Doney v Chief Commissioner of State Revenue

[2005] NSWADT 133

CITATION:	Doney v Chief Commissioner of State Revenue [2005] NSWADT 133
DIVISION:	Revenue Division
PARTIES:	APPLICANT Geraldine Mary Doney RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	056006
HEARING DATES:	6/06/2005
SUBMISSIONS CLOSED:	06/06/2005
DATE OF DECISION:	15/06/2005
BEFORE:	Block J - ADCJ (Judicial Member)
APPLICATION:	Duties Act - principal place of residence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Duties Act 1997 State Revenue Legilsation Further Amendment Act 2004 Taxation Administration Act 1996
CASES CITED:	Bellinz and others v Commissioner of Taxation (1998) 84 FCR 154 Federal Commissioner of Taxation v G M Swift and others 89 ATC 5101 Giris Pty Limited v The Commissioner of Taxation of the Commonwealth of Australia (1968) 119 CLR 365
REPRESENTATION:	APPLICANT L Woodhead, solicitor RESPONDENT R Seiden, barrister
ORDERS:	The decision under review is set aside; the Applicant is entitled to a refund of the duty paid together with interest calculated in accordance with the Taxation Administration Act 1996

REASONS FOR DECISION

Introduction and documentation

1 The decision which is under review is the disallowance of an objection dated 5 October 2004 against the refusal by the Respondent of a request that he exercise his discretion under section 162B (4) of the Duties Act 1997 (the "Act"), and so as to grant to the Applicant a refund of duty amounting to $22,150 and which was paid on 17 September 2004, in consequence of the sale of the Residence (as defined hereafter) by the Applicant. It is common cause that at the relevant time the Respondent was vested with a discretion in accordance with section 162B(4) of the Act; that discretionary power was thereafter repealed, but it applied at the time when the duty was paid and must be considered accordingly.

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997. The Tribunal also admitted into evidence the following exhibits:

Exhibit A1 is an extract from the State Revenue Legislation Amendment Act 2004

Exhibit A2 is a letter from Borough Mazars to Mr Woodward, the Applicant's solicitor, dated 2 June 2005.

Exhibit A3 is the mini-budget speech by the Honourable Michael Egan MLC, Treasurer of New South Wales, delivered on 6 April 2004

Exhibit R1 consists of extracts from certain tax returns filed by the Applicant.

3 Although it was not (inadvertently) allotted an exhibit number, Ms. Seiden made it clear that the Applicant would not be required for cross- examination and so that her lengthy statement dated 17th May 2005 (attached to the Applicant's submissions of the same date) can and should be accepted as correct. (For this reason I do not intend to have regard to allegations contained in the Respondent’s written submissions as to alleged discrepancies between Applicant’s Statement and the Applicant’s objection) In addition to the Applicant's submission, the Tribunal received the Respondent’s detailed submissions; at the hearing Ms Seiden (most helpfully) furnished the Tribunal with a large file containing, in tabbed sections, case reports, statutory provisions and the like.

The facts

4 Having regard in particular to the Applicant's statement (referred to in brief as "AS") the facts fall within a narrow and (not very complex) compass. In late 2000 the Applicant and her family (husband and three daughters) relocated from Canberra to Sydney. They sold their family home in Canberra and purchased the residence situated at 14 Lucknow Street, Willoughby (the "Residence"). The residence was small for their needs and the interior was in poor condition; it was purchased having regard to its affordable price, the size of the land and the fact that extensions would be possible. (Clause 2 of AS).

5 Having purchased the Residence the Applicant and her husband undertook interior renovations (detailed in clause 3 of AS) designed to be compatible with a later extension to the rear of the Residence.

6 By mid 2000 to the Applicant and her family had become frustrated by the lack of storage and living space in the Residence. They commissioned Albion Construction and Design (the “first architects”) to design and implement alterations (referred to hereafter as “the alterations”). The first architects advised the Applicant and her husband that, having regard to the need inter alia for planning permission and other relevant approvals, it would take between 18 months and two years to complete the alterations, and moreover that it would be necessary for the Applicant and her family to vacate the Residence for the purpose of effecting the necessary alterations.

7 The Applicant and her family therefore decided to move to a rental home if a suitable home became available prior to the commencement of the alterations... They found a suitable rental home (the “Rental Home”) in Naremburn; in September 2002 a lease was signed and they moved into the Rental Home. The rental required for the Rental Home varied according to the term; the rental required for a term of 12 months was higher than the rental proposed for a term of 18 months, which was in turn higher than that required for a term of 24 months. For reasons which I need not detail, the term of 18 months selected arose from economic considerations and the anticipated time needed for the alterations. A copy of the relevant lease is attached to AS; the rental payable for the Rental Home was $4779.76 per month.

8 On the 13 September 2002 the Applicant authorised an estate agent to seek a tenant to rent the Residence. The agent was authorised to find a tenant for up to 12 months, a period selected by reference to the anticipated planning and approval period referable to the alterations. In the result a tenant was found for the Residence and a lease with him was signed on 1 October 2002 for a period of six months at a rental of $2650 per month. That tenant resided in the Residence during the agreed term of six months and remained in occupation on a month- to- month basis thereafter.

9 Clauses 8 to 11 of AS deal with the Applicant's difficulties as regards the proposed alterations. The Applicant and her husband were unhappy about the plans designed by the first architects and thus resulting in negotiations with and engagements (in succession) of two other firms of architects, the second of whom was Stuart Gelder.

10 While Mr Gelder was busy with plans for the alterations, the Applicant and her husband became aware of a house for sale at 19 Onyx Road, Artarmon ("the first Artarmon property"). For the economic and other reasons set out in clause 11 of AS, the Applicant decided to discontinue the proposals as to the alterations of the Residence and, instead, to purchase (if possible) the first Artarmon property. The Applicant was however unsuccessful as a bidder at the auction of the first Artarmon property and in the result, and in May 2004 purchased a house two doors away from the first Artarmon property, and being the home at 15 Onyx Road Artarmon ("the second Artarmon property").

11 Having purchased the second Artarmon property the Applicant and her family had no further need of the Residence. It was put on the market and sold at auction on 26 June 2004. It was that sale which gave rise to the vendor duty assessment referred to in clause 1 of this decision.

12 Specifically in relation to the Residence, the extracts from tax returns (exhibit R1) establish that the Applicant reflected the rent received for tax purposes; at the same time she claimed and was allowed a deduction for inter alia interest on her mortgage loan. In the result she incurred losses of $2600 and $10,454 in the (successive) tax years in which rental was received in respect of the Residence. Those losses were allowed as a deduction is against her other income.

13 AS indicates, as set out previously, that the Residence was rented out for a six months term and that the tenant remained in it thereafter on a month-to-month basis. It is thus common cause that the Residence was rented out during the relevant period, and in a technical and legal sense, became a rental property. Mr Woodward contended that the renting out of the Residence by the Applicant was nothing more or less than an economy measure designed to reduce the burden of rent payable in respect of the Rental Home. That contention is consistent with AS and its annexures. The rental derived in respect of the Residence was approximately one half of the rental payable for the Rental Home; it is significant also that the term selected in respect of the renting of the Residence was part of the overall proposal for the alterations to the Residence. In fact and as set out previously, the renting of the Residence had the effect that a loss for tax purposes was incurred and deducted, and no doubt affording a financial advantage; it could be said however that that financial advantage conferred, a further reduction in real terms of the cost of renting the Rental Home. The Applicant was entitled under tax legislation to claim the net losses incurred as a deduction against other income and the fact that she did so is not in my view a factor against her.

The law

14 Vendor duty is payable under section 146 of the Act on an agreement for the sale or transfer of land-related property but not, pursuant to section 162B (1) of the Act where the principal place of residence (“PPR”) exemption applies.

15 At the relevant time sections 162B (3) and (4) of the Act read as follows:

(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.
16 Section 162B (4) has since been repealed. However it was repealed after the sale of the Residence and the Applicant is accordingly entitled to seek to bring a claim pursuant to it.

17 The Applicant did not fall within any of the subsections of section 162B (3). At the time of sale of the Residence she was not in occupation, and so that section 162B (3) (a) did not apply. Section 162B (3) (c), did not apply because the period of ownership was in excess of 2 years. Section 162B (3) (b) would have applied if the period of residence prior to sale had amounted to three years; the period of residence was in fact approximately 21 months. As appears from AS the period of residence commenced in December 2000, when the Applicant and her family moved into the Residence and endured until September 2002, when they moved into the Rental Home. Mr Woodward in closing submissions contended that the Applicant would have qualified under section 162B (3) (a) if the Applicant and her family had stayed in the Residence for another three months or if they had moved into the Residence three months earlier. I do not think that that contention was correct because the relevant subsection in its terms required occupation until sale; clause 2 of Schedule 2 to the Act would not have assisted in either event, simply because in either event the period between cessation of occupation and sale would have been greater than 6 months; clause 4 (4) of Schedule 2 came into effect, as will be noted later in this decision, after the sale, and to that an application for an extension of time would not have been competent. And in any event the derivation of rental might have been fatal; see discussion as to this aspect later in this decision. Put in other words (and leaving aside the rent aspect) the gap in time between cessation of occupation and sale of the Residence would have been sufficient to disqualify the Applicant.

18 Schedule 2 to the Act (and which refers to section 162E) contains a number of provisions related to the PPR exemption; the most relevant of those provisions is contained in clause 4, which reads as follows:

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, 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.

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” is derived. (It may be noted that in accordance with clause 4 (4) the Respondent has the power to increase the period of 6 months). That clause would not in any event, in its terms apply, if only because the Applicant vacated the Residence more than 6 months prior to its sale, and in fact the period of time involved was considerably longer than 6 months; as at the date of sale of the Residence the Respondent did not have the power assuming that he would have been inclined to do so, to assist under clause 4 (4) of Schedule 2 because, as I have noted, that subclause was enacted too late. As to what is meant by “income” in this context (and see clause 4 (3) of Schedule 2) is not clear. The Applicant derived rent after vacating the Residence; however the rental received did not, it might be argued, produce income because it resulted in a loss. Tax is under tax legislation levied on income which in turn is calculated by reference to incomings less permitted deductions or outgoings. In this particular instance the Applicant may have received rent but she did not, it may be argued, derive income. The use of the words “income derived” may however mean that the focus is on derivation and so that the subclause is inapplicable where revenue is derived regardless of whether that derivation results in a loss. But and as I have said clause 4 of schedule 2 is not in any event applicable. (It may be noted that subclauses (1) to (3) of clause 4 were introduced with effect from 1 June 2004 through the State Revenue Legislation Amendment Act 2004 while subclause (4) was introduced as from 6 July 2004 through the State Revenue Legislation Further Amendment Act 2004).

20 The discretion contained in section 162B (4) is cast in wide terms. As is often the case with discretionary powers contained in revenue (and other) legislation the decision-maker (and the Tribunal standing in his shoes) is not given any guidance as to the criteria which must be taken into account in respect of any such decision.

21 The case law (set out in greater detail later in this decision) makes it clear that the decision maker must have regard to the policy underlying the relevant statute. Exhibit A3 sets out that it was the intention of the legislature that the 2 1/4 per cent duty be levied "on the sale of properties except for a person's principal place of residence and farms”. The following extract is taken from pages 13 and 14 of the Treasurer’s Mini-budget speech, delivered on 6 April 2004 [from page 13]

The third and fourth measures concern stamp duty on the sale and purchase of properties.

Over recent years the property market has boomed.

An overheated property market is no good for the economy, it’s no good for the community and it’s certainly no good for young people and families who are battling to buy their first home and are priced out of the market.

[from page 14]

An overheated property market is only good for people like me – people who, besides owning their own home, have made good profits by owning an investment or second property.

We’ve made the profits on our property investment, so I believe we can afford to pay a 2¼ per cent stamp duty when we sell the property.

This duty, of course, will not apply to the sale of a person’s principal place of residence and it will not apply to the sale of farms.

To ensure that only property profits are being taxed, properties will be exempt from the duty in cases where the vendor’s sale price does not exceed 12 per cent of their original purchase price, with the exemption phasing out between 12 per cent and 15 per cent.

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.

During drafting of the legislation consultations will be held with the property industry to prevent any unintended effects and to maximise administrative efficiency and simplicity.

Clearly exceptions will need to be put in place for genuine builders to ensure that the duty does not become a value added tax on new homes.

The case law

22 In Federal Commissioner of Taxation v G.M. Swift and others 89 ATC 5101 French J made it clear (in relation to a discretion of a similar nature) that the dispensing power is incidental and ancillary to the primary object of the legislation; he noted also that there will be a threshold beyond which the primary object of the legislation would be defeated; see page 5116 as follows:

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. It is unnecessary to define that threshold for present purposes. The discretion cannot, however, be limited to the case where a person has not in any way benefited from the evasion giving rise to the recoupment tax liability. And in this respect ground 4(c) of the grounds of appeal was rightly abandoned. The absence of such a simply expressed limitation from the language of sub-s.5 (4) is indicative of the absence of any such legislative intention. That is not to say that it is not open to consider whether a person claiming dispensation under the sub-section benefited from the sale of shares in the subject company. But, it is not, as a general rule, conclusive.
23 See also French J in Swift’s case at page 5118 as follows:
It may be said that the Tribunal's exercise of its discretion has undermined the objectives of the Act. If that be so, then it is for the legislature to consider confining the dispensing power. But the conflict between the primary purpose of collecting evaded company tax and the ancillary function of dispensation has not risen here to such a level that the primary purpose is defeated. Any dispensation under sub-s.5 (4) will necessarily undermine the primary purpose, for tax which might have been collected will not be collected. That is an inescapable consequence of the operation of Sub-s.5 (4). Its invocation by the Tribunal in this case has not, in my opinion, involved the crossing of that threshold beyond which the exercise of the discretion falls outside the scope and objects of the Act.
24 One of the leading cases in this area is Giris Pty Limited v The Commissioner of Taxation of the Commonwealth of Australia (1968) 119 CLR365. At pages 380 and 381 Menzies J noted that discretions of this nature can be difficult to exercise:

The section does confer an extraordinary responsibility upon the Commissioner of Taxation. It requires him, in every case where there is income of a trust estate in a particular year of income, to consider whether it is unreasonable "that this section should apply in relation to that trust estate in relation to that year of income". Unless he forms such an opinion the section applies. The section directs the Commissioner in forming his opinion to have regard to certain facts and circumstances but gives no guidance upon what significance should be given to the presence or absence of the facts or circumstances as specified. Moreover, there appears to be no common principle underlying the various matters specified so as to give the Commissioner a lead to other matters to which he might have regard. Accordingly, whether or not the section is to apply to a particular trust estate has been made to depend upon an opinion which the Commissioner may form, after the close of the year of income, and with no legislative guidance other than that he is to have regard to a medley of facts and circumstances. The enactment of such a provision can only be regarded as an acknowledgment by the legislature of its inability to make laws laying down prospectively what will give rise to a particular taxation liability. It leaves, as a problem for the Commissioner to decide, retrospectively and in the light of what has happened, whether the particular provision should not apply to a particular trust estate in respect of a year that has passed.
25 And at page 384 of Giris Windeyer J said:
The Commissioner is to ask himself whether it would be unreasonable that s. 99A should apply to any particular trust estate. But the idea of reasonableness seems to be here amorphous. It is, of course, true that, as a measure in fact of time, space, quantity and conduct, reasonableness is a concept deeply rooted in the common law: and so, in such cases, is the power of a court to say whether a particular decision of that fact is or is not within the bounds of reason. But, in cases of that kind, the circumstances in which the question arises provide criteria for its solution. Here the Commissioner's discretion is apparently at large. It does not clearly emerge from the Act in respect of what matter--or whose interest, that of the taxpayer or of the revenue--he is to consider whether it would be reasonable or unreasonable to apply s. 99A in the case of any particular trust estate. He is to have regard to certain stated matters; but what weight or influence each is to have is not made clear. Moreover, the Act requires that he "shall have regard to such other matters, if any, as he thinks fit". However I assume that he is to be guided and controlled by the policy and purpose of the enactment, so far as that is manifest in it. That would exclude from his consideration and matter which it would be unlawful for him to take as a criterion
26 It is unnecessary for me to refer to a number of other cases to similar effect cited in this context by Ms. Seiden. It is altogether clear that when considering a discretionary power of this nature it is always necessary to have regard to the purpose underlying the statute. However I should refer to Bellinz and others v Commissioner of Taxation (1998) 84 FCR 154 in the context of another aspect, (administrative fairness), raised by the Respondent. See page 167 of Bellinz as follows:
It is unnecessary to refer to the numerous other cases, many from areas outside revenue, which were cited to the Court in support of the submission that equality of treatment of taxpayers is an aspect of unreasonableness of decision making. There is little difficulty in accepting that, where a decision-maker, including the Commissioner of Taxation, has a discretion, a principle of fairness will require that that discretion be exercised in a way that does not discriminate against taxpayers: cf Pickering v Commissioner of Taxation (Cth) (1997) 37 ATR 41; 97 ATC 4893 and, in another context, NSW Aboriginal Land Council v Aboriginal and Torres Strait Island Commission (1995) 59 FCR 369 at 387-388
The decision proper

27 It is convenient to deal firstly with the question of administrative fairness in relation to other taxpayers similarly placed. On 1 December 2004 the Respondent wrote to the Applicant in the following terms:

We refer to your objection letter dated 5th October 2004 pursuant to the above vendor duty matter.

After careful and thorough determination of the facts and circumstances, together with giving consideration to the discretion under section 162B (4), we regret to inform you that your objection is disallowed.

Section 162B(4) states that “despite any other provision of the 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 a particular case”.

Clearly the main issue to be dealt with in applying this provision is to determine whether it is fair and reasonable to consider any land related property, land used and occupied as a principal place of residence regardless of the fact that the property does not meet may of the expressed criteria in other provisions of the Act.

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

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.

In regards to your objection, the Willoughby property has only been used as you 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 26th 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 do not make for an exceptional case that merits an exemption upon the Chief Commissioner’s exercise of discretion under section 162B(4).

28 There are allegations of a similar nature contained in the Respondent’s submissions. No evidence was furnished to the Tribunal as to the manner in which this comparatively new law has been administered in respect of other taxpayers. It may be that there have been other cases in which assessments have been raised in similar circumstances and where the taxpayers concerned have not sought to object and to seek a refund of duty as the Applicant has done. The fact that this may be so is not to the point. The Respondent in his submissions contended that, having regard to the last paragraph of the letter dated 1 December 2004, the Applicant bears an onus; the words used are: “The onus rests upon the Applicant to show that there has been unfair treatment.” The Respondent stated in bald terms that there have been cases which are similar but furnished no evidence of any kind in substantiation of that assertion. The Tribunal doubts in any event whether as between any two cases the circumstances will be so similar as to warrant a blanket denial of relief. The specific circumstances in this case are likely to be applicable to the Applicant alone even if there are similarities in other situations. I do not think that the reference to an onus is in this context apposite. It is true that where an assessment is made the taxpayer in tax cases bears the onus of establishing that it is wrong; in fact the case authorities make it clear that the burden on the taxpayer goes further and that he or she must establish what the correct assessment should be.. This is not such a case; there was an assessment and there is no dispute about its correctness. The dispute is simply that the Applicant contends that in her particular circumstances she is entitled to discretionary relief and the Respondent contends that she is not. In formulating the correct and preferable decision in relation to the exercise of a discretion, onus cannot be a relevant factor, and particularly where the Respondent states in bald terms without more that there are other similar cases. The Applicant in her submissions contends that the Respondent has (incorrectly) adopted a purely formulistic approach; that contention is correct.

29 The correct approach must be to have regard to the policy in respect of the statutory provisions. That policy put in simplistic terms it that the taxpayer is not liable for the duty when he or she disposes of his or her PPR. So much is clear. That simple policy must of necessity when inserted in the Act be amplified and fleshed out by provisions, and often provisions as to time periods which are (necessarily) arbitrary. Section 162B (3) refers in its terms to time periods of 2 years and 3 years out of 5 years respectively. Those time periods could have been longer or shorter. .

30 There are comparable provisions in the Land Tax Management Act 1956. Again there are provisions as to the PPR exemption and including in respect of time periods. Some of those provisions have been amended from time to time. There too the provisions as to the PPR exemption are now contained (mainly) in a schedule. Put in very simple terms an exemption is allowed for a land tax year if on the preceding 31 December the taxpayer owned and resided in a property in such manner that it was his or her PPR and where that taxpayer had done so for the immediately preceding 6 months commencing on the preceding 1 July. However the Respondent is empowered to dispense with the 6 months requirement.

31 In the result and on analysis it is my view that the Applicant when she sold the Residence did in substance, if not in strict fact, sell her PPR. It is true that she was not living in it at the time because, for good and proper reasons she had vacated the Residence in order to live firstly in the Rental Home and thereafter (for a short period prior to sale of the Residence) in the second Artarmon property. It is also true that she rented out the Residence for a short term which in the result proved to be longer than first anticipated, and that she received rental in consequence. That too is explicable on the basis that it did no more than minimise the cost in rent of the Rental Home. The fact that she claimed deductions evidences nothing more than that she claimed what in law she was entitled to claim. The period of occupation of 21 months was more than half the period of 3 years prescribed by section 162B (3) (b).

32 The discretionary power conferred by section 162B (4) was clearly given to enable the Respondent to relieve taxpayers where the relevant provisions applied in a manner which was unreasonable or harsh. It cannot be sufficient for the Respondent in denying relief to recite the provisions and then to deal with the matter by denying relief because there was not compliance with those provisions. On this basis the discretion itself is denied meaning and effect. To grant the relief sought would in my view be fair and reasonable; to do so would accord with the underlying policy and would not go beyond the threshold described by French J in Swift’s case; to exercise the discretion in favour of the Applicant is in my view the correct and preferable decision. It is my view moreover that this is the type of case envisaged by the provision and where because of factors (reasonable in all the circumstances) there was not strict compliance with relevant time provisions.

33 Accordingly the decision under review is set aside; the Tribunal determines that the Applicant is entitled to a refund of the duty paid, amounting to $22150 together with interest calculated in accordance with the Taxation Administration Act.