Dyda P/L v Commissioner of State Taxation - [2013] SASC 156

SUPREME COURT OF SOUTH AUSTRALIA
(Appeals to a Single Judge: Civil)
DYDA P/L & ANOR v COMMISSIONER OF STATE TAXATION
[2013] SASC 156
Judgment of The Honourable Justice Stanley
15 October 2013
TAXES AND DUTIES - STAMP DUTIES - ASSESSMENT AND AMOUNT PAYABLE INCLUDING FINES - GENERALLY - SOUTH AUSTRALIA
TAXES AND DUTIES - STAMP DUTIES - EXEMPTIONS - TRUSTS
TAXES AND DUTIES - STAMP DUTIES - EXEMPTIONS - LAND RICH ENTITIES
TAXES AND DUTIES - STAMP DUTIES - APPEAL, CASE STATED ETC - SOUTH AUSTRALIA
This is an appeal against an assessment of stamp duty.
Central to this appeal is a commercial property situated at Woodville North (“the land”).
In late 2006, an agreement was entered into between Colt Ventilation Pty Ltd as trustee for the Woodville Property Trust and the purchaser. By the agreement, the parties agreed to enter into a contract for the purchase of the land by Dyda Pty Ltd for $5.15 million, or to acquire control of parts of the trust funds of certain trusts so as to effect transfer of control of the trust property, namely, the land, to the Dyda interests.
A contract for the sale and purchase of the land was executed on 22 December 2006. By the time the Contract was executed, the purchase price had been renegotiated to a sum of $4.8 million.
The Contract provided for what it described as an “Alternative Acquisition”. The purpose of the “Alternative Acquisition” was to allow the purchaser to acquire control of part of the trust funds so as to effect the transfer of control of the land from the vendor to the purchaser. It involved a complex arrangement requiring the execution of multiple instruments resulting in the “cloning” of that part of the trust fund of the Woodville Property Trust comprising the land and the appointment of Dyda Pty Ltd as trustee of the “cloned” trust. The “Alternative Acquisition” contemplated the transfer of the land to Dyda Pty Ltd for the purposes of effecting the appointment of it as a new trustee.
On 6 February 2007, the purchaser made the election for which the Contract provided. Pursuant to the election, on 8 March 2007 the “Alternative Acquisition” was implemented. The land was transferred from Colt Ventilation Pty Ltd to Dyda Pty Ltd. The “Alternative Acquisition” was completed on 16 March 2007 by the payment by Dyda Pty Ltd of $4.8 million to Colt Ventilation Pty Ltd.
On 12 January 2012 the Commissioner of State Taxation assessed stamp duty to be payable as follows:
• An amount of $257,830 plus interest of $37,488.30 and penalty tax of $64,457.50 against Dyda Pty Ltd as trustee for the Burleigh Avenue Trust in respect of the transfer of the land;
• An amount of zero dollars against J Dyda Nominees Pty Ltd as trustee for the Burleigh Avenue Trust No. 2 in respect of the transfer of one ordinary unit in the Burleigh Avenue Trust;
• An amount of zero dollars against J Dyda Nominees Pty Ltd as trustee for the Burleigh Avenue Trust No. 3 in respect of the transfer of one ordinary unit in the Burleigh Avenue Trust; and
• An amount of $257,830 plus interest of $37,488.30 and penalty tax of $64,457.50 against J Dyda Nominees Pty Ltd as trustee for both the Burleigh Avenue Trust No. 2 and the Burleigh Avenue Trust No. 3 in respect of the acquisition of a significant interest in the Burleigh Avenue Trust.
On 16 July 2012, the Minister for Finance of South Australia confirmed the assessment of stamp duty, penalty tax and interest made by the Commissioner.
Held:
1. The transfer of the land from Colt Ventilation Pty Ltd to Dyda Pty Ltd was not for the purpose of effecting the appointment of a new trustee. Further, the “Alternative Acquisition” was part of a scheme for conferring a benefit in relation to the land upon the Dyda interests to the detriment of beneficial interests in the land. It follows that the appellants are not entitled to the exemption from stamp duty conferred by s 71(5)(d) of the Stamp Duties Act 1923 (SA). [55]; [91] - [92]; [100].
2. The Commissioner applied Part 4 of the Stamp Duties Act to the same transactions that constituted part of the scheme which took the transfer of the land outside the exemption of s 71(5)(d). The operation of s 71(12) precludes the application of the provisions of Part 4 to those transactions. Further, s 97(5) operated to reduce the duty that would otherwise have been payable upon the unit transfers transaction by the amount of the duty paid in respect of the Memorandum of Transfer. As such, the assessment of the Commissioner under Part 4 of the Stamp Duties Act is wrong. The Commissioner’s assessment of stamp duty, penalty tax and interest payable in respect of the Part 4 assessment must be revoked. [110]; [119], [138].
3. Sections 101, 102(2) and 102(3) are not applicable to the facts of the “Alternative Acquisition”. [139].
4. The purpose of the “Alternative Acquisition” was to avoid liability for stamp duty that would have arisen on the Contract for the sale and purchase of the land. [165].
5. Dyda Pty Ltd did not take reasonable care to comply with a taxation law. There was no error in the Commissioner’s imposition of penalty tax in relation to the Memorandum of Transfer. [188] - [189].
Taxation Administration Act 1996 (SA) s 3, s 11, s 30, s 35, s 92, Part 6; Stamp Duties Act 1923 (SA) s 2, s 4, s 20, s 60, s 70, s 71, Part 4, Schedule 2; Income Tax Assessment Act 1936 (Cth) Part IX, referred to.
Pharmos Nominees Pty Ltd v Commissioner of State Taxation (2012) 113 SASR 487; Pharmos Nominees Pty Ltd v Commissioner of State Taxation [2012] SASC 24; CCM Holdings Trust Pty Ltd v Commissioner of State Revenue [2013] NSWSC 1072, applied.
Dadeeton v Commissioner of State Taxation(2004) 88 SASR 109 (2004) 88 SASR 109; Federal Commissioner of Taxation v Commercial Nominees of Australia Ltd (2001) 47 ATR 220; PMT Partners Pty Ltd (In Liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301; Commissioner of State Revenue v Snowy Hydro Ltd [2012] VSCA 145; Snowy Hydro Ltd v Commissioner of State Revenue (Vic) (2010) 79 ATR 118, discussed.
Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (1997) 42 NSWLR 505; St George Bank Ltd v Commissioner of Taxation (2008) 69 ATR 634; Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351; K-Generation v Liquor Licensing Court (2009) 237 CLR 501; Federal Commissioner of Taxation v Clark (2011) 190 FCR 206; Central Northern Adelaide Health Services v Atkinson (2008) 103 SASR 89; MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; Slutzkin v Federal Commissioner of Taxation (1977) 140 CLR 314, considered.

DYDA P/L & ANOR v COMMISSIONER OF STATE TAXATION
[2013] SASC 156
STANLEY J:
Introduction

This is an appeal against an assessment of stamp duty.
Central to this appeal is a commercial property situated at 33-37 Burleigh Avenue, Woodville North (“the land”).
In late 2006 the registered proprietor of the land was Colt Ventilation Pty Ltd (“Colt Ventilation”) as trustee for the Woodville Property Trust. The Woodville Property Trust is a unit trust. Gerard Meeuwissen and Brian Young were the sole directors and shareholders of Colt Ventilation Pty Ltd. Horizon Engineering Pty Ltd (“Horizon Engineering”), as trustee of the Meeuwissen Family Trust, was the holder of one unit in the Woodville Property Trust. Young Engineering Pty Ltd (“Young Engineering”), as trustee of the Young Family Trust, was the holder of the other unit in the Woodville Property Trust.
Interests associated with John Dyda wished to acquire the land. Negotiations were entered into between the Dyda and the Colt Ventilation interests for this purpose. That resulted in entry into Heads of Agreement dated 12 December 2006. By the Heads of Agreement the parties agreed to enter into a contract for the purchase of the land by Dyda Pty Ltd (“Dyda”) for $5.15 million, or to acquire control of parts of the trust funds of the trusts so as to effect transfer of control of the trust property, namely, the land, from the Meeuwissen and Young interests to the Dyda interests. The Heads of Agreement was intended to create a binding and enforceable agreement for the sale and purchase of the property.[1]
[1] Heads of Agreement, Exhibit A1, clause 7.
A contract for the sale and purchase of the land, as contemplated by the Heads of Agreement, was executed on 22 December 2006 (“the Contract”).
By the time the Contract was executed, the purchase price had been renegotiated to a sum of $4.8 million.
The Contract further provided for what it described as an “Alternative Acquisition”. The “Alternative Acquisition” depended upon an election by the purchaser. The purpose of the “Alternative Acquisition” was to allow the purchaser to acquire control of part of the trust funds so as to effect the transfer of control of the land from the vendor to the purchaser. It involved a complex arrangement requiring the execution of multiple instruments resulting in the “cloning” of that part of the trust fund of the Woodville Property Trust comprising the land and the appointment of Dyda as trustee of the “cloned” trust. The “Alternative Acquisition” contemplated the transfer of the land to Dyda for the purposes of effecting the appointment of it as a new trustee.
On 6 February 2007 the purchaser made the election for which the Contract provided.
Pursuant to the election, on 8 March 2007 the “Alternative Acquisition” was implemented. The land was transferred from Colt Ventilation to Dyda. The “Alternative Acquisition” was completed on 16 March 2007 by the payment by Dyda of $4.8 million to Colt Ventilation Pty Ltd. I will explain this in detail later in these reasons.
On 12 January 2012 the Commissioner of State Taxation assessed stamp duty to be payable as follows:
·An amount of $257,830 plus interest of $37,488.30 and penalty tax of $64,457.50 against Dyda as trustee for the Burleigh Avenue Trust in respect of the transfer of the land contained in Certificate of Title Register Book Volume 5876 Folio 825, being the land based on an assessable value of $4.8 million;
·An amount of zero dollars against J Dyda Nominees Pty Ltd (“Dyda Nominees”) as trustee for the Burleigh Avenue Trust No. 2 in respect of the transfer of one ordinary unit in the Burleigh Avenue Trust;
·An amount of zero dollars against Dyda Nominees as trustee for the Burleigh Avenue Trust No. 3 in respect of the transfer of one ordinary unit in the Burleigh Avenue Trust; and
·An amount of $257,830 plus interest of $37,488.30 and penalty tax of $64,457.50 against Dyda Nominees Pty Ltd as trustee for both the Burleigh Avenue Trust No. 2 and the Burleigh Avenue Trust No. 3 in respect of the acquisition of a significant interest in the Burleigh Avenue Trust, based on an assessable value of $4.8 million.
On 16 July 2012, the Minister for Finance of South Australia confirmed the assessment of stamp duty, penalty tax and interest made by the Commissioner.
The appeal is brought pursuant to s 92 of the Taxation Administration Act 1996 (SA) (“the Taxation Administration Act”).[2] On the hearing of the appeal, the parties submitted an agreed statement of facts. The agreed statement together with relevant documents were received as evidence on the appeal. Mr Todd MacDonald, an officer of Revenue SA, gave evidence. There were no disputed facts. The parties, however, differed as to the consequences that resulted from those facts, and the application of various provisions of the Stamp Duties Act 1923 (SA) (“the Act”).
[2] Section 92 of the Taxation Administration Act 1996 (SA) relevantly provides:
A person who has made an objection may appeal to the Supreme Court if –
(a) the person is dissatisfied with the Minister’s determination of the objection;
…
The facts
On 22 December 2006 the Contract was executed between Colt Ventilation Pty Ltd as trustee for the Woodville Property Trust, as vendor, and Dyda and/or nominee, as purchaser. The terms of the Contract provided that the purchase price of the land was $4.8 million. A deposit of $750,000 was payable in accordance with the terms of the Contract. Importantly, the Contract provided the purchaser with the ability at any time up to 21 days before the settlement date of 28 February 2007 to elect, by notice in writing served on the vendor, to acquire control of that part of the trust fund of the Woodville Property Trust, comprising the land, that part of the trust fund of the Young Family Trust comprising the units it held in the Woodville Property Trust, and that part of the trust fund of the Meeuwissen Family Trust, comprising the units it held in the Woodville Property Trust. This was to be on terms which resulted in Colt Ventilation Pty Ltd receiving the same economic return as under the Contract. This was on the basis that Dyda would indemnify Colt Ventilation Pty Ltd for any stamp duty liability that resulted from these transactions.[3] This was described in the Contract as the “Alternative Acquisition”.
[3] Clause 2.3 of the Special Conditions to the Contract.
Clause 2.5 of the Special Conditions to the Contract provided that Dyda was not under an obligation to exercise the right to make the election and reserved the right to determine whether the “Alternative Acquisition” would not result in a liability for stamp duty comparable to the liability that would arise pursuant to a conventional settlement under the Contract.
Further, the Contract provided that upon an election being made and the parties entering into and executing the documents which would give effect to the “Alternative Acquisition”, the Contract would be cancelled and the deposit paid under the Contract would be retained and applied as part of the “Alternative Acquisition”.
However, clause 2.3.2 of the Special Conditions to the Contract provided that if, after the election made by the purchaser to undertake the “Alternative Acquisition”, the parties were not able to agree the terms of the acquisition and control of that part of the trust fund comprising the land, then the purchaser’s right to acquire control of that part of each of the trusts would terminate and the purchaser was bound to purchase the land in accordance with the terms of the Contract.
On 27 December 2006 a caveat was lodged at the Lands Titles Office by Dyda as caveator claiming an interest as purchaser under and by virtue of the Contract.
On 6 February 2007 Dyda gave notice in writing to Colt Ventilation Pty Ltd that it has exercised its right to make the election.
Consequent upon the exercise of the right of election in the

Contract, on 8 March 2007 the parties executed what is described as an Overarching Agreement. This had the effect of cancelling the Contract.
The Overarching Agreement was entered into between John Dyda, Dyda, Dyda Nominees, Brian Young, Gerard Meeuwissen, Colt Ventilation Pty Ltd, as trustee for the Woodville Property Trust, Horizon Engineering Pty Ltd, as trustee for the Meeuwissen Family Trust, and Young Engineering Pty Ltd, as trustee for the Young Family Trust.
The Overarching Agreement agreed terms to give effect to the transaction constituting the “Alternative Acquisition”. It provided for Dyda and Dyda Nominees to be appointed the trustees of certain parts of the trusts, and certain other matters which involved the passing of control as contemplated by the Heads of Agreement and the Contract.   These were:
·An agreement between Colt Ventilation Pty Ltd, Horizon Engineering Pty Ltd, as trustee for the Meeuwissen Family Trust, and Young Engineering Pty Ltd, as trustee for the Young Family Trust, whereby Colt Ventilation Pty Ltd agreed to distribute to Horizon Engineering Pty Ltd, as trustee for the Meeuwissen Family Trust, and Young Engineering Pty Ltd, as trustee for the Young Family Trust, an interim distribution, as income, of $1,464,642 referrable to the capital gain made as a result of the appointment of Dyda as trustee in respect of that part of the Woodville Property Trust, comprising the land and the variation of the Trust Deed of the Woodville Property Trust to the extent that it applied to the land.
·A Deed of Appointment and Variation made between Colt Ventilation Pty Ltd, Dyda, Horizon Engineering Pty Ltd, as trustee for the Meeuwissen Family Trust, and Young Engineering Pty Ltd, as trustee for the Young Family Trust, whereby:
1.      Dyda was appointed as trustee in respect of that part of the trust fund of the Woodville Property Trust comprising the land to the exclusion of Colt Ventilation Pty Ltd;
2.     Dyda indemnified Colt Ventilation Pty Ltd in respect of the following liabilities of the Woodville Property Trust:
(a)Liabilities in the amount of $2.7 million incurred by Colt Ventilation Pty Ltd in discharging a Memorandum of Mortgage that applied to the land;
(b)A liability of Colt Ventilation Pty Ltd in the amount of $635,358 in respect of existing unpaid beneficiary entitlements payable to the unit holders of the Woodville Property Trust; and
(c)A liability of Colt Ventilation Pty Ltd for $1,464,642 in respect of beneficiary entitlements payable to the unit holders of the Woodville Property Trust in accordance with the terms of the agreement to make an interim distribution in that sum to the trustees of the Meeuwissen and Young Family Trusts referred to above;
3.     The trust deed of the Woodville Property Trust, to the extent that it related to that part of the trust fund in respect of which Dyda had been appointed as trustee, was varied so that:
3.1the name of that part of the trust fund was changed to the Burleigh Avenue Trust;
3.2the governing law of the trust was changed from the law of New South Wales to the law of South Australia; and
3.3new provisions were inserted giving the trustee the power to issue a new class of units known as “funding units”. The holder of a funding unit could be called upon by the trustee to make payments of capital in respect of the funding unit but never in an aggregate amount greater than $4.8million. Subject to the holder of the funding unit paying any calls made by the trustee in respect of the funding unit, the holder was entitled to receive distributions of net income in priority to the holders of all the other classes of units, and the trustee had the right to repay to the holder of the funding unit any amounts paid by the holder pursuant to any calls made in respect of the funding unit.
·A Deed of Appointment of New Trustee made between Horizon Engineering Pty Ltd, Dyda Nominees, and Gerard Meeuwissen, whereby Dyda Nominees was appointed as trustee, to the exclusion of Horizon Engineering Pty Ltd, in respect of that part of the trust fund of the Meeuwissen Family Trust comprising one ordinary unit in the Burleigh Avenue Trust;
·A Deed made between Dyda Nominees, Gerard Meeuwissen, and John Dyda whereby:
(1)    The trust deed of the Meeuwissen Family Trust, to the extent that it related to that part of the trust fund in respect of which Dyda Nominees had been appointed as trustee, was varied so that it was known as the Burleigh Avenue Trust No. 2 and the governing law was the law of South Australia;
(2)    The guardian and appointor of that part of the trust fund in respect of which Dyda Nominees had been appointed as trustee, was amended to be John Dyda;
·A Deed of Appointment of New Trustee made between Young Engineering Pty Ltd, Dyda Nominees and Brian Young whereby Dyda Nominees was appointed as trustee, to the exclusion of Young Engineering Pty Ltd, in respect of that part of the trust fund of the Young Family Trust, comprising one ordinary unit in the Burleigh Avenue Trust;
·A Deed entered into between Dyda Nominees, Brian Young and John Dyda whereby:
(1)    The trust deed of the Young Family Trust, to the extent that it related to that part of the trust fund in respect of which Dyda Nominees had been appointed as trustee, was varied so that it was known as the Burleigh Avenue Trust No. 3 and the governing law was the law of South Australia;
(2)    The guardian and appointor of that part of the trust fund in respect of which Dyda Nominees had been appointed as trustee was changed to be John Dyda.
·A Memorandum of Transfer executed by Colt Ventilation Pty Ltd and Dyda for effecting the transfer of the land to Dyda in its capacity as trustee of the Burleigh Avenue Trust pursuant to the terms of the Deed of Appointment and Variation referred to above.
·A Standard Transfer Form executed by Horizon Engineering Pty Ltd and Dyda Nominees effecting the transfer of one ordinary unit in the Burleigh Avenue Trust to Dyda Nominees in its capacity as trustee of the Burleigh Avenue Trust No. 2 pursuant to the terms of the Deed of Appointment of New Trustee referred to above (“the Horizon unit transfer”).
·A Standard Transfer Form executed by Young Engineering Pty Ltd and Dyda Nominees effecting the transfer of one ordinary unit in the Burleigh Avenue Trust to Dyda Nominees in its capacity as trustee of the Burleigh Avenue Trust No. 3 pursuant to the terms of the Deed of Appointment of New Trustee referred to above (“the Young unit transfer”).
·Dyda, in its capacity as trustee of the Burleigh Avenue Trust, issued to Dyda, in its capacity as trustee of the Burleigh Avenue Trust No. 4, one funding unit in the Burleigh Avenue Trust for a total consideration of $1.00.
·Gerard Meeuwissen indemnified Dyda Nominees against any claim made by him, his family or associates under the Burleigh Avenue Trust No. 2 (under which one ordinary unit was held in the Burleigh Avenue Trust), and indemnified Dyda against any such claims made under the Burleigh Avenue Trust No. 4 (under which the funding unit in the Burleigh Avenue Trust was held). Brian Young gave the same indemnities in respect of claims by him, his family and associates under the Burleigh Avenue Trusts No. 3 and Burleigh Avenue Trust No. 4.
·Dyda as trustee of the Burleigh Avenue Trust indemnified Colt Ventilation Pty Ltd in relation to any liability it incurred to pay stamp duty in respect of any of the above documents.

These instruments were all executed on 8 March 2007. On the same day the Memorandum of Transfer and the Deeds of Appointment of new trustees to the Burleigh Avenue Trusts No. 2 and 3 were stamped via RevNet[4] by the appellants’ solicitors as exempt.
[4] RevNet is Revenue SA’s Internet based system that provides approved agents/taxpayers with the ability to perform Stamp Duty, Certificate and Payroll Tax functions online.
Completion occurred on 16 March 2007, as contemplated by the Overarching Agreement, with Dyda providing funds in the sum of $4.8 million[5] to Colt Ventilation under its liability to indemnify pursuant to clause 3.1 of the Deed of Appointment and Variation.
[5] Less the deposit of $750,000 previously paid which was applied to payment of the indemnity.
It can be seen that the “Alternative Acquisition” was a complex arrangement. In essence, it involved the carving out of what the appellants describe as the “cloning” of that part of the trust fund of the Woodville Property Trust comprising the land, and the appointment of Dyda as trustee of the “cloned” trust. This was renamed as the Burleigh Avenue Trust. The Meeuwissen and Young Family Trusts were also “cloned”, and Dyda Nominees appointed as trustee of these “cloned” trusts which were thereafter known as the Burleigh Avenue Trust No. 2 and the Burleigh Avenue Trust No. 3 respectively. The two units in the unit trusts were transferred to Dyda Nominees and the funding unit was issued in favour of Dyda. By these arrangements and the change of trustees, the Dyda interests acquired control of the land from the Meeuwissen and Young interests, culminating in the execution of the Memorandum of Transfer of the land in favour of Dyda as trustee of the Burleigh Avenue Trust. By this means the Dyda interests came to hold the legal and beneficial interests in the land.
Issues on appeal
Against this background, the issues on appeal are:
·Whether Dyda was entitled to an exemption from stamp duty pursuant to s 71(5)(d) of the Act on the basis that the Memorandum of Transfer effected a transfer of the land for the purposes of effecting the appointment of a new trustee;
·Whether the transfer of the two ordinary units to Dyda Nominees attracted stamp duty under Part 4 of the Act (“the land rich provisions”), and whether the purchaser was entitled to an exemption from stamp duty under these provisions pursuant to s 101 or s 102 of the Act;
·Whether s 71(12) of the Act applied so as to relieve Dyda Nominees from a liability to pay duty pursuant to Part 4 of the Act on the basis that the liability in respect of the transfer of the two ordinary units and the issue of the funding unit was all part of a single transaction;
·Whether, in the alternative, the “Alternative Acquisition” was effected in order to avoid or evade the payment of stamp duty so as to attract the operation of s 70 of the Act;
·If so, whether the Memorandum of Transfer and the unit transfers were annihilated, or whether the Memorandum of Transfer was liable to duty at the market value of the land; and
·Whether the appellants were liable to pay penalty tax.
Approach on appeal
In Pharmos Nominees Pty Ltd v Commissioner of State Taxation[6] Gray J set out the principles relevant to the interpretation of taxing statutes and the approach to determining appeals against an assessment of stamp duty in the following terms:[7]
[6] [2012] SASC 24.
[7] [2012] SASC 24 at [48]-[51], [53]-[56].
The approach to the interpretation of taxing or fiscal statutory provisions has been the subject of extensive judicial comment. In Cooper Brooks (Wollongong) Pty Ltd v Federal Commissioner of Taxation,[8] Mason and Wilson JJ confirmed the approach to be taken to the interpretation of a taxing statute:[9]
[8]    Cooper Brooks (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297.
[9]    Cooper Brooks (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320-321; see also Pearce & Geddes, Statutory Interpretation (LexisNexis Butterworths, 6^th ed, 2004) [9.33].
… The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole. But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction.
The rules, as D. C. Pearce says in Statutory Interpretation, p. 14, are no more than rules of common sense, designed to achieve this object. They are not rules of law. If the judge applies the literal rule it is because it gives emphasis to the factor which in the particular case he thinks is decisive. When he considers that the statute admits of no reasonable alternative construction it is because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the legislature.
On the other hand, when the judge labels the operation of the statute as “absurd”, “extraordinary”, “capricious", “irrational" or “obscure” he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.
The fact that an Act is a taxing statute does not make it immune to the general principles governing the interpretation of statutes. The courts are as much concerned in the interpretation of revenue statutes as in the case of other statutes to ascertain the legislative intention from the terms of the instrument viewed as a whole.
The statutory interpretation principles generally applicable, where revenue statutes and in particular stamp duty statutes are under consideration, were recently stated by French CJ in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory):[10]
[10] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, [4].
The starting point in consideration of the first question is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill as: "dictated by elementary considerations of fairness, for, after all, those who are subject to the law's commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage." In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy.
[Footnotes omitted.]
The other members of the High Court in that decision made the following observations in relation to the task of interpreting revenue statutes: [11]
[11] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, [51], [53] (Hayne, Heydon, Crennan and Kiefel JJ).
Fixing upon the general legislative purpose of raising revenue carried with it the danger that the text did not receive the attention it deserves. This danger was adverted to by Gleeson CJ in Carr v Western Australia when he said:
“[I]t may be said that the underlying purpose of an Income Tax Assessment Act is to raise revenue for government. No one would seriously suggest that s 15AA of the Acts Interpretation Act has the result that all federal income tax legislation is to be construed so as to advance that purpose. Interpretation of income tax legislation commonly raises questions as to how far the legislation goes in pursuit of the purpose of raising revenue. In some cases, there may be found in the text, or in relevant extrinsic materials, an indication of a more specific purpose which helps to answer the question. In other cases, there may be no available indication of a more specific purpose. Ultimately, it is the text, construed according to such principles of interpretation as provide rational assistance in the circumstances of the particular case, that is controlling.”
…
… The general purpose of the Act to raise revenue is insufficient to support an intention to exclude a clearly expressed definition and to substitute a quite different meaning. …
[Footnote omitted.]
The Right of Appeal
Division 2 of Part 10 of the Taxation Administration Act governs appeals to the Supreme Court. That Division includes the following provisions:
92—Right of appeal
A person who has made an objection may appeal to the Supreme Court if—
(a)     the person is dissatisfied with the Minister's determination of the objection;
…
96—Grounds of appeal
(1)     The appellant’s and respondent's cases on an appeal are not limited to the grounds of the objection or the reasons for the determination of the objection or the facts on which the determination was made.
(2)     However, if the objection was to a reassessment, any limitation of the matters to which the objection could relate under Division 1 applies also to the appeal.
…
98—Determination of appeal
On an appeal, the Supreme Court may do one or more of the following:
(a)confirm or revoke the assessment or decision to which the appeal relates;
(b)make an assessment or decision in place of the assessment or decision to which the appeal relates;
(c)make an order for payment to the Commissioner of any amount of tax that is assessed as being payable but has not been paid;
(d)make any further order as to costs or otherwise as it thinks just.
…
Section 97 of the Taxation Administration Act provides:
On an appeal, the appellant has the onus of proving the appellant's case.
The effect of section 97 is that [the appellants] must prove that the amount assessed in fact exceeds its true liability to duty. A similar provision was considered by the High Court in Federal Commissioner of Taxation v Dalco, where Brennan J observed:[12]
[12] Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614, 621, 623-624.
… [T]he purpose of the procedure of assessment, objection and appeal or review is to ascertain the true tax liability of the taxpayer under the substantive provisions of the Act. Oftentimes, the grounds of an objection and the Commissioner's notice of decision thereon will define the issues for determination by a court entertaining an appeal against the assessment; but not necessarily so. It is not the grounds of the objection against an assessment but the objection itself which is treated as an appeal and forwarded to a Supreme Court for hearing and determination: ss. 187(1)(b), 197, 199. It would be inappropriate for a court determining an appeal to make an order altering the tax liability assessed (s. 199) unless the court were satisfied that the amount to which it proposed to alter the assessment represented the true tax liability of the taxpayer. Although the grounds of objection limit the grounds of appeal, the ultimate question for the court hearing the appeal is not whether the grounds have been made out but whether the amount assessed as taxable income is wrong. The burden which rests on a taxpayer is to prove that the assessment is excessive and that burden is not necessarily discharged by showing an error by the Commissioner in forming a judgment as to the amount of the assessment.
…
The ground of objection on which the taxpayer here relies is error in the formation of a judgment as to the amount on which tax ought to be levied. But mere error in the formation of that judgment by the Commissioner does not warrant the setting aside of the amount assessed. Given the validity of the exercise of the power to make an assessment under s. 167(b), the ultimate question is whether the amount of the assessment is excessive. The amount of the assessment might not be excessive in fact, though the reasons which led to the assessment were erroneous. In George's Case the Full Court said:
the law has always been taken to be that in an appeal from an assessment the burden lies upon the taxpayer of establishing affirmatively that the amount of taxable income for which he has been assessed exceeds the actual taxable income which he has derived during the year of income.
Kitto J., from whose judgment the appeal in George's Case was brought, said:
[Section] 190 (b) places the burden of proving that the assessment is excessive upon the appellant; and in order to carry that burden he must necessarily exclude by his proof all sources of income except those which he admits. His case must be that he did not derive from any source taxable income to the amount of the assessment.
…
The manner in which a taxpayer can discharge that burden varies with the circumstances. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. …
[Footnotes omitted. Emphasis added.]
The Fundamentals of Stamp of Duties Legislation
In Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd, Gleeson CJ and Gummow, Kirby and Hayne JJ restated certain fundamental principles concerning stamp duties legislation:[13]
In considering the true construction of [Stamp Duties Legislation] two principles must be kept in mind. First, the statutory provisions in question in this case impose a duty on instruments, not on transactions. Secondly, liability to duty arises because the dutiable instrument transfers an estate or interest in real property, and it is by reference to the value of that which is transferred that duty is imposed.
The Court in Pioneer Concrete relied on the following observations from DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW), where Mason J observed:[14]
It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect ... [I]n the case of a conveyance the statutory command is that it attracts duty on the property conveyed; in the case of the declaration it attracts duty on "the property comprised therein". Consequently the issues are: (1) What was the property conveyed by the transfer?; and (2) What was the property comprised in the declaration? The decision on these issues hinges on the interpretation of the two instruments, that is, on the description given by them of the relevant estate or interest as applied to the facts of the case. It is a matter of ascertaining what is the property with which each instrument deals, according to its terms.
We cannot substitute for the issues prescribed by the statute a different issue having no foundation in the statutory provisions. Nor can we substitute for the property which the parties have chosen by their instruments to convey and make the subject of a declaration of trust the interest in property which in a practical sense represents the alteration in [the transferor's] position brought about by the combined operation of the two instruments.
[Footnote omitted.]
[13] Commissioner of State Revenue (Vic) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651, [34].
[14] Commissioner of State Revenue (Vic) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651, [35] citing DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, 449.
I adopt that approach.
While it is the instrument that is to be assessed, not the transaction, a court may require an understanding of the transaction from which the instrument emanates in order to properly characterise the instrument.[15] There is no room for concepts of economic equivalence.[16] But evidence may be led to determine the real nature of a transaction to which an instrument relates. In Commissioner of Stamp Duties (Qld) v Hopkins, Latham CJ observed:[17]
… in many cases the courts have heard extrinsic evidence in order to determine the real nature of the transaction to which the instrument relates and to ascertain the amount of duty payable. See also ss. 22 (2) and 23 of the Act, which enable the Commissioner to inquire into facts and circumstances not appearing upon the face of an instrument. It is true that, as has often been said, the Stamp Duty Acts impose duties upon instruments and not upon transactions. It is obvious that you can stick a stamp or impress a stamp upon an instrument, but not upon a transaction. But, in order to determine whether an instrument is dutiable, it is nevertheless necessary to ascertain the legal operation of the instrument, i.e., to determine the nature of the transaction which it accomplishes. Thus, for example, if a person purported to make a conveyance or settlement of land in which he had no interest whatever, the instrument would not be dutiable as a conveyance or settlement, because it would not produce any legal effect whatever in relation to the property with which it purported to deal: See per Rich A.C.J. in Wedge v. Acting Comptroller of Stamps (Vict.); Kent v. Commissioner of Stamps; Alpe, Law of Stamp Duties, 19th ed. (1929), p. 249:—"A settlement must effect a disposition of property"; Massereene v. Commissioners of Inland Revenue.
In the first place, I consider the instrument in itself independently of any extrinsic evidence and ask what would be the legal operation of the instrument if fully executed. The instrument recites an intention of the father to transfer certain property to the son to be held by him upon the trusts mentioned therein. It does not contain any agreement (either with the son or with the proposed beneficiaries) to settle the property, but only states an intention to do so. If the father had changed his mind and had refused or merely failed to transfer the property to the son, neither the son nor the proposed beneficiaries (who were volunteers) could have compelled him to do so. It is a common practice for an intending settlor to execute a deed containing or referring to an agreement to settle property owned by him and declaring the intended trusts thereof, the property to be transferred upon or immediately after the execution of the deed: See Davidson v. Chirnside. Such a document does not itself settle any property, but, as an agreement to settle property, it would be a settlement within the meaning of the Act. The instrument now in question cannot be brought within the Act as being an agreement to settle property.
Further, the document itself does not transfer any property to any person. It does not itself affect the right or title of any person to any property. The document states that the father, described as the settlor, declares that the son shall hold the property upon certain trusts, but it does not in itself (i.e. apart from the extrinsic fact of transfer of the property) give any rights to any person in respect of the property.
(Footnotes omitted)
[15] Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (1997) 42 NSWLR 505 per Gleeson CJ at 508.
[16] Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (1997) 42 NSWLR 505 at 511; St George Bank Ltd v Commissioner of Taxation [2008] FCA 453 at [63], (2008) 69 ATR 634 at 653.
[17] [1945] HCA 14, (1945) 71 CLR 351 at 360-361.
The appellants’ submissions
The appellants submit that the respondent wrongly assessed the land transfer as dutiable.

The appellants submit that each of the instruments assessed, namely, the Memorandum of Transfer on the basis of a value of $4.8 million, the Horizon Unit Transfer pursuant to the Meeuwissen Deed of Appointment on the value of zero dollars, and the Young Unit Transfer pursuant to the Young Deed of Appointment on the value of zero dollars, was exempt pursuant to s 71(5)(d) of the Act. These instruments are a conveyance for effecting the retirement of a trustee or the appointment of a new trustee, where the Commissioner should be satisfied that the transfer is not part of a scheme for conferring a benefit, in relation to the trust property, upon the new trustee or any person, whether as a beneficiary or otherwise, to the detriment of the beneficial interests of any person.
They submit that s 71(5)(d) does not require exclusivity of purpose. So long as a purpose of the transfer of the property was to effectuate the appointment of a new trustee, it is irrelevant that there were any other consequences of the appointment of a new trustee.
They submit the transfer did not involve the conferring of a benefit, nor the suffering of a detriment. When the scheme is considered in its entirety, they submit, there has been no change to the beneficial interests of any person in any of the trust property and therefore no benefit conferred on a person in relation to the trust property, nor detriment suffered by any person to their beneficial interest in the trust property. The objects of the Meeuwissen Family Trust and the Young Family Trust remained the same. Their rights were not altered.
In the case of the land transfer, the appellants submit, it did not involve the conferring of a benefit in relation to the trust property in any form. Nothing was conferred on anybody, as nothing additional was done to create in any person rights apart from the rights that existed under the existing trust. On the appointment of the new trustee in relation to the trust property, no rights were conferred in relation to the trust property on the trustee apart from those inherent on the appointment of the new trustee. The same trusts remained, with the unit holders being in effect the same discretionary trusts, there were no new objects or beneficiaries of the discretionary trusts having the benefit of the units or otherwise becoming entitled to any benefits from those trusts. Accordingly, none of the new trustees in their own right obtained advantages that the retiring trustees did not have. The issue of the funding unit deprived none of the existing unit holders of any rights or benefits. The existing unit holders had the same rights and benefits that they always had. Even if the issue of the funding unit could be regarded as creating a benefit in the new unit holder, which was not the case, it was not a detriment to the existing unit holders. For there to be a detriment, there must have been some diminution of one or more of the legal rights of the unit holders. There was no variation of those rights under any document or any other arrangement. Their interest in the fund was always the net value of the fund, no matter how it was measured from time to time.
Further, the appellants submit that in the case of the Horizon Unit Transfer and the Young Unit Transfer, these transactions did not involve the conferring of a benefit in relation to the trust property in any form. Nothing was conferred on anybody as nothing additional was done to create in any person rights apart from the rights that existed under the existing discretionary trusts. On the appointment of the new trustee to the trust property, no rights were conferred in relation to the trust property on the trustee apart from those inherent on the appointment of the new trustee. Any benefit to have been conferred must have been in respect of trust property. But on the appointment of the new trustee, no rights were conferred in relation to the trust property. The rights remained as they were. The same persons remained objects and beneficiaries of the discretionary trusts, there were no new objects of the discretionary trusts, and the new trustee did not obtain any advantages or benefits that the retiring trustees did not have. For there to be a detriment, there must have been some diminution of rights. That did not happen.
In the alternative, the appellants submit that if any instrument was dutiable, then all the other instruments should have been duly stamped without the payment of further duty pursuant to s 71(12).
The appellants also submit that the Commissioner wrongly assessed Dyda Nominees with duty of $359,775.80[18] on the basis that Part 4 of the Act applied. Part 4 applies to land rich entities. Relevantly, for the purposes of the appeal, Part 4 applies to private unit trusts with underlying local land assets with a value of $1 million or more, where the unencumbered value of the entity’s underlying land assets comprises 60 per cent or more of the unencumbered value of the entity’s total underlying assets. Section 95(1) provides that a person or group that acquires a significant interest, or increases its significant interest, in a land rich entity, notionally acquires an interest in the underlying local land assets of the entity and is liable to duty in respect of the notional acquisition. The underlying interest in assets of an entity means a beneficial interest in the assets of the entity. A significant interest is a proportionate interest in a private entity of fifty per cent or more. The appellants submit that neither the Horizon Unit Transfer nor the Young Unit Transfer constituted the acquisition of a significant interest in the Woodville Property Trust by Dyda Nominees. Dyda Nominees did not acquire a beneficial interest in anything. It is not entitled in its own right to exercise the voting rights attaching to either the unit held for the Meeuwissen Family Trust or the Young Family Trust, nor is it entitled to share in distributions of income or any assets on a winding up. It therefore did not acquire a significant interest in anything. The appointment of new trustees, which did not alter the underlying interests in the land, did not involve the acquisition of a significant interest by the new trustees. Accordingly, neither the Horizon Unit Transfer nor the Young Unit Transfer involved a transaction whereby there was acquisition of a significant interest such that Part 4 applied.
[18] Includes interest and penalty tax.
In any event, the appellants submit that even if the change of trustee did constitute the acquisition of a significant interest in a land rich entity, Part 4 did not apply by reason of the operation of s 101(1) of the Act. Section 101(1) provides that a transaction under which a person or group acquires an interest in a land rich entity is exempt from duty under Part 4 if it takes place in circumstances in which a conveyance of an interest in the underlying local land assets would not attract ad valorem duty. The appellants submit that because each of the transfers is not dutiable under s 71(5)(d), the transactions are exempt from duty.
Further, the appellants submit that duty is not assessable in respect of these transactions by reason of the operation of s 102(2) or s 102(3) of the Act.
Section 102(2) provides that if a person or group acquires a significant interest in a land rich entity, and another person or group later acquires a significant interest in the land rich entity, without diminishing the former significant interest, the Commissioner may, if satisfied that it is just and equitable to do so, exempt the later acquisition, wholly or partly, from duty under Part 4. The appellants submit that it is just and equitable to exempt the acquisition of the funding unit from duty if the issue to Dyda of the funding unit and the acquisition of the Horizon unit and the Young unit by Dyda Nominees as trustee respectively of the Burleigh Avenue Trusts No. 2 and No. 3 are associated transactions pursuant to s 95A. This is because Dyda Nominees, as trustee respectively of the two trusts, already had a significant interest, and the acquisition of the funding unit did not diminish the significant interest held by Dyda Nominees as trustee of the two trusts.
Section 102(3) provides that if a group acquires a significant interest in a land rich entity as a result of a dutiable transaction, and the person or group that is a member or sub-group of the group acquires that significant interest from the group, the Commissioner may, if satisfied that it is just and equitable to do so, exempt the later acquisition, wholly or partly, from duty under Part 4. The appellants submit that in this case, each of the unit holders of the Woodville Property Trust, and the trustee thereof, constituted a group. In turn, each of the trustees of the Meeuwissen Family Trust and the Young Family Trust are grouped with their beneficiaries, and then grouped together by reason of holding units in the Woodville Property Trust. That broad group acquired a significant interest in a land rich entity, the Woodville Property Trust, on the trustee of that trust acquiring the land. The acquisition of the land was a dutiable transaction. The Woodville Property Trust thereby became land rich under Part 4. The group thereby acquired interests in a land rich entity and the group has a significant interest. So, as there was an acquisition of a significant interest by reason of the unit transfers, there was an acquisition by a person or group that is a member or sub-group of the group. In these circumstances, the Commissioner should have been satisfied that it was just and equitable to exempt the transaction wholly.
The appellants submit that s 70 has no application to any of these instruments. Section 70 renders void an instrument executed in order, either directly or indirectly, to avoid or evade the payment of the duty to be payable upon a conveyance on sale. The appellants submit that each of the instruments comes expressly within a provision of the Act, and therefore s 70 cannot apply to any of them. Nothing is done by any of those instruments to avoid any duty payable on a conveyance on sale, for none was inevitably payable under the arrangements adopted. Further, the Act allows for choices that were availed of and/or the arrangements were common business transactions. Even if s 70 did apply, the effect is to annihilate the instruments so there is nothing left to stamp, and there is no power to reconstruct or re-characterise any of the instruments so as to render them dutiable as conveyances, or to trigger Part 4 of the Act.
The appellants submit that the Commissioner should have been satisfied in accordance with s 30(2) of the Taxation and Administration Act 1996 (SA) that they took reasonable steps to comply with the taxation law, and no penalty should have been imposed.
Accordingly, the appellants submit that the Court should revoke each of the assessments made and substitute for them an assessment that there is no duty payable pursuant to s 71(5)(d), clause 16(28) of Part 2 of Schedule 2, and s 4(1) of the Act.[19] Further, the Court should set aside the assessments of penalty tax and interest made by the respondent.
[19] Section 4(1) provides: Subject to the exemptions contained in Schedule 2 and the other provisions of this Act, the stamp duties specified in that Schedule are charged in respect of the instruments specified in that Schedule.
Clause 16(28) of Schedule 2 provides:
The following instruments are exempt from all stamp duties:
A conveyance (other than a conveyance operating as a voluntary disposition inter vivos) for effectuating the appointment of a new trustee or the retirement of a trustee.
The respondent’s submissions
The Commissioner submits that the appellants have failed to prove that the amount assessed exceeds their true liability to duty.
The Commissioner submits that neither the exemption under s 71(5)(d) nor s 101 applied. He submits that it is permissible and necessary to consider the background transactional facts to determine whether there was a relevant scheme for the purposes of s 71(5)(d), or an attempt to avoid or evade the payment of duty for the purpose of s 70. He submits the “Alternative Acquisition” was not a common business transaction, and was explicable only as a device to attempt to avoid or evade liability for stamp duty. He submits it amounted to a conveyance on sale by other means.
The Commissioner submits that s 71(5)(d) proposes a two-limb test. Unless the appellants prove that they fall within both limbs of the test, the exemption does not apply. The Commissioner contends that the transfer was not bona fide for the purpose of effectuating the retirement of a trustee or the appointment of a new trustee. He submits there was no “cloning” or splitting of the Woodville Property Trust into two identical trusts. The Burleigh Avenue Trust is a new trust carved from the Woodville Property Trust. Accordingly, there is an absence of continuity which is necessary for the appointment of a new trustee to the same trust. On this basis alone, the exemption cannot apply. In any event, the “Alternative Acquisition” constituted a scheme for conferring a benefit in relation to the trust property upon Dyda to the detriment of the unit holders i.e. Dyda Nominees. Section 71(5)(d) is to be construed purposively. It is not necessary that an actual benefit is conferred or an actual detriment suffered. It is sufficient if the purpose of the scheme merely is directed to those ends. A benefit is conferred upon Dyda in respect of the land and the issue of the funding unit, pursuant to the “Alternative Acquisition”. By contrast, Dyda Nominees as the units holder is adversely affected by the issue of the funding unit. But Dyda Nominees, as units holder, has beneficial interests in the property of the Burleigh Avenue Trust as a whole. The issue to Dyda of the funding unit relegates the beneficial interests of the two unit holders to an inferior position with respect to potential distributions in the future. In any event, the operation of s 71(5)(d) is excluded by s 71(6) because Dyda had a prior beneficial interest in the property under the Contract. Accordingly, the respondent submits that the exemption did not apply and the Memorandum of Transfer attracted ad valorem stamp duty on the sum of $4.8 million.
The Commissioner submits that the provisions of Part 4 also applied to the “Alternative Acquisition”. He submits that the object of Part 4 is to prevent the avoidance of stamp duty by the acquisition of interests in land holding entities rather than a direct purchase of land. He submits that the transactions that attract the application of Part 4 are the acquisition by Dyda Nominees of two units in the Burleigh Avenue trust, and the issue to Dyda of the funding unit. He submits that the Burleigh Avenue Trust is a private unit trust scheme and accordingly a private entity for the purposes of Part 4 pursuant to the definition of “private entity” in s 91(1). It is a land rich entity, having regard to the provisions of s 94, because the land is an underlying local land asset of the Burleigh Avenue Trust valued at $4.8 million. Dyda and Dyda Nominees are a group within the definition of s 91 because of the common directorship and shareholdings of John Dyda. He submits that, by reason of Dyda Nominees holding the units in the Burleigh Avenue Trust, and Dyda holding the funding unit, the group constituted by Dyda Nominees and Dyda controlled all of the votes and was entitled to all distributions of income and all shares in assets upon the winding up of the Woodville Property Trust, pursuant to the Trust Deed as varied by the Deed of Appointment and Variation which permitted the issue of the funding unit. The proportionate interest of the group in the Burleigh Avenue Trust was therefore 100 per cent. Accordingly, the respondent submits Dyda Nominees and Dyda as a group held a significant interest in the Burleigh Avenue Trust as a land rich entity, rendering it liable to duty under Part 4. Alternatively, Dyda Nominees was liable for stamp duty under Part 4 pursuant to s 95A. The issue to Dyda of the funding unit and the acquisition of the two units by Dyda Nominees on 8 March 2007 were associated transactions because the companies were acting in concert under the “Alternative Acquisition” scheme to transfer control of the land to the Dyda group. When Dyda was issued the funding unit in the Burleigh Avenue Trust, Dyda acquired an interest in a land rich entity. When Dyda’s interest is aggregated with Dyda Nominee’s interest in the entity acquired that day under the associated transaction by which it acquired its two units in the trust, Dyda acquired a significant interest in the Burleigh Avenue Trust.
The Commissioner submits that s 101 does not relieve the appellants of the liability for stamp duty because s 71(5)(d) does not apply. It was not a bona fide transfer to a new trustee which would attract the exemption.
The Commissioner submits further that s 102(3) cannot or should not operate to relieve the appellants from liability to pay stamp duty. First, on the basis that neither Dyda nor Dyda Nominees are members or a subgroup of a group that acquired a significant interest in the land rich entity as a result of a dutiable transaction. Second, given the underlying purpose of the transactions constituting the “Alternative Acquisition”, it is not just and equitable that the appellants be exempted from a liability for duty.
In the alternative to a liability based on Part 4 of the Act the Commissioner submits that the issue of the funding unit to Dyda is a conveyance for the purposes of s 71(3)(a)(iii) or (iv) based on the reasoning in Pharmos Nominees Pty Ltd v Commissioner of State Taxation.[20]
[20] [2012] SASCFC 89, (2012) 113 SASR 487.
In the further alternative, the Commissioner submits that s 70 applies to void instruments executed in order, either directly or indirectly, to avoid or evade the payment of duty payable by conveyance on sale. He submits that s 70 applies to the “Alternative Acquisition” as the purchase of the land would have proceeded as a conveyance on sale under the Contract but for the execution of those instruments. However, not every instrument executed for the purposes of the “Alternative Acquisition” is avoided. The Memorandum of Transfer is not avoided and is therefore subject to the payment of duty.
Further, the Commissioner submits that as two distinct instances of liability for stamp duty arose s 71(12) does not apply.
Finally, the Commissioner submits that the appellants are not entitled to be relieved from a liability for penalty tax pursuant to s 30(2) of the Taxation Administration Act as there was a tax default that resulted wholly or partly from the failure by the tax payer to take reasonable care to comply with the requirements of the taxation law. The appellants failed to exercise reasonable care by failing to submit the instruments for the Commissioner’s opinion before proceeding to stamp them as exempt via RevNet.
Accordingly, the Commissioner submits the appeal should be dismissed.
Section 71(5)(d)
In my view, the appellants are not entitled to the exemption from stamp duty conferred by s 71(5)(d) of the Act. I find that the transfer of the land from Colt Ventilation to Dyda was not for the purpose of effecting the appointment of a new trustee and was part of a scheme for conferring a benefit on the Dyda interests, in particular Dyda and John Dyda, in relation to the land, to the detriment of the beneficial interests of Dyda Nominees, Horizon Engineering and Young Engineering.
Section 4(1) of the Act provides that:
Subject to the exemptions contained in Schedule 2 and the other provisions of this Act, the stamp duties specified in that Schedule are charged in respect of the instruments specified in that Schedule.

Schedule 2, Part 1, Clause 3 of the Act provides for duty to be paid in relation to the conveyance or transfer on sale of any property. Clause 4 provides for duty to be paid in relation to a conveyance operating as a voluntary disposition inter vivos of any property.
Section 60 of the Act defines conveyance, inter alia, to include
…
(d) every other assurance or instrument of any kind,
by which or by virtue of which or by the operation of which, whether upon registration or otherwise, or by the issue of a certificate of title in pursuance of which, any real or personal property or any estate or interest in any such property is assured to, or vested in, any person, and to convey has a meaning coextensive with the meaning of conveyance, as extended by this section.
Property is defined in s 2(1) to mean “real or personal property and includes … an interest in property”. Interest in property is defined by s 2(1) to mean “a legal or equitable interest and includes a potential, contingent, expectant or inchoate interest”.
Section 71(3)(a) provides:
(3)For the purposes of this Act, the following instruments shall, subject to this section, be deemed to be conveyances operating as voluntary dispositions inter vivos:
(a) an instrument to which subsection (4) applies effecting or acknowledging, evidencing or recording, any of the following transactions:
(i) a transfer of property to a person who takes as trustee; or
…
Section 71(4) provides:
(4)This subsection applies to any instrument that relates to land, a financial product or a unit under a unit trust scheme, or an interest in land, a financial product or a unit under a unit trust scheme.
Section 71(5)(d) provides:
(5) Subject to subsection (6), an instrument effecting or acknowledging, evidencing or recording, any of the following transactions shall be deemed not to be a conveyance operating as a voluntary disposition inter vivos:
…
(d) a transfer of property for the purpose of effectuating the retirement of a trustee or the appointment of a new trustee, where the Commissioner is satisfied that the transfer is not part of a scheme for conferring a benefit, in relation to the trust property, upon the new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest of any person;
…
Section 71(6) provides:
(6)Subsection (5) does not apply in relation to a transfer of property or a beneficial interest in property to a person who has, prior to the transfer, a beneficial interest in the property but who takes the property or interest transferred to him as trustee under a further trust.
“Beneficial interest”, “potential beneficial interest”, “discretionary trust”, “transfer” and “property” are defined in s 2(1) as follows:
beneficial interest means an equitable interest or an interest vested both at law and in equity in the holder of the interest and includes a potential beneficial interest;
…
potential beneficial interest means the rights, expectancies or possibilities of an object of a discretionary trust in, or in relation to, property subject to the discretionary trust;
…
discretionary trust means an arrangement, however made, under which a person holds property, and the beneficial interest in all or any part of that property may be vested in a person (in this Act referred to as an object of the discretionary trust) on the exercise of a discretion, whether subject to any other contingency or not and whether the exercise of the discretion is obligatory or optional;
…
transfer, in relation to property, means transfer, assure or vest at law or in equity (whether or not the transfer, assurance or vesting is subject to registration, the issue of a certificate of title or some other similar requirement);
…
property means real or personal property and includes—
(a) intellectual property (except know-how and confidential information); and
(b) an interest in property;
…
Unless s 71(5)(d) applies, the Memorandum of Transfer is a conveyance operating as a voluntary disposition inter vivos pursuant to s 71(3)(a)(i) as a transfer to a person who takes as trustee.
Section 71(5)(d) posits a two-limb test. To qualify for the exemption, first, the instrument effecting, acknowledging, evidencing or recording a transfer of property must be for the purpose of effectuating the retirement or the appointment of a trustee, and, secondly, must not be part of a scheme for conferring a benefit, in relation to the trust property, upon a person to the detriment of the beneficial interest of any person.
I reject the appellants’ submission that s 71(5)(d) does not require exclusivity of purpose. That submission overlooks the effect of the second limb of the provision. If the appointment of a new trustee is for the purpose of conferring a benefit in relation to the trust property to the detriment of the beneficial interest of any person, it does not matter a purpose in transferring the property was to effectuate the appointment of a new trustee.
The Commissioner submits that s 71(5)(d) is intended to apply to the bona fide retirement or appointment of a trustee to an existing trust. The appellants submit that this construction involves impermissibly reading the words “bona fide” into the provision. I disagree. In my view, the limitation on the application of the provision for which the respondent contends is amply justified by the second limb of the test.
In Dadeeton v Commissioner of State Taxation,[21] Debelle J, with whom Mullighan J agreed, held that s 71(6) is intended to prevent schemes to avoid the payment of duty on the transfer of property.[22]
[21] [2004] SASC 88, (2004) 88 SASR 109.
[22] [2004] SASC 88 at [39], (2004) 88 SASR 109 at 119.
Like s 71(6), s 71(5)(d) is intended to prevent schemes to avoid the payment of duty on the transfer of property.[23] This conclusion is reinforced by consideration of the mischief to which s 71 as a whole is directed.
[23] Dadeeton v Commissioner of State Taxation [2004] SASC 88 at [39], (2004) 88 SASR 109 at 119.
It is open to the Court to consider the Second Reading Speech for the purposes of identifying the mischief to which a statutory provision is directed.[24] Section 71 was amended in 1980. In the Second Reading Speech of the then Attorney-General, The Hon KT Griffin MLC, to the amending Bill, the Attorney identified the purpose of the amendment to s 71.[25] He said the amendments were designed to counter avoidance schemes which make use of ordinary trusts, unit trusts, discretionary trusts or equitable mortgages. The effect of those amendments was to make any transfer of property into a trust chargeable with full ad valorem duty whether or not there is any change in beneficial ownership of the property. Any transfer of the beneficial ownership in trust property was also intended to be subject to ad valorem duty as was any transfer of property to a beneficiary under a trust who did not have the beneficial interest by virtue of an instrument that was duly stamped. However, the Parliament intended that there should be a number of necessary exceptions to this legislative regime. This included the exemption in s 71(5)(d). Accordingly, the purpose of the scheme established by s 71, and in particular s 71(5)(d) is to counter avoidance schemes but not so as to capture legitimate transactions which were not intended to be dutiable, including the simple replacement of a trustee without any change in beneficial interests or ownership. This conclusion is reinforced also by consideration of many of the other provisions of s 71(5) which exempt transfers of property which are made otherwise than pursuant to a sale.[26] The exemption is not intended to apply where the underlying purpose of the transfer of the property is, as here, to effect a sale by other means.
[24] K-Generation v Liquor Licensing Court [2009] HCA 4 at [51] – [52], (2009) 237 CLR 501 per French CJ at 521 – 522.
[25] Hansard, Legislative Council, 3 December 1980, p 2525-2526.
[26] See ss 71(5)(c) and (h).
In Dadeeton v Commissioner of State Taxation,[27] Debelle J also held that s 71(5)(d) requires regard to be had to the purpose of the transfer of property effected by the conveyance. To that extent it is necessary to have regard to the underlying transaction.[28]
[27] [2004] SASC 88, (2004) 88 SASR 109.
[28] [2004] SASC 88 at [29], (2004) 88 SASR 109 at 116.
In order to satisfy the first limb of the test the new trustee must take the property on an existing trust under which the property is held. The transfer of property to a person to take on a different trust cannot be the transfer of a property to effectuate the appointment of a new trustee.
In Federal Commissioner of Taxation v Commercial Nominees of Australia Ltd,[29] the High Court considered, albeit in a different context, namely the taxation treatment of superannuation trust funds, the position in relation to the continuity of trusts. It identified the three main indicia of continuity for the purposes of Part IX of the Income Tax Assessment Act 1936 (Cth) (“ITAA”). They are the constitution of the trust under which the trust fund operated, the trust property and membership. Changes in one or more of those matters were held to terminate the existence of a superannuation trust as an eligible entity for the purpose of the ITAA.[30] By parity of reasoning it is apparent from this analysis that for the continued existence of a trust there must be a continuity in the constitution of the trust under which the trust fund operates, the trust property and the membership of the trust. Changes in one or more of those matters breaks continuity and thereby terminates the trust. This is consistent with the position in relation to the four essential indicia of the existence of a trust: the trustee, the trust property, the beneficiary and an equitable obligation annexed to the trust property.[31]
[29] [2001] HCA 33, (2001) 47 ATR 220.
[30] [2001] HCA 33 at [36], (2001) 47 ATR 220 at 227.
[31] Federal Commissioner of Taxation v Clark [2011] FCAFC 5 at [88], (2011) 190 FCR 206 at 233.
Accordingly, in order to determine whether the Memorandum of Transfer is for the purpose of effectuating the appointment of a new trustee to the Woodville Property Trust, it is necessary to ask whether there is a material change in the rights or obligations attaching to the trust property which is inconsistent with the continuity of the trust estate.
When regard is had to the underlying transaction, it is apparent that the Memorandum of Transfer did not effect the transfer of property for the simple purpose of effectuating the retirement of Colt Ventilation as trustee and the appointment of Dyda as the new trustee.
The variations effected to the Woodville Property Trust Deed, either alone or in combination with the issue of the funding unit, indicate a break in continuity between the Woodville Property Trust that existed prior to the transfer of the land and the trusts that existed after the parties amended the Trust Deed.
I reject the contention of the appellants that the “Alternative Acquisition” resulted in a “cloning” of the Woodville Property Trust into two identical copies. On the contrary, the Burleigh Avenue Trust is a new trust carved from the Woodville Property Trust. It has a different trustee. It has different property. The nature of the trust obligation has changed. The beneficial interest of the unit holders has changed.
The trust property of the Burleigh Avenue Trust held by Dyda as trustee is the land. Since the variation to the Woodville Property Trust deed, the trust assets of the Woodville Property Trust no longer include the land. After the variation the trust assets of the Woodville Property Trust held by Colt Ventilation as trustee, are those assets, excluding the land that the Woodville Property Trust held prior to the Deed of Variation.
The effect of the funding unit is to remove any discretion that the trustee had to distribute income and capital under the trust. If the holder of the funding unit pays a call on the unit, the trust is obliged to pay income to the holder in priority to other unit holders and, on cessation or redemption of that interest, is obliged to pay capital to the holder to the extent of the amount paid on the call. Before the creation of the funding unit, the unit holders held beneficial interests in the trust property and were thereby entitled to distributions of income and capital under the Woodville Property Trust upon the exercise of the trustee’s discretion in their favour. Upon the issue of the funding unit, the beneficial interests of the unit holders were adversely affected as the holder of the funding unit enjoys a priority in relation to distributions of income and capital to the exclusion of all other beneficiaries.[32]
[32] See the analysis by Gray J of a transaction involving a comparable instrument to the funding unit in Pharmos Nominees Pty Ltd v Commissioner of State Taxation [2012] SASC 24 at [102] – [103].
Accordingly, the nature of the trust obligation has been altered by the creation of the funding unit and the issue of the funding unit changed the nature of the beneficial interests of the ordinary unit holders by relegating their rights to distributions behind those of the holder of the funding unit.
It follows that the appellants cannot satisfy the first limb of the test in s 71(5)(d). Section 71(5)(d) did not apply because the transfer of the land to Dyda, as trustee of the Burleigh Avenue Trust, was not to effectuate the retirement of the existing trustee, nor the appointment of a new trustee to the same trust under which the former trustee, Colt Ventilation, as transferor, was trustee, but was a transfer to a trustee to hold under a resettled trust.
In any event, the appellants cannot satisfy the second limb of the test.
The exception to the exemption in s 71(5)(d) is purposive. It is the purpose of the scheme that is relevant not its effect. The provision speaks of a “scheme for” conferring a benefit upon a person to the detriment of the beneficial interests of a person, not a “scheme which” confers a benefit upon a person to the detriment of a person. Further, the provision directs attention to whether the transfer is “part of a scheme”. Necessarily, this requires consideration of the purpose of the scheme considered as a whole rather than the purpose of the discrete transactions which constitute part of the scheme.
For the purposes of s 71(5)(d) a scheme means a course of action designed to achieve a particular end or purpose.[33]
[33] Central Northern Adelaide Health Services v Atkinson [2008] SASC 371 at [110], (2008) 103 SASR 89 at 116.
I am satisfied that the “Alternative Acquisition” constitutes a scheme within the meaning of s 71(5)(d). The mechanism of the “Alternative Acquisition” is identified in the Overarching Agreement. The Overarching Agreement predicates a series of transactions which fall within the meaning of a “scheme” for the purposes of s 71.
Further, I am satisfied that the “scheme” constituted by the “Alternative Acquisition” is for the purpose of conferring a benefit in relation to the trust property, namely the land, upon Dyda and John Dyda to the detriment of the beneficial interests of the unit holders, namely Dyda Nominees, Horizon Engineering as trustee for the Meeuwissen Family Trust and Young Engineering as trustee for the Young Family Trust.
“Benefit” is to be construed broadly. Such an approach is consistent with the purpose of the legislative policy of s 71. As the provision is purposive, it does not depend upon the new trustee or any other person obtaining an actual benefit. It is sufficient if that is merely the purpose of the scheme. I reject the submission of the appellants that any benefit must be “direct”. There is no basis to construe the provision so narrowly. A benefit for the purposes of the provision may be actual or contingent, present or future, direct or indirect. A “benefit” is “anything that is for the good of a person or thing … a beneficial outcome”[34] or “an advantage or profit; a gain”.[35]
[34] Macquarie Dictionary.
[35] Encyclopedic Australian Legal Dictionary.
The benefit must be in relation to the trust property i.e. the land.
“In relation to” is an expression of wide meaning. It is to be ascertained by reference to the nature and purpose of the provision in question and the context in which it appears.[36] In PMT Partners Pty Ltd (In Liq) v Australian National Parks and Wildlife Service,[37] Toohey and Gummow JJ observed that the expression is designed to catch things which have a sufficient nexus to the subject matter of the provision. They said:[38]
The connection which is required by the phrase “in relation to” is a question of degree. There must be some “association” which is “relevant” or “appropriate”. The question of the relevance or appropriateness of the connection is a question which cannot be divorced from the particular statutory context.
[36] PMT Partners Pty Ltd (In Liq) v Australian National Parks and Wildlife Service [1995] HCA 36 at [26], (1995) 184 CLR 301 per Brennan CJ, Gaudron and McHugh JJ at 313.
[37] [1995] HCA 36, (1995) 184 CLR 301.
[38] [1995] HCA 36 at [65], (1995) 184 CLR 301 at 330-331.
I am satisfied that the transfer is part of a scheme to confer a benefit in relation to the land upon the Dyda interests, in particular Dyda and John Dyda. The benefit is the control and enjoyment of the land and the realisation of the income and capital to be derived from it.
Further, I am satisfied that the purpose of the scheme is to confer that benefit to the detriment of the beneficial interest of the unit holders.
In the context of s 71(5)(d) I consider “detriment” means loss, damage, injury or harm. In CCM Holdings Trust Pty Ltd v Commissioner of State Revenue,[39] Bergin CJ in Eq had to consider the provisions of s 54(3)(c) of the Duties Act 1997 (NSW) (“the Duties Act”) concerned with the duty payable on land rich transactions. In that context, her Honour considered the meaning of the expression “detriment”. She said:[40]
The word “detriment” should be given its ordinary meaning in the context in which it appears in s 54(3)(c). It is to be understood as “the state of being harmed or damaged” (The New Oxford Dictionary of English (1998)) and includes “loss, damage, or injury” (The Macquarie Dictionary Federation Edition). If an interest is conferred “to the detriment” of the beneficial interest or potential beneficial interest “of any person”, it must cause harm, loss or damage to the interest.
[39] [2013] NSWSC 1072.
[40] [2013] NSWSC 1072 at [370].
The relevant expression in the Duties Act is “to the detriment of the beneficial interest or potential beneficial interest of any person”. That expression has a clear parallel with the relevant expression in s 71(5)(d). Bergin CJ in Eq held that in that context, detriment may take many forms. It may be a diminution in value of a particular interest. It could be the introduction of obstacles to the beneficiaries’ enjoyment or access to their interests in a timely manner. It could be the appointment of a trustee who is perceived to lack support for particular beneficiaries. I adopt her Honour’s approach in construing and applying s 71(5)(d).
“Beneficial interest” is to be construed in this context in accordance with the definitions of “beneficial interest”, “potential beneficial interest”, “interest” and “discretionary trust” in s 2(1). Accordingly, “beneficial interest” means an equitable interest or interest vested both at law and in equity in the holder of the interest and includes a potential, contingent, expectant or inchoate interest and the rights, expectancies or possibilities of an object of a discretionary trust in, or in relation to, property subject to the discretionary trust.
The persons who have held beneficial interests in the trust property were originally Horizon Engineering and Young Engineering and ultimately Dyda Nominees, as the persons that, but for the funding unit, would have been immediately entitled as ordinary unit holders to distributions of income and capital under the Burleigh Avenue Trust upon the exercise of the trustee’s discretion in their favour.

In addition, I am satisfied that the appointment of Dyda Nominees as trustee of the Burleigh Avenue Trust No. 2 and No. 3 was part of a scheme to confer a benefit in relation to the trust property, namely the units, upon a person to the detriment of the beneficial interest of any person.
I adopt the approach to the construction of s 71(5)(d) set out earlier in these reasons. In particular, I adopt a purposive construction. The focus of the analysis of the submission must be the purpose of the scheme, not its effect.
I am satisfied that there was a scheme to confer a benefit in relation to the ordinary units upon the members of the Dyda group. Part of the purpose of the scheme was for the members of the Dyda group to acquire a benefit in relation to the ordinary units by means of the appointment of John Dyda as appointor and guardian of the Burleigh Avenue Trusts No. 2 and No. 3, and by the indemnities granted by Mr Meeuwissen and Mr Young in respect of claims under those units by the beneficiaries of the Meeuwissen and Young Family Trusts. That appointment and those indemnities were critical parts of the scheme by which the Dyda group acquired absolute control and enjoyment of the land to the exclusion of the beneficiaries of the Meeuwissen and Young Family Trusts. The issue of the funding unit was intended to enable the Dyda group to enjoy the fruits of the trust property in priority to the ordinary unit holders and to their exclusion.
The intended benefit of the scheme was to confer on the Dyda group the ability to enjoy the fruits of the land exclusively without regard to any potentially competing claims from the holders of the ordinary units or their beneficiaries asserting rights under those units. One of the purposes of the scheme was to occasion detriment to those who had beneficial interests in the units. Rights that would otherwise be able to be enjoyed under those units were compromised by the scheme.
Section 102(2)
Section 102(2) provides that if a person or a group acquires a significant interest in a land rich entity, and another person or group later acquires a significant interest in the land rich entity without diminishing the former significant interest, the Commissioner may, if satisfied that it is just and equitable to do so, exempt the later acquisition wholly or in part from duty under Part 4.
The appellants submit that it is just and equitable to exempt the acquisition of the funding unit from duty if the issue to Dyda of the funding unit and the acquisition of the Horizon unit and the Young unit by Dyda Nominees as trustee respectively of the Burleigh Avenue Trusts No. 2 and No. 3 are associated transactions pursuant to s 95A. This is because Dyda Nominees, as trustee respectively of the two trusts, already had a significant interest, and the acquisition of the funding unit did not diminish the significant interest held by Dyda Nominees as trustee of the two trusts.
I do not accept this submission. Section 102(2) is not capable of applying to the issue of the funding unit to Dyda because Dyda and Dyda Nominees were together a group and therefore there has not been any acquisition of a significant interest by “another person” as required by the subsection.
Section 102(3)
Section 102(3), like s 102(2), exempts from duty, wholly or in part, certain acquisitions of a significant interest in a land rich entity. The exemption is conditional on two matters. First, s 102(3) requires that a group acquires a significant interest in a land rich entity as a result of a dutiable transaction, and a person or group that is a member or subgroup of the group acquires that significant interest from the group. Secondly, s 102(3) requires the Commissioner to be satisfied that it is just and equitable to do so.
For the purpose of this appeal the Court is able to exercise the discretion conferred by the subsection on the Commissioner.
In my view, the appellants would not have been entitled to an exemption, either wholly or in part, from an assessment under Part 4, pursuant to s 102(3).
First, the provision predicates the existence of two transactions, but the facts of this case involve only one. Secondly, in my view, Dyda and Dyda Nominees were not a subgroup of a group that acquired a significant interest in a land rich entity as a result of a dutiable transaction.
Pharmos Nominees Pty Ltd v Commissioner of State Taxation
In the alternative to liability based upon the land rich provisions of Part 4, the Commissioner submits the issue of the funding unit to Dyda is a conveyance for the purposes of s 71(3)(a)(iii) or (iv) of the Act based on the reasoning in Pharmos Nominees Pty Ltd v Commissioner of State Taxation[46] confirming Pharmos Nominees Pty Ltd v Commissioner of State Taxation.[47]
[46] [2012] SASCFC 89, (2012) 113 SASR 487.
[47] [2012] SASC 24 at [102]-[103].
Section 71(3)(a) provides:
(3)For the purposes of this Act, the following instruments shall, subject to this section, be deemed to be conveyances operating as voluntary dispositions inter vivos:
(a) an instrument to which subsection (4) applies effecting or acknowledging, evidencing or recording, any of the following transactions:
(i)a transfer of property to a person who takes as trustee; or
(ii)a declaration of trust; or
(iii)the creation of an interest in property subject to a trust; or
(iv)a transfer of an interest in property subject to a trust; or
(v)the surrender or renunciation of an interest in property subject to a trust; or
(vi)the redemption, cancellation or extinguishment of an interest in property subject to a trust,
whether or not any consideration is given for the transaction; or
…
I reject this submission. For the reasons previously explained at [111] – [113] I consider that any liability of the kind asserted pursuant to s 71(3)(a)(iii) or (iv) would be subject to the provisions of s 71(12). The instrument by which the funding unit was issued to Dyda had to be stamped pursuant to s 71(12) because it is an instrument of a kind referred to in s 71(3)(a) that related to the same transaction by which the Memorandum of Transfer was liable to be stamped. Accordingly, it could not be dutiable on any further basis pursuant to s 71(3)(a).
Section 70
In the alternative, the Commissioner submits that the “Alternative Acquisition” was undertaken to avoid or evade a payment of stamp duty payable upon a conveyance on sale. Section 70(1) renders void an instrument executed in order, either directly or indirectly, to avoid or evade the payment of duty payable upon a conveyance on sale. Section 70(2) creates an exemption from the effect of s 70(1) where a third party relying in good faith on any such instrument purports to acquire an interest in property subject to the instrument provided that the instrument is duly stamped as a conveyance on sale.
The Commissioner submits that all the instruments involved in the “Alternative Acquisition” are void, except the Memorandum of Transfer, the two unit transfers to Dyda Nominees, and the issue of the funding unit to Dyda, as they fall within the provisions of s 70(1).
He submits the Memorandum of Transfer is not void because it was not entered into to advance a duty avoidance or evasion purpose. The Memorandum of Transfer was executed to pass title to Dyda upon registration by the Registrar‑General. Further, the parties would have executed a memorandum of transfer in any event.
Further, he submits the transfer of the Horizon and Young units to Dyda Nominees would have been a conveyance on sale but for the execution of the instruments designed to give the appearance of a transfer of property pursuant to the appointment of a new trustee. Accordingly, the unit transfers to Dyda Nominees and the issue of the funding unit gave rise to a liability for duty under Part 4 unaffected by s 70(1).
Section 70(2) has no application to the facts and circumstances of this appeal.
The object of s 70(1) is clear. It is an anti-avoidance mechanism. It is to deny effect to an instrument executed for the purpose, either directly or indirectly, of evading or avoiding the payment of duty upon a conveyance on sale.
For the reasons already explained, I find that the “Alternative Acquisition” constitutes a scheme. I am satisfied that the purpose of the “Alternative Acquisition” was to avoid or evade the payment of duty upon a conveyance on sale.
Clause 2.5 of the Special Conditions to the Contract evinces this purpose. The object of the “Alternative Acquisition” is to give the sale and purchase of the land the appearance of a transfer of property pursuant to the appointment of a new trustee so as to attract the exemption in s 71(5)(d).
The appellants invoke the “choice principle”[48] in contending that the instruments created for the purposes of the “Alternative Acquisition” did not have a stamp duty evasion or avoidance purpose. They submit that the changing of the control of the trusts was always contemplated as an alternative from the outset. Taxpayers always have the choice to arrange their affairs in this manner. They submit the arrangement had a real business purpose.
[48] Slutzkin v Federal Commissioner of Taxation [1977] HCA 9, (1977) 140 CLR 314 at 319.
I do not accept this submission. I do not accept the arrangement had a real business purpose. None was identified. The only purpose of the “Alternative Acquisition” was to avoid the liability for stamp duty that would have arisen on the Contract for the sale and purchase of the land.
I am satisfied that the Memorandum of Transfer of the land is not void because it is not an instrument executed in order to avoid or evade the payment of the duty payable upon a conveyance on sale. If the Contract had not been cancelled by the election and implementation of the “Alternative Acquisition”, the Memorandum of Transfer would still have been executed and registered for the purposes of effecting the sale and purchase of the land. On the other hand, all the other instruments forming the “Alternative Acquisition” are void pursuant to s 70(1). Contrary to the submission of the Commissioner, I consider that the two unit transfers to Dyda Nominees and the issue of the funding unit to Dyda are void, as both the transfers and the issue of the funding unit occurred in order to avoid or evade the payment of the duty that was otherwise payable upon the conveyance on sale of the land.
For the reasons already given, the Commissioner does not need to rely upon the provisions of s 70 for the purposes of upholding the assessment of duty in respect of the Memorandum of Transfer. Likewise, the conclusion I have reached in relation to the assessment of duty under Part 4 means there is no scope for the operation of s 70. In any event, as the instruments relied upon for the Commissioner’s assessment under Part 4 are void, the basis for the Commissioner’s assessment under Part 4 is annihilated. This constitutes a further reason for revoking the Commissioner’s assessment under Part 4. I reach this conclusion with some reluctance, however, as it seems to me this conclusion runs counter to the legislative purpose of s 70(1). Nonetheless, I consider that the language of the subsection is intractable.
In my view, an impugned instrument is not saved from the annihilating effect of s 70(1), for the purpose of the Commissioner assessing such instrument as dutiable, where the instrument has been brought into existence for a duty avoidance or evasion purpose. This may require further consideration by the Parliament.
Penalty tax
The appellants appeal from the imposition of penalty tax by the Commissioner.
Pursuant to s 30(1) of the Taxation Administration Act, a taxpayer is liable for penalty tax if a tax default occurs. A tax default is defined in s 3 of the Taxation Administration Act to mean “failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of tax that the taxpayer is liable to pay”.
Pursuant to s 30(2) penalty tax is not payable in respect of a tax default if the Commissioner is satisfied that the tax default was not a deliberate tax default and did not result, wholly or partly, from any failure by the taxpayer, or a person acting on the taxpayer’s behalf, to take reasonable care to comply with the requirements of a taxation law.
As I have found that the Commissioner’s assessment pursuant to Part 4 of the Act is wrong and must be revoked, there is no tax default by Dyda Nominees in failing to pay the duty assessed by the Commissioner pursuant to Part 4. Accordingly, the only issue in respect of penalty tax is whether the Commissioner erred in imposing penalty tax on Dyda. The issue is whether the exception in s 30(2) applies. That turns on whether Dyda took reasonable care to comply with the requirements of a taxation law. There is no suggestion that the tax default by Dyda was deliberate.
Dyda submits that the Commissioner should have been satisfied in accordance with s 30 that it took reasonable steps to comply with the taxation law, and no penalty should have been imposed.
The Commissioner submits that there was a clear tax default in this case. Reasonable care was not taken to comply with the requirements of a taxation law.
An instrument liable for stamp duty may be stamped either by lodging it with the Commissioner or stamping it using RevNet by a person approved to do so.[49] It is no longer necessary to stamp all documents.[50] The Commissioner’s Circular 243 contains directions as to how documents are to be stamped, distinguishing between those to be submitted to the Commissioner and those to be stamped, if dutiable, using RevNet. The RevNet Stamp Duty Document Guide describes how various documents are to be stamped using RevNet.
[49] Section 20(4) of the Act, and Part 6 of the Taxation Administration Act.
[50] Agreements that do not constitute a contract of sale of certain property are not chargeable (s 31 and Item 16(1A) of Part 2 of Schedule 2 of the Act).
RevNet is an administrative system implemented by the Commissioner pursuant to s 35 of the Taxation Administration Act. In accordance with that provision, the RevNet terms of approval in respect of stamp duty exempt taxpayers from complying with s 11 of the Taxation Administration Act.
Section 11 provides:
11—Instruments and returns to include all relevant information
(1) A taxpayer and any tax agent of the taxpayer must ensure that there is included in an instrument that is liable to tax, or in a statement that is produced to the Commissioner together with the instrument prior to payment of tax, all information necessary for a proper assessment of the tax liability of the taxpayer in respect of the instrument.
Maximum penalty: $10 000.
(2) A taxpayer and any tax agent of the taxpayer must ensure that there is included in a return required to be lodged with the Commissioner under a taxation law, in addition to the information required under that taxation law, any further information necessary for a proper assessment of the tax liability of the taxpayer in respect of the return or the matters to which the return relates.
Maximum penalty: $10 000.
(3)     It is a defence to a charge of an offence against this section if it is proved—
(a)      that the defendant, being a taxpayer, reasonably relied on—
(i) another person who was liable or required with the defendant to pay the tax or lodge the return; or
(ii) a tax agent (whether engaged by the defendant or any such other person),
to ensure that the requirements of this section are satisfied; or
(b) that the defendant, being a tax agent, reasonably relied on information supplied by the taxpayer or by another person who was liable or required with the taxpayer to pay the tax or lodge the return.
(4)     In this section—
tax agent, in relation to a taxpayer, means a person engaged by the taxpayer for fee or reward (otherwise than as an employee) who prepares, or assists in the final preparation of, the instrument, statement or return on behalf of the taxpayer.
Dyda submits that the instruments involved in the “Alternative Acquisition” clearly raise difficult questions of characterisation.
The issue is whether the tax default by Dyda resulted from any failure by Dyda, or a person acting on Dyda’s behalf, to take reasonable care to comply with the requirements of the taxation law.
Dyda submits that it took reasonable care. It submits that following completion of stamping of the documents via RevNet, Dyda considered no further liability to stamp duty existed. It submits that it was reasonable for it to adopt this view, having been advised by its solicitors that the Commissioner’s longstanding practice was to regard instruments of similar effect as being exempt from ad valorem duty pursuant to s 71(5)(d). Dyda acted in reliance upon this legal advice.
The Commissioner submits that it was not reasonable in the circumstances for Dyda to assume that the variation to the Woodville Property Trust Deed did not effect a new settlement of the trust property, rather than a simple appointment of a new trustee. It should have submitted the instruments to the Commissioner for opinion on the point rather than proceeding to stamp them as exempt via RevNet. Given the complex nature of the scheme, it was incumbent upon Dyda to confirm its belief that the instruments were exempt instead of proceeding to stamp them as such via RevNet. Reasonable care was not taken because the instruments ought to have been submitted to the Commissioner for opinion but were not. Dyda has not disclosed the legal advice it obtained nor indicated whether the advice was independent.
This matter bears some similarity to the case of Pharmos Nominees Pty Ltd v Commissioner of State Taxation.[51]In Pharmos there was a challenge to the conclusion of a trial judge that the Commissioner had not erred in imposing penalty tax in circumstances where it was submitted that the taxpayer had not failed to take reasonable care because it had obtained legal advice. In that case the legal advice was not disclosed. Blue J, with whom Anderson J and I agreed, held:[52]
… While Pharmos was not obliged to disclose the content of its legal advice, it could not rely on the fact that it obtained legal advice on the issue of reasonable care unless it elected to disclose the content of that advice. Pharmos relies upon Challenger Listed Invested Ltd v Commissioner of State Revenue,[53] in which the taxpayer acted in accordance with solicitor’s advice. However, in that case, the taxpayer disclosed the content of the advice and in any event the circumstances attracting stamp duty liability were quite different to those in the present case. Pharmos also relies upon Snowy Hydro Ltd v Commissioner of State Revenue (Vic),[54] in which the Court found there was no primary stamp duty liability and went on to find that the taxpayer acted reasonably in relying on legal advice. While the reasons for judgment do not make it clear, there is no suggestion in the reasons that the content of the advice was not disclosed and in any event the circumstances attracting stamp duty liability were quite different to those in the present case.
While Pharmos did not necessarily need to have obtained legal advice in order to have taken reasonable care, the objective circumstances (including the complexity of the transactions negotiated between the parties and of the Instrument itself and the decision not to submit the Instrument for opinion) point to a lack of reasonable care by Pharmos.
[51] [2012] SASCFC 89, (2012) 113 SASR 487.
[52] [2012] SASCFC 89 at [80] – [81], (2012) 113 SASR 487 at 504 – 505.
[53] [2010] VSC 464, (2010) 80 ATR 630.
[54] [2010] VSC 221, (2010) 79 ATR 118.
Dyda seeks to impugn the reasoning of the Full Court in Pharmos on the basis it is inconsistent with the judgment of the Victorian Court of Appeal in Commissioner of State Revenue v Snowy Hydro Ltd.[55]In Pharmos Blue J considered the judgment of the Victorian Supreme Court in Snowy Hydro Ltd v Commissioner of State Revenue (Vic)[56] in which Davies J found the taxpayer acted reasonably in relying on legal advice. Blue J noted that the reasons of Davies J did not make it clear that the content of the advice was not disclosed. Dyda submits that it is apparent from the judgment of the Court of Appeal in Snowy Hydro that the legal advice was not disclosed and that the non-disclosure of that advice did not justify any inference that the taxpayer was acting other than in good faith in applying that advice. Dyda submits that I should follow the approach of the Victorian Court of Appeal in Snowy Hydro.
[55] [2012] VSCA 145.
[56] [2010] VSC 221, (2010) 79 ATR 118.

I do not accept Dyda’s submission.
In the first place I am bound to follow the reasons of our Full Court in Pharmos. In the second place, I am satisfied that the reasons of the Full Court in Pharmos are correct when applied to the circumstances of that case, and the circumstances of this case. As the reasons of Blue J in Pharmos note, the circumstances attracting stamp duty liability in Snowy Hydro were quite different to those in Pharmos. I reject the submission of Dyda that the facts and circumstances of this case are very different from Pharmos. In my view, where Dyda sought to establish that it had taken reasonable care to comply with the requirements of the taxation law by relying on legal advice, it was necessary that Dyda disclose that legal advice for the purposes of making good that proposition. It did not do so. As in Pharmos, it is entirely possible that Dyda had been advised there was a real risk that the Memorandum of Transfer was dutiable. Also, as in Pharmos, while the Commissioner had issued Circulars encouraging taxpayers to lodge straightforward documents for stamping through RevNet, and not submit them for assessment, the transaction in question was particularly complex, and the Circulars made it plain that in cases of doubt, documents should be submitted for assessment. The Circulars also advise that the obligation to take reasonable care includes not only seeking professional advice for uncertain or complex matters, but also seeking a formal decision from RevenueSA before relying on any legislative exemption which required the exercise of the Commissioner’s discretion. In addition, the RevenueSA stamp duty document guides refer to the necessity to submit for opinion a conveyance of units from a trustee to a trustee with supporting documentation.
In my view, given the complexity of the transaction, reasonable care required Dyda to submit the documents for opinion. There was no error in the imposition of penalty tax.
Conclusion
I would allow the appeal to the extent of revoking the assessment of stamp duty under Part 4 of the Act in the sum of $257,830. I would also revoke the assessments of interest of $37,488.30 and penalty tax of $64,457.50 in respect of that assessment, being a total of $359,775.80.
Otherwise, the Commissioner’s assessment of duty, interest and penalty tax in the sum of $359,775.80 on the Memorandum of Transfer of the land stands.
I will hear the parties as to the costs of the appeal.