons for Decision: 16 March 2010
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 92 of 2009
BETWEEN:
JAMES COLIN BYRNE
Applicant
AND:
COMMISSIONER FOR ACT REVENUE
Respondent
Tribunal:Mr Allan O’Neil Senior Member
Date: 16 March 2010
ORDER
The decision under review is affirmed.
……………………………….
Mr Allan O’Neil
Senior Member
REASONS FOR DECISION
On 27 October 2009 Mr J C Byrne applied to the Australian Capital Territory Civil and Administrative Tribunal (‘the Tribunal’) for a review of the decision of the Commissioner for ACT Revenue (‘the Commissioner’) of 26 October 2009 disallowing his objection to the assessment of stamp duty on his agreement to purchase “off the plan” Unit 1, Block 1, Section 137, Macgregor, dated 20 April 2008.
On 15 May 2009 Mr Byrne signed an application for concessional stamp duty under the Home Buyers Concession Scheme (‘HBCS’) and lodged it with the Commissioner on 18 May 2009 which was more than one year and 14 days from the date of the agreement. The applicable scheme was established by the Taxation Administration (Amounts payable – Home Buyer Concession Scheme) Determination 2006 (No.2) (ACT) which is set out at Annexure A.
The Commissioner assessed stamp duty on the transaction without considering Mr Byrne’s eligibility for concessional stamp duty. The Commissioner took the view that the application must be made within one year and 14 days of the date of the agreement and that there was no discretion to extend the time. Mr Byrne objected and his objection was disallowed.
The relevant legislation is set out below. Section 16A of the Duties Act 1999 (ACT) reads:
“16A Payment of duty—‘off the plan’ purchase agreements
(1)For section 16, liability for duty on an ‘off the plan’ purchase agreement is taken to arise if at least 1 of the following events happens:
(a)the agreement is completed;
(b)the whole, or any part, of the purchaser’s interest under the agreement is assigned;
(c)the following period, beginning on the date of the agreement, ends:
(i)for a purchase agreement for a declared affordable house and land package—2 years;
(ii)for any other ‘off the plan’ purchase agreement—1 year;
(d)a certificate of occupancy has been issued under the Building Act 2004 for the building to which the agreement relates.
(2)The duty payable on an ‘off the plan’ purchase agreement—
(a)is payable within 14 days after 1 of those events happens; and
(b)may be paid before any of those events happens.
(3)Despite section 16, a tax default happens for the Taxation Administration Act if the duty payable on an ‘off the plan’ purchase agreement is not paid within the 14 day period under subsection (2) (a).
(4)In this section:
declared affordable house and land package means a house and land package declared under section 16B.
‘off the plan’ purchase agreement means—
(a)an agreement for the sale or transfer of dutiable property that is, or includes, land where a residence is to be erected or developed before completion of the sale or transfer; or
(b)a purchase agreement for a declared affordable house and land package.”
Sections 40 and 139 of the Taxation Administration Act 1999 (ACT) read:
“40 Variation of time for lodgment of return or of period covered by return
(1) A person may apply to the commissioner to—
(a)extend the time by which a return must be lodged; or
(b)vary the period to which the return is to relate.
(2) An application shall—
(a)be in writing, addressed to the commissioner; and
(b)specify—
(i)the name and address of the applicant; and
(ii)the grounds on which the variation is sought.
(3) If the commissioner is satisfied that it would be unduly onerous for a person to lodge a return in accordance with a tax law, the commissioner may, by written notice addressed to the applicant, vary the period in relation to which, or the time within which, the applicant is to lodge the return.
NoteThe commissioner’s decision refusing to vary a period or time in accordance with a taxpayer’s application is a commissioner-reviewable decision (see s 107, def commissioner-reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).
(4)While a notice under this section is in force in relation to a person, the person must lodge returns in accordance with the notice.
(5)If the commissioner is no longer satisfied that it would be unduly onerous for the person to lodge returns in accordance with the relevant tax law, the commissioner may, by written notice addressed to the person, revoke a notice under this section.
NoteThe commissioner’s decision to revoke a notice given to a person is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the person (see s 107B).
(6)A notice of revocation has effect 21 days after it is made.
(7) This section does not apply to returns the lodging of which may be varied under the Payroll Tax Act 1987, section 17.
…
139 Determination of amounts payable under tax laws
(1) The Minister may determine the following:
(a)the amount of tax, duty or licence fee payable under a tax law;
(b)the rate or differential rates at which, or the method by which, an amount of tax, duty, a licence fee or interest, payable under a tax law is to be calculated;
(c)a scale of allowances for expenses of witnesses under section 82 (5).
(2)A determination under subsection (1) is a disallowable instrument.
NoteA disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.”
The definition of “return” in the dictionary (p88) of the Taxation Administration Act 1999 (ACT) reads:
“return means a return, statement, application, report or other record that—
(a) is required or authorised under a tax law to be lodged by a person with the commissioner or a specified person; and
(b) is liable to tax or records matters in relation to which there is or may be a tax liability.”
This matter was heard by the Tribunal on 11 February 2010. Mr Gabbedy, the principal of pappas, j. - attorney, appeared for Mr Byrne and Dr Jarvis of counsel appeared for the Commissioner. No oral evidence was called.
The question of the mandatory time limit for an HBCS application was considered by President Peedom of the then ACT Administrative Appeals Tribunal in Fitzpatrick v Commissioner of ACT Revenue [2008] ACTAAT 21. The material facts in that matter were for all relevant purposes the same as in the present matter. President Peedom decided that under the Determination then in force the time limit had to be strictly applied and that the Commissioner did not have any discretion to extend the time for making an application.
Mr Fitzpatrick was not legally represented at the hearing and the wider question whether elsewhere in the Taxation Administration Act 1999 (ACT) (‘TAA’) there is a discretion vested in the Commissioner to grant an extension of time was not canvassed. There was no mention made of the ambit of section 40 of the TAA and whether that might be relevant. The Determination that established the HBCS does not suggest any discretion to extend the time for lodging an application under paragraph 5. Indeed paragraph 8 is expressed in mandatory terms as to when the application must be lodged. There are provisions in the Determination that permit time limits to be varied but none of these deal with an extension of time to lodge an application under the HBCS. However the Determination is subordinate legislation and cannot limit the operation of its parent statute for “a stream cannot rise higher than its source”: see Australian Communist Party v The Commonwealth [1951] 83 CLR 1 per Fullagar J at 258, or as the heading to section 43 of the Legislation Act 2001 (ACT) states in more prosaic terms: “Statutory instruments to be interpreted not to exceed powers under authorising law”.
Section 40 of the TAA provides that a written application may be made to the Commissioner to extend the time by which a return must be lodged. The only requirements are to specify the name and address of the applicant and the grounds on which the variation is sought. The Tribunal considers that the three letters from pappas, j. – attorney dated 24 June 2009, 7 July 2009 and 17 August 2009 amount to an application to extend the time by which a return must be lodged.
The conclusion in the preceding paragraph that the requirements of sub-section 40(2) of the TAA are satisfied hinges on the question of whether the application under the HBCS is a “return” for the purposes of section 40 being answered in the affirmative. A careful examination of the definition of “return” is required.
Neither of the parties argued that the HBSC application was not for the purposes of the definition an application authorised under tax law. The Tribunal finds that paragraph (a) of the definition of “return” is satisfied. The matter in issue is whether the HBCS application “is liable to tax or records matters in relation to which there is or may be a tax liability”. The application itself is not “liable to tax”, but can it be said that the application “records matters in relation to which there is or may be a tax liability?
The application records those matters which are required by paragraph 5 of the Determination if the applicant is to be an “eligible home buyer” and obtain the benefit of the lower amount of stamp duty.
Paragraph 6 of the Determination functions to determine the “amount of duty that is payable on the purchase of an eligible property .... by an eligible home buyer”. The lowest amount of duty payable is “$20 where the dutiable value of the eligible property does not exceed the lower threshold”.
The various pieces of information supplied by Mr Byrne in his application are matters that are relevant to whether he is “an eligible home buyer”, whether the property is “an eligible property” and other matters that are relevant to the assessment of duty under paragraph 6.The fact that paragraph 6 also functions to substitute a much lower concessional rate of duty does not detract from the fact that it determines an amount of duty based on the matters recorded in the application.
It is the view of the Tribunal that the application “records matters in relation to which there may be a tax liability”. The application thus satisfies the definition of “return” and allows the Commissioner to consider whether Mr Byrne’s application for an extension of time should be granted.
Some confusion and overlap has occurred in the matter of the applications and objections made by Mr Byrne and how they have been dealt with by the Commissioner. It does not do a disservice to both parties to say that, while the issues are sometimes conflated, they treated the various applications and objections on the basis that the intent of the parties was to act consistently with the relevant legislation.
Thus as far as Mr Byrne is concerned the Tribunal proposes to treat the letters from pappas, j. – attorney as:
(a)seeking an extension of time under section 40 of the TAA to lodge his application under the HBSC on stamp duty;
(b)objecting to the assessment of stamp duty without taking into account his application;
(c)objecting to the refusal of the Commissioner to grant a section 40 extension of time; and
(d)providing the $64 fee cover to both objections.
The Tribunal proposes to treat the Commissioner’s correspondence as:
(a)rejecting the extension of time application under section 40,
(b)disallowing the objection to the section 40 rejection, and
(c)disallowing the objection to the assessment of stamp duty.
The Tribunal notes that, to extend the time for the lodgement of a return under section 40(3) of the TAA, the Commissioner must be satisfied that it would be unduly onerous for the person to lodge a return in accordance with a tax law. In the circumstances of this matter would it have been unduly onerous for Mr Byrne to have lodged his application under the HBSC within the one year and 14 days permitted? The only evidence before the Commissioner (and now before the Tribunal) does not explain why Mr Byrne did not lodge his application within time. Mr Gabbedy argued that the effect of the late lodgement was unduly onerous in terms of the amount of duty Mr Byrne had to pay, but that is not what the Commissioner must consider. The Commissioner must consider the circumstances that gave rise to the late lodgement. It is difficult the see on the evidence how the Commissioner could validly grant an extension of time under section 40(3) of the TAA. The Tribunal further notes that a decision under section 40(3) is not reviewable by the Tribunal.
Mr Gabbedy also argued that section 16A of the Duties Act 1999 (ACT) created an ambiguity because of the use of the word “may” in subsection 2(b) but the Tribunal is unable to agree with him. Mr Byrne committed to an “off the plan” purchase agreement of the kind contemplated in subsection (1)(c)(ii). This is clear from subsection 2(a) and is reinforced by subsection (3) which states that a tax default happens if the duty is not paid within the 14 day period set out in subsection 2(a). It must be said that subsection 2(b) is a curious provision because it permits (hence the use of the word “may”) the payment of stamp duty before the events set out in subsections (1)(a), (1)(b), (1)(c) and (1)(d) happen, that is, before the liability for duty has arisen. However although it may be curious it does not create any ambiguity.
The meaning of “date of agreement” used in subsection 16A(1)(c) of the Duties Act 1999 (ACT) was also the subject of argument before the Tribunal. Mr Gabbedy contended that the phrase should not mean the date the agreement was signed but rather the date the agreement became unconditional. He argued that because the agreement could be rescinded the preferred meaning of “date of agreement” was the date when the condition was waived or met. It is not clear on the evidence when the agreement became unconditional but it was within the one year and 14 days prescribed for the lodgement of the HBSC application.
The Tribunal cannot agree with this interpretation. The plain meaning of the words is the date the agreement was signed, which prima facie is the date which appears on the document, that is, 20 April 2008. It is on this date that the rights of the parties arose and indeed it is on this date that Mr Byrne’s right to rescind the contract if the condition in it were not fulfilled also arose.
The decision under review is affirmed.
…………………………………..
Mr Allan O’Neil
Senior Member
ANNEXURE “A”
Australian Capital Territory
Taxation Administration
(Amounts payable – Home Buyer Concession Scheme)
Determination 2006 (No 2)
Disallowable instrument DI2006—265
made under the
Taxation Administration Act 1999, s139 Determination of amounts payable under tax laws
Name of Instrument
This instrument is the Taxation Administration (Amounts Payable—Home Buyer Concession Scheme) Determination 2006 (No 2).
Commencement
This instrument commences on 1 January 2007.
Application
This instrument applies to:
a)a grant, where granted on or after 1 January 2007; and
b)a transfer, or if the transfer is preceded by an agreement for transfer - that agreement - first executed or entered into on or after 1 January 2007;
of a Crown lease.
Definitions
In this instrument:
a)“The Act” means the Duties Act 1999.
b)“Certificate of Occupancy and Use” means the certificate issued under section 28 of the Building Act 2004 to advise that the dwelling is fit for occupation and use.
c)“Date the duty must be paid” is either 90 days after the liability to pay the duty arises (section 16 of the Act) or a period up to 12 months plus 14 days (section 16A of the Act) for an ‘off the plan’ purchase agreement.
d)“Dependent child” has the same meaning as in the Social Security Act 1991 (Cwlth).
e)“Determined” in the definitions of “lower threshold” and “upper threshold” means determined by the Minister by instrument pursuant to section 139 of the Taxation Administration Act 1999.
f)A reference to a “domestic partner” is a reference to someone who lives with the person in a domestic partnership, and includes a reference to a spouse of the person.
g)“Domestic partnership” is the relationship between 2 people, whether of a different or the same sex, living together as a couple on a genuine domestic basis. Section 169 of the Legislation Act 2001 gives examples of indicators of a domestic partnership.
h)“Dutiable value” has the same meaning as in section 20 of the Act.
“Eligible property” means an estate in fee simple or a Crown lease with a dwelling upon it and having a dutiable value less than the determined upper threshold for property value other than an eligible vacant block.
j)“Eligible vacant block” means an estate in fee simple or a Crown lease without a dwelling upon it and having a dutiable value less than the determined upper threshold for land value.
k)“Leave” includes maternity leave, leave without pay, leave on half pay and leave while receiving workers compensation payments.
l)“Lower threshold” means the determined lower threshold for the property value threshold or land value threshold.
m)“Relevant income threshold” means the income threshold amount with reference to the number of dependent children the applicants and domestic partner/s have as specified below:
Number of dependent children Income threshold
0 $100,000
1 $103,330
2 $106,660
3 $109,990
4 $113,320
5 or more $116,650
n)“Total income” means the income of all persons named in the grant, transfer or agreement for transfer of the subject property and their domestic partner/s:
i.it includes income from all sources including benefits from a salary packaging arrangement, maintenance payments, and income classified as “exempt income” under the Income Tax Assessment Act 1997.
ii.it excludes eligible termination payments (such as those made for years of service under a bona fide redundancy payment) that are not assessable for income tax under the Income Tax Assessment Act 1936 (Cwlth), Part 3, Division 2, Subdivision AA.
iii.for self‑employed persons, it is the profit or gain made in the ordinary course of carrying on business. The net trading profit (and not turnover) is taken to be the equivalent of salary and wages.
o)“upper threshold” means the determined upper threshold for the property value threshold or land value threshold.
ELIGIBLE HOME BUYER
“Eligible home buyer” means a person who provides written evidence to the Commissioner for ACT Revenue regarding all persons named in the grant, transfer or agreement for transfer of the eligible property or eligible vacant block as the grantee or transferee that:
a)on the date of the grant, transfer or agreement for transfer (whichever comes first) they together and their domestic partners had a combined total income over the previous 12 months (from the day of the grant, transfer or agreement for transfer, whichever comes first) less than or equal to the relevant income threshold and that the details provided reflect their usual income; and
b)at least one applicant named in the grant, transfer or agreement for transfer of the subject property as the grantee or transferee must:
i.reside in the home for a continuous period of 6 months; and
ii.commence this residency period within 12 months of:
▪ completion of the transfer for an eligible property; or
▪ the date of the Certificate of Occupancy and Use following completion of construction of the residence on the eligible vacant block.
c)If the Commissioner for ACT Revenue is satisfied there are good reasons to do so, the Commissioner may:
i.approve a residency period shorter than the 6 months in 5. b) i.;
ii.exempt the applicant from the requirement to reside in the home for the continuous period of 6 months in 5. b) i.;
iii.extend the time in 5 b) ii. for an applicant to meet the residency requirement.
These discretions are:
i.limited to where an applicant is unable to reside in the property because of a compulsory or unforeseen circumstance eg work or health related issues; and
ii.exercisable only where the request for an extension of time or exemption from the requirement is made when the period of time for compliance with the residency requirement has not elapsed.
d)they together and their domestic partners do not, either alone or jointly with another person or persons, hold a legal or equitable interest in land other than the subject property; and
e)they together and their domestic partners have not, either alone or jointly with another person or persons, held a legal or equitable interest in land other than the subject property in the 2 years preceding the date of the grant, transfer or agreement for transfer, except where a person is required to relinquish an interest in land by:
i.an order of a court; or
ii.a financial agreement made under the Family Law Act 1975 (Cwth), section 90B, 90C or 90D that is binding on the parties under that Act and the relationship has ended; or
iii.by a domestic relationship agreement or a termination agreement under the Domestic Relationships Act 1994 as a consequence of a termination of a relationship between domestic partners; and
f)under the transfer or grant they together are acquiring both the legal and beneficial interest in the property; and
g)on the date of the grant, transfer or agreement for transfer they had attained the age of 18 years. However, if the Commissioner for ACT Revenue is satisfied there are good reasons to do so, the Commissioner for ACT Revenue may exempt the applicant from the requirement to be at least 18 years old.
DETERMINED AMOUNT
The determined amount of duty that is payable on the purchase of an eligible property or eligible vacant block (or an undivided share of either) by an eligible home buyer for the purpose of section 31 of the Act shall be:
a)For an eligible property:
i.$20 where the dutiable value of the eligible property does not exceed the lower threshold; or
ii.the greater of:
▪ $20; or
▪ the concessional duty rate for each $100 or part thereof by which the dutiable value of the eligible property exceeds the lower threshold. The concessional duty rate is calculated using the following formula and then rounded down to the nearest multiple of 5 cents:
F x 100
G
Where:
F = Duty payable on upper threshold
G = upper threshold less lower threshold
b)For an eligible vacant block:
i.$20 where the dutiable value of the eligible vacant block does not exceed the lower threshold; or
ii.the greater of:
▪ $20; or
▪ the concessional duty rate for each $100 or part thereof by which the dutiable value of the eligible vacant block exceeds the lower threshold. The concessional duty rate is calculated using the following formula and then rounded down to the nearest multiple of 5 cents:
F x 100
G
Where:
F = Duty payable on upper threshold
G = upper threshold less lower threshold.
c)For one or more than one undivided share in the eligible property or eligible vacant block – the greater of $20 or the duty calculated using the following formula:
C x E
D
Where:
C = the concessional duty payable upon a grant, transfer or agreement for transfer of the whole of the eligible property or eligible vacant block.
D = the duty payable upon a grant, transfer or agreement for transfer of the whole of the eligible property or eligible vacant block.
E = the duty payable upon a grant, transfer or agreement for transfer of the relevant share of the eligible property or eligible vacant block.
Under the Duties Act 1999, the duty is payable by the transferee to the Territory.
TIME LIMIT FOR APPLICATION
An application for concessional duty under the Scheme must be received by the Commissioner for ACT Revenue before the date the duty must be paid [defined in paragraph 4 c)].
Revocation
I revoke DI2005-157.
Jon Stanhope MLA
Treasurer
18 December 2006
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO: AT 09/92
APPLICANT: JAMES COLIN BYRNE
RESPONDENT: COMMISSIONER FOR ACT REVENUE
COUNSEL APPEARING: APPLICANT: GABBEDY
RESPONDENT: JARVIS
SOLICITORS: APPLICANT: PAPPAS, J - ATTORNEY
RESPONDENT: ACT GOVERNMENT SOLICITOR
OTHER: APPLICANT:
RESPONDENT:
TRIBUNAL MEMBER/S: MR ALLAN O’NEIL, SENIOR MEMBER
DATE/S OF HEARING: 11 February 2010 PLACE: CANBERRA
DATE/S OF DECISION: 16 March 2010 PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
2
1
0