FERGUSON and COMMISSIONER OF STATE REVENUE
[2010] WASAT 179
•8 DECEMBER 2010
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: TAXATION ADMINISTRATION ACT 2003 (WA)
CITATION: FERGUSON and COMMISSIONER OF STATE REVENUE [2010] WASAT 179
MEMBER: JUDGE T SHARP (DEPUTY PRESIDENT)
HEARD: 19 OCTOBER 2010
WRITTEN SUBMISSIONS
16 NOVEMBER 2010
DELIVERED : 8 DECEMBER 2010
FILE NO/S: CC 998 of 2010
BETWEEN: MYLES KENNETH FERGUSON
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Assessment of duty - Transfer of land - Public authority not estopped from performing functions - Distribution in the estate of a deceased person - More than one dutiable transaction
Legislation:
Duties Act 2008 (WA), s 10, s 11, s 11(1)(a), s 15(a), s 27, s 139(1), s 139(2), s 41(1), s 147AG, cl 2, Sch 3
Taxation Administration Act 2003 (WA), s 40(1)
Result:
The decision of the Commissioner of State Revenue is affirmed
The applicant's application is dismissed
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Ms R Panetta
Solicitors:
Applicant: N/A
Respondent: State Solicitor's Office
Case(s) referred to in decision(s):
State of South Australia v ATSA (1980) 29 ALR 367
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
Under her will, the late Mrs Dorothea Evelyn Lane left her home jointly to her son, who is the applicant in this matter and her daughter, the applicant's sister. The applicant and his sister contended that Mrs Lane's intention, despite the terms of her will, was that the property was to pass to the applicant alone, his sister already having been given part of the property during Mrs Lane's lifetime. A transfer of land was prepared on that basis, conveying the property solely to the applicant. The transfer included the consent of the applicant's sister, who 'gifted' to the applicant her half share of the property which she received under the will.
The transfer of land was presented to the Commissioner of State Revenue for assessment of duty and the Commissioner issued an assessment notice. The assessed duty was calculated on one half of the value of the property. The applicant objected to this assessment because the transfer was merely giving effect to the testamentary wishes of his mother and it should therefore only attract nominal duty. The Commissioner disallowed that objection and the applicant applied to the Tribunal for a review of the Commissioner's decision.
The Tribunal upheld the Commissioner's decision and dismissed the application. The Tribunal considered that s 139 of the Duties Act 2008 (WA) provided for nominal duty in respect only of the distribution to the applicant and his sister, and that duty at the general residential rate should apply to the transfer by the applicant's sister of her half share of the property to the applicant.
Facts
(1)On 11 December 1975 a document entitled 'Deed of Agreement as to Wills' (Wills Agreement) was executed between John Kenneth Lane (Mr Lane), Dorothea Evelyn Lane (Mrs Lane), the applicant (then named Myles Kenneth Lane) and, the applicant's sister Debra Ann Kirton (then named Debra Ann Lane) (Ms Kirton).
(2)Mr Lane and Mrs Lane were husband and wife at the time of the execution of the Wills Agreement and also the parents of the applicant and Ms Kirton. Mr Lane and Mrs Lane were joint tenants of property located at 71 Gildercliffe Street, Scarborough being the whole of the land comprised in Certificate of Title Volume 1154 Folio 77 (Land).
(3)Under the Wills Agreement, Mr Lane and Mrs Lane agreed to make separate wills which would each provide that, in the event that he or she survived the other, he or she leaves his or her interest in the Land to the applicant and to Ms Kirton in equal shares.
(4)Clause 3 of the Wills Agreement states as follows:
Neither [Mr Lane] or [Mrs Lane] will revoke or vary such devise provided however that they may at any time by written Agreement made between them revoke or vary the terms of this Indenture or make any Agreement with the object or effect of making such revocation or variation of this Agreement.
(5)Mr Lane and Mrs Lane further agreed in the Wills Agreement that neither of them would dispose of or charge his or her interest in the Land.
(6)On 8 December 1975, Mrs Lane executed a will substantially as provided for in the Wills Agreement.
(7)In or around 1984, Mr Lane and Mrs Lane were divorced and Mr Lane transferred his interest in the Land to Mrs Lane.
(8)On 16 June 1988, Mrs Lane executed a new will revoking all former wills and leaving, so far as is relevant, the Land to the applicant and to Ms Kirton in equal shares.
(9)In or around November 1999, Mrs Lane subdivided the Land into the following two lots:
• Lot 1 on survey strata plan 37416, being the whole of the land in Certificate of Title Volume 2181 Folio 891, upon which the original house stood (Lot 1);
• Lot 2 on survey strata plan 37416, being the whole of the land in Certificate of Title Volume 2181 Folio 892 (Lot 2).
(10)In early 2000, Mrs Lane transferred Lot 2 to Ms Kirton and Ms Kirton built her present home on Lot 2.
(11)Mrs Lane died on 8 March 2009.
(12)On 23 November 2009, a grant of probate was issued by the Supreme Court of Western Australia to the applicant as one of the executors of Mrs Lane's last will. The will was proved in common form.
(13)On 7 December 2009, a transfer of land in respect of Lot 1 (Transfer) was granted by the applicant as Mrs Lane's executor and as transferor in favour of the applicant in his personal capacity as transferee. The Transfer was also signed by Ms Kirton and the consideration for the transfer is expressed in the following words:
1.Terms of the will of the deceased.
2. At the time of the will of Dorothea Evelyn Lane was written, the land was described in Volume 1154 Folio 877 and was to be shared by the beneficiaries of the will, namely Myles Kenneth Ferguson and Debra Ann Lane. The will was written on 16 June 1988. On 19 January 2000, the land was survey strated whereupon the description changed Volume 2181 Folio 891 remained with Dorothea Evelyn Lane and Volume 2181 Folio 892 was transferred to Debra Ann Lane. In keeping with the intent of the will Debra Ann Lane gifts her share of the land described in Volume 2181 Folio 891 to Myles Kenneth Ferguson.
3. Consent.
I, Debra Ann Lane as beneficiary of the will of Dorothea Evelyn Lane hereby consent to the land, Volume 2181 Folio 891, to be transferred to Myles Kenneth Ferguson as a gift.
(14)On 9 December 2009, the Transfer was lodged with the Office of State Revenue for assessment of duty and on 11 December 2009, the Office of State Revenue received a letter from the applicant in relation to the Transfer explaining why Lot 1 was being transferred only to the applicant contrary to the terms of the will.
(15)On 7 January 2010, the Valuer General's Office provided a written valuation to the Office of State Revenue for Lot 1 of $525,000.
(16)On 18 January 2010, the applicant submitted an application form under s 147A G of the Duties Act 2008 (WA) (Duties Act). This is an application form for concessional duty at residential rates.
(17)On 22 January 2010, a duties assessment notice was issued to the applicant specifying an amount payable of $7,410, the duty having been calculated on one half of the respondent's valuation of Lot 1 at the concessional rate of duty applicable to residential property.
(18)On 2 February 2010, the applicant lodged an objection with the respondent (Commissioner) to the assessment referred to above, and on 29 June 2010, that objection was disallowed.
Application and issues for determination
The applicant has applied to the Tribunal under s 40(1) of the Taxation Administration Act 2003 (WA) for a review of the decision of the Commissioner.
The issues for determination by the Tribunal are, first, whether the Commissioner is bound by some comments made to the applicant by one of its officers at the time when the applicant lodged the Transfer for assessment and, second, whether s 139 of the Duties Act applies to the transfer of the whole of Lot 1 to the applicant or applies only to a half interest.
Statutory framework
Unless otherwise stated, all references to particular sections are references to sections of the Duties Act.
Clause 2 of Sch 3 of the Duties Act provides that the Duties Act:
… applies in relation to the imposition of transfer duty on a transaction only if that transaction takes place on or after 1 July 2008.
Section 10 provides as follows:
Transfer duty imposed
Duty is imposed on dutiable transactions.
The Duties Act defines a dutiable transaction to include a 'transfer of dutiable property': s 11(1)(a).
Dutiable property includes 'land in Western Australia'; s 15(a).
Section 26 and s 27 provide as follows:
26. Rate of transfer duty
(1)Unless otherwise provided in this Chapter, duty is chargeable
(a)by reference to the dutiable value of a dutiable transaction; and
(b)at the general rate of duty.
(2)The general rate of duty, concessional rates of duty and the amount of nominal duty are set out in Schedule 2.
27. Dutiable value of dutiable transactions, unless otherwise provided
Unless otherwise provided in this Chapter, the dutiable value of a dutiable transaction is
(a) the consideration for the dutiable transaction; or
(b)the unencumbered value of the dutiable property the subject of the transaction when liability for duty on the transaction arises if
(i) there is no consideration for the transaction; or
(ii)the consideration cannot be ascertained when liability for duty on the transaction arises; or
(iii)the unencumbered value is greater than the consideration for the transaction.
Section 41(1) provides as follows:
No double duty general
(1)If a transaction for property constitutes more than one dutiable transaction for the property and the charging of duty on all of the dutiable transactions for the property would result in duty being imposed more than once on the transaction, the Commissioner is to decide the dutiable transaction on which duty is imposed and duty is not chargeable on the other dutiable transaction, or dutiable transactions.
Section 139 provides as follows:
Deceased estates
(1)In this section
distribution means a distribution under a will or on an intestacy.
(2)Nominal duty is chargeable on the following dutiable transactions
(a)a transfer, or agreement for the transfer, of dutiable property to the extent that
(i)the transfer gives effect to a distribution in the estate of a deceased person; and
(ii)there is no consideration for the agreement or transfer;
(b)a declaration of trust over dutiable property to the extent that it gives effect to a distribution in the estate of a deceased person;
(c)a vesting of dutiable property by, or as a consequence of, a court order made
(i)under the Inheritance (Family and Dependants Provision) Act 1972; or
(ii)under the Trustees Act 1962 section 65 on an application under the Inheritance (Family and Dependants Provision) Act 1972.
The parties' submissions
The applicant submits that its objection to the Commissioner should have been upheld for two reasons.
First, the applicant argues that he was told by an officer of the respondent at the time when he lodged the Transfer for assessment that the Transfer would attract nominal duty only and that the respondent should therefore be bound by that initial assessment.
Second, and in the alternative, the applicant argues that notwithstanding the terms of Mrs Lane's will, the Transfer reflected Mrs Lane's actual testamentary wishes, namely that Lot 1 should be left to the applicant, and that the Transfer therefore fell to be assessed with nominal duty under the provisions of s 139.
The Tribunal's response
In respect of the applicant's first argument, the Commissioner does not appear to be denying or arguing with the proposition that the applicant received the advice referred to. However, the Commissioner submits, and I agree, that the imposition of duty under the Duties Act is a statutory duty of the Commissioner, who is obliged to apply the provisions of the Duties Act, despite whatever advice had been given to the applicant.
The Duties Act, being a statute designed to raise revenue, must be regarded as enacted for the benefit of the public. The Commissioner cannot be estopped from issuing an assessment because the Commissioner is a public authority performing a function for the public good and it is inappropriate for him to be estopped from performing such functions: State of South Australia v ATSA (1980) 29 ALR 367 at [397].
In respect of the applicant's second argument, I have no doubt that the applicant believes that the terms of Mrs Lane's will did not truly reflect her testamentary intentions at the time of her death. The applicant contends that Mrs Lane always intended that the Land was to be left to the applicant and Ms Kirton and that when the Land was subdivided and Lot 2 transferred to Ms Kirton, the effect of that was, as the applicant puts it, 'an early inheritance' to Ms Kirton. On that basis, according to the applicant, the balance of the Land, namely Lot 1, should have been left to the applicant alone.
As part of his argument, the applicant seeks support from the terms of the Wills Agreement. However, I do not believe that the terms of the Wills Agreement have any influence on this matter. If Mrs Lane breached the terms of the Wills Agreement by transferring Lot 2 to Ms Kirton, it was with the full knowledge and acquiescence of the applicant but in all other respects, Mrs Lane adhered to the terms of the Wills Agreement, at least to the extent of her remaining interest in the Land, namely Lot 1.
It is beyond the jurisdiction of the Tribunal to make any finding in regard to the applicant's contention that Mrs Lane's will did not express her testamentary intentions. The Tribunal can only take account of the provisions of Mrs Lane's will as proved in common form.
Turning to the Transfer itself, the Commissioner concedes in his later submissions that he is unclear whether, when the assessment was made, the Commissioner regarded the Transfer as one dutiable transaction, namely:
•the transfer of Lot 1 from the applicant as one of Mrs Lane's executors in favour of himself as an individual;
or two dutiable transactions, namely:
•the transfer of Lot 1 from the applicant as one of Mrs Lane's executors in favour of himself and Ms Kirton as beneficiaries;
•the transfer by Ms Kirton of her half share in Lot 1 in favour of the applicant.
However, it is evident from the Commissioner's submissions that he regarded the Transfer as giving effect to two dutiable transactions. He says, for example:
49. It follows that duty at the nominal rate provided for by s 139 of the Duties Act is only chargeable in respect of half of the dutiable value of the land.
50. By error of omission, the Commissioner did not charge this $20 amount in relation to the applicant's half interest in Lot 1 acquired pursuant to the terms of the 1988 will.
However, regardless of how the assessment was made, s 139(2) clearly provides that nominal duty is chargeable 'to the extent that' a transfer gives effect to a distribution (as that word is defined in s 139(1)) in the estate of a deceased person.
The Commissioner concludes, and I agree, that the effect of this is that nominal duty is to be charged, on the transfer of Lot 1 by the applicant as one of Mrs Lane's executors in favour of himself and Ms Kirton as beneficiaries, and then duty is separately charged on the transfer by Ms Kirton of her half share in Lot 1 to the applicant.
This is consistent with the Explanatory Memorandum (Explanatory Memorandum) which accompanied the Duties Bill during its passage through Parliament where it states in relation to cl 139 (now s 139):
Should a transfer … only be partly in accordance with a distribution, duty at the general rate of duty will be charged in respect of the transaction to the extent that it is not in accordance with the distribution.
For completeness, I have considered also the provisions of s 41 which is headed 'No double duty general'. That section provides that if the transfer gave effect to two dutiable transactions, then the Commissioner is to decide which of the dutiable transactions the duty is to be imposed upon.
The Commissioner contends that s 41 does not apply and submits that the words 'more than one dutiable transaction for the property' means more than one type or category of dutiable transaction. This is also consistent with the words of the Explanatory Memorandum:
41. No double duty general
…
Subclause (1) provides that where a transaction over dutiable property constitutes more than one type of dutiable transaction, the Commissioner is to decide the dutiable transaction that is the most applicable on which to impose duty. (Emphasis added).
I agree with the Commissioner's interpretation of s 41 and conclude that s 41 is not applicable to this matter.
Conclusion
For the reasons set out above, the application of Mr Myles Kenneth Ferguson to set aside the Commissioner of State Revenue's decision to dismiss his objection to the assessment of duty is refused.
Orders
The Tribunal orders:
1. The applicant's application is dismissed.
2. The decision of the Commissioner of State Revenue dismissing the objection to the assessment of duty of the applicant is affirmed.
I certify that this and the preceding [32] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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