Fisk v Chief Commissioner of State Revenue

[2008] NSWADT 59

CITATION:	Fisk v Chief Commissioner of State Revenue [2008] NSWADT 59
DIVISION:	Revenue Division
PARTIES:	APPLICANT Ryan Paul Fisk RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	076041
HEARING DATES:	23 January 2008
SUBMISSIONS CLOSED:	23 January 2008
DATE OF DECISION:	27 February 2008
BEFORE:	Verick A - Judicial Member
CATCHWORDS:	First Home Owners grant - reversal by administrator
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 First Home Owner Grant Act 2000 Interpretation Act 1987 State Revenue Legislation Further Amendment Act 2003 State Revenue Legislation Further Amendment Act 2005
CASES CITED:	Alexopoulos v Commissioner of State Revenue (Taxation) [2006] VCAT 806 Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236 Collector Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 Cullen v Chief Commissioner of State Revenue [2007] NSWADT 121 Daniell v Commissioner of ACT Revenue 2008 ACTAAT 1 Federal Commissioner of Taxation v G M Swift and Others 89 ATC 5101 Hare v Commissioner of State Revenue (Taxation) [2006] VCAT 1054 Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28 Lawrance & anor v Chief Commissioner of State Revenue [2002] NSWADT 104 Mawad v Chief Commissioner of State Revenue [2005] NSWADT 207 McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 Minister of Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36 UH v Chief Commissioner of State Revenue [2005] NSWADT 284 WH v Chief Commissioner of State Revenue [2006] NSWADT 199
REPRESENTATION:	APPLICANT I Young, barrister RESPONDENT S Benjamin, agent
ORDERS:	The decision under review is affirmed.

REASONS FOR DECISION

Introduction

1 The Applicant seeks a review of a decision made by the Chief Commissioner of State Revenue (“the Commissioner”) to refuse an extension of time to comply with the “residence requirement” under the First Home Owners Grant Act 2000 (NSW) (“FHOG Act 2000”) and to recall a grant of $7,000 made to the Applicant together with a penalty of 20 percent ($1,400).

2 The grant was made to the Applicant to assist him to purchase a unit situated at Crows Nest, New South Wales (“the Property”).

Factual Background

3 The significant facts leading to this application are not in dispute.

4 By contract dated 14 August 2003, the Applicant acquired the property and settlement occurred on 3 October 2003. In an application dated 20 September 2003, lodged with ANZ bank on 15 October 2003, the Applicant applied for the grant. The grant was approved and was paid into the Applicant’s bank account on 16 October 2003.

5 At about the same time the Applicant was purchasing the property he had negotiated with his Sydney employer, an international accounting firm, to “second” him to its Toronto office. In a letter dated 25 September 2003, the Applicant’s employer confirmed his “secondment” to its Toronto office for 18 months commencing on 13 October 2003. The Applicant commenced his “secondment” in Toronto on 13 October 2003.

6 Meanwhile in Sydney, on 25 November 2003, the Applicant’s mother entered into an exclusive agency agreement with a firm of real estate agents in North Sydney to manage the letting of the property for 6 or 12 months. On 20 December 2003, the property was in fact let to tenants for 13 months terminating on 19 January 2005. On 25 January 2005, at the conclusion of the first tenancy, the property was let for a further 12 months until 24 January 2006 to new tenants. A further extension was granted to the tenants until 2 April 2006. On 19 April 2006, the property was let to the third set of tenants who occupied the property until 28 July 2007.

7 The property was not tenanted again and, after some renovations, the Applicant has on 28 December 2007, occupied the property as his principal place of residence. The Applicant had returned from Toronto in April 2005 and lived with his parents and grandmother until 28 December 2007.

8 On 1 April 2005, the Commissioner as part of his compliance program wrote to the Applicant and sought a statutory declaration to confirm that he had complied with the residence requirement. The Applicant responded sometime in May 2005 from Toronto and confirmed in his statutory declaration that he had not occupied the property within 12 months of settlement and attached a letter in which he stated that, as he was “seconded” to Toronto by his employer, he had not been able to occupy the property within the 12 months allowed. He further stated that:

“… I believe despite the fact that I was unable to move into the property within 12 months of acquisition, it has always been my intention to do so and remains my intention upon returning to Sydney. Given this, I believe I should be entitled to the first home buyers grant received on acquisition.”
9 On 14 June 2006, the Commissioner issued the Applicant with an assessment recalling the grant under section 45 of the FHOG Act 2000 and imposing a penalty of 20 percent on the grounds the Applicant had not met the eligibility criteria as he had not occupied the property as his principal place of residence within 12 months of completion of the eligible transaction.

10 The Applicant lodged an objection against the assessment on 2 August 2006. In addition to the factors brought to the attention of the Commissioner in his statutory declaration and letter sent in May 2005 from Toronto, the Applicant in his objection also relied on the following other factors:

“1. The First Home Owner Grant was introduced to provide assistance to purchase their first home in what is an extremely inflated property market. My decision to acquire my apartment hinged greatly on my ability to receive this grant and basically without it, I would have not been able to make the purchase when I did.

2. I also note that had I not acquired my apartment in October 2003, the height of the property boom, and had in fact waited until post 1 July 2004, not only would I have more than likely acquired my apartment at a lower price, I would have also been eligible for the First Home Buyers Plus Scheme and would have not been required to pay at least $16,000 in Stamp Duty to the state government, based on my property being worth less than $500,000. Despite my frustration with the timing of my purchase, to me this indicated the State Government has recognised the growing difficulties people such as me face when buying their first home and has as a result extended even greater assistance.

3. The fact that I have been able to live in my grandmother’s house has been somewhat fortuitous. Given I am single person, attempting to finance such an expensive property in an environment of rising interest rates, I have serious doubt whether I would be able to afford to live in the apartment on my own, without some form of rental income being obtained.

4. It remains my intention to live in the apartment as soon as my period at my grandmother’s house is complete.”

11 The Commissioner disallowed the objection on 2 January 2007 on the grounds that the Applicant had failed to comply with the residence requirement and that the circumstances detailed by the Applicant in his objection that led to his failure to occupy and use the property as his principal place of residence did “not constitute an exceptional circumstance” to warrant the exercise of the discretionary powers pursuant to section 12(1) of the FHOG Act 2000 to allow the Applicant an extended period to comply with the residence requirement.

12 On 9 March 2007 the Applicant lodged an application with the Tribunal seeking a review of the Commissioner’s decision disallowing his objection.

Relevant Legislative Provisions

13 The Act was introduced to encourage and assist home ownership and contains a complete scheme dealing with government financial grants to enable residents of New South Wales to purchase or build their first homes. The entitlement requirements for a grant are set out in section 7(1) of the FHOG Act 2000 as follows:

“A first home owner grant is payable on an application under this Act if:

(a) the applicant or, if there are 2 or more of them, each of the applicants complies with the eligibility criteria, and

(b) the transaction for which the grant is sought:

(i) is an eligible transaction, and

(ii) has been completed.”

14 The eligibility criteria is set out in Division 2 of Part 2 of the FHOG Act 2000 which requires an applicant to satisfy 5 “Eligibility Criteria” to obtain a grant.

15 The relevant requirement in issue in this matter is Criterion 5, the “Residence Requirement”, which is set out in section 12 of the FHOG Act 2000. There are three historical versions of this provision. In this matter, the original version which applied up to 26 November 2003 is the relevant provision and provides as follows:

“ 12 Criterion 5—Residence requirement

(1) An applicant for a first homeowner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after completion of the eligible transaction or a longer period approved by the Chief Commissioner.

(2) If an application is made by joint applicants and at least one (but not all) of the applicants complies with the residence requirement, the non-complying applicant or applicants are exempted from compliance with the residence requirement.”

16 The “residence requirement” was amended by the State Revenue Legislation Further Amendment Act 2003 (“SRLFA Act 2003”) and the relevant provisions in the second version that apply from 1 January 2004 are as follows:
“(1) An applicant for the first homeowner grant must occupy the home to which the application relates as the applicant’s principal place of residence for a continuous period of at least 6 months.

(2) However, if the Chief Commissioner is satisfied there are good reasons to do so, the Chief Commissioner may:

(a) approve a shorter period, or

(b) exempt the applicant from the requirement to comply with subsection (1).

(1B) The period of occupation required under subsection (1), or the shorter period approved under subsection (1A)(a), must start within 12 months after completion of the eligible transaction or a longer period approved by the Chief Commissioner.

…”
17 A further important change was made to section 12 of the FHOG Act 2000 by State Revenue Legislation Further Amendment Act 2005 (“SRLFA Act 2005”) which inserted a new section 12(5) in the version that applies from 7 December 2005 and is the current version. The new subsection (5) which was added to section 12 allows the Chief Commissioner to grant an extension for the compliance of the residence requirement “at anytime, even if, the period of 12 months after completion of the eligible transaction has already expired or if the applicant’s occupation of the home as a principal place of residence has already ceased”.

18 Section 13 of the FHOG Act defines an “eligible transaction”. There is no dispute in this matter that the purchase of the property was an “eligible transaction” and that it had been completed on 3 October 2003.

19 At the relevant time, section 20(1)(b) of the FHOG Act 2000 allowed the Commissioner to authorise the payment of the grant in anticipation of compliance with the residence requirement, if the Commissioner was satisfied that the applicant who is required to comply, but has not complied, with the residence requirement, intends to occupy the property as his or her principal place of residence within twelve months after completion of the eligible transaction or a longer period allowed by the Commissioner.

20 In the case of an applicant who is given a grant in anticipation of compliance with the “residence requirement, the payment is made under section 20(3) on condition that, if the “residence requirement” is not complied with the applicant will within fourteen days after the end of the period allowed for compliance, give written notice of the fact to the Commissioner and repay the amount of the grant.

21 In this matter the Commissioner has exercised his power under section 45 of the FHOG Act 2000, which allows the Commissioner to recover a grant and impose a penalty where the applicant fails to satisfy the eligibility requirements. In the present matter, the following historical version of Section 45 applies which provides as follows:

“ 45 Power to require a repayment and impose penalty

(1) The Chief Commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if:

(a) the amount was paid in error, or

(b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason.

(2) If, as a result of an applicant’s dishonesty, an amount is paid by way of a first home owner grant, the Chief Commissioner may, by notice in which repayment is required or a separate notice, impose a penalty not exceeding the amount the applicant is required to repay.

(3) If an applicant (or former applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the Chief Commissioner may, by written notice, impose a penalty not exceeding the amount the applicant is required to repay.

(4) If an amount is paid in error on an application for a first home owner grant to a third party, the Chief Commissioner may, by written notice, require the third party to repay the amount to the Chief Commissioner.”

Issue and Submissions

22 The issue in this matter was put in the following terms by Mr Young, counsel for the Applicant, in his written submissions:

“2. At issue in this case is whether the Commissioner’s decision on objection to refuse to exercise his discretions pursuant to section 12(1) in favour of Mr. Fisk, is defensible before this Tribunal as the “ correct and preferable decision ”.

3. More particularly the issue is, in administrative law terms has the Commissioner, in requiring the “presence of “exceptional circumstances” seemingly to the exclusion of all other considerations, applied the correct legal test and has the Commissioner improperly exercised the discretion by taking account of irrelevant considerations.”

23 Mr Young’s relevant submissions in relation to the issue were as follows:
“12. In the applicant’s submission, the requirement that the discretion will only be exercised in “ exceptional circumstances ” is ultra vires and beyond power and as a matter of law overstates the relevant test under the section.

13. The discretion conferred by section 12 (1) FHOG Act 2000 is untrammelled by any limitations on its exercise. The respective discretion falls to be exercised in the context of, and having regard to, the whole of the circumstances in which an application is made. It is not limited to having regard only to one issue, namely whether there existed “exceptional circumstances”.

14. To adopt a fixed rule, that the discretion will only be available if there are “exceptional circumstances” in such circumstances is to fail to exercise properly the discretion: see the observations of Lord Browne-Wilkinson in R v Secretary of State for the Home Department, ex parte Venables [1998] AC 407 at 497:

“… but the decision is different if the policy adopted is such as to preclude the person on whom the power is conferred from departing from the policy or taking into account circumstances which are relevant to the particular case in relation to which the discretion is being exercised. If such an inflexible and invariable policy is adopted, both the policy and the decisions taken pursuant to it will be unlawful .” (Emphasis added)
15. That rule or policy that the discretion will only be exercised where there are “ exceptional circumstances ” expressed in the objection report is the antithesis of the requirement in section 12(1). It allows absolution in one circumstance only, and seemingly, binds and directs individual decision-makers to automatically refuse any absolution other than in the one set of circumstances, namely “ exceptional circumstances ” being factors or circumstances beyond his control.

16. Additionally, the suggested requirement of “exceptional circumstances” is not to be found within the words of the statute, or by necessary implication. Nor is it found or expressed in the Explanatory Note or judicial decision, and not even by the Commissioner in administrative ruling.”

24 Mr Young further in his submissions dealt with the facts that should have been taken into account by the Commissioner in considering his discretion to allow an extended period to comply with the “residence requirement”. In particular, Mr Young highlighted the following:
“27. Here, in the applicant’s submission it is reasonable that he was did not and was unable to use and occupy the premises because his employer, squarely in the middle of the period between contract and settlement, had posted him on secondment out of the country for 18 months.

…

29. The relevant date for the exercise of the discretion is, as the Commissioner himself recognizes, the expiry of the relevant 12 month period. It is the circumstances during those 12 months, and particularly those prevailing at that point in time, which must be considered. At the expiry time, namely, 3 October 2004 Mr Fisk was a little over half way through his secondment.

30. For the Commissioner to require him to have returned to Australia prematurely and commenced occupation at that point in time would have required Mr Fisk to have broken his bond or agreement with his employer and potentially exposed himself to damages for breach of contract.

31. The Commissioner failed, utterly, to take into account as a relevant consideration the adverse consequences, that is, financial, contractual damages, career advancement potential and development within Ernst & Young, to Mr Fisk if he were forced to occupy the premises by 3 October 2004.

…

34. But again, if the Commissioner is not in error in taking into account that Mr. Fisk did not occupy the premises immediately on return and instead lived with his grandmother, then, in turn, the Commissioner has failed to take account of another most relevant consideration, namely, the legal consequences of terminating the … tenancy.

...

38. The Commissioner has not one iota of communication with Mr Fisk in the period from 1 April 2005 (the date of the questionnaire) until the issue of the assessments.

39. Rather the Commissioner has conducted an audit by stealth and issued an assessment by ambush.”

25 The Commissioner’s case was essentially what had been said in the objection decision sent to the Applicant. Against the factual background background, the Commissioner disallowed the Applicant’s objection to the assessment requiring him to repay the grant with a penalty on the grounds that the Applicant had “not met the conditions imposed by the scheme” in particular the ‘residence requirement”. The Commissioner in disallowing the Applicant’s objection also stated as follows:
“Your circumstances detailed in your submission that led to your failure to occupy and use the property as your principal place of residence do not constitute an exceptional circumstance. Therefore it is inappropriate to exercise the discretionary powers pursuant to section 12(1) of the First Home Owner Grant Act 2000.”
Findings and Reasons

26 As indicated above, there are three versions of section 12 of the FHOG Act 2000. The original version that applies in this matter, merely provided that an “applicant for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after completion of the eligible transaction or a longer period allowed by the Commissioner”.

27 The changes introduced in the second and current versions do not apply in the present matter. The changes “apply in respect of applications for a first home owner grant that are made on or after the commencement of the amendments”. In the case of the second version, the changes apply from 4 January 2004 (see Clause 8 of Schedule 3 of the SRLFA Act 2003) and in the case of the current version, the changes apply from 7 December 2005 (see Clause 9 of Schedule 1 of the SRLFA Act 2005).

28 The issue in this matter has to be decided entirely on the terms of the relevant section 12(1) of the FHOG Act 2000 applicable in this matter. The Applicant’s written submissions were prepared on the basis of the second version. At the hearing, Mr Young agreed that that version did not apply and that the submission had to be read in the context of the original version that applied in this matter. The Applicant had assumed that there was a discretionary power under the section 12(1) applicable in this matter to allow the Commissioner to extend the period of 12 months at anytime. The Commissioner had also, in considering the objection, taken the view that he had the power to consider the extension outside the period of 12 months.

29 At the hearing the Tribunal was concerned whether the application for extension of time had to be made within 12 months from settlement, the period during which the Applicant was required to establish the property as his principal place of residence in relation to the version of section 12 applicable in this matter. This issue was raised with the parties. Disappointingly, both parties did not make any helpful submissions to assist the Tribunal on this issue.

30 An examination of the relevant provisions and decided cases establish that any application for an extended period in relation to the relevant section 12(1) of the FHOG Act 2000 that applies in this matter had to be made within 12 months from settlement which occurred on 3 October 2003.

31 This approach has been applied in a consistent manner, with the exception of two cases, in a number of decisions of this Tribunal, including Lawrance & anor v Chief Commissioner of State Revenue [2002] NSWADT104; Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36; McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214; UH v Chief Commissioner of State Revenue [2005] NSWADT 284; WH v Chief Commissioner of State Revenue [2006] NSWADT 199; Basonovic v Chief Commissioner of State revenue [2006] NSWADT 236 and Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28.

32 In McKenzie, the President of the Tribunal in deciding this issue, stated this approach as follows:

“20. The Parliament intended to set strict boundaries. The usual strict boundary is provided by the twelve month rule that is people can have the grant in advance but they must move in within twelve months. This view is borne out by the following provisions – section 7(1)(b)(ii); section 7(2); section 12(1); and section 20(2).

21. The scheme of the Act contemplates certainty as to the period within which a person must move in. Any change must be made known ahead of the expiry of what might be called the usual period. The period of permitted delay is either twelve months or such extended period as has been permitted ahead of the expiry of that period (plus fourteen days).”

33 The approach taken in McKenzie was followed by the Victorian Civil and Administrative Tribunal in respect of similar provisions found in the Victorian First Home Owners Grant legislation in Hare v Commissioner of State Revenue (Taxation) [2006] VCAT 1054 and Alexopoulous v Commissioner of State Revenue (Taxation) [2006] VCAT 806. More recently, the Australian Capital Territory Administrative Appeals Tribunal has also taken a similar view in relation to similar provisions in Daniell v Commissioner for ACT Revenue [2008] ACTAAT 1.

34 However, in two cases, Mawad v Chief Commissioner of State Revenue [2005] NSWADT 207 and Cullen v Chief Commissioner of State Revenue [2007] NSWADT 121, the Tribunal has taken a contrary view.

35 In Mawad, the Tribunal had proceeded on the basis of the Commissioner’s submission that, contrary to his previous position and Tribunal authorities, he had power during the relevant period to extend time for the compliance of the residence requirement even after the 12 months had expired. Subsequently, the President of the Tribunal in his reasons in UH v Chief Commissioner of State Revenue observed that the Commissioner’s submission in Mawad was “uncritically” accepted by the Tribunal without any “substantive explanation” and expressed the view that the Tribunal should “continue to apply the considered views that have been expressed on the matter in earlier Tribunal decisions”.

36 In Cullen the Tribunal concluded that “the discretions of the Commissioner under section 12 as applicable in this case, were not restricted as to time and were capable of exercise by the Commissioner at any time”. The Tribunal’s reasons for this view are summarised in the reasons for decisions at the following paragraph:

“41 In light of the absence of any amendment to section 20(3), section 20(4) and section 45 of the FHOG Act 2000 by the SRLFA Act 2005 or by any other Act and the use of the words “clarifies” and “confirms” (as compared to words such as “extends” or “increases”) in the Second Reading Speech to the SRLFA Act 2005 as it relates to the amendment effected to section 12, I find that the effect of the amendment of section 12 of the FHOG Act 2000 by the SRLFA Act 2005 which inserted new section 12(5), was to remove doubt as to the meaning of section 12 as it applies in this case, I find that section 20(3), section 20(4) and section 45 of the FHOG Act 2000 must be read, and must have been intended to be, subservient to the power(s) of the Commissioner under section` 12 as applicable in this case.”
37 Under section 34 of the Interpretation Act 1987 (NSW), extrinsic material can be used to (a) confirm that the ordinary meaning of a provision is appropriate or (b) to resolve the meaning of an ambiguous or obscure provision or to determine the meaning of a provision where the ordinary meaning is manifestly absurd or unreasonable. However, where the terms of the relevant law are clear and easily understood, extrinsic material plays no part.

38 In Cullen, the Tribunal did not refer to the above rules of interpretation but nevertheless proceeded to rely on the Second Reading Speech of the Minister without regard to the clear words of the relevant provisions. In paragraph 37 of the decision, the Tribunal placed a great deal of reliance on the “New section 20(5) of the FHOG Act 2000”. No new section 20(5) of the FHOG Act 2000 has been introduced. Perhaps, the Tribunal was referring to the “new section 12(5)”. Whatever may be the case, the scheme of the FHOG Act 2000 is quite easily understood, as the relevant provisions are clear and not ambiguous or obscure and it is not necessary to resort to any extrinsic material in understanding their meaning.

39 Having introduced the new section 12(5), it was not necessary to make any amendments to section 20(3), section 20(4) and section 45 which simply applied in their original terms and continued to operate taking into account any extended period granted by the Commissioner under the new section 12(5).

40 Subsection 20(3) was always subject to the period allowed under section 12 and section 20(4) merely created an offence where an applicant who received a grant in advance did not complete the eligible transaction or failed to comply with the residence requirement within the time allowed by the Commissioner under section 12. Section 20(3) requires an applicant, in those circumstances, within 14 days after the expiry of the time allowed to inform the Commissioner in writing and make repayment of the grant.

41 Section 45 gives the Commissioner an independent power to require repayment of the grant and impose a penalty where a grant is paid in error or where the Commissioner reverses his decision under which the grant had been paid. A penalty is imposed if the grant had been made because of an applicant’s dishonesty or failure to make a repayment if the applicant is required to do so under section 45 or by the conditions of the grant.

42 Having given the Commissioner a power under the new section 12(5) to extend the time period outside the 12 months and at any time, sections 20 and 45 apply in their original terms accordingly without the need for any amendments.

43 The section 12 version of the FHOG Act 2000 relevant to this matter was clear in its terms. The extended period had to be allowed prior to the expiration of the 12 month period as held in the majority of the decisions of the Tribunal referred to above. The Applicant made no such application within the period of 12 months from date of settlement.

44 This application must accordingly fail notwithstanding that the Commissioner, in considering the objection, had erroneously taken the view that the Commissioner had power to grant an extended period outside the 12 months period in this matter. Because the Commissioner did not have the power to consider an extension of the period allowed under section 12, the decision could be regarded as a “nullity” but the Tribunal has nevertheless the jurisdiction to review the decision made in the “purported exercise” of powers by the Commissioner (see Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1).

45 There was an error on the part of the Commissioner to consider extending the period to comply with the residence requirement under the version of section 12 applicable in this matter. As was pointed out by the President of the Tribunal in UH v Chief Commissioner of State Revenue at paragraph 15, section 63 of the Administrative Decisions Tribunal Act 1997 requires the Tribunal to make its decision “within the framework of the law” and “whatever is the preferable decision as permitted by law”.(Emphasis added) In this matter, the version applicable clearly did not permit the Commissioner to grant any extended period after the expiration of the 12 month period from settlement.

46 Although this application can be dismissed on that basis, the Tribunal is also of the view that, if the interpretation suggested by the Tribunal in Cullen is correct and that the Commissioner had a discretion to extend the period under the section 12 version applicable in this matter at any time, there were in any case no grounds to grant the discretionary relief in this particular case.

47 The facts are not in dispute in this matter. The Applicant was required to use and occupy the property within 12 months after settlement of the purchase of the property, which occurred on 3 October 2003. The Applicant did not occupy the property until 28 December 2007. The property, since its purchase and until occupation by the Applicant has been let to various tenants.

48 At the time the Applicant was negotiating the purchase of the property he was actively pursuing a job transfer to Canada with his employer. He was aware that if the secondment was approved he could not comply with the “residence requirement”. Against that background, he chose to inform the Commissioner that he would comply with residence requirement when making the application for the grant. The application was in fact lodged through the ANZ bank on 15 October 2003 when he was already in Canada. He clearly made a misleading or false statement in the application that he would occupy the property within 12 months of settlement.

49 During the period of 12 months after settlement, the Applicant made no contact with the Commissioner to inform him of the non-compliance of the “residence requirement” nor did the Applicant seek the approval of the Commissioner for an extended period to comply with the “residence requirement”.

50 The Applicant only made his first contact with the Commissioner sometime in May 2005 when the Commissioner, as part of his compliance program, sought to ascertain if the Applicant had complied with the “residence requirement”.

51 The Applicant responded to the Commissioner’s compliance inquiry by sending to the Commissioner a Statutory Declaration and a letter. In the standard Statutory Declaration, which had been sent by the Commissioner, the Applicant confirmed that the property had not been occupied within 12 months of settlement of the property. In the letter, the Applicant explained that, because he had to go to Canada, he was not able to comply with the residence requirement but that, on his return, he would occupy the property.

52 In his response, the Applicant again made a misleading or false statement that he would occupy the property on his return from Canada because, on his return, he resided with his parents and grandmother. The Applicant returned from Canada in April 2005 and continued to let the property to tenants until 28 July 2007.

53 On the basis that the Commissioner’s had a discretion to extend time outside the 12 month period after settlement, the question the Tribunal has to decide is whether there were “good reasons” to warrant the extension in this matter.

54 The Tribunal agrees with counsel for the Applicant that in terms of a broad discretion, the Commissioner is not restricted to consider only “exceptional circumstances”. What factors the Commissioner is bound to consider in making the decision is essentially determined by the construction of the relevant provision conferring the discretion as suggested by the High Court in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40 per Mason J. The Commissioner, if given a broad discretion, is bound to consider all relevant factors that he is aware of and those brought to his attention by the Applicant and not merely “exceptional circumstances”. But it is important to note that, in exercising a broad discretion there is a “threshold beyond which the exercise of the discretion falls outside the scope and objects of the Act” (see French J in Federal Commissioner of Taxation v G M Swift and Others 89 ATC 5101 at page 5118).

55 The Applicant’s case is that the Commissioner ought to have taken into account the fact that he had to go to Canada for career reasons and that on his return he was bound by the lease with the tenants. The secondment to Canada was a choice made by the Applicant and, again, it was his choice to stay first with his parents and later with his grandmother on his return.

56 On 25 January 2005 the property was let to tenants for 12 months until 25 January 2006 notwithstanding that the Applicant was due back from Canada on 25 May 2005. The tenancy was further extended to 2 April 2006 and, on 19 April 2006; a new tenancy was entered into in respect of the property, which continued until 28 July 2007. Effectively, the Applicant treated the property as his investment property earning rental income for some four years. The Applicant did not make any contact with the Commissioner until confronted with the compliance inquiry.

57 The Applicant again made no contact with the Commissioner on his return until he received the assessment recalling the grant in June 2006.

58 Against the above background and in the absence of any good reasons for not occupying the property after his return from Canada, it is difficult to conclude that the Applicant was entitled to an extended period of some more than four years to comply with the “residence requirement”. To grant any discretionary relief would be beyond the threshold for the relief to be within the scope and objects of the FHOG Act 2000. The purpose of the FHOG Act 2000 is to assist a first homebuyer to purchase his or her principal place of residence for his or her own use and occupation and not as an investment property.

59 The matter that remains is the penalty of 20 percent that was included pursuant section 45 of the FHOG Act 2000 in the assessment recalling the grant. The Applicant has not established any grounds that the penalty should be reduced or fully remitted. The Applicant has had the grant for more than four years, and in the context of the factual background of this matter, the penalty of 20 percent imposed was in all circumstances not inappropriate and the Tribunal sees no reason to interfere with the Commissioner’s judgment.

Order

60 The decision of the Commissioner to disallow the objection against the assessment recalling the grant with a 20 percent penalty is affirmed for the reasons set out in this decision.