Gao v Chief Commissioner of State Revenue

[2020] NSWCATAD 216

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216

Hearing dates:

10 June 2020; (Final submissions received 4 August 2020)

Date of orders:

3 September 2020

Decision date:

03 September 2020

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

S E Frost, Senior Member

Decision:

The Chief Commissioner’s decision to refuse the refund of surcharge purchaser duty is confirmed.

Catchwords:

STATE TAXES – Surcharge purchaser duty – identifying the decision under review – extension of time – whether transferee a ‘foreign person’ – whether transferee ‘ordinarily resident’ in Australia – whether a person in a commercial aircraft flying in Australian airspace is ‘actually in Australia’ – identifying the ‘particular time’ at which transferee’s status is to be determined – identifying the relevant period for examining transferee’s presence in Australia – meaning of the word ‘during’

Legislation Cited:

Duties Act 1997 (NSW)

Taxation Administration Act 1996 (NSW)

Foreign Acquisitions and Takeovers Act 1975 (Cth)

Civil Aviation Act 1988 (Cth)

Seas and Submerged Lands Act 1973 (Cth)

Migration Act 1958 (Cth)

Acts Interpretation Act 1901 (Cth)

Cases Cited:

Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184

Texts Cited:

Chicago Convention on International Civil Aviation

Category:

Principal judgment

Parties:

Sen Gao (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
C D Freeman (Applicant)
R Clark (Respondent)

Solicitors:
Goodwin & Co Lawyers (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2020/00020289

Publication restriction:

No restriction

Reasons for decision

Introduction

1. This is a case about surcharge purchaser duty (SPD) payable under Chapter 2A of the Duties Act 1997 (the Duties Act). The outcome of the case turns on whether the applicant was a ‘foreign person’ when he became the owner of an apartment in a block in St Leonards.

2. The applicant, Sen Gao, is a permanent resident of Australia but he is not an Australian citizen. On 28 March 2018 he entered into a contract to purchase the apartment. The respondent Chief Commissioner made an assessment of the duty payable on the agreement; the assessment included an amount in respect of SPD. Mr Gao paid the full amount assessed.

3. Settlement took place on 3 January 2019. Mr Gao then asked the Chief Commissioner to make a reassessment and to refund the SPD he had paid, arguing that at the time of completion he was no longer a ‘foreign person’ for the purposes of the Duties Act. The Chief Commissioner rejected the refund request, taking the view that Mr Gao was still a ‘foreign person’.

4. Mr Gao lodged an objection to the refund rejection decision but the objection was disallowed. He has now applied to the Tribunal for review of the objection decision.

Preliminary issues

5. The Chief Commissioner has correctly pointed out that Mr Gao has erred in nominating the objection decision as the decision under review by the Tribunal. Instead the decision under review is the Chief Commissioner’s operative decision to refuse to refund the SPD: Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28]. Both parties proceeded on the basis that the operative decision is the decision being reviewed.

6. Furthermore, the application to the Tribunal was made 2 days late – the time limit set by s 99(1) of the Taxation Administration Act 1996 (subject to the Tribunal granting an extension of time) is 60 days after the date of issue of the notice of the Chief Commissioner’s determination of the objection. The Tribunal grants the extension of time, a course not opposed by the Chief Commissioner.

The relevant legislation

7. The dutiable transactions on which SPD is chargeable are listed in s 104L(1) of the Duties Act. They are referred to in the Duties Act as surcharge duty transactions.

8. The relevant transaction in Mr Gao’s case, on which the SPD was assessed, is ‘an agreement for the sale or transfer of residential-related property to a foreign person’, listed in s 104L(1)(b)(i). There is no dispute, and I find, that the apartment Mr Gao purchased is ‘residential-related property’.

9. The actual transfer of residential-related property to a foreign person is also a surcharge duty transaction but double duty is avoided in most cases (and including in Mr Gao’s case) by s 104X(2).

10. Section 104ZF is a critical provision. It provides:

104ZF Refund if property transferred to persons who are no longer foreign on transfer

If surcharge purchaser duty has been paid on an agreement for the sale or transfer of residential-related property and the Chief Commissioner is satisfied that none of the transferees in respect of a transfer made in conformity or partial conformity with the agreement are foreign persons, the Chief Commissioner must reassess and refund that duty if an application is made within 5 years of the initial assessment.

11. This is the provision Mr Gao relied on when he applied for the reassessment and refund of SPD.

12. It can be seen that the reassessment and refund depend on whether the Chief Commissioner (or the Tribunal on review) is satisfied that the transferee – Mr Gao – is not a ‘foreign person’. It is tolerably clear, from the language and the context, that the question whether Mr Gao is or is not a ‘foreign person’ is to be asked and answered at the time of the transfer. Put simply, if Mr Gao was a foreign person when he made the agreement but I am satisfied that he was not a foreign person when the transfer was effected, he will be entitled to a refund of the SPD originally paid.

13. The expression ‘foreign person’ is defined in s 104J(1) of the Duties Act. I set out s 104J in its entirety:

104J Meanings of “foreign person” and “foreign trustee”

(1)   In this Chapter—

foreign person means a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section.

foreign trustee means a person who is a foreign person because of the person’s capacity as the trustee of a trust.

(2)   The definition of foreign person in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth is modified as follows—

(a)   an Australian citizen is taken to be ordinarily resident in Australia, whether or not the person is ordinarily resident in Australia under that definition,

(b) a New Zealand citizen who holds a special category visa, within the meaning of section 32 of the Migration Act 1958 of the Commonwealth, at any particular time is taken at that time to be an individual whose continued presence in Australia is not subject to any limitation as to time imposed by law.

Note.

Section 5 of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth provides that an individual who is not an Australian citizen is ordinarily resident in Australia at a particular time (and is therefore not a foreign person) if and only if—

(a)   the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time, and

(b)   at that time—

(i)   the individual is in Australia and the individual’s continued presence in Australia is not subject to any limitation as to time imposed by law, or

(ii)   the individual is not in Australia but, immediately before the individual’s most recent departure from Australia, the individual’s continued presence in Australia was not subject to any limitation as to time imposed by law.

(3) For the purposes of charging surcharge purchaser duty on a surcharge duty transaction, a person is taken to be a foreign person if the person is a foreign person when a liability for duty charged by Chapter 2 on the transaction arises (or would arise but for section 53A or a concession or exemption from duty under that Chapter).

Note.

See section 12.

14. I will refer to the Foreign Acquisitions and Takeovers Act 1975 (Cth), which provides the meaning of the expression ‘foreign person’ for the purposes of the Duties Act, as the FAT Act. That meaning is found in s 4 of the FAT Act, which provides relevantly that:

foreign person means:

(a)   an individual not ordinarily resident in Australia; …

15. The Note following s 104J(2) of the Duties Act is, with two minor exceptions, a faithful reproduction of s 5(1) of the FAT Act. The exceptions are:

1. the words ‘(and is therefore not a foreign person)’ do not appear in s 5(1) – but that distinction can be ignored, since the words that have been added simply explain the effect of the provision, taking into account the definition of ‘foreign person’ in s 4; and

2. the expression ‘ordinarily resident’ appears in bold italics in the FAT Act.

16. The Note following s 104J(2) of the Duties Act does not, however, make any reference to s 5(2) of the FAT Act, which I quote here for completeness:

(2)   Without limiting paragraph (1)(b), an individual’s continued presence in Australia is subject to a limitation as to time imposed by law if the individual is an unlawful non-citizen within the meaning of the Migration Act 1958.

17. Now, since Mr Gao is not and has never been an Australian or New Zealand citizen, the modification in s 104J(2) of the Duties Act to the meaning of ‘foreign person’ has no relevance to this case.

Mr Gao’s movement records

18. Whether or not Mr Gao was, at the relevant time, a ‘foreign person’ will depend on the number of days during which he had ‘actually been in Australia’ in the relevant 12 month period. Identifying the ‘relevant time’ for testing his status, and identifying the ‘relevant 12 month period’ that has to be measured, will require some analysis later in these reasons. For the time being I will simply note the following information, derived from his International Movement Record as supplied by the Department of Home Affairs (all movements are into and out of Sydney Airport):

• Arrived on 26/12/2017 on CA173

• Departed on 30/03/2018 on CA174

• Arrived on 07/07/2018 on CA173

• Departed on 27/07/2018 on CA174

• Arrived on 04/10/2018 on CA173 and was still in Australia on the date of transfer, 3 January 2019.

19. Based on these records (s 58 documents, page 4) I find that:

1. Mr Gao was in Australia on the date of entering into the contract (28 March 2018);

2. Mr Gao was on flight CA174 that departed from Sydney Airport on 30 March 2018;

3. Mr Gao was on flight CA173 that arrived at Sydney Airport on 7 July 2018;

4. Mr Gao was on flight CA174 that departed from Sydney Airport on 27 July 2018;

5. Mr Gao was on flight CA173 that arrived at Sydney Airport on 4 October 2018;

6. Mr Gao was in Australia on the date of settlement (3 January 2019).

The parties’ calculation of days in Australia

20. Mr Gao’s application for the SPD refund was accompanied by the following calculation of days in Australia (s 58 documents, page 10):

• 2 January 2018 to 30 March 2018 – 88 days

• 7 July 2018 to 27 July 2018 – 21 days

• 4 October 2018 to 3 January 2019 – 92 days,

for a total of 201 days.

21. The Chief Commissioner’s rejection letter (s 58 documents, pages 29-30) included the following (original emphasis):

… To be considered non foreign within the settlement period, the transferee must have resided in Australia for a period of 200 days within a 12 month period. In this case, the 200 day test is in the 12 months preceding the date of settlement (4^th January 2018 – 3^rd January 2019).

…

In relation to section 5(1)(a) of the FAT Act, the transferee must have been in Australia during 200 or more days in the period of 12 months immediately preceding the date of settlement.

Set out below is a summary of Sen Gao’s international movement record:

4 January 2018 – 30 March 2018 = 86 days

7 July 2018 – 27 July 2018 = 21 days

4 October 2018 – 3 January 2019 (settlement date) = 92 days

Total days in Australia in the 12 months immediately preceding the settlement is 199 days.

The supporting documentation provided to the Revenue NSW shows that Mr Gao was not in Australia during 200 or more days in the period of 12 months immediately preceding the date of settlement. As Mr Gao does not meet the definition of ordinarily resident, he is a foreign person and a reassessment and refund is not approved.

I note that in your cover letter you have calculated the days from 2 January 2018 to 3 January 2019 which is a period of 12 months and 2 days prior to settlement.

…

22. Those exchanges between the parties prompt the following observations:

1. First, the Chief Commissioner was correct to note that Mr Gao’s calculations had gone back further than the 12 months stipulated in the statute;

2. Second, the Chief Commissioner’s calculation of the number of days by reference to the dates specified is correct, at 199 days;

3. Third, both Mr Gao and the Chief Commissioner identified the answer to the ‘foreign person’ question as requiring the calculation of the number of days Mr Gao had been in Australia during the period of 365 days (each of them a 24-hour period from midnight to midnight) ending at the conclusion of the date of settlement.

4. Finally, both parties were of the view that if Mr Gao had been in Australia for any part of a day during the period, then that day would count towards the 200 day goal.

23. I will have more to say about observations (3) and (4) later in these reasons. For the time being I will focus on how Mr Gao initially responded to the Chief Commissioner’s claim that he was one day short of the required figure of 200 days.

The identification of two extra days that may count in Mr Gao’s favour

24. There are two extra days, 31 March 2018 and 28 July 2018, that Mr Gao thinks should be treated as days during which he had ‘actually been in Australia’. Each of them is the day after one of the two dates shown in the movement records as the dates he left Australia. Mr Gao says these two days should count in his favour because in each case the flight he was on did not leave Australian airspace until after midnight on the date shown in the movement records.

25. In other words, although the movement records show he departed Australia on 30 March 2018 and 27 July 2018, he says in each case he did not leave Australia until the following day.

26. The Chief Commissioner accepts (Outline of Submissions at [7]), and I find, that:

1. Flight CA174, which departed from Sydney Airport on the evening of 30 March 2018, was still over Australian land at 00:33:29 Australian Eastern Daylight Time on 31 March 2018; and

2. Flight CA174, which departed from Sydney Airport on the evening of 27 July 2018, was at latitude 11°59’7.58”S and at longitude 134°8’54.98”E (which Mr Gao believes to be over Australian land) at 00:01:35 Australian Eastern Standard Time (AEST) on 28 July 2018 and in any event was over Australian territorial sea at 00:07:00 AEST on 28 July 2018.

27. It follows, according to Mr Gao, that he was in Australia for part of 31 March 2018 and part of 28 July 2018, and so he passed the 200 day requirement – reaching, in fact, 201 days during the identified period.

Do these two extra days count in Mr Gao’s favour?

28. The narrow question here is whether a person sitting in a commercial aircraft cruising at an altitude of several kilometres above either (a) Australian land or (b) Australian territorial sea, is ‘in Australia’ for the purposes of s 5(1)(a) of the FAT Act. (Mr Gao notes that he will get to 200 days if the answer to either one of those scenarios is ‘yes’.)

The parties’ positions at objection

29. At objection, Mr Gao’s solicitors based their client’s case on the interaction between several statutory definitions in Commonwealth legislation (s 58 documents, page 33). The first one was the definition of ‘Australia’ in s 4 of the FAT Act:

Australia, when used in a geographical sense, includes the external Territories.

30. The second one was the definition of ‘Australian territory’ in s 3 of the Civil Aviation Act 1988 (Cth), which they said ‘defines Australian territory in a geographical sense’:

Australian territory means:

(a)   the territory of Australia and of every external Territory;

(b)   the territorial sea of Australia and of every external Territory; and

(c)   the air space over any such territory or sea.

31. The submission then proceeded as follows (original emphasis):

[11] Division 1 ‘The territorial sea’ of the Seas and Submerged Lands Act 1973 (Cth) and Australian Government guidelines ‘Maritime Boundary Definitions’ define the territorial sea (see the link: Territorial Sea is a belt of water not exceeding 12 nautical miles limit in width measured from the territorial sea baseline. Australia’s sovereignty extends to the territorial iits seabed (sic) and subsoil, and to the air space above it.

[12]   As a result, Mr Gao has stayed in Australia in a geographical sense until his plane has crossed the Australian Border. The date should be used for the purpose of calculating the number of days Mr Gao has actually been in Australia.

32. The Chief Commissioner’s objection decision responded as follows (s 58 documents, page 51; bold, italics and underlining as in the original):

The main object of the Civil Aviation Act is to establish a regulatory framework for maintaining enhancing and promoting the safety of civil aviation. The definition of ‘Australian territory’ under this Act is only applicable for the purpose of civil air operations in Australian territory and the operation of Australian aircraft outside Australian territory. We do not consider that the definition of ‘Australian territory’ under the Civil Aviation Act has any relevance for the purpose of surcharge purchaser duty.

Under the Migration Act 1958 (Cth) ‘enter Australia’, in relation to a person, means enter the migration zone; ‘leave Australia’, in relation to a person, means leave the migration zone; and ‘remain in Australia’ in relation to a person, means remain in the migration zone (definition under Section 5(1)).

Under sub-section 9(3) of the Migration Act, a person is taken to be in Australia while he or she is taken to be in the migration zone.

Under the Act ‘migration zone means the area consisting of the States, the Territories, Australian resource installations and Australian sea installations and, to avoid doubt, includes:

(a)   land that is part of a State or Territory at mean low water; and

(b)   sea within the limits of both a State or a Territory and a port; and

(c)   piers, or similar structures, any part of which is connected to such land or to ground under such sea,

but does not include sea within the limits of a State or Territory but not in a port.

In this matter according to the movement records Mr Gao left the migration zone on 30 March 2018, not on 31 March 2018. It is irrelevant that the aircraft that carried Mr Gao did not leave Australian air space until the following day.

Similarly, on the second occasion, as per the movement record Mr Gao left Australia on 27 July 2018, not 28 July 2018.

As according to the movement record Mr Gao was not actually in Australia during 200 or more days in the period of 12 months immediately preceding the settlement date, he was a foreign person for the purpose of surcharge purchaser duty.

The parties’ submissions in the Tribunal

33. In these proceedings Mr Gao submitted that the Chief Commissioner was wrong to base the objection decision on the Migration Act and the concept of ‘migration zone’.

34. He submitted the definition in s 104J of the Duties Act specifically refers to and picks up the definition of ‘ordinarily resident’ in s 5 of the FAT Act but does not refer to or pick up any definitions in, or concepts from, the Migration Act. Also, the phrase used in the Duties Act is ‘in Australia’, not ‘in the migration zone’.

35. Furthermore, it was submitted that having regard to the object of the Migration Act (as specified in s 4 of that Act) and to the purpose of the creation of the ‘migration zone’ concept (identified as the desire to limit the rights of unauthorised maritime arrivals), the Migration Act has no role to play in construing the Duties Act.

33. Mr Gao submitted the expression ‘in Australia’ in the context of s 5 of the FAT Act is specifically a geographical reference, and noted in support of that submission the definition of ‘Australia’ in s 4 of the FAT Act (‘when used in a geographical sense, includes the external Territories’). There being no limitation on the geographical sense of Australia in the FAT Act, it includes airspace.

34. He also referred to the Chicago Convention on International Civil Aviation (the Convention), and particularly Articles 1 and 2, which provide as follows:

Article 1 – Sovereignty

The contracting States recognize that every State has complete and exclusive sovereignty over the airspace above its territory.

Article 2 – Territory

For the purposes of this Convention the territory of a State shall be deemed to be the land areas and territorial waters adjacent thereto under the sovereignty, suzerainty, protection or mandate of such State.

38. Noting the limitation in Article 2 (‘For the purposes of this Convention’), it was submitted:

Article 1 is a statement at large, and not only for the purposes of the Convention, that Australia has complete and sovereignty (sic) over the airspace above its territory. That is, in a geographical sense, the airspace above Australia is part of Australia. It must follow that the definition of ‘in Australia’ in section 5 of the [FAT Act] must include the airspace above its territory.

39. It followed that Mr Gao was ‘in Australia’ within the meaning of s 5 of the FAT Act on 31 March 2018 and 28 July 2018, and he therefore met the 200 day requirement.

40. The Chief Commissioner’s written submissions commenced by noting that the definition of ‘Australia’ in s 4 of the FAT Act – ‘Australia, when used in a geographical sense, includes the external Territories’ – provides little guidance as to the scope of the meaning of the phrase ‘has actually been in Australia’. This was said to be because the question was whether Mr Gao was ‘in Australia’ on the relevant dates, not whether or not he was in an external territory.

41. It was submitted that the meaning and scope of the phrase ‘in Australia’ may differ from one statute to another, guided by the conduct or circumstances intended to be regulated by the statute. The task in this case is ‘to determine the meaning of the phrase for the purposes of s 5 of the FAT Act only’.

42. The submissions continued:

[18]   The starting point for the interpretation of any statutory provision is the words of the provision itself, when read in context and in light of the particular purpose of a provision [Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]]. While the operative test in s 5(1)(a) is whether a non-citizen ‘has actually been in Australia’ for a certain period of time, that phrase, the test in s 5(1)(a), and therefore s 5 of the FAT Act itself, is deployed to give meaning to the term ‘ordinarily resident’, which appears in the definition of ‘foreign person’ in s 4 of the FAT Act. Therefore, it is important to construe the phrase ‘has actually been in Australia’ in s 5(1)(a) in light of the concept (residency) that is sought to be determined by the provision itself.

[19]   ‘Reside’ is defined in the Macquarie Dictionary to mean ‘dwell permanently or for a considerable time’ and a ‘resident’ as ‘someone who resides in a place’. Therefore, Applicant’s submissions fall at the first hurdle, because one cannot be sensibly be considered (sic) to ‘reside’ in a place, or ‘dwell’ in a place, while airborne above it, and one cannot be considered to ‘reside’ or ‘dwell’ airborne in a place because an individual cannot ‘reside’ airborne for any extended period of time, as compared to on land, or even on the ocean. There is no permanency, even short-term permanency, to being airborne, and s 5 of the FAT Act is concerned with setting the necessary degree of permanence to where one resides for the purposes of that Act and deciding whether a person is a foreigner or not. Indeed, one cannot in a practical sense even dwell in ‘a place’ while airborne. In essentially all circumstances a person who is airborne is necessarily travelling through space from one place to another, so there is no permanency to being in any one place if one is airborne, because at every point in time the person will be in a new physical place.

43. There followed at [20] some references to Australian and UK authorities reinforcing the notion that a person’s place of residence is the place where he or she eats, drinks and sleeps, and that a person ‘resides’ where he or she lives. That led to a submission that it was ‘inappropriate’ to include the period during which Mr Gao was airborne on a commercial aircraft travelling to China as part of the period of time when he had ‘actually been in Australia’ because the aircraft could not be where Mr Gao eats, drinks and sleeps, nor where he lives.

44. The Chief Commissioner then submitted that s 5 should be read in light of the Migration Act 1958 (Cth) (the Migration Act), and for the following reasons:

1. On its face, s 5 of the FAT Act only applies to non-citizens;

2. The object of the Migration Act is to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens; and to advance this object the Act provides for visas permitting non-citizens to enter or remain in Australia;

3. The Migration Act is intended to be the only source of the right of non-citizens to enter or remain in Australia;

4. Non-citizens may be removed from Australia if their presence in Australia is not permitted by the Migration Act.

45. It follows, according to the submission, that ‘the Migration Act’s conception of persons who are in, not in, or remain in, Australia, is the most apposite to s 5 of the FAT Act, because the Migration Act is intended to regulate the circumstances in which non-citizens can enter, exit and remain [in] Australia and thus the circumstances in which they can be resident in Australia’: [22](b).

46. The Chief Commissioner also submitted at [22](c) that ‘on its face, s 5 of the FAT Act cross-references the Migration Act directly pursuant to s 5(1)(b) and (2)’. This was said to be because the prima facie satisfaction of the requirements of s 5(1)(a) will be negated if the person does not have an ongoing right to be present in Australia – ‘including based on restrictions found in the Migration Act. This cross-reference suggests that it was Parliament’s intention that the regulatory regime in the Migration Act have a bearing upon whether someone is ordinarily resident in Australia for the purposes of s 5 of the FAT Act’.

47. The Chief Commissioner’s submissions largely repeated, at [23], the legislative references to the ‘migration zone’ that were highlighted in the reasons for the objection decision: see [32] above.

48. The Chief Commissioner also referred at [24] to s 271 of the Migration Act, which provides that for the purposes of migration proceedings:

for the purpose of proving that a person entered Australia on, or left Australia in, an aircraft (whether or not the person travelled to Australia on a pre-cleared flight), a certified printout of the relevant movement records is prima facie evidence of the matters contained in the printout.

49. While it was conceded that this provision could not be determinative of the question that needs to be answered here, it was submitted that it ‘does indicate the intention of the Migration Act is that a person be taken to leave Australia when they are recorded as having left by means of their movement records’: at [25].

Consideration

50. First of all, I find the authorities relied on by the Chief Commissioner in relation to the concepts of ‘reside’ and ‘resident’ to be irrelevant to the question before me. This is because the concept of ‘ordinarily resident’, for the purposes of the FAT Act, and by extension for the purposes of the Duties Act, is marked out solely by the words in s 5(1)(a) of the FAT Act. Whatever the ordinary meaning of the expression may be, it has been displaced by the words in s 5(1)(a).

51. The question is not whether Mr Gao at the relevant time ordinarily dwelt in Australia, or whether at the relevant time the place where he ordinarily ate, drank and slept was Australia. The answer to either of those questions, which reasonably well paraphrase the question whether he was ‘ordinarily resident’ in Australia within the ordinary meaning of those words, may well be yes. But that would not mean he was ‘ordinarily resident’ for the purposes of s 5(1)(a). All that matters is whether or not he satisfied the 200-day requirement.

52. Furthermore, the use of the word ‘resident’ in the composite expression ‘ordinarily resident’ is of no significance in itself. The composite expression is nothing more than an arbitrary two-word label, used as a more convenient way of representing the 22 words in paragraph (a), but only as a step on the way to answering the ultimate, and only important, question – whether or not someone is a ‘foreign person’ for the purposes of the FAT Act.

53. I also find the references to the Migration Act unhelpful. The Migration Act’s concept of ‘migration zone’ is an artificial construct which effectively becomes a proxy for ‘Australia’ – but an ‘Australia’ that is different from the one defined in the FAT Act. While the FAT Act notion of ‘Australia’ includes all the external territories, the Migration Act notion of ‘migration zone’ only includes some of them. In any event, the meaning of the expressions ‘enter Australia’ and ‘leave Australia’ is consistent with the Chief Commissioner’s position only if the assumption is made that ‘Australia’ does not include Australian airspace – and you cannot answer the very question in issue by assuming it away.

54. Nor does s 271 of the Migration Act assist the Chief Commissioner’s case. The various paragraphs of the section apply only in ‘migration proceedings’ (of which this proceeding is not one).

55. In summary, this issue is not resolved by looking at the Migration Act, or the Civil Aviation Act, or the Chicago Convention, but by looking at the words of the statute, and working out their meaning in context.

56. Now, for what it is worth, I agree with Mr Gao’s submission that ‘Australia’, when used in s 5(1)(a), is used in a geographical sense. But how the resultant statutory definition bears on his case is unclear, since, as the Chief Commissioner observes, Mr Gao’s location in relation to any of the external territories is not in issue here.

57. As to whether the two days in question (31 March 2018 and 28 July 2018) are days during which Mr Gao had ‘actually been in Australia’, in my view they are not. To say that Mr Gao was ‘actually … in Australia’ when the aircraft was at cruising altitude above the very limits of Australian territory, on the way to China, strains the language beyond breaking point.

58. The word ‘actually’ is defined in the Macquarie Dictionary to mean ‘as an actual or existing fact; really’. In light of that meaning, it is difficult to see how the phrase ‘has actually been in Australia’ in s 5(1)(a) of the FAT Act differs from the alternative ‘has been in Australia’, other than perhaps as a matter of emphasis, to reinforce the requirement that a person be in Australia, rather than on the way to Australia, bound for Australia, or in some other way close to but not quite in Australia.

59. In my view, ‘actually … in Australia’ captures land-based presence in Australia, and also presumably sea-based (in territorial waters) presence in Australia, but it does not capture presence in Australian airspace. Therefore, if, on a particular day, you are in Australian airspace but you do not land in Australia or set down in Australian territorial waters on that day, then you cannot be said to have been ‘actually in Australia’ on that day. Otherwise, it would be the case that the passengers on a hypothetical flight from Jakarta to Auckland, and flying hypothetically over the Australian land mass, would be ‘actually in Australia’ for all the time the aircraft is in Australian airspace. That does not accord with the ordinary meaning of the words ‘actually … in Australia’ in s 5(1)(a) of the FAT Act.

60. That conclusion would dispose of the matter if observations (3) and (4) in [22] above were correct. The question now is, are they?

Additional issue raised during the hearing

61. During the hearing I asked both counsel for their views on another phrase in s 5(1) of the FAT Act that they had not commented on – that phrase is ‘at a particular time’. I asked the question because it seemed to me that both counsel had approached the issue (that is, whether or not Mr Gao was a ‘foreign person’ when the property was transferred to him) as if the expression in s 5(1) had been ‘on a particular day’, not ‘at a particular time’. Their approach had been to count backwards from the date of settlement, 3 January 2019, so that the ‘period of 12 months immediately preceding’ that starting point excluded the anniversary of that date 12 months earlier. In short, I was asking them to satisfy me that this was the correct way to undertake the enquiry.

62. After a brief discussion I granted both parties leave to file further written submissions on this issue, and to indicate to the Tribunal whether they wished to supplement their written submissions with further oral argument. Written submissions were filed in accordance with the timetable I set, and neither party considered further oral argument necessary.

63. The Chief Commissioner’s further written submissions requested leave to include argument in relation to the meaning of the word ‘during’, appearing in s 5(1)(a). Leave was granted, and Mr Gao was permitted to file further written submissions in reply.

The meaning of the word ‘during’ in s 5(1)(a)

64. The Chief Commissioner noted the alternative dictionary definitions of ‘during’ as either ‘throughout the continuance of’ or ‘in the course of’. It was then submitted that:

1. if the former meaning applied, then even on Mr Gao’s interpretation of ‘in Australia’ as including Australian airspace, he would not have reached the 200 day threshold in any event, since on each of 31 March 2018 and 28 July 2018 he had been in Australian airspace only for a matter of minutes;

2. if the latter meaning applied, then the question is whether, as a matter of substance, Mr Gao was ‘actually in Australia’ in the course of the two days in question – which, given the de minimis nature of Mr Gao’s presence in Australian airspace on those days (33 minutes in one case and 7 minutes in the other), the Chief Commissioner submitted, he was not.

65. In Mr Gao’s submission, ‘during’ means ‘at some point in the duration of’, rather than ‘for the entirety of’.

66. In my view, a person will have ‘actually been in Australia during’ a particular day if s/he has spent part of that day in Australia. If it had been necessary to be in Australia for the entire day then I am confident the statutory language would have been either ‘throughout the entirety of 200 days’ or ‘during 200 full days’ or something similar.

67. I conclude that the word ‘during’ in the context of s 5(1)(a) means ‘for some part of’. I am inclined to think the meaning will be subject to a de minimis restriction but it is best that I leave that question open since it is not necessary for me to decide it.

‘At a particular time’

68. The parties initially thought, or assumed, the ‘particular time’ referred to in s 5(1) of the FAT Act was the date of settlement (also referred to as the date of completion). It was because I was concerned that this identification of a calendar day, rather than a point in time, may not align with the statutory language, that I sought the further submissions from the parties.

69. Mr Gao now submits the ‘particular time’ for establishing whether or not Mr Gao was ‘ordinarily resident’ in Australia is the actual time of registration of the transfer, which his counsel submits is 15:33 on 3 January 2019. For the sake of convenience I will accept 15:33 on 3 January 2019 as the time of registration although the materials seem to suggest nothing more specific than that registration took place some time between 15:12:13 and midnight on that day.

70. Mr Gao’s submission is as follows:

[5] [Section 5(1)] prefaces time with the word ‘particular’, which in the applicant’s submission, refers to the time of registration being 15:33 on 3 January 2019. Section 2G of the Acts Interpretation Act 1901 (Cth) defines month. Using that definition, 12 months immediately prior to 15:33 on 3 January 2019 commences on 15:34 on 3 January 2018. That is, the 12 month period is 15:34 on 3 January 2018 to 15:33 on 3 January 2019.

71. The Chief Commissioner submits this is not the correct approach: while the word ‘time’ is used in the statute rather than ‘day’, the word is referring to a calendar day period, not a particular time of day. The submissions, relying on the various definitions in the Macquarie Dictionary, argue that the word ‘time’, even when paired with the word ‘particular’, does not necessarily denote an infinitesimal sliver of time – ‘it can just as easily refer to a period of time, or approximations of time’.

72. The Chief Commissioner goes on to submit there is no policy reason why the question posed in the statute would need to be asked at the level of specificity of a particular time of day, rather than at the level of approximation of a day period.

73. The Chief Commissioner notes the period in which the 200 day test is to be established is referred to in s 5(1)(a) as a ‘period of 12 months’, and in that context cites s 2G of the Acts Interpretation Act 1901 (Cth) (the AIAct), which provides:

2G Months

(1)   In any Act, month means a period:

(a)   starting at the start of any day of one of the calendar months; and

(b)   ending:

(i)   immediately before the start of the corresponding day of the next calendar month; or

(ii)   if there is no such day—at the end of the next calendar month.

Example 1:   A month starting on 15 December in a year ends immediately before 15 January in the next year.

Example 2:   A month starting on 31 August in a year ends at the end of September in that year (because September is the calendar month coming after August and does not have 31 days).

(2)   In any Act, a reference to a period of 2 or more months is a reference to a period:

(a)   starting at the start of a day of one of the calendar months (the starting month); and

(b)   ending:

(i)   immediately before the start of the corresponding day of the calendar month that is that number of calendar months after the starting month; or

(ii)   if there is no such day—at the end of the calendar month that is that number of calendar months after the starting month.

Example 1:   A reference to 6 months starting on 15 December in a year is a reference to a period starting on that day and ending immediately before 15 June in the next year.

Example 2:   A reference to 6 months starting on 31 October in a year is a reference to a period starting on that day and ending at the end of April in the next year (because April is the calendar month coming sixth after October and does not have 31 days).

74. The Chief Commissioner accepts that s 2G refers to reckoning of time looking forward but submits the same principle of interpretation should apply equally with respect to reckoning time looking backward.

75. The submissions continue:

[9] … Therefore, given that s 5(1)(a) is concerned with a number of days in a 12 month period, contrary to the submissions of the Applicant, it is clear that the provision is concerned with days, not a specific time of day, because:

(a)   a reference to two or more months in an Act is a reference to calendar months and calendar days; and

(b)   the period starts at the start of the calendar day from which the period runs.

[10]   Therefore, while the phrase ‘at a particular time’ and ‘that time’ are used in s 5(1), given the period in which the test is to be assessed by reference to the words ‘period of 12 months’, the use of the word ‘time’ in s 5(1) of the FAT Act, when read with s 2G of the Acts Interpretation Act, must be referring to the period of a day, not a specific time of day.

Consideration

76. There are two questions that need to be answered.

77. The first is – What is the ‘particular time’ at which it must be determined whether or not Mr Gao was ‘ordinarily resident’ in Australia?

78. The second is – What is the relevant ‘period of 12 months’ for examining the days during which Mr Gao was actually in Australia?

79. On the first question, the parties initially identified the date of settlement (also referred to as the date of completion) as the ‘particular time’. During the hearing, as the specific statutory language was being debated, both counsel seemed to move, even if only tentatively, towards the time of registration of the transfer as the ‘particular time’. Mr Gao is maintaining that as his position, while the Chief Commissioner is now submitting that the relevant time is ‘when settlement is completed’ – although noting that nothing turns on the distinction in this case, since settlement and registration of the transfer occurred on the same day.

80. In my view, the date of settlement cannot be the ‘particular time’ referred to.

81. The whole purpose of this exercise is to determine whether a purchaser of residential-related property, who was a foreign person at the time of entering into the agreement, remains a foreign person at the time of the ‘transfer made in conformity or partial conformity with the agreement’: Duties Act, s 104ZF. The transfer is not made on settlement, but on registration.

82. Perhaps the Chief Commissioner’s submission was designed to obstruct the use of schemes to attract the benefit of s 104ZF by artificially delaying the date of registration of the transfer, thus increasing the potential number of qualifying days to count towards the 200-day target. (In any event, such schemes would likely fall foul of the anti-avoidance provisions in Chapter 11A of the Duties Act.) Whether or not that is so, I reject the Chief Commissioner’s submission, and confirm that the ‘particular time’ is when the transfer is registered.

83. I now turn to the second question as stated in [78] above.

84. Both parties have referred in their submissions to s 2G of the AI Act. For completeness, I note s 2 of the AI Act, which provides as follows (omitting the Note after subsection (1), which is not relevant):

2 Application of Act

(1)   This Act applies to all Acts (including this Act).

(2)   However, the application of this Act or a provision of this Act to an Act or a provision of an Act is subject to a contrary intention.

85. I perceive nothing in the FAT Act, or in s 5 in particular, to suggest an intention that the AI Act should not apply in the interpretation of the statutory provision. It follows that, to the extent relevant, s 2G should guide the interpretation of s 5(1) of the FAT Act.

86. As mentioned above, the Chief Commissioner submitted that, while s 2G of the AI Act refers to the reckoning of time going forward, the principle mandated by the section should apply to the reckoning of time going backward. That may be so in a practical sense, although it is not necessary for me to decide one way or the other on its correctness. This is because what needs to be identified in this case is a particular period of 12 months – which will start on a particular date and end on a particular date. The end date will, logically, be a date later than the start date. And we will know if the period identified is the correct period if it is the period (and there can be only one) that ‘immediately preced[es]’ the ‘particular time’ at which Mr Gao’s status – whether or not he was ‘ordinarily resident’ in Australia – has to be determined.

87. Now, I have already found the ‘particular time’ at which Mr Gao’s status is relevant is when the transfer is registered. I have not specified whether that means the specific time of the day when the transfer is registered, or the day on which the transfer is registered. As it happens, it is not necessary to decide the point, since no matter which alternative is fixed upon, the relevant 12 month period is the same.

88. The application of s 2G(2) of the AI Act means the 12 month period must be a period comprising complete calendar days, each of them reckoned from midnight to midnight. There is simply no room in the application of s 2G(2) to allow a computation of the 12 month period that comprises anything other than complete calendar days.

89. The parties initially submitted – and the Chief Commissioner continues to submit – that the ‘period of 12 months immediately preceding’ the ‘particular time’ referred to in s 5(1) of the FAT Act is the period 4 January 2018 to 3 January 2019 (the nominated period). However, the nominated period cannot be the correct 12 month period, for the following reasons:

1. If the ‘particular time’ for the purposes of s 5(1) of the FAT Act is the time of registration, then the nominated period includes a period of time (from 13:33 to midnight on 3 January 2019) that does not precede that particular time; and

2. If the ‘particular time’ for the purposes of s 5(1) of the FAT Act is the date of registration, then the nominated period includes an entire day (3 January 2019) that does not precede that particular time.

90. The proper 12 month period in Mr Gao’s case is the period 3 January 2018 to 2 January 2019. This is the ‘period of 12 months immediately preceding’ the ‘particular time’ referred to in s 5(1) of the FAT Act.

91. The recalculated number of days during which Mr Gao had ‘actually been in Australia’ in the relevant period is:

• 3 January 2018 to 30 March 2018 – 87 days

• 7 July 2018 to 27 July 2018 – 21 days

• 4 October 2018 to 2 January 2019 – 91 days,

for a total of 199 days.

92. It follows that Mr Gao has fallen short of the 200 day requirement in s 5(1) of the FAT Act by one day. That means he was a ‘foreign person’ for the purposes of s 104J(1) of the Duties Act at the time of transfer to him of the apartment in St Leonards.

Decision

1. The Chief Commissioner’s decision to refuse the refund of surcharge purchaser duty is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 03 September 2020