Chief Commissioner of State Revenue v Doney (No 2) (Rd)

[2006] NSWADTAP 23

Appeal Panel - Internal

CITATION:	Chief Commissioner of State Revenue v Doney (No 2) (RD) [2006] NSWADTAP 23
PARTIES:	APPELLANT Chief Commissioner of State Revenue RESPONDENT Geraldine Doney
FILE NUMBER:	059046
HEARING DATES:	15/11/2005
SUBMISSIONS CLOSED:	11/15/2005
DATE OF DECISION:	05/16/2006
BEFORE:	Needham J SC - Judicial Member; Seve J - Judicial Member; Bennett C - Non Judicial Member
CATCHWORDS:	exercise of discretion - special circumstances - relevant/irrelevant considerations
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	056006
DATE OF DECISION UNDER APPEAL:	06/15/2005
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Duties Act 1997 Duties Amendment (Land Rich) Act 2004 State Revenue Legislation Amendment Act 2004 State Revenue Legislation Further Amendment Act 2004 Taxation (Unpaid Company Tax) Assessment Act 1982
CASES CITED:	Affinity Health Ltd v Chief Commissioner of State Revenue [2005] NSWSC 663 Chief Commissioner of State Revenue v Doney (RD) [2006] NSWADTAP 22 Cody v. JH Nelson Pty Ltd (1947) 74 CLR 629 De Mestre v A D Hunter Pty Ltd (1952) 77 WN (NSW) 143 Elias v. FCT [2002] ATC 4761 FC of T v. Swift 89 ATC 5101 Full v. Chief Commissioner of State Revenue [2005] NSWADT 190 Giris v. FCT (1969) 119 CLR 365 Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 at 26 R v. Ford [1945] SASR 118 Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 20 ALR 129
REPRESENTATION:	APPELLANT RL Seiden, barrister RESPONDENT S Gageler, SC
ORDERS:	1. Decision of the Tribunal affirmed

1 The appellant, the Chief Commissioner of State Revenue (also, herein, “Commissioner”) appeals against the respondent’s successful application for review of a disallowance of an objection dated 5 October 2004. The appellant had refused to exercise a discretion under s 162B(4) of the Duties Act 1997 (“the Act”) and to refund vendor duty amounting to $22,150.00 paid on 17 September 2004. Those proceedings were heard by Tribunal member, Acting Judge Block on 6 June 2005 and decided on 15 June 2005.

The Facts and the Statutory Framework

2 The respondent, Geraldine Doney purchased a property at 14 Lucknow Street, Willoughby (“the property”) in late 2000. The respondent and her family relocated from Canberra to Sydney and moved into the property in late 2000. There is no dispute that from that point in the chronology the property was the respondent’s principal place of residence for a continuous period of approximately 21 months. The family undertook some renovations to the interior and engaged architects to undertake more substantial alterations to the property.

3 In September 2002 the respondent and her family relocated to a rental property at Naremburn to enable the extensions to take place. The property was leased out for six months, while the house they rented was taken on an 18 month lease to provide time for the preparation of plans, obtaining of planning approval and undertaking of the necessary renovations.

4 There were difficulties with the planning of the renovations, and when the original six month lease of the property expired the tenant remained in occupation on a month-to-month basis thereafter.

5 In May 2004, the respondent purchased an alternative property, more suitable for the family’s needs, and the decision was taken to sell the property. The contract for sale of the property (being the relevant vendor duty transaction) was made on 26 June 2004. The respondent moved from the rental property where she had been living, into the alternative property that was purchased, a short period prior to sale of the property.

6 While the property was rented, the respondent received rental, which rental was disclosed for the purposes of her tax returns. Deductions for items such as interest were claimed against the rent.

7 On sale of the property the respondent was assessed for vendor duty payable under s 146 of the Act on the basis that she did not come within the “principal place of residence” exception pursuant to s 162B of the Act. That section provided, at the relevant time:-

“162B Principal place of residence exemption

(1) A vendor duty transaction is not chargeable with vendor duty in relation to land to which the principal place of residence exemption applies.

(2) Subject to this Division, the "principal place of residence exemption" applies to land used and occupied by the vendor as the principal place of residence of the vendor, and for no other purpose, if the land:

(a) is a parcel of residential land, or
(b) is a strata lot, or

(c) is assessed as if it were a strata lot under section 21A or 21B of the Land Tax Management Act 1956 .

(3) For the purpose of this Chapter, land is not used and occupied as the principal place of residence of a person unless:
(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes for a period of at least 2 years ending immediately before the date on which, but for this Division, a liability for vendor duty would arise, or

(b) the land has been used and occupied by the person for residential purposes and for no other purposes for a total period of at least 3 years in the 5 years ending immediately before the date on which, but for this Division, a liability for vendor duty would arise and during those 3 years no other land was used and occupied by the person for residential purposes, or

(c) if the vendor became an owner of the land less than 2 years before the date on which, but for this Division, a liability for vendor duty would arise, the Chief Commissioner is satisfied that the land has been used and occupied by the person as the person’s principal place of residence since the vendor became an owner of the land.

(4) Despite any other provision of this Act, the principal place of residence exemption is also taken to apply to any land used and occupied as a principal place of residence if the Chief Commissioner is satisfied that it is fair and reasonable for the exemption to apply in the particular case.

(sub-s (5) omitted).”

8 Chapter 4 (Transactions Concerning Land-Related Property - Vendor Duty) of the Act was amended by the Duties Amendment (Abolition of Vendor Duty) Act 2005 as from 2 August 2005 to restrict vendor duty to transactions that occur before that date. Vendor duty was thus imposed for only a short period of time, although neither the fact that it was a short-lived innovation nor that it has now been abolished has any effect on the interpretation questions which this Appeal Panel is asked to decide. Section 162B(4) was repealed by the Duties Amendment (Land Rich) Act 2004 on 15 December 2004. It is unnecessary to consider this fact in this appeal, although, it is recognised that the Explanatory Notes to the Bill for that Act referred to that repeal as the removal of a “broad discretion” of the Commissioner.

9 The respondent applied on 13 July 2004 for an exercise of the Commissioner’s discretion pursuant to s 162B(4). That decision was refused on 1 December 2004. The reasons given by the appellant in a letter dated 1 December 2004 were that:-

“The property cannot be considered as a principal place of residence, as it does fall under the exemption provisions of s 162B(3), which states the requirements for principal place of residence exemption as follows:-

(the writer set out s 162B(3))

In regards to your objection, the Willoughby property has only been used as your principal place of residence for the first 21 months out of a total period of ownership of 3 years and 6 months prior to its sale on 26 June 2004.

In actual practice since the introduction of vendor duty legislation vendor duty has been generated on matters of same nature and this similarity indicates that the circumstances presented to not make for an exceptional case that merits an exemption upon the Chief Commissioner’s exercise of discretion under s 162B(4)”.

10 It appears from the reasons for the disallowance of the objection that the Commissioner considered that the discretion in s 162B(4) should not be exercised unless the circumstances were exceptional and by reason of an unintended result of the legislation (see Commissioner’s “Vendor Duty – Objection Submission”, tab 9, s 58 Documents).

11 The respondent sought a review of the decision of the Commissioner, and the Tribunal set aside that decision, in the decision under appeal, on 15 June 2005.

12 The learned Tribunal member’s reasons for setting aside the decision may be summarised as follows:-

a) The discretion given to the Commissioner in the Act must be exercised with regard to the policy of the statutory provisions, which is, in this case, that the taxpayer is not liable for vendor duty when she disposes of her principal place of residence (par [29])

b) The property was “in substance, if not in strict fact”, the appellant’s principal place of residence (par [31])

c) The exercise of the discretion was given to the Commissioner to relieve taxpayers where the relevant provisions applied in a manner which was unreasonable or harsh; it is not enough for the Commissioner to deny relief to the appellant because she falls outside the exemptions in the Act (par [32]). In this case the Commissioner adopted a “purely formulistic approach” in the decision whether to exercise the discretion or not (par [28]).

d) The correct and preferable decision is to give the taxpayer the benefit of the discretion and to relieve her of the duty, despite the fact that she did not comply strictly with the relevant time provisions (par [32]).

13 At the hearing, a preliminary point was raised about the Commissioner’s grounds of appeal. As an interim decision, the Appeal Panel held that an extension of time was refused for the Commissioner’s first ground of appeal and an extension of time was allowed for the Commissioner’s other grounds of appeal. Reasons for the decision were given and are published separately (Chief Commissioner of State Revenue v Doney (RD) [2006] NSWADTAP 22). The Commissioner’s first ground of appeal raised for the first time, the argument not raised at first instance, that s162B(4) of the Act only applies where the subject land is (or is deemed to be) used and occupied as the principal place of residence of the vendor at the liability date. As an extension of time for this ground of appeal was refused, it would be inappropriate for this argument to be considered further in this appeal and therefore, for the purposes of this decision, it is assumed that the discretion in s162B(4) of the Act is available if the subject land is used and occupied as a principal place of residence of the vendor at any time.

14 There was no application for leave to extend to the merits of the decision (see s 113(2)(b)) and so the Commissioner must demonstrate an error of law in the decision below. In doing so, the Appeal Panel must have regard to s 114(2) of the Administrative Decisions Tribunal Act 1977 which provides:-

“The orders that may be made by the Appeal Panel on any such appeal include, but are not limited to, any of the following:

(a) an order affirming or setting aside the decision of the Tribunal (as originally constituted),

(b) an order remitting the case to be heard and decided again by the Tribunal (as originally or similarly constituted), either with or without the hearing of further evidence, in accordance with the directions of the Appeal Panel,

(c) an order made in substitution for an order made by the Tribunal.”

15 The remaining grounds of appeal are set out in the Written Submissions filed by the appellant as follows (omitting ground for which an extension of time was refused):-

a) That the Tribunal misconstrued s 162B(4) of the Act:-

i. … (omitted)

ii. That, in the context of the vendor duty legislation, which includes the Appellant’s duty not to discriminate between taxpayers, it could only be “fair and reasonable” to apply the Discretion where circumstances were exceptional, or where there was an unintended result, or other good reason (“the Just Reason Condition”)

b) That the Tribunal failed to have regard to whether the Respondent’s circumstances were exceptional, or whether there was an unintended result, or other good reason to exercise the Discretion;

c) The Tribunal failed to properly take into consideration the receipt of rental income from the Property.

16 While the submissions were dealt with separately at the hearing, the first two overlap to such an extent that they can be dealt with together.

The Commissioner’s submissions - exercise of the discretion (grounds (a)(ii) and (b))

17 The conclusion urged by the Commissioner is that the Tribunal below should have affirmed the Commissioner’s decision and held that the discretion ought not to apply to the Respondent’s property, and that the Appeal Panel should now so affirm the original decision.

18 The Commissioner submits that the discretion granted in s 162B(4) should be exercised in accordance with the legislative intentions as demonstrated by the policy manifested by the enactment itself. The Commissioner further submits that the discretion should be exercised in a way which does not detract from the purpose of the enactment. These submissions are eminently sensible and in accordance with the principles set out in cases such as Giris v. FCT (1969) 119 CLR 365 and Elias v. FCT [2002] ATC 4761 at [47].

19 The Commissioner then argues that the dispensing provision should only be exercised at all where there is “just reason” to do so, and in circumstances which are “exceptional” or where there was an “unintended result”. This is a way of restating the statutory words which are that the discretion may be exercised where “it is fair and reasonable for the exemption to apply in the particular case”. The Commissioner relied on the decision of French J in FC of T v. Swift 89 ATC 5101 where his Honour reviewed the dispensing powers in the Taxation (Unpaid Company Tax) Assessment Act 1982 and said (at 5116):-

“The dispensing power is incidental and ancillary to the primary object of the legislation. On the spectrum of cases in which it could conceivably be exercised, there will be a threshold beyond which it would defeat the primary object of the legislation”.

20 The Commissioner’s submission, based upon the building blocks set out above, is that the “dispensing provisions must not be construed in such a manner as to defeat the intention of the vendor duty provisions” (see Appellant’s Written Submissions, par [43]). The Commissioner points to the 2-year minimum as being a strong guide to the operation of the discretion, and concedes that “some departure from the 2-year rule is to be tolerated”, while pointing to the statutory exceptions as the limits of that tolerance.

21 The Commissioner takes issue with the finding of the learned Tribunal member that the approach that “the respondent sold, in substance if not in fact, her principal place of residence” is not the correct test. The proper test is, it is submitted, whether the circumstances which apply to the respondent are exceptional circumstances or an unintended result of the legislation. An example given is if the respondent suffered some misfortune (see par [54], Appellant’s Written Submissions).

22 In support of the submissions going to the exercise of the discretion, the Commissioner refers to the decision of the President at first instance in Full v. Chief Commissioner of State Revenue [2005] NSWADT 190, where his Honour noted:-

“[A] primary role for a dispensing power is to permit relief to be afforded in relation to cases of a kind which, had they been known to exist at the time the law was being framed would, in all likelihood, have been given exemption.

The dispensing power also provides a means for dealing with minor non-compliance with the strict rules; for example, a case that just falls short of the statutory period, and about which there are other extenuating circumstances”.

23 The respondent submits that the “just reason” condition, and the “exceptional circumstances” approach as submitted by the appellant are “an impermissible gloss on the plain and ordinary meaning of the words of the provision”. Further, she submits that the proper means of ascertaining the application of the principal place of residence exemption is to determine whether the property is in fact a principal place of residence, and then to consider, as the Act requires, the duration of use an occupation. She points out that s 162B(4) does not require use or occupation for any period, let alone a period for two years.

24 In answer to the submission that the Act’s requirement of two years (in particular circumstances) is a strong guide to the kind of occupation required in order to ground a dispensing power, the respondent notes that the occupation was approximately 21 months, some short period of time less than that required for the application of clause 5 in schedule 2.

25 The respondent relies upon the fact that the property was purchased and used as a principal place of residence, and not primarily as an investment property, as grounds for submitting that the exercise of the discretion would not defeat, or be inconsistent with, the primary object of the legislation. Further, there is nothing in the legislation which would point to a requirement of extraordinary circumstances before the discretion may be exercised, let alone a requirement that some misfortune have attended the respondent before the discretion may be exercised in her favour.

Determination of the question of the exercise of the discretion

26 This part of the appeal falls to be determined on the proper construction of the dispensing power and the application of the properly construed power to the facts of this case. Added to that is the approach taken by appellate bodies to the exercise by the Tribunal at first instance of his discretionary power. This appeal Panel should be reluctant to interfere unless a clear case has been made out that the learned Tribunal member has acted on some wrong principle or has made an order which works a substantial injustice to one of the parties. For examples of this well-entrenched and accepted principle, see De Mestre v A D Hunter Pty Ltd (1952) 77 WN (NSW) 143 at 146 per Hardie AJ; Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 20 ALR 129; Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 at 26.

27 It is worth setting out once again the terms of the dispensing power as it appears in s 162B(4):-

“Despite any other provision of this Act, the principal place of residence exemption is also taken to apply to any land used and occupied as a principal place of residence if the Chief Commissioner is satisfied that it is fair and reasonable for the exemption to apply in the particular case.”

28 In order for the dispensing power to be exercised, the following conditions must be met, applying the statutory language as it appears in the section:-

a) the land must be used and occupied as a principal place of residence; and

b) the Chief Commissioner (or Tribunal, on review) must be satisfied that it is fair and reasonable to apply the exemption.

29 It is common ground that the land had been used and occupied as the principal place of residence of the respondent from end 2000 to September 2002. It is, further, common ground that the dispensing power is the only way in which the respondent would be entitled to an exemption, as she does not fall within the confines of the statutory conditions for the exemption.

30 For the purposes of this appeal, the role of the Commissioner is taken by the learned Tribunal member. The appellant has argued strongly that there are implied conditions to the exercise of the power - firstly, what was termed the “Just Reason Condition”, and secondly, the requirement that the circumstances be extraordinary or otherwise exceptional.

31 The general principles of statutory construction are of use to this decision. The rule that general words are to be given their primary and natural significance, and limitations to those words must ordinarily be demonstrated. Words will be given their plain and ordinary meaning, unless the contrary can be shown: see Cody v. JH Nelson Pty Ltd (1947) 74 CLR 629 per Dixon J at 647. In R v. Ford [1945] SASR 118, Mayo J said:-

“It is a well-known principle that where is a discretion is given in the widest language, there is no justification for being at pains to interpolate some artificial limit not implicit anywhere in the context”.

32 The Appeal Panel was provided with the Mini-Budget speech of the Treasurer, Mr Egan, on 6 April 2004 in which the vendor duty was introduced, but nothing of great assistance can be found in that speech. The Second Reading Speech by Mr West (on behalf of Mr Knowles) on 7 May 2004 gives an outline of the legislative scheme but provides no real assistance on the manner of the exercise of the discretion which is at the heart of the appeal in this matter.

33 It may be inferred that the legislature’s intent in providing such a widely-framed discretion (“… if the Chief Commissioner is satisfied that it is fair and reasonable for the exemption to apply …”) was not to limit the breadth of that discretion. In order for the presumption that the words of the statute be given their ordinary meaning to be rebutted, the appellant would need to demonstrate the limiting effect contended for. Consequently, the “just reason condition” and/or the requirement of extraordinary or exceptional circumstances would need to be able to be demonstrated.

34 A legislative principle should be read in such a way that different sections of the Act fit in with each other, and this may be a source of limiting the apparent breadth of a section: see Ross v. R (1979) 25 ALR 137 at 145. In this case, the discretion appears at the end of a series of alternative circumstances which must be satisfied in order to ground the exemption (see s 162B(3)). The discretion to exempt in circumstances which are “fair and reasonable” appears after a list of circumstances in which the duty would not apply. In the absence of some statutory indication that fairness and reasonableness should be found only in a case of exceptional circumstances, or where there was an unintended consequence of the legislation, it is difficult to say that the words of s 162B(4) should be read more restrictively than their plain and ordinary meaning would admit.

35 As for the argument that the discretion should not discriminate against taxpayers, the question before the Tribunal at first instance was “what was the correct and preferable decision?” The respondent’s case needed to be approached on the merits as they appeared to the learned Tribunal member, and as there is no error of principle in the way his Honour decided the issue, the fact that other taxpayers may have been treated differently is not an issue in this Appeal.

36 In his Reply, the Commissioner relied upon the passage in Full cited above and submitted that the respondent’s case was not one which would have been included in the legislation had attention been paid to that kind of case at the time. With all due respect to the learned President, we do not think that he intended his comment to be a solely definitive approach to the application of dispensing powers. The legislature may, as we have noted above, be presumed to have intended to give wide powers if the words they used, not limited by any of the factors dealt with above, have the plain and ordinary meaning of the requisite width. While applying the dispensing power to cases which fall just outside the statutory limitations is an appropriate use, it is not appropriate to limit the discretion only to those cases.

37 Support for the approach taken by the learned Tribunal member is found in the decision of the Supreme Court in Affinity Health Ltd v Chief Commissioner of State Revenue [2005] NSWSC 663 which concerned a “not just and reasonable” discretion of the Commissioner in the land rich duty provisions of the Act. In that case, Justice Gzell held that the fact that amendment legislation applied to render the taxpayer liable to duty in circumstances where there was nothing that the taxpayer could do to avoid its obligations under an agreement entered into prior to amendment legislation meant that the application of the amended provisions to the performance of that agreement would not be just and reasonable [at 69].

38 Although there are obvious factual differences, this case has a parallel with Affinity Health. Unlike in Affinity Health, the Treasurer had announced in the Mini-Budget on 6 April 2004, the introduction of amending legislation (to introduce vendor duty) before the respondent agreed to purchase the alternative property. However, the Mini-Budget speech (an extract of which was included at paragraph 21 of the decision at first instance) stated that: “Legislation for the new duty will be introduced in May and the new duty will apply as soon as possible but no later than 1 July” (emphasis added). The Bill for the State Revenue Legislation Amendment Act 2004 which introduced vendor duty was introduced into Parliament on 7 May 2004 and under cl 2(2) of the Bill, the vendor duty provisions were to commence on the later of 1 June 2004 and the date of assent. The Bill received assent on 25 May 2004 and thus, the vendor duty provisions commenced from 1 June 2004. Accordingly, like the position in Affinity Health, when the respondent purchased the alternative property and made her decision to sell the subject property in May 2004, the vendor duty provisions had not yet commenced. Like the circumstances in Affinity Heath, there was nothing that the respondent could do to avoid her obligations under the agreement for purchase of the alternative property at the time the vendor duty provisions did commence. Although in this case, performance of the agreement to purchase the alternative property was not what triggered liability of the respondent to vendor duty, the agreement to purchase the alternative property influenced the decision of the respondent to sell the subject property, the performance of which triggered such liability. In the view of the Appeal Panel, the differences between this case and the facts of Affinity Health do not make the latter distinguishable. Even if it does, this circumstance coupled with the other circumstances of this case do not point to any error in the learned Tribunal member finding it fair and reasonable for the principal place of residence exemption from vendor duty to apply in the circumstances of this case.

39 Accordingly, the Appeal Panel would dismiss the appeal on these grounds.

Determination on the question of receipt of rental income

40 The final ground is that the learned Tribunal member failed to take into account the importance of the rental income received by the respondent.

41 The Commissioner submitted that, on the basis of clause 4 of Schedule 2 to the Act, clause 4 could not apply to the respondent’s claim because rental income had been derived from the property after the cessation of occupation.

42 Clause 4 of Schedule 2 provides:-

4 Concession for sale of former principal place of residence

(1) If the Chief Commissioner is satisfied that land to which a vendor duty transaction relates has been occupied by the vendor as his or her principal place of residence for a period ending within 6 months before the liability date, that use and occupation is taken, for the purpose of the principal place of residence exemption, to have continued until the liability date.

(2) The liability date, in respect of a vendor duty transaction, is the date on which, but for this clause, a liability for vendor duty would arise in respect of the transaction.

(3) This clause applies in respect of land only if the Chief Commissioner is satisfied that no income has been derived from the use or occupation of the land since the actual use or occupation of the land by the vendor ceased.

(4) The Chief Commissioner may, if satisfied that there is a good reason for doing so, extend the period of 6 months referred to in subclause (1) in a particular case.

43 The learned Member dealt with this issue by finding (at [19]):-

“Clause 4 of Schedule 2 provides in effect for a grace period of six months between cessation of occupation and sale but not where any “income” has been derived … that clause would not in any event in its terms apply, if only because the Applicant vacated the Residence more than six months prior to its sale, and in fact the period of time involved was considerably longer than six months …”

44 The learned Tribunal member then went on to find that the appellant “did not have the power [to extend the period under cl 4(4)] assuming that he would have been inclined to do so, to assist under clause 4(4) of Schedule 2 because … that subclause was enacted too late”. The appellant points to the fact that cl 43(1) of Schedule 1 of the Act provides that

(1) An amendment to this Act made by the State Revenue Legislation Further Amendment Act 2004, except an amendment referred to in section 2 (2) of that Act, is taken to have effect as if it had commenced on 1 June 2004.

45 Further, the appellant points to a finding by the learned Tribunal member as to the meaning of “income”. His Honour queried (at 19) whether the respondent actually received “income” from the property, given that she was making a net loss.

46 While it appears to the Appeal Panel that the appellant’s submissions are correct on both the commencement date of cl 4(4) of Schedule 2 of the Act, and the definition of “income” as it should be construed in a taxation statute, neither argument advances the Commissioner’s case in any way, as the learned Tribunal member did not find that the period should be extended under cl 4(4) of Sch 2. Even if there were a basis for returning this somewhat arid point to the learned member for redetermination, it appears to us that this ground of appeal may be easily disposed of by reliance on the opening words of s 162B(4) “despite any other provision of this Act”, and on the point that cl 5 of Schedule 2 of the Act contains no restriction as to derivation of income so that the ability to grant an exemption from vendor duty would apply notwithstanding the receipt of rental in respect of a principal place of residence.

47 Cl 5 of Schedule 2 provides as follows:

“5 Concession for absences from former residence

(1) If the Chief Commissioner is satisfied that:

(a) land to which a vendor duty transaction relates (the former residence) has been used and occupied by the vendor as his or her principal place of residence for a continuous period of at least 2 years, and

(b) that period of use and occupation ended no more than 6 years before the vendor duty transaction occurred,

the vendor is taken, for the purpose of the principal place of residence exemption, to have continued to use and occupy the former residence as his or her principal place of residence during the period after that actual use and occupation ended.

(2) The maximum period for which the vendor may be taken, under this clause, to continue to use and occupy the former residence as a principal place of residence is 6 years starting at the end of the most recent actual occupation period of at least 2 years.

(3) An actual occupation period is a period during which the former residence was actually used and occupied by the vendor as a principal place of residence, and does not include any period for which the vendor may be taken, under clause 4 or this clause, to have used and occupied the former residence as a principal place of residence.

(4) Despite the other provisions of this clause, the use or occupation of land by a person is not taken to continue during any period in respect of which the person used or occupied other land as a principal place of residence, if a vendor duty transaction in relation to that other land is not chargeable with vendor duty as a consequence of that person’s use and occupation of the other land as a principal place of residence.

(5) This clause is subject to clause 10 (which limits members of a family to one principal place of residence exemption).”

48 If the respondent had stayed in the property for another three months, then pursuant to cl 5 of Schedule 2 of the Act, the respondent would have been deemed to have continued use and occupation after actual use and occupation had ended. Section 162B(3)(b) of the Act would have been satisfied and the principal place of residence exemption would have applied (a point missed at paragraph 17 of the decision at first instance). The fact that a vendor rents property after moving out of it is irrelevant to cl 5 of Schedule 2 and should not limit the discretion of the Commissioner under s162B(4).

Order

49 Decision of the Tribunal affirmed.