Imrie v Commissioner of State Revenue

[2010] QCAT 682

CITATION: Imrie v Commissioner of State Revenue [2010] QCAT 682

PARTIES:	Terrence John Imrie
v
Commissioner of State Revenue Office of State Revenue

APPLICATION NUMBER:   GAR001-10

MATTER TYPE: General administrative review matters

HEARING DATE:     29 November 2010

HEARD AT:  On the Papers

DECISION OF: Dr P McDermott, Member

DELIVERED ON: 1 December 2010

DELIVERED AT:      Brisbane

ORDERS MADE:

1. To set aside the decision of the Commissioner of State Revenue dated 29 October 2009, being a decision to disallow an objection against an assessment of transfer duty imposed on the applicant, and to substitute the following decision:-

This Tribunal decides

(i) that the transfer of Unit 1040, Swell Apartments, 1 Ocean Street, Burleigh Heads to Mr Terrence John Imrie, the applicant, is a transfer of dutiable property under section 9(1)(a) of the Duties Act 2001; and

(ii) that the resolution of 30 April 2009 is not an agreement for the transfer of dutiable property under s 9(1)(b) of the Duties Act 2001.

CATCHWORDS :  Duties Act 2001 - dutiable transactions -agreement to transfer dutiable property - transfer of land exemptions - surrender of trust interest

APPEARANCES and REPRESENTATION (if any):

Decision was made on the papers without the parties being present.

REASONS FOR DECISION

INTRODUCTION

1. On 1 October 2003 Mr Terrence John Imrie, the applicant, executed the deed which created the Imrie Superannuation Fund.  The deed provided that the trustees of the fund are the applicant and Mr Brent Imrie.  The applicant is the sole member under the deed.

2. On 30 April 2009 a resolution of the trustees was made in which the applicant contends that the interest of the applicant in the fund was surrendered.  The applicant consented to receive, as an in specie distribution, Unit 1040, Swell Apartments, 1 Ocean Street, Burleigh Heads (the land) which was then vested in the trustees.

3. I have essentially to determine whether this transfer is a dutiable transaction or whether the transfer is exempt from duty.

CASE FOR APPLICANT

4. On 7 May 2009 the solicitors for the applicant lodged the resolution document with the respondent for assessment.

5. The case for the applicant is that on 28 July 2009 the respondent wrongly assessed the resolution as an agreement to transfer dutiable property with an assessment of $10,600. The applicant contends that the transfer of the land to the applicant was stamped under section 22(2) of the Duties Act2001 as being exempt from duty.  This subsection provides that if transfer duty is imposed and paid on an agreement for the transfer of dutiable property, then no transfer duty is imposed on the actual transfer.

6. The applicant also contends that the transfer is exempt from duty under section 119 and section 123 of the Act.

7. The objection decision of the respondent dated 29 October 2009 contains the statement that “the resolution was assessed on the basis that it evidenced an agreement for the transfer of dutiable property that is land in Queensland: ss 9(1)(b) and 10(1)(a) of the Act. No transfer duty was imposed on the transfer of the property to the transferee (Terry) under the agreement, pursuant to s 22(2) of the Act”.

ACTUAL ASSESSMENT

8. In this review the applicant and respondent have both proceeded on the assumption that the transfer of the land to the applicant was stamped under section 22(2) of the Duties Act2001 as being exempt from duty.  However, the transfer document bears an assessment stamp which records that on 27 August 2009 duty of $10,600 was paid on the transaction.  The resolution document also bears a similar assessment stamp which assesses that document to duty of $10,600.  However, in this case it does not appear that two lots of duty were actually paid.

REVIEWABLE DECISION

9. I am satisfied that the Taxation Administration Act2001 is an “enabling Act” for the purposes of section 9 of the Queensland Civil and Administrative Tribunal Act 2009. This is because section 69A(a)(ii) of the Taxation Administration Act2001 provides that a taxpayer may apply to QCAT for a review of the decision of the Commissioner of State Revenue relating to an objection against an assessment of the taxpayer’s liability for tax.

10. The reviewable decision is the decision of the delegate of the Commissioner of State Revenue dated 29 October 2009, being a decision to disallow an objection against an assessment of transfer duty imposed on the applicant.

11. In determining this review I am only examining the decision of 29 October 2009 that was made by the respondent.

12. The applicant has more recently contended that there has been a transfer of a half interest in the land held by himself and Mr Brent Imrie as trustees, to himself alone. However, this contention is not in the objection of the applicant and so cannot under section 69A of the Taxation Administration Act2001 be the subject of this review.

GROUNDS OF OBJECTION

13. The objection of the applicant dated 28 September 2009 raises two grounds of objection.

The first ground of objection is:-

“The sole purpose of the resolution was to wind up the Fund to provide retirement benefits to the member and as such the criteria for obtaining an exemption to duty under Section 119(a) was satisfied”.

The second ground of objection is:-

“In terms of s 123(1) the dutiable transaction is either a transfer of dutiable property to a beneficiary or the surrender of a trust interest to a beneficiary and it represents the beneficiary’s trust interest on a distribution by the trustee under the trust”.

THE RESOLUTION DOCUMENT

14. On 30 April 2009 the trustees of the Imrie Superannuation Fund executed a document entitled:  “Resolution of the Trustees for the Terry Imrie Superannuation Fund”.

15. The resolution recited that the trustees have satisfied themselves that an arrangement under which the applicant, the sole member of the Superannuation Fund, has come to an end and he is over the age of sixty.  As such a condition of release has been met.

16. The recital records that the trustees have conducted an independent valuation of Unit 1040, Swell Apartments, 1 Ocean Street, Burleigh Heads (described in the resolution as ‘the Lot’) and have concluded that the lot has a market value of $550,000.

17. The recital also contains the following statement:

“6. The Beneficiary has requested that his member’s interest in the Fund be surrendered”.

The trustees passed various resolutions:

“1. The Lot be distributed to Terrence Imrie as a surrender of the Beneficiary’s trust interest in the Superannuation Fund with such in specie distribution to be exempt from Transfer Duty pursuant to Section 199 of the Duties Act”.

The resolution also resolved:

“3. Terrence Imrie, by his signature hereto, consents, as a member, to receive the distribution as an in specie benefit pursuant to Clause 7.1.4 of the Fund Deed.

……

5. The Trustees will take further action to distribute the Beneficiary’s member benefits or roll over same to a successor complying fund and to do everything necessary to wind up the Fund.

6. The Fund shall remain in pension mode until wound up.”

The resolution was signed by Terrence John Imrie and Brent Imrie.

DUTIABLE TRANSACTION

18. Under the scheme of the Duties Act 2001 transfer duty is imposed on a dutiable transaction:  section 8(2).  A “transfer of dutiable property” is a dutiable transaction.  The land in Queensland is “dutiable property”:  section 3.

19. In my opinion the transfer of land in Queensland from the trustees to the applicant is a dutiable transaction which attracts duty of $10,600 pursuant to section 9(1)(a) of the Duties Act 2001.

AGREEMENT FOR THE TRANSFER OF DUTIABLE PROPERTY

20. I respectfully differ from the delegate of the Commissioner who in the objection decision has stated that there is a dutiable transaction which is an agreement for the transfer of dutiable property under section 9(1)(b) of the Duties Act 2001.  I accept the submission of the applicant that the assessment cannot be sustained on that basis.  In the next two paragraphs I give my reasons for that conclusion.

21. There is no definition of “agreement” in Schedule 6 of the Duties Act2001 so it is necessary to have regard to the general law to find a definition of what is an “agreement”.  I take the view that in construing a revenue statute the term “agreement” should not be given an expansive meaning.  The various meanings of the term “agreement” were discussed by Lord Ellenborough CJ in Wain v Warlters (1804) 5 East 10 at 16-17. His Lordship finally construed the term “as signifying a mutual contract on consideration between two or more parties”.

22. There is Australian authority that the term “agreement” “signifies primarily a contract, that is a legally binding arrangement between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other”:  Re Symon, Public Trustee v Symon [1944] SASR 170 at 174 per Mayo J. In my view the resolution document is not an enforceable agreement or contract for the distribution of trust property. There is certainly no advancement of consideration by the applicant. There is nothing which would have prevented the trustees from revoking the resolution.

SURRENDER OF A TRUST INTEREST OF A BENEFICIARY

23. The second ground of the objection of the applicant is that the exemption in section 123(1) of the Duties Act 2001 is applicable to this transaction which is evidenced by the resolution document.  The submissions of the parties have focused upon the terms of that provision.

24. Subsection 123(1) of the Duties Act 2001 provides that transfer duty is not imposed on a dutiable transaction that is the surrender of a trust interest of a beneficiary to the extent it represents the beneficiary’s trust interest on a distribution by the trustee under a trust.

25. The fact that resolution 1 contains the words “distribution to be exempt from Transfer Duty pursuant to Section 199 of the Duties Act” cannot, of course, be determinative of this review.

26. At the relevant time when the transfer was executed by the trustees of the Imrie Superannuation Fund, those trustees held dutiable property.  This dutiable property was the land in Queensland that was acquired by the trustees on 9 October 2006 on which $13,525 in transfer duty was imposed and paid by the trustees.

27. The term “surrender” is defined in Schedule 6 of the Duties Act 2001 as including:  ‘abandonment, abrogation, cancellation, extinguishment, forfeiture, redemption or relinquishment’.

28. The terms of the resolution to which the applicant has given his consent provide as follows:

“3. Terrence Imrie, by his signature hereto, consents, as a member, to receive the distribution as an in specie benefit pursuant to Clause 7.1.4 of the Fund Deed.”

29. There is no Clause 7.1.4 in the Fund Deed.  There is also no clause in the Fund Deed that actually refers to an “in specie benefit”.

30. The words in specie, of course, have an accepted technical legal meaning:  “In its own form and substance, not in the form of an equivalent: in coin, as distinguished from paper money”: see Jowitt’s Dictionary of English Law (3^rd ed., 2010), Vol 1, p.1154.  The transfer of the land to the applicant would certainly be regarded as an in specie distribution as referred to in resolution 1.  However, the fact remains that the Fund Deed does not contain such terminology.  In my view resolution 3, in referring to a non-existent clause in the deed, does not have any effect.

31. Having reviewed the whole of the Fund Deed, I should mention that clause 16.1.4 of the Fund Deed, which is headed “Transfer of Assets”, provides that the Trustee, with the agreement of the Member or beneficiary who is entitled to receive a Benefit, may pay all or any part of the Benefit by transferring to that person any of the investments held by the Trustee on behalf of the Fund.  Even if it is accepted that resolution 3 should be read as if Clause 16.1.4, it cannot in my view be regarded as being evidence of an agreement.

WHETHER THERE WAS A SURRENDER

32. I will next consider whether there was a “surrender” of a trust interest by the applicant within the meaning of section 123(1) of the Duties Act2001.  This in my view entails a consideration of the resolution document as a whole.  A “trust interest” may certainly be the interest of the applicant as a member of the superannuation fund:  section 57.

33. Recital 6 of the resolution document recites:  “The Beneficiary has requested that his member’s interest in the Fund be surrendered”.  I am not satisfied that this recital has any operative force.  It cannot in my view be regarded as evidence of a surrender of a trust interest by the applicant.  The wording of the recital is a “request” that the interest of the applicant as a beneficiary in the Fund be surrendered.  This wording is not in my view evidence of a surrender of a trust interest by the applicant himself.  If the applicant wished to surrender an interest then that could be simply stated in those terms.

34. The terms of resolution 1 provide:  “The Lot be distributed to Terrence Imrie as a surrender of the Beneficiary’s trust interest in the Superannuation Fund”.  This resolution is, of course, signed by the Trustees who certainly include the applicant.  However, having regard to the whole resolution document, I cannot be satisfied that the terms of resolution 1 can itself operate “as a surrender of the Beneficiary’s trust interest in the Superannuation Fund”.  This is because the terms of resolution 1 are, in my view, inconsistent with other parts of the resolution document.

35. After the execution of the resolution document, it is still intended that the applicant still has an interest in the Fund.  This is apparent from resolution 5 which provides that the applicant still has an interest in the Fund.  It is also apparent from resolution 6 that after the execution of the resolution document there would be a need to wind up the Fund.  The applicant, who is the sole member of the fund, would be entitled to benefits having to clauses 14.1 to 14.6 of the Fund Deed.  Having regard to the presence of resolutions 5 and 6 in the resolution document, the terms of resolution 1 cannot, as the resolution states, operate as “a surrender of the Beneficiary’s trust interest in the Superannuation Fund”.

36. The only part of the resolution document to which the applicant has expressly consented is resolution 3 which provides as follows:

“3.Terrence Imrie, by his signature hereto, consents, as a member, to receive the distribution as an in specie benefit pursuant to Clause 7.1.4 of the Fund Deed”.

37. The wording of resolution 3 cannot in my view operate in any respect as a surrender of the interest of the applicant.  I have already concluded that the resolution in referring to a non-existent clause in the deed does not have any effect.

38. In considering whether there has been a “surrender” I have essentially considered whether the applicant has given up a trust interest: there is no evidence of this having occurred. I have also had regard to the definition of “surrender” in Schedule 6 of the Duties Act 2001. I do not find the various alternative elements which are included in that definition applicable to this review.

39. The applicant has not executed a deed of surrender of his interest in the superannuation fund.  It is commonplace for a person who wishes to surrender a property interest to execute a deed of surrender.  In the context of leases and partnerships quite commonly the deed of surrender will usually provide for payment or the transfer of property to the person surrendering the interest:  see, eg, Khora v Khora [2006] NSWCA 184 at [87]; Seachange Management Pty Ltd v Pital Business Pty Ltd [2009] VSCA 139 at [47]. In this respect a deed of surrender, rather than a deed of disclaimer, gives protection to the person who executes the deed. A deed is generally executed in case there is a need for formal compliance with property law statutes.

40. In the context of trusts it is common for a beneficiary who wishes to surrender his or her interest to execute a deed of surrender:  eg, ATO ID 2003/470.  It is, of course, not necessary for a deed to be executed by a beneficiary but a deed is a solemn act by a beneficiary that a trustee can place some reliance on.

41. What is of prime importance for me to consider in this application are the terms of section 56 of the Duties Act 2001 which provide that a person makes a trust surrender if the person surrenders a trust interest in a trust that holds dutiable property; or has an indirect interest in dutiable property.  There is no evidence before me of the applicant surrendering any such trust interest.

42. My conclusion is that there has not been a “surrender” of a trust interest by the applicant within the meaning of section 123 of the Duties Act 2001. My conclusion means that it is not necessary to consider whether the applicant has satisfied section 123(2) of the Act.

DISTRIBUTION TO MEMBERS OF SUPERANNUATION FUND

43. I have also examined section 119 of the Act.  This exemption applies in the case of distribution to members of superannuation funds.  However, this provision applies where there is a trust acquisition or trust surrender of a trust interest.  The case of the applicant is based on the submission that there is a trust surrender of a trust interest.  As I have earlier found that there was no such surrender, in my view the terms of section 119 have no application.

44. I do not accept that the exemption in section 119 of the Act applies in this case.

TERMINATION OF TRUST

45. The applicant also raised the application of section 66(3) of the Act as part of the first ground of his objection.  The provision applies if a “trust of dutiable property is terminated if a person, having held the property as trustee, starts to hold the property other than as trustee”:  see section 54.  In my view section 66(3) of the Act can have no application as it is necessary that “a person surrenders a trust interest in the property”.  I have earlier found that there has not been the surrender of a trust interest in the property.

DECISION

46. I will set aside the decision of the delegate of the Commissioner of State Revenue dated 29 October 2009 which is a decision to disallow an objection against an assessment of transfer duty imposed on the applicant. I consider that the decision should be set aside as the resolution has been assessed as an agreement to transfer dutiable property. In my opinion the resolution should not have been assessed as an agreement to transfer dutiable property. Another reason why the decision should be set aside is that the delegate regards the transfer of the land to the applicant to be exempt from duty under section 22(2) of the Duties Act2001.  I instead consider that the transfer of the land to the applicant is a dutiable transaction.

47. For these reasons it is the decision of the Tribunal (pursuant to section 24(1)(b) of the Queensland Civil and Administrative Tribunal Act 2009) to set aside the decision of the Commissioner of State Revenue dated 29 October 2009, being a decision to disallow an objection against an assessment of transfer duty imposed on the applicant, and to substitute the following decision:-

This Tribunal decides

(i)that the transfer of Unit 1040, Swell Apartments, 1 Ocean Street, Burleigh Heads to Mr Terrence John Imrie, the applicant, is a transfer of dutiable property under s 9(1)(a) of the Duties Act 2001; and

(ii)that the resolution of 30 April 2009 is not an agreement for the transfer of dutiable property under s 9(1)(b) of the Duties Act 2001.