Hildard Pty Ltd v Chief Commissioner of State Revenue
[2023] NSWCATAD 5
•09 January 2023
Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Hildard Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCATAD 5 Hearing dates: 20 December 2022 Date of orders: 09 January 2023 Decision date: 09 January 2023 Jurisdiction: Administrative and Equal Opportunity Division Before: S E Frost, Senior Member Decision: The duties assessment in respect of the declaration of trust is confirmed.
Catchwords: TAXES AND DUTIES — Dutiable transactions — Dutiable property — Declaration of trust
Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Duties Act 1997 (NSW)
Taxation Administration Act 1996 (NSW)
Cases Cited: Tzovaras v Chief Commissioner of State Revenue [2020] NSWCATAD 265
Texts Cited: None cited
Category: Principal judgment Parties: Hildard Pty Ltd (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel:
H Morgan, Solicitor Advocate (Respondent)
Solicitors:
Applicant – Self represented (G Catt, Director)
Crown Solicitor (Respondent)
File Number(s): 2022/00242091 Publication restriction: No restriction
REASONS FOR DECISION
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The Applicant has been assessed to duty in respect of a declaration of trust over a parcel of residential land. The Applicant thinks the assessment is wrong and has applied to the Tribunal for an administrative review of the assessment.
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I have concluded the assessment is correct. These are my reasons.
The Tribunal’s jurisdiction
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The assessment was made under s 8 of the Taxation Administration Act 1996 (NSW) (TA Act). The Applicant objected against the assessment under s 86 of the TA Act; the Chief Commissioner considered the objection under s 91 of that Act and disallowed it. In reliance on s 96 of the TA Act, the applicant has applied to the Tribunal for review of the assessment. Section 9 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act) grounds the Tribunal’s jurisdiction.
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The Tribunal’s task is to decide what the correct and preferable decision is having regard to the material before it: s 63(1) of the ADR Act.
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The Applicant has the onus of proving its case: s 100(3) of the TA Act.
The facts
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On 19 September 2016 the Applicant made a declaration of trust over a residential property it intended to purchase.
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On 30 September 2016 it entered into a contract to purchase the land as trustee of the nominated trust.
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On 11 October 2016 the Applicant lodged the contract with the Chief Commissioner for stamping, and paid ad valorem duty totalling $38,260.
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On 3 April 2019, two and a half years later, the Applicant lodged the Trust Deed with the Chief Commissioner’s office. It applied for a duty concession under s 55 of the Duties Act 1997 (NSW). If the concession applied then only $50 duty would be payable rather than a further amount of ad valorem duty.
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The Chief Commissioner asked the Applicant for information and documents to support its claim for the concession. Not satisfied with what the Applicant provided, the Chief Commissioner ultimately made the assessment of duty in the full amount.
The Applicant’s case
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The Applicant has abandoned its claim under s 55 of the Duties Act. It now says s 18(1) applies. That provision grants relief from double duty in the following circumstances:
18 No double duty
(1) If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $50.
Note. Instrument includes a written statement.
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The Applicant claims the declaration of trust and the purchase of the property in September 2016 were one transaction. Mr Catt, the director of the Applicant, submits that it would have been difficult, if not impossible, for both to have been done on the one day. Furthermore, he submits that duty is payable only on transfers, and the declaration of trust does not amount to a transfer.
The Chief Commissioner’s response
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The Chief Commissioner points to various provisions of the Duties Act to support the assessment. Those provisions affecting the Applicant’s circumstances are outlined as follows.
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Land in New South Wales is ‘dutiable property’: s 11(1)(a).
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A declaration of trust over dutiable property is a dutiable transaction on which duty is charged: s 8(1)(b)(ii).
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A ‘declaration of trust’ is ‘any declaration … that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons … mentioned in the declaration …’: s 8(3).
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An agreement for the sale or transfer of dutiable property is also a dutiable transaction on which duty is charged: s 8(1)(b)(i).
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The duty charged on a declaration of trust over dutiable property and an agreement for the sale or transfer of dutiable property is to be charged as if each such dutiable transaction were a transfer of dutiable property: s 9(1).
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If the dutiable transaction is a declaration of trust, the property ‘transferred’ is the property vested or to be vested in the declarant, and the ‘transferee’ is the person declaring the trust: the Table in s 9(2).
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A liability for duty arises when a transfer of dutiable property occurs: s 12. In the case of a declaration of trust, that is when the declaration is made: the Table in s 9(2).
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Duty is payable by the transferee: s 13.
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Put simply, the effect is this:
The agreement for the sale of the land to the Applicant in 2016 was a dutiable transaction.
Clause 2.1 of the Trust Deed, by which the Applicant declared its intention to acquire the property ‘as bare trustee for the sole benefit of the Beneficiary’, satisfies the definition of ‘declaration of trust’ in s 8(3).
The declaration of trust over the land in 2016 was also a dutiable transaction.
Section 18 doesn’t apply because there is not one dutiable transaction, as required by s 18(1), but two separate dutiable transactions.
Duty is payable by the Applicant on the declaration of trust: the Table in s 9(2), and s 13.
Consideration
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The Chief Commissioner’s analysis is correct. The relief from double duty as provided in s 18 is not available.
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The facts of this case are not materially different from those in Tzovaras v Chief Commissioner of State Revenue [2020] NSWCATAD 265.
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In that case the Tribunal also dealt with an argument that a declaration of trust and a contract for sale of land gave effect to a single transaction. The Tribunal noted at [39] that s 18(1) might well have a role to play in either of the following circumstances:
If the agreement for sale comprised several individual instruments which, taken as a whole, gave rise to that single agreement; or
If the creation of a trust over the property had been effected by several individual documents which, taken as a whole, amounted to a declaration of trust.
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The Tribunal continued:
[39] … That, however, is not the case here: each of the Contract and the Declaration of Trust is a complete and self-contained instrument, the legal effect of which meets the description of a dutiable transaction set out in section 8 of the Duties Act. Section 18(1) therefore cannot apply. This is because there is not a single dutiable transaction effected by multiple documents, but rather two dutiable transactions, each of which is given effect to by a discrete instrument.
[40] Underlying the Applicant’s argument is the idea that, taken as a whole, the Contract and the Declaration of Trust are directed at achieving a wider commercial end, being the acquisition of the Property with a view to its being beneficially owned by the Purchasers on the trusts set out in the Declaration of Trust. That may well be the case, but the existence of such an overarching commercial objective does not mean that the Contract and the Declaration of Trust automatically cease to be distinct dutiable transactions. If that commercial objective is achieved by means of multiple dutiable transactions, the logical consequence is that its participants are exposed to a corresponding multiplicity of charges to ad valorem duty, subject to whatever express relief the Duties Act may offer. That, in the Tribunal’s view, is the position here.
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With respect, I agree with that reasoning. It applies equally in the present case.
Conclusion
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The duties assessment in respect of the declaration of trust is confirmed.
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: 09 January 2023
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