McArthur v Commissioner for Act Revenue (Administrative Review) - [2012] ACAT 65

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

MCARTHUR V COMMISSIONER FOR ACT REVENUE

(Administrative Review) [2012] ACAT 65

AT12/31 & AT12/71

Catchwords: ADMINISTRATIVE REVIEW – First Home Owner Grant (FHOG) – Home Buyer Concession (HBC) – failure to meet residence requirement for FHOG – decision to require the Applicant to repay the amount of FHOG – liability for penalty tax and interest – belief formed by the Applicant from a telephone conversation he said he had with a government officer in relation to his obligation – the Applicant’s failure to formally communicate with the Department – whether absence overseas could exempt the Applicant from compliance with FHOG requirements - missed opportunity to seek the exercise of the commissioner’s discretion

List of legislation: First Home Owner Grant Act 2000, ss. 12, 20, 23, 24, 47, 48 & 49
Taxation Administration Act 1999, ss. 25, 26, 29, 30, 31, 32, 33 & 37

List of cases: Chief Commissioner for State Revenue v Ferrington (GD)
[2004] NSWADTAP 41

Daniell v Commissioner for ACT Revenue [2008] ACTAAT 1
Negus v Commissioner for ACT Revenue [2008] ACTAAT 12
Taylor v Chief Commissioner for State Revenue [2004] NSWADT 36
Taskovski v Commissioner for ACT Revenue [2007] ACTAAT 11
Philpot v Chief Commissioner of State Revenue [2008] NSWADTAP 18

Tribunal: Ms W. Corby, Senior Member

Date of Orders: 3 September 2012
Date of Reasons for Decision: 28 September 2012

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL) AT12/31 & AT12/71

BETWEEN:
CAMPBELL MCARTHUR
Applicant

AND:

THE COMMISSIONER FOR ACT REVENUE

Respondent

TRIBUNAL: Wilhelmena Corby Senior Member

DATE: 3 September 2012

ORDER

That part of the application for review filed on 8 May 2012 that deals with the Home Buyer Concession will, as matter AT 12/71, be heard concurrently with the part of that application that deals with the First Home Owner Grant (matter AT 12/31).
Any directions made in relation to matter AT 12/31 will apply mutatis mutandis to matter AT 12/71.

In relation to AT 12/31 the determination dated 15 March 2012 is varied in that a penalty is imposed under sub-section 47(3) rather that sub-section 47(2) of the First Home Owner Grant Act 2000. The determination of 15 March 2012 is otherwise affirmed.
In relation to AT12/71 the determination dated 15 March 2012 is varied so that interest payable pursuant to Part 5.1 of the Taxation Administration Act 1999 is to be remitted to the Respondent for calculation on a daily basis from 15 December 2007. The determination dated 15 March 2012 is otherwise affirmed.

The Tribunal notes that, on 3 September 2012, the respondent requested a statement of reasons for the making of Orders 3 and 4.

………………………………..signed

Ms L. Crebbin, General President
For and on behalf of
Ms W.Corby, Senior Member
REASONS FOR DECISION

Introduction

On 25 June 2007, the Applicant entered into a contract to purchase a property at Unit 9/5 Hyndes Crescent in Holder in the ACT (the ‘property’). Settlement occurred on 30 June 2007.
At the time of settlement, the property was managed by a real estate agency and occupied by a tenant pursuant to a periodic residential tenancy. The real estate agency management of the property and the tenancy continued after the settlement so that the Applicant became the lessor. In order to end the tenancy agreement and obtain vacant possession so that he as owner could reside at the property, the Applicant would have needed to give the tenant 4 weeks’ written notice.
An application pursuant to the First Home Owner GrantAct 2000 (the ‘FHOG Act’) was signed by the Applicant and dated 29 May 2007. A Home Buyer Concession (‘HBC’) application was signed by the Applicant and dated 29 June 2007. Both were date stamped as having been received in the Respondent’s office on 21 August 2007.
The Respondent sent a letter to the Applicant at his parents’ address, dated 23 August 2007. The letter advised that the Commissioner had approved payment to the Applicant of the FHOG in the sum of $7,000.00.
By letter dated 22 November 2007 to the Applicant’s solicitor, the Commissioner advised the Applicant of the reassessment of the duty payable by the Applicant in response to his HBC application. By letter dated 7 December 2007, the Commissioner wrote to the Applicant at his parents’ address and enclosed with that letter a cheque in the sum of $5,244.00 to reimburse the Applicant pursuant to that reassessment.
One of the conditions attached to the payment by the Commission of the FHOG and an undertaking by the Applicant in his Application for the HBC, was that the Applicant must reside for a continuous period of six (6) months at the property during which time it was to be his principal place of residence. That period of continuous residence was to have commenced within twelve (12) months of the date of purchase, being 30 June 2007.
At no time did the Applicant in the period 30 June 2007 to 30 June 2008 reside in the property. In the absence of some exception or exclusion applying to the Applicant because of his particular circumstances, the Applicant failed to comply with a condition of the FHOG and honour his undertaking in relation to the HBC. Subject to the particular circumstances of his situation, the Applicant would therefore be obliged to notify the Commissioner of his inability to comply with the residence requirements of both the FHOG and the HBC, and repay the amounts paid to him, namely, FHOG in the sum of $7,000.00 and HBC in the sum of $5,244.00.
The amounts have not been repaid. The Applicant asserts that following a telephone call made by him in December 2007 he did, in effect, notify the Respondent that he would not be able to meet the residence requirements. He also contends that this telephone conversation that he had with an ACT Government representative led him to believe that his circumstances were such that he would be exempt from the residence requirement of the FHOG and HBC schemes.
The Respondent undertook an authorised investigation of the Applicant in 2011 and concluded that the Applicant had not complied with the residence requirements of either the FHOG or the HBC schemes. The Commissioner sent written Notification to the Applicant at his address in London, United Kingdom:
a. on 26 Sep 2011 (the ‘HBC decision’), advising that:
i.the Applicant would therefore be required to repay the amount paid to him in response to his HBC application, being $5,241.00 after a remission of $3.00, and
ii.the Commissioner made a decision to impose penalty tax of 25% calculated at $1,310.25, and interest for the period 25 September 2007 to 16 September 2011 calculated at $2,772.68.
b. on 27 Sep 2011 (the ‘FHOG decision’), advising that:
i.the Applicant would be required to repay the FHOG in the sum of $7,000.00, and
ii.the Commissioner made a decision to impose a penalty amount – of 25% calculated at $1,750.00, and interest for the period 23 August 2007 to 16 September 2011 calculated at $3,794.19.
On 16 Dec 2011, the Applicant lodged objections, via his solicitor, to these decisions. The Commissioner accepted the late lodgement and processed the objections which were allocated the identifying numbers:
a. Objection 2985 in respect of the FHOG decision;
b. Objection 2986 in respect of the HBC decision.
The Commissioner on 15 March 2012 sent two letters to the Applicant’s solicitor advising of the Commissioner’s determination that both of the objections were disallowed. Accordingly, the objection fees were not reimbursed to the Applicant. The statements of reasons for the determinations disallowing the objections were enclosed with the letters to the Applicant.
It is these determinations by the Commissioner in relation to the objections numbered 2985 (the ‘FHOG determination’) and 2986 (the ‘HBC determination’) that are the reviewable decisions before the Tribunal. Those determinations, as the objections were disallowed, are basically in the same terms as the decisions which gave rise to the Applicant’s objections.

The hearing

In considering this matter, the Tribunal had regard to the Tribunal documents, the information including cases referred to by the parties in the various documents filed in the Tribunal prior to and at the hearing on 3 September 2012, and the oral evidence and submissions made by the parties at the hearing on 3 September 2012.
Prior to the hearing commencing on 3 September 2012, a preliminary matter for the Tribunal to deal with was the fact that although the Applicant’s application at all times related to two reviewable decisions, only one application had been processed and one application number, AT12/31, was allocated by ACAT. The Tribunal was satisfied, and neither of the parties raised any objection to the Tribunal’s orders, that:
a.the information and materials filed with the Tribunal by both parties raised issues and referred to information which were relevant to both reviewable decisions; and
b.the Tribunal could deal with both applications concurrently on 3 September 2012.
The Tribunal ordered that –
a.a second application number, AT12/71, would be allocated to the FBC determination for the purposes of review by the Tribunal; and
b.both AT12/31 and AT12/71 dealt with essentially the same issues and could be heard concurrently on 3 September 2012, thus the normally payable application fee for the lodgement by the Applicant of AT12/71 was waived.
Based on the written information filed in the Tribunal by both parties and the evidence given by the Applicant at the hearing, including in response to questions posed by the Tribunal and the Respondent’s counsel, the Applicant’s evidence was as follows.
The Applicant purchased the property on 30 June 2007 with the intention of residing in the property as his principal place of residence. As evidence of this, he cited the fact that he had:
a.   made enquiries of the real estate agency, which I gather was both the selling agency and the agency that managed the residential tenancy of the property prior and subsequent to the purchase by the Applicant, as to how much notice the Applicant would need to give the long term tenant who resided at the property in order for the Applicant to gain vacant possession, and he was told four (4) weeks’ written notice was needed;
b.   arranged for inspection of the property by a builder to get information relevant to renovations that he planned to make once he began residing at the property;
c.   set up the mortgage on the property as an ‘owner/occupier’, and, indeed, had made enquiries of the mortgage broker as to whether he would be able to borrow further funds to carry out these renovations.
In July 2007, the Applicant’s superiors at his workplace discussed with the Applicant the possibility of a ‘secondment’ to work for a period at a ‘sister firm’ in New York. The Applicant says he agreed to the move, but the specific details were not discussed at that time. The Applicant said that the secondment would present a career advancement opportunity which he was keen to pursue (see T27).
In evidence at the hearing, the Applicant advised that the New York secondment was a highly sought after opportunity among his colleagues and that many employees from the Australia-wide firm for which he worked would ‘apply’ for the position, but only one or two people would be chosen.
The Applicant was chosen for the New York secondment. At the hearing he said that although there may well have been written information about the details of the offer, he did not have that information with him at the hearing on 3 September 2012 and, doing his best, he recalled that he was advised that the possibility had become an actual offer in about August or September 2007.
At the hearing the Applicant gave evidence that initially the details, such as travel dates, of the New York position, were not provided to him, but he confirmed that:
a. his employer would provide accommodation for him while in New York; and
b. although he could not recall specific dates, the secondment was to begin in early January 2008. The Applicant said that he knew that his Australian employer would require him to be back in Australia to assist with the demands of end of financial year on 30 June 2008. Therefore the Applicant knew that the secondment would end and he would return to Australia at some time before 30 June 2008.
The Applicant took no steps at any time before he left for New York in December 2007 to end the tenancy at, or occupy, the property. The same long term tenant who was in the property at the time of settlement on 30 June 2007, has continuously resided at the property from some time prior to 30 June 2007 up to and including the hearing date.
The Respondent sent a letter dated 6 July 2011 (T24) to the Applicant. The letter enclosed documentation which notified the Applicant that the Respondent was conducting an ‘authorised investigation’ and required the Applicant to provide documents and a Statutory Declaration to confirm that he had complied with the residence requirements of the FHOG; or to provide a ‘written response advising the reasons why this did not occur’. The Applicant’s undated letter (T27) to the Respondent provides his ‘explanation’ for his failure to comply with the residence requirements. The letter was received by the Respondent on or about 26 September 2011.
In summary, in his letter (T27), the Applicant relied on the following factors which he said meant that he either could not or was not required to comply with the residence requirement.
a.   The fact that he did not know until, at earliest, August 2007 that the secondment to New York was certain. He would be required to depart Australia in December 2007. That meant that if in August 2007 he gave the required 28 days’ notice to the tenant at the property, the Applicant could only have resided at the property from about October 2007 for a maximum of about two and a half (2.5) months before he was required to leave for New York.
b.   Some time in ‘late 2007’ the Applicant checked a New South Wales website dealing with similar grants. He concluded from the information that he read that ‘if you were sent overseas for work then the FHOG would not be reduced or pro-rated(sic)’;
c.   Based on this information, the Applicant telephoned and had a conversation in mid December 2007 with ‘someone who answered an information line listed on an ACT Government website’. The Applicant said that this person did ‘endorse his view as correct’ but added that he ‘should send a note stating the situation anyway’. The Applicant did not write to, nor contact, the Respondent after this telephone conversation before receiving the Respondent’s letter of 6 July 2011.
At the hearing, the Applicant was unable to recall which ACT Government information line he had contacted in mid December 2007. He did not recall the name of the person he spoke to. The Applicant was not sure if he had provided his name. He confirmed that he did not provide the woman whom he had spoken to with any details about the property or his particular circumstances.
At the hearing the Applicant said that he had checked a New South Wales website rather than the ACT website, but it was his understanding that the ACT website would have had the same information about the need to travel overseas for work and thus he would have come to the same conclusion.
In any event, the Applicant then travelled to New York for work. He agreed at the hearing that, referring to his bank records ( T18 at page 152), the last record of a transaction in Australia in 2007 was at the Sydney International Airport on 27 December 2007. The Applicant agreed that whilst he may have departed on 26 December 2007, on either 26 or 27 December 2007 he departed Australia for the secondment in New York.
The New York secondment ended and, shortly thereafter, the Applicant returned to Canberra. At the hearing, based on his bank records (T18 at page 161), he agreed that he was back in Australia on or about 12 May 2008. After his return to Australia he resumed his position with his employer in Canberra. He lived for a short time with his parents who lived in New South Wales, somewhat out of the ACT. It was a very busy time at his work and he was working long hours so, after a couple of weeks, the Applicant rented a room from a friend who had a flat in Braddon, ACT. The Applicant is not sure if he paid a bond, but he did pay rent for the room and continued to live there until about 29 August 2008.
In July 2008, the Applicant gave his employer 3 months’ notice to end his employment on 1 October 2008. He gave evidence at the hearing that it was his intention to finish work in October 2008, then spend several months doing various things in Australia before travelling, indefinitely, to live and work in the United Kingdom. He applied for a 2 year work visa for the United Kingdom.
At the hearing, the Applicant confirmed that on or about 29 August 2008 he moved to Campbell, ACT where he shared a flat with a woman. He paid a bond and paid rent and resided at the Campbell premises until he departed Australia, with the intention of living and working in England, in April or May 2009.
The Applicant lived and worked in London until December 2009. The Applicant said that he returned to Australia on several occasions between May 2009 and September 2011. He returned to Australia in December 2009 and remained here until April 2010 when he returned to London. He worked in London until May 2011. Between May and September 2011 he travelled, and then returned to Australia to live on or about 29 September 2011.
As set out above, the Applicant received a letter from the Respondent dated 6 July 2011 which was initially sent to him at his parents’ address in Burra, New South Wales (T24). The Applicant’s mother advised the Respondent that the Applicant was living in London. She provided the Applicant’s London address. She also advised the Respondent that the Applicant was travelling and so may not receive correspondence sent to him until he returned to London from his trip.
The Respondent sent a further copy of the 6 July 2011 letter (T24) to the
Applicant at his London address on 11 July 2011 (T26). The Applicant responded to this letter (T27) by providing his explanation for having failed to comply with the residence requirements of the FHOG and HBC schemes, as discussed at paragraph 23 above.
The Respondent then proceeded to make the HBC decision and FHOG decision. The HBC decision (T28)required the Applicant to repay the HBC amount which had been paid to him and imposed a penalty tax and interest in addition to that amount. The FHOG decision (T29) required the Applicant to repay the FHOG amount which had been paid to him and imposed a penalty and interest.
The Commissioner concluded that the Applicant had not complied with the residence requirement. The decisions were based on the information the Respondent had gathered as part of the ‘authorised investigation’ including information provided by the Applicant, the Applicant’s bank and the Real Estate Agency with management of the rental of the property.
The decisions of 26 and 27 September 2011 were sent by the Respondent to the Applicant at his London address.
On 29 September 2011, the Applicant telephoned the Respondent’s office to ask whether he was required to provide any further information (T30). He was told that letters had been sent to his London address. The Applicant advised that he was in Australia and the letters would take some time to reach him via England. It was agreed that another copy of the documents, as attachments to an email (T31), would be sent to him. The Applicant confirmed that he received that email, but was unable to open the attachments. He said that in the telephone conversation with the Respondent’s representative she did not specifically advise of the outcome of the decisions. The Applicant said that he assumed that there would be no problem and so, rather than contact the Respondent to request that a further copy of the email be sent, he waited to receive the letters which had been redirected to him in Australia from his London address.

The Applicant said that when he received the letters, in or about November 2011, setting out the decisions of 26 and 27 September 2011, he was surprised that they required him to repay the Grant and Concession amounts. He sought legal advice.
From 28 November 2011, the Applicant’s solicitor then corresponded with the Respondent on the Applicant’s behalf (T32 to T36 inclusive). The Applicant’s solicitor by letter dated 16 December 2011 (T36) lodged objections to both the FHOG decision and HBC decision.
Essentially, the Applicant’s solicitor repeated the information set out in the Applicant’s letter (T27) which was received by the Respondent on 16 September 2011. It added that the Respondent’s decision would cause the Applicant financial hardship and the letter responded specifically to some of the matters raised by the Respondent in the decisions. The letter of objection concludes that although the Applicant conceded that he did not comply with the residence requirements:
a. the Applicant relied on the telephone conversation that he had with a representative of the ACT Government in December 2007 to form the view that his circumstances were such that because of his overseas work, he was not required to comply with the residence requirement; and
b. the ACT Government representative whom the Applicant had a telephone conversation with in December 2007 did suggest that he write a ‘note’ to the Respondent ‘stating the situation’ but the representative did not indicate to the Applicant that he had an obligation to do so and that by failing to do so he would compromise his situation in relation to the FHOG and HBC which had been paid to him.
The Applicant said that had he realised the implications of not sending the ‘note’ to the Respondent explaining his circumstances, he would have sent one. At the hearing the Applicant said that his primary submission was that whilst he agreed he had not complied with the residence requirements of the FHOG and HBC schemes, the Tribunal should set aside the Respondent’s determinations to disallow his objections to the FHOG and HBC decisions on the grounds that:
a. he had understood that the ACT Government representative, whom he spoke to in December 2007, that in his circumstances ‘travelling overseas for work’ would be a sufficient explanation for the Applicant’s failure to comply with the residence requirements. [The Appicant’s understanding had been gleaned from his perusal of the New South Wales website that he had viewed before that telephone conversation.]; and
b. whilst the Applicant confirmed that the Government representative he spoke to said he ‘should send a note’ to the Respondent about his circumstances, she had not indicated that he was obliged to do so and that there might be negative consequences for him if he did not.
In short, the Applicant urged the Tribunal to accept that he had taken reasonable steps to inform himself about his position in December 2007 once he formed the view, before his departure for New York in December 2007, that he would not be able to comply with the residence requirements.
The Applicant next had contact with the Respondent when he received the Respondent’s letter dated 6 July 2011 (T24) advising of the ‘authorised investigation’. At the hearing the Applicant said that he had not made any further contact with the Respondent between December 2007 and July 2011 as he believed he was not required, due to his circumstances, to comply with the residence requirement and had not expected anything further would be required of him.
The Applicant also asserted that his position was further supported by the fact that given he clearly could have met the residence requirement by giving notice to the tenant and assuming occupation of the property subsequent to his return from New York in or about May 2008, the fact that he did not is evidence of his reliance on the information provided to him in the telephone conversation in December 2007 and his understanding that he was not required to comply with the residence requirements.
At the hearing the Respondent’s counsel requested that the Applicant be sworn and then asked the Applicant questions. The Applicant’s answers provided further details about his specific movements in the period from 30 June 2007 until, in particular, his return to Australia from New York in or about May 2008 and before his departure for England in or about May 2009.
In answers to questions from the Respondent’s counsel the Applicant said as follows.
a.   He agreed that he had signed the FHOG application (T7, at page 66) on 29 May 2007 and made the declaration at section 5 on page 66 which, among other things, required him to ‘notify’ the Commissioner within 28 days of a ‘notifiable event’ in relation to the FHOG. The Applicant submitted that this notification was not stipulated as needing to be in writing; and
b.   By signing the form he accepted that failure to meet the conditions of the FHOG may mean he would not be ‘entitled to receive or retain the’ FHOG.
c.   The Applicant confirmed that when completing the FHOG application he had ticked ‘yes’ to question 6 under the heading ‘Applicant Eligible Criteria’ (T7, at page 64) that he would be occupying the home as his principal place of residence within 12 months of settlement.
d.   The Applicant accepted that the impact of the Declaration signed by him on 29 May 2007 was that the onus was on him to advise the Commissioner about a change in his circumstances.
In the FHOG application (T7, at Section 3 on page 65), the Applicant advised that his ‘intended date of occupancy’ was 1 December 2007.
In answering the Respondent’s counsel’s questions about his HBC application, the Applicant:
a. agreed that he had signed his HBC application (T6) on 29 June 2007 and that in doing so he had made the Declaration at Section 6 (T6, at page 61) in which, among other things, he undertook to comply with the residence requirements; and
b. acknowledged that he understood that if he did not ‘meet the relevant criteria …(such as not meeting the residence requirements)’ the Commissioner may subsequently issue an amended assessment in relation to the concession amount granted.
The Tribunal notes that during the various periods between December 2007 and July 2011 when the Applicant travelled between New York, Australia and the United Kingdom/Europe, the Applicant did not have any contact with the Respondent. In his undated letter (T27) sent by the Applicant from London,, which was received by the Respondent on 16 September 2011, the Applicant made no mention that he was returning to Australia later that month. Indeed, he arrived in Australia on or about the 28^th and rang the Respondent on 29 September 2011. It seems he has remained in Australia since. He is now living and working in Sydney.
The Applicant failed to contact the author of the email (T31) sent to him on 29 September 2011 to advise that he could not open the attachments notwithstanding that the author’s contact details were included in the covering email.
The Applicant asks the Tribunal to accept that the only explanation for his failure to take up residence after May 2008 was his belief that he was not required to do so. The Tribunal notes that the Applicant has either advised the Tribunal, his solicitor and/or the Respondent as follows.
a.   T36, at page 212 – The Applicant’s solicitor’s letter states that the Applicant returned to Australia in ‘June 2008, 12 months after settlement of the property’;
b.   T27, at paragraph 7 - ‘the secondment lasted until June 2008 when I returned to Canberra’ and paragraph 9 - ‘the only time I could have moved into the property was the period between finalising the dates of my move to New Your and my actual leaving to go to New York’ in December 2007.
c.   Applicant’s Statement of Facts and Contentions dated 3 August 2012, at paragraph 4 - ‘I moved to New York in late December 2007 and his (sic) secondment lasted until June 2008, 12 months after settlement’ of the property.
d.   At the hearing the Applicant advised that even when he was not aware of specific dates of the proposed secondment, he was aware that he would be required by his Australian employer to be back in Australia before the end of the financial year, that is, before 30 June 2008.
At no time before the hearing did the Applicant provide information to the Respondent or the Tribunal to suggest that he had an opportunity to comply with the residence requirement subsequent to December 2007. Indeed the impression given in the documents referred to above was that the Applicant, once he left Australia in December 2007, was effectively precluded from complying.
The Tribunal accepts that the Applicant may not have been able to comply with the residence requirements before December 2007, subject to any application he may have made to the Respondent in relation to reducing the period of continuous residence. However, there was no explanation for his failure to take the steps necessary to ensure that he assumed occupancy subsequent to his return from New York and before 30 June 2008. Indeed, at the hearing the Applicant confirmed that, whatever the uncertainty about the New York secondment and travel arrangements, he at all times knew that he would be back in Australia before 30 June 2008. If as that date approached some problem arose, the Applicant was still free to apply to the Respondent for either an extension of time to commence or an exemption from the residence requirement, and he would still be within the 12 month period.
The Tribunal accepts that the Applicant had a telephone conversation with an ‘ACT Government representative’ in December 2007 before he flew to New York. In that conversation the Applicant did not provide any specific details of his particular circumstances. The Tribunal accepts that the Applicant may have, at the conclusion of that conversation, formed a view that his circumstances were such that he may have successfully applied to the Commissioner to have the start date or duration of the residence period amended or have sought an exemption. The Tribunal does not accept that this telephone conversation amounted to notification to the Commissioner of the Applicant’s circumstances. Nor does the Tribunal accept that this conversation amounted to an application to the Commissioner to exercise the discretion, in relation to the FHOG, to shorten the period, exempt the applicant from compliance or extend the time within which the residence could commence pursuant to section 12 of the FHOG Act.
Although completed in May and June 2007 respectively, the Applicant’s FHOG and HBC applications were not received by the Respondent until 21 August 2007. By letter dated 23 August 2007 (T8), the Respondent, in relation to the HBC, requested further information from the Applicant. The Applicant responded by undated letter (T8, at page 96), received by the Respondent 7 November 2007. In that letter the Applicant mentioned a ‘recent’ telephone conversation that he had had with another person at the Respondent’s office.
It is not apparent that the Applicant made any reference to his New York travel plans in either the telephone conversation that the Applicant refers to, nor in the body of the letter (T8, at page 96). This letter (T8, at page 96) appears to have been sent, if not written, in November 2007. By either 21 August 2007, when the applications were lodged with the Respondent, or certainly by November 2007, the Applicant was aware of his decision to accept the secondment to New York. Whilst exact details were perhaps not available to him, the Applicant at least knew, or ought to have known, that his anticipated residence date of 1 December 2007, as set out in his FHOG application form (T7, at Section 3 on page 65), was not realistic. Nonetheless, the Applicant made no attempt to explore his situation further with the Respondent. In particular he did not take this opportunity when he was speaking with and writing to representatives of the Respondent up to November 2007 and before the HBC application had been finalised.
At the hearing, the Applicant could not recall whether he or his mortgage broker had lodged the FHOG or HBC applications.
In relation to the FHOG, the Respondent sent a letter to the Applicant dated 23 August 2007 (T9) to his parents’ address advising him that his FHOG application had been successful and he would be paid $7,000.00. The letter included a paragraph which essentially restates the legislative residential requirements of section 12 of the FHOG Act and the section 20 requirement. Namely that, because the grant was paid in advance of the residence condition being complied with, the Applicant was obliged to notify the Commissioner in writing and repay the grant within 14 days of either becoming aware that the Applicant would be unable to comply or the period for compliance ended (in this case 30 June 2008) and the residence had not occurred.
At the hearing the Applicant said that he did not recall receiving this letter from the Respondent. Indeed, he said, he may not have received it because there was a slight spelling error in the address “Bodgery Road’ rather than “Badgery Road’. However as the funds were electronically credited to his account, he realised that the FHOG had been approved.
The Tribunal accepts that at this stage, if the Applicant had not received the letter from the Respondent dated 23 August 2007, he may not have been aware of the specific need to provide written notice of his inability to meet the residence requirement, nor necessarily of the 14 day time limit on providing that notice – at least if the failure to comply were to occur within the 12 months from the date of settlement. The Tribunal also notes in passing that the spelling error by the Respondent in the letter of 23 August 2007 (T9) may have been the result of the applicant’s FHOG application form (T7, at page 65), where the hand written address does look like ‘Bodgery’. Whatever the reason for the address error, the Tribunal accepts the Applicant’s evidence that he does not recall receiving this letter. The Applicant conceded that he may have received it.
The Applicant paid the full amount of stamp duty assessed in relation to the purchase of the property, $9,885.00 around the time the property was purchased. In relation to advising the Applicant of his successful HBC application the Respondent sent two letters.
a. The first letter, dated 22 November 2007 (T10), was addressed to the solicitors who had acted for the Applicant on the purchase of the property. This was the ‘Notice of Reassessment’ which set out the amount of concession, $5,244.00, to be reimbursed to the Applicant;
b. The second letter dated 7 December 2007 (T11), was addressed to the Applicant at his parents’ address. It enclosed a cheque in the sum of $5,244.00. The Applicant acknowledged that he received this letter, but it did not provide any detail about the payment.
The document headed ‘contentions’ was lodged by the Applicant with ACAT on 31 August 2012 (Exhibit 5). At paragraph 4, the Applicant suggests that if the Applicant had not relied on the ‘information’ provided to him in the telephone conversation in December 2007, then he could have taken ‘several other’ courses of action whereby he would have avoided the current situation, such as
a. ‘foregoing (sic) the grants’; or
b. leaving the property unoccupied during the time, presumably, he was in New York, but maintaining the premises as his principal place of residence.
The Applicant asserts that had he applied for an ‘extension or exemption’ his circumstances were clearly within guidelines for the operation of the Commissioner’s discretion to grant those applications.
The Applicant does not include the option of making the necessary arrangements to occupy the premises on his return from New York, such as instructing the Real Estate Agency which managed the tenancy at the property to give notice to the tenant sufficient that the Applicant could commence residence at some time before 30 June 2008.
The Applicant, in response to questioning by the Respondent’s counsel, confirmed that he had ‘turned his mind’ to the residence requirements before he left for New York in December 2007. However the Applicant said that he took no action because he had come away from the telephone conversation with the Departmental representative in December 2007 believing that there were no specific obligations that he was required to meet and his legal position was ‘OK’. The Applicant agreed that by December 2007 he knew it was possible that he would not comply with the residence condition, but he said he believed that because he was travelling overseas for work, he was not required to meet the condition.
The Applicant agreed with the Respondent’s counsel’s proposal that, based on his bank records (T18, at page 161), he had returned to Australia by 12 May 2008 and possibly as early as 9 May 2008.
The Applicant agreed that he had received rental income from the property from the date of the purchase on 30 June 2007 until the date of the hearing and continuing. The same tenant had occupied the property uninterrupted for that entire period. The Applicant now lives and works in Sydney.
The Applicant denied that his failure to meet the residential requirements first came to light as a result of the authorised investigation undertaken by the Respondent and referred to in the Respondent’s letter to the Applicant dated 6 July 2011. However, the Applicant confirmed that the only contact he had with the Respondent , subsequent to the Respondent’s letter dated 7 December 2007 (T11) to the Applicant confirming payment of the HBC, was the telephone conversation in December 2007. He agreed that he had not provided any details about his particular situation to the person he spoke to at that time.
At the end of the Respondent’s questioning the Applicant advised the Tribunal that he had no questions, but that he considered that if the telephone call that he had had in December 2007, and his ‘take on it’, was not ‘sufficient’ then he considered he would be liable in relation to the FHOG and the HBC.
The parties were then invited to make submissions. As the Applicant was unrepresented the Respondent agreed to make submissions first and the Applicant agreed with this approach.

The Legislation

In relation to the FHOG, the relevant legislation is the FHOG Act and the Taxation Administration Act 1999 (the ‘TAA’). The relevant provisions are set out below.
FHOG Act, section 12:
12         Criterion 5—Residence requirements
(1)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 for a continuous period of at least 6 months.
(2)        However, if the commissioner is satisfied there are good reasons to do so, the commissioner may—
(a)     approve a shorter period; or
(b)     exempt the applicant from the requirement to comply with    subsection
(3)The period of occupation required under subsection (1), or the shorter period approved under subsection (2) (a), must start within 1 year after completion of the eligible transaction to which the application relates or a longer period approved by the commissioner.
(4)The commissioner may give an approval or exemption under this section within 18 months after completion of the eligible transaction to which the application relates.
(5) …..

The parties do not dispute, and the Tribunal accepts, that up to the time of the authorised investigation referred to in the Respondent’s letter of 6 July 2011, there was no application by the Applicant to either reduce the period of residence or extend the time within which it should commence, pursuant to subsections 12(2)(a) or 12(3) of the FHOG Act.
The Respondent’s counsel pointed out that in February 2012, section 12 had been amended to include the time limit set out in subsection 12(4) of the FHOG Act. Subsection 12(4) requires an application for extension of time, reduction in residence period or exemption to be made within 18 months of the ‘eligible transaction’ – in this case, the settlement date being 30 June 2007. The application would have had to be made on or before 30 December 2008. Whilst these restrictions did not apply before February 2012, the Respondent’s counsel noted that the amendment would operate to preclude the Tribunal from exercising the discretion afforded by section 12 once the 18 month time limit had expired.

The Tribunal accepts this submission in relation to any purported application in these proceeding by the Applicant seeking to have the Tribunal, for the first time, exercise the discretions referred to in subsection 12(2)(a) – approval of a shorter period of residence – or subsection 12(3) – longer period for starting the period of residence. The Applicant has made no application in relation to these matters.
The Applicant says that the telephone conversation that he had in December 2007 was with a representative of ‘the Department’, although he was unable to say exactly where this person worked within the ACT Government and this was not established. The Applicant appeared to assert that this telephone conversation was in effect an ‘application’ for an exemption from the requirement to comply with subsection 12(1). The Tribunal’s understanding of the Applicant’s submissions is as follows:
a.   the Applicant was not aware that he was required to give written notice to the Respondent in any event;
b.   his circumstances were such that, he believed, overseas travel for work would be sufficient ‘good reason’ for the Commissioner to have exercised the discretion to exempt in the Applicant’s favour; and
c.   when in the telephone conversation he had in December 2007 he did ‘give notice’ by describing his situation, albeit in general terms and without any specific reference to his personal or the property details, he came away from that telephone conversation with the understanding that:
i.His situation was consistent with the kind of situations where exemptions were granted;
ii.That although he was advised to write ‘a note’ about his situation he was under no obligation to do so; and
iii.That no negative consequences would flow from him failing to write a note or meet the residence requirements.
FHOG Act, section 20:
Payment in anticipation of compliance with residence requirements or first home owner grant cap
(1) The commissioner may authorise payment of a first home owner grant in anticipation of compliance with the residence requirements if the commissioner is satisfied that each applicant intends to comply with the residence requirements.
(2) If a first home owner grant is paid in anticipation of compliance with the residence requirements, the payment is made on condition that, if the residence requirements are not complied with, the applicant must within 14 days after the relevant date—
(a)    give written notice of that fact to the commissioner; and
(b)    repay the amount of the grant.
(3) The relevant date is the earlier of the following:
(a)the end of the period allowed for compliance with the residence requirements;
(b)the date it first becomes apparent that the residence requirements will not be complied with during the period allowed for compliance.
(4) The commissioner may authorise payment of a first home owner grant in anticipation of compliance with the first home owner grant cap if—
(a)the grant is to be paid in relation to an eligible transaction that involves the building of a home by an owner builder before the completion of the eligible transaction; and
(b)    the first home owner grant cap applies to the eligible transaction.
(5) If a first home owner grant is paid in anticipation of compliance with the first home owner grant cap, the payment is made on condition that, if the applicant becomes aware that the total value of the eligible transaction is, or will be, more than the first home owner grant cap, the applicant must, within 14 days after the day the applicant becomes aware of that fact—
(a)    give written notice of that fact to the commissioner; and
(b)    repay the amount of the grant.
(6) If a first home owner grant is paid to a person on the condition mentioned in subsection (2) or (5), the person must comply with the condition.
Maximum penalty: 50 penalty units.
(7) An offence against this section is a strict liability offence.
The Respondent submitted that if the payment by the Commissioner was made pursuant to subsection 20(1) then, at the latest, within 14 days of 30 June 2008, pursuant to subsection 20(2) the Applicant was obliged to notify the Commissioner he had not complied with the residence requirement and repay the FHOG which had been paid to him ‘in anticipation of compliance with that condition’.
The Tribunal understood the Applicant’s position to be that, whilst he was paid the FHOG pursuant to subsection 20(1), his changed circumstances and the telephone conversation that he had with a ‘Departmental representative’ in December 2007 meant that:
a.   the Applicant accepted the information exchange which occurred in that telephone conversation as being, effectively, his notification to the Respondent of his inability to meet the residence requirements because of his need to travel overseas for work; and
b.   the Departmental officer’s ‘acceptance’ of the Applicant’s situation as falling within the kind of circumstances for which a residence requirement exemption would be granted; and thus
c.   although the Applicant did not, as recommended by the Departmental officer, write to the Respondent to confirm his situation, the Applicant believed after that conversation that he was, in effect ‘exempt’ from the need to comply with the residence requirement. Thus he made no further enquiries, believed he was entitled to retain the FHOG and HBC amounts paid to him and was surprised to receive the letter advising of the authorised investigation, sent to him in London, dated 6 July 2011.
The Tribunal does not accept that it was reasonable for the Applicant to conclude that the vague and general telephone conversation that the Applicant had in December 2007 could be interpreted as a successful application by him to the Respondent for an exemption to the residence requirements of the FHOG or HBC scheme payments which had been made to him. The Tribunal observes the following matters in relation to the telephone conversation that the Applicant relies on.
a.   The telephone conversation was with a person whom the Applicant can not identify;
b.   The person the Applicant spoke to was from an organisation within the ACT Government, which the Applicant cannot with any certainty identify. The Applicant had on several occasions in documents and at the hearing described this person as a ‘Departmental officer’, however at the hearing he agreed that he could not be certain where this person worked as he had rung a general ‘ACT Government information line’, which he had identified on an ACT Government website;
c.   The telephone call was made by the Applicant following his perusal of a New South Wales website, notwithstanding that the Applicant knew there was a relevant ACT website, but which the Applicant concluded without viewing it ‘would not have been helpful’;
d.   During the telephone conversation the Applicant provided no personal details or specific information about his property, or the FHOG or HBC applications by or payments made to him;
e.   The Applicant did not act on the advice of the ACT Government representative to write a ‘note’ to the Respondent setting out his circumstances. The Applicant said that he was very busy at work and preparing for his secondment to New York. The Tribunal considers that the Applicant had many opportunities prior and subsequent to the telephone conversation in December 2007 and before 30 June 2008 to explore his situation, in writing, with the Respondent and chose not to.
Relevant sections of the FHOG Act 2000:
23 Power to correct decision
(1) If the commissioner decides an application, and is later satisfied (independently of an objection under this Act) that the decision is incorrect, the commissioner may vary or reverse the decision.
(2) A decision cannot be varied or reversed under this section more than 5 years after it was made.
24 Notification of decision
(1) If the commissioner decides an application (or decides to vary or reverse an earlier decision on an application), the commissioner must give the applicant notice of the decision.
(2) If the decision is to authorise the payment of a first home owner grant without conditions, the payment of the grant is sufficient notice of the decision.
(3) If the decision is to refuse an application, or to vary or reverse an earlier decision on an application, the commissioner must state in the notice the reasons for the decision.
Power to require repayment and impose penalty
(1)The 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 commissioner reverses the decision under which the amount was paid for any other reason.
(2)If, because of an applicant’s dishonesty, an amount is paid by way of a first home owner grant, the commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty of not more than 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 commissioner may, by written notice, impose a penalty of not more than 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 commissioner may, by written notice, require the third party to repay the amount to the commissioner.
Interest in relation to repayments
(1)A person is liable to pay interest under this section on the amount of a first home owner grant paid to the person if the amount is repayable under section 20 (2) (b) or section 21 (2).
(2)A person is liable to pay interest under this section on an amount paid to the person on an application for a first home owner grant if the amount is repayable under section 47.
(3)Interest under this section is to be calculated on a daily basis from—
(a)if the amount is repayable under section 20 (2) (b)—the relevant date as defined in section 20 (3); or
(b)if the amount is repayable under section 21 (2)—the day the notice mentioned in section 21 (2) (a) is given to the commissioner; or
(c)if the amount is repayable under section 47 (1)—the date the amount was paid to the applicant.
(4)For this section, the interest rate is the interest rate mentioned in the Taxation Administration Act 1999, section 26.

At the hearing the Respondent’s counsel advised that the Respondent’s decision of 22 August 2007 to pay the grant in anticipation of compliance with the residence requirement was reversed pursuant to section 23 of the FHOG Act. This decision was made because the authorised investigation conducted into the Applicant’s circumstances in 2011 revealed that the Applicant had not complied with the residence requirement. The Respondent made the decision set out in the notice dated 27 September 2011(T29) to reverse the decision made 22 August 2007 to pay the FHOG to the Applicant.
In the Notice dated 27 September 2011, the Respondent advised the Applicant pursuant to section 47(1)(b) that he was required within 30 days to repay the FHOG amount of $7,000.00 plus a penalty amount of 25% pursuant to subsection 47(2). In addition, interest was calculated pursuant to subsection 48(3)(c) for the period from the payment of the FHOG to the Applicant on 23 August 2007, until 15 September 2011.
At the hearing, the Respondent’s counsel submitted, and the Tribunal accepts, that section 47 provides the Respondent with a discretion to impose a penalty or not and the level of that penalty up to 100%, but the FHOG Act does not provide the Respondent with the authority to remit a penalty imposed.
Interest on the other hand, imposed by the operation of section 48, is payable in the circumstances provided, which encompass the Applicant’s situation, and is not discretionary. However, pursuant to subsection 49(6) of the FHOG Act:
49 Power to recover amount paid in error etc
(1) to (5)……
(6) The commissioner may remit or refund all or part of an amount of interest paid or payable by a person.
(7) …………
The Respondent’s counsel noted that were the amount repayable by the Applicant pursuant to section 20, then the interest pursuant to subsections 48(1) and 48 (3)(a) would have been calculated from, at the latest, 30 June 2008. However the amount was repayable pursuant to subsection 47(1)(b) and thus interest was calculated from the date of payment of the FHOG on 23 August 2007.
The Respondent’s counsel said that the penalty rate of 25% was imposed and interest was not remitted for the following reasons:
a.   the Applicant’s alleged inability to comply with the residence requirements was based on his own career decisions;
b.   the Applicant had ample opportunity from May 2008 to commence the residence requirement before 30 June 2008 and within 12 months from the settlement date of 30 June 2007;
c.   there was no voluntary disclosure of his situation by the Applicant; and
d.   there was no effort by the Applicant to either occupy the property within the required period to meet the residence requirements, or to communicate with the Commissioner about his circumstances.
The Tribunal finds that the Applicant did not make any concerted effort to communicate with or notify the Respondent of his particular situation in 2007 before he left for New York. Similarly the Applicant did not contact the Respondent when he returned to Australia in about May 2008 and before 30 June 2008 when the 12 month period for commencing to occupy the property as his principal place of residence ended.
The Applicant said he believed that the December 2007 telephone conversation he had with a person from an ACT Government information line had confirmed his understanding of his situation However the Tribunal does not accept as ‘reasonable’ the Applicant’s failure to send the ‘note’ about his situation to the Respondent, which the person he spoke to told the Applicant he ‘should’ do. Nor does the Tribunal accept as ‘reasonable’ the Applicant’s failure to view the relevant ACT website or make any further enquiry of the Respondent prior to the authorised investigation.
Whilst the Respondent imposed a penalty in relation to the FHOG pursuant to subsection 47(2) of the FHOG Act, the Tribunal did not find evidence of any overtly dishonest action on the part of the Applicant. Certainly, the Applicant consistently stated, prior to the hearing, that he would have been unable after he left for New York in December 2007 to meet the residence requirements. Clearly, on the facts established at the hearing, the Applicant was back in Australia plenty of time in 2008 to have made the necessary arrangements to assume occupancy of the property before the 12 months expired on 30 June 2008, but he made no attempt to adopt this course. It became clear at the hearing that the Applicant knew before he flew to New York, on 27 December 2007, that he would be back in Australia in time to occupy the property, provided he gave adequate notice to his tenant, before 30 June 2008.
Whether the Applicant might have applied for and been granted an extension of time within which to meet the residence requirement or been granted an exemption from the residence requirement or granted a shorter period of residence pursuant to subsections 12 (2) and 12(3) of the FHOG Act, is really irrelevant. By the time the applicant responded to the authorised investigation, it was about September 2011. He did not seek in that response, or in the objections that he lodged, to have the Respondent consider such applications. Rather, the Applicant seeks to suggest that his situation and the ACT Government’s representative’s ‘advice’ in the telephone conversation in December 2007 somehow brings him within the exemption for which he might have applied under subsection 12(2)(b).
The Tribunal finds that the Applicant’s situation when he flew to New York on or about 27 December 2007 was that he was obliged to either comply with the residence requirement before 30 June 2008, or either:
a. make the necessary application to the Respondent under section 12; or
b. within 14 days of realising that he was unable to meet the residence requirement, or on 30 June 2008, whichever came first, he needed to notify the Respondent in writing of his failure to comply, and repay the FHOG pursuant to section 20.
The Tribunal finds that the Applicant’s failure to undertake any of the actions set out above represents a failure on the Applicant’s part to comply with his obligations under the FHOG and HBC schemes and he is:
a. liable to repay the FHOG amount of $7,000.00 pursuant to the Respondent’s decision sent to the Applicant under cover of a letter of 27 September 2011, reversing the earlier decision to pay him the FHOG;
b. liable to pay a penalty pursuant to subsection 47(3) of the FHOG of 25% for failing to repay the amount of the FHOG as required by the Respondent. [The Applicant failed to comply with the residence requirement and the condition requiring notification and repayment of the FHOG amount paid to him.]; and
c. interest calculated pursuant to subsection 48(4) and commencing 23 August 2007 pursuant to subsection 48(3) (c) of the FHOG Act, because the amount is repayable by the Applicant pursuant to subsection 47(3).
In relation to the HBC, duty was initially assessed and paid in full by the Applicant in the sum of $9,885.00. Contracts were exchanged on 25 June 2007 and the Applicant paid the duty well before the due date of 25 September 2007. The Applicant lodged his HBC application on 21 August 2007. It was processed, approved and a reassessment undertaken on 27 November 2007. A letter setting out the amount of the reassessment was sent to the Applicant’s solicitor and a cheque in payment of the approved sum, $5,244.00, was sent to the Applicant at his parents’ address under cover of a letter from the Respondent dated 7 December 2007.
Relevant sections of the TAA are as follows:
9 Reassessment
(1) The commissioner may make 1 or more reassessments of a tax liability of a taxpayer.
(2) A reassessment of a tax liability must be made in accordance with the legal interpretations and assessment practices generally applied by the commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time.
(3) The commissioner must not make a reassessment of a tax liability more than 5 years after the initial assessment of the liability, unless—
(a)the purpose of the reassessment is to give effect to a decision on an objection or appeal as to the initial assessment; or
(b)at the time the initial assessment or a reassessment was made, all the facts and circumstances affecting the liability under the relevant tax law of the person in relation to whom the assessment or reassessment was made were not fully and truly disclosed to the commissioner.
(4) The initial assessment of a tax liability remains the initial assessment of the liability for this Act even if it is withdrawn under section 13.

26 Interest rate
(1) The interest rate is the sum of—
(a)the market rate component; and
(b)the premium component.

29Remission of interest
(1)The commissioner may remit all or part of the market rate component or the premium component of interest, or both, if—
(a)the commissioner has determined that no penalty tax is payable under section 31 (6); or
(b)the amount of penalty tax has been reduced under section 32 or section 33; or
(c)penalty tax has been remitted in whole or in part under section 37.
NoteThe commissioner’s decision refusing to remit interest in accordance with a taxpayer’s application is a commissioner-reviewable decision (see s 107, def commissioner-reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).

(2)The commissioner must not remit the market rate component unless the commissioner is also satisfied that the circumstances are exceptional and justify the remission.

30Penalty tax in relation to certain tax defaults
(1)If a tax default happens, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.
NoteA taxpayer may also be liable to pay penalty tax under the Land Tax Act 2004, s 19A (5) (Interest and penalty tax payable on land tax if no disclosure).

(2)Penalty tax imposed under this division is in addition to interest.
(3)Penalty tax is not payable in relation to a tax default that consists of a failure to pay—
(a)interest under division 5.1; or
(b)penalty tax previously imposed under this division.
31Amount of penalty tax
(1)The amount of penalty tax payable in relation to a tax default is 25% of the amount of tax unpaid, subject to this division.
(2)The amount of penalty tax payable in relation to a tax default is 50% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by a failure by the taxpayer (or a person acting on behalf of the taxpayer) to take reasonable care to fulfil the taxpayer’s obligations under a tax law.
(3)Subsection (2) does not apply if the tax payer satisfies the commissioner that the taxpayer (or a person acting on behalf of the taxpayer) had a reasonable excuse for the failure.
(4)Subsections (2) and (3) apply to a tax default that happened before their commencement in the same way as they apply to a tax default that happened after their commencement.
(5)The amount of penalty tax payable in relation to a tax default is 75% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a tax law.
(6)No penalty tax is payable in relation to a tax default if the commissioner is satisfied that—
(a)the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the tax law; or
(b)the tax default happened solely because of circumstances beyond the taxpayer’s control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person’s or the taxpayer’s control) but not amounting to financial incapacity.
NoteThe commissioner’s decision to impose penalty tax is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).

32Reduction in penalty tax for voluntary disclosure
The amount of penalty tax determined under section 31 is reduced by 80% if, before the commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out, the taxpayer discloses to the commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined.
33Reduction in penalty tax for disclosure before investigation
The amount of penalty tax determined under section 31 is reduced by 20% if, after the commissioner informs the taxpayer that an investigation relating to the taxpayer is to be carried out and before it is begun, the taxpayer discloses to the commissioner, in writing, sufficient information to enable the nature and extent of the tax default to be determined.
37Remission of penalty tax
The commissioner may remit all or part of an amount of penalty tax payable by a person if satisfied that—
(a)either—
(i)the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; or
(ii)the circumstances that resulted in the liability for penalty tax were exceptional; and

(b)it would be fair and reasonable to remit all or part of the penalty tax.
NoteThe commissioner’s decision to refuse to remit penalty tax payable by a person is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the person (see s 107B).

The Respondent’s counsel submitted that once satisfied that the residence requirement of the HBC had not been complied with, the Commissioner was entitled to reassess the Applicant’s stamp duty liability under section 9 of the TAA. This is the reassessment which gave rise to the notice from the Respondent dated 26 September 2011. That reassessment required the Applicant to pay the ‘outstanding duty’ being the amount of concession he was reimbursed by cheque on 7 December 2008 being $5,244.00 (less $3.00 remitted). In addition, the Respondent required the Applicant to pay penalty tax pursuant to subsection 31(a) of the TAA calculated at 25%, plus interest calculated for the period 25 September 2007 to 16 September 2011.
The Respondent’s counsel submitted that the same consideration applied as had been put forward in relation to the FHOG. In particular, the Applicant’s situation was such that there was no basis for the Tribunal to exercise the discretions afforded by section 31(6), section 32 or section 33.
The Tribunal agrees that the Applicant’s situation is not one which can be said to be that of someone who ‘took reasonable care’ after he was paid the concession amount at some time soon after 7 December 2007, to ‘comply with the tax law’. Nor was the Applicant in a situation where the tax default occurred ‘because of circumstances beyond’ his control. As set out above, whilst the Applicant might have taken steps to communicate with the Respondent and this may have impacted on his liability, he did not take that action. Although the Applicant provided a written response to the Respondent’s letter of 6 July 2011, which advised of the authorised investigation, the Applicant’s response was an explanation for his failure to meet his obligation rather than a disclosure to enable the determination of his tax liability.
The Respondent’s counsel noted that the Applicant had ample opportunity following his return to Australia from New York to inform the Commissioner about his situation and seek an exemption or extension in relation to the residence requirement. Indeed the Applicant had time to meet his obligation had he chosen to do so.
The Tribunal notes that in addition to the opportunity to contact the Respondent that the Applicant had between May 2008 and his departure from Australia for England in May 2009, the Applicant gave evidence at the hearing that he returned to Australia on visits on several occasions before he returned to Australia to live and work in September 2011.
The Applicant gave evidence that he did not fully appreciate his obligations when he had the telephone conversation with the representative of the ACT Government in December 2007. However the Applicant did not make any further effort, or write the recommended letter, to clarify his position. When specifically asked by the Tribunal what he had intended to achieve by the December 2007 phone call by him to the Government representative, the Applicant seemed to suggest that it was to confirm his understanding of the impact of his overseas work on the residence requirements placed on him by the FHOG and HBC schemes. Given that he provided little or no specific information in that phone call, he conceded that it could not have been interpreted as an application or notification to the Respondent in relation to his particular obligation under either scheme.
In relation to the authorities relied on by the Respondent, the Respondent’s counsel referred to Chief Commissioner for State Revenue v Ferrington (GD) [2004] NSWADTAP 41 which deals with a similar legislative scheme to the FHOG and the payment, ‘in anticipation’ of residency, permitted by section 20 of the FHOG Act. The decision notes that as the purpose of the scheme is to assist in the purchase of a home, provisions such as section 20 of the FHOG Act enable administrators of the scheme to provide funding at the time of purchase based on the ‘intention’ of the applicant to ‘reside’ in the property. It can only be by reference to subsequent events that the administrators can determine whether those events correlate to that stated intention.
Whilst the Tribunal accepts that the Applicant may have had the intention to reside at the property when he made the FHOG and HBC applications, the fact is he did not subsequently do so for any period, and sought no exercise of the Respondent’s discretion which may have impacted on the Applicant’s obligation to reside at the property.
The Respondent’s counsel also referred to the decisions of Taylor v Chief Commissioner for State Revenue [2004’] NSWADT 36 – a NSW decision where the applicant had to travel overseas for study; and Daniell v Commissioner for ACT Revenue [2008] ACTAAT 1 - where the applicant had to travel overseas for work. The Daniell decision predates the February 2010 amendment of the FHOG Act which introduced the time limit (see, subsection 12(4)), whereby any approval of extension of time, reduction of period of residence or exemption sought by an applicant must be granted by the Commissioner within 18 months of the relevant date. Nonetheless, in both Taylor and Daniell, the commissioner’s decision to require repayment and impose a penalty was affirmed. In both decisions it was found that the discretion to exempt the applicant from the residence requirement could not be made subsequent to the time for complying with the requirement having passed.
The Respondent’s counsel submitted that the Applicant could not be ‘retrospectively exempted’ from complying with the residence requirement. Further, that it is mere speculation to say what the Commissioner would have done had the Applicant applied at any time from December 2007 until 30 June 2008 seeking the exercise of the Commissioner’s discretion. The Respondent’s counsel submitted that the telephone call that the Applicant made to a ‘person’ in December 2007 can be viewed as no more than an ‘enquiry’ and is neither sufficient communication with nor notification to the Commissioner to meet the Applicant’s obligations under the FHOG or HBC schemes.
The Respondent’s counsel noted that the Applicant relied on the decision of Negus v Commissioner for ACT Revenue [2008] ACTAAT 12, however by contrast the applicant in that matter was in constant communication with the Commissioner, sought exemption, but was granted an extension, and then a further extension of time in which to lodge an objection. The Respondent says this is a very different factual situation from that of the Applicant in the present case.
Finally, the Respondent’s counsel referred to the decisions of Taskovski v Commissioner for ACT Revenue [2007] ACTAAT 11 and Philpot v Chief Commissioner of State Revenue [2008] NSWADTAP 18, both of which provide guidance on the principles to be considered when imposing penalty. The Respondent’s counsel made the following submissions in relation to the current matter:
a.   there was little time between the lodgment of the application documents submitted by the Applicant and his decision to go overseas, thus it is unlikely that he ‘forgot or failed to recall’ his obligations as set out in those documents;
b.   there is no basis for either remission or reduction of penalty arising out of the Applicant’s circumstances; and
c.   Whilst there is no reason to doubt that the Applicant was ‘candid and frank’ when completing the documentation and lodging his FHOG and HBC applications with the Respondent, any intention the Applicant had of residing at the property had clearly gone by possibly in May 2008 but certainly 30 June 2008.
In closing the Respondent’s counsel urged the Tribunal to affirm the determinations under review, subject to providing instructions on the question of interest in relation to the HBC.
The Applicant’s primary contention was that he relied on, and was entitled to rely on, the advice that he received from an ACT Government representative in a telephone conversation in December 2007. The Applicant said that the advice he received was based on general information that he provided. The Applicant conceded that he did not provide specific details about his situation. Nonetheless he said the advice that he received did not suggest that he was required to undertake any particular action subsequent to that conversation. He relied on that advice and considers that the fact that another ‘branch’ of the government can act contrary to that advice is unacceptable. The Applicant considered his situation analogous to the applicant in Daniell.
Whilst the reasoning in the authorities referred to was of interest, the Tribunal does not consider that the decisions referred to are of particular relevance to the matter before the Tribunal, particularly since the Applicant at no time resided at the property nor made any application in relation to the residence requirement.
The Applicant asserted that he was at all times honest and co-operative in his dealings with the Respondent. He considers that his reliance on the December 2007 advice amounts to exceptional circumstances and this should be taken into account by the Tribunal so that he should be given the benefit of the positive exercise by the Tribunal of its discretion in regard to penalty.
The Applicant submitted at the hearing that the fact that he could have occupied the property after his return from New York in May 2008, but did not, further supports his assertion that he relied on the ‘advice’ provided to him in the December 2007 conversation. In other words, his understanding that he was no longer required to comply with the residence requirement. This submission may have been more persuasive had the Applicant not, prior to the hearing and in correspondence, his objections and in documents filed in these proceedings, consistently asserted that he arrived back in Australia in June 2008 when he could no longer have complied with the residence requirement. The Tribunal is not persuaded by the Applicant’s submission in this regard.
The Tribunal notes that the Applicant could not recall whether he or his mortgage broker lodged the FHOG and HBC applications with the Respondent. However the documents were signed by the Applicant in May and June 2007 respectively. He gave evidence that he became aware in July 2007 that he may be chosen for the New York secondment. In addition the Applicant gave evidence at the hearing that he did understand the requirement that he reside at the property for 6 continuous months commencing within 12 months of purchase. Thus even if the Applicant did not lodge the applications with the Respondent on 21 August 2007, the Tribunal accepts the Respondent’s submission that the Applicant was aware of and had not forgotten this obligation.
The Tribunal finds that the Applicant was required to repay the FHOG and HBC amounts which had been paid to him on 23 August 2007 and 7 December 2007 respectively.
By failing to repay the HBC amount the Applicant is liable pursuant to section 30 of the TAA to pay penalty tax. The Tribunal imposes a penalty tax of 25% pursuant to subsection 31(1) of the TAA. Although the Tribunal considers the Applicant made little effort to fulfill his obligation under the HBC scheme, the Tribunal is prepared to give him the benefit of having believed, albeit erroneously and with little justification, that the telephone conversation in December 2007 provided him with some ‘excuse’ for his failure to meet that obligation.
The Tribunal considers that there were no ‘exceptional circumstances’ which might have impacted on the Tribunal’s decision in relation to imposing penalty tax. The Applicant had, and still has, the benefit of a long term tenancy at the property. The Applicant has never made any attempt, beyond enquiring what would be required, to seek vacant possession of the property. When the opportunity presented itself, particularly at the time that his secondment to New York ended in May 2008, the Applicant made no attempt to either reside in the property or clarify with the Respondent his obligations if he were unable or unwilling to do so.
The Applicant’s decision to accept a work opportunity in New York was not only positive for the Applicant and something that he sought, but it did not in fact preclude him from complying with the residence requirement as he was back in time to commence residence in May or June 2008.
Even if the Tribunal accepts the Applicant’s explanation that due to his interpretation of the telephone conversation he had in December 2007 in some way ‘relieved him’ of the need to comply with the residence requirements of both the FHOG and the HBC, the Tribunal does not accept that this was the effect of that conversation nor that it was reasonable for the Applicant to have interpreted the conversation as having that consequence.
Notwithstanding the December 2007 conversation, the Applicant was obliged, at least, to write to the Respondent setting out his circumstances and clarifying his obligations – including the need to make an application seeking the exercise of the Commissioner’s discretion to extend the time, truncate the period of residence or exempt the applicant from this condition. The Applicant’s approach of doing nothing and assuming he was ‘fine’ was not a reasonable response.
The Tribunal finds that the Applicant failed to comply with the residence requirements of the FHOG and HBC in that he at no time resided at the property subsequent to settlement on 30 June 2007 and before 12 months had elapsed on 30 June 2008.
In relation to the FHOG - the Applicant is ordered to repay the full amount of the FHOG – in the sum of $7,000.00, plus interest calculated from 23 August 2008 plus penalty tax pursuant to subsection 47 (3) at a rate of 25%.
The FHOG decision under review, being the determination to refuse the objection to the FHOG decision made 27 September 2007, is varied in so far as the penalty is imposed under subsection 47(3) of the FHOG. The decision under review is otherwise affirmed. The matter is remitted to the Respondent for calculation of applicable interest.
The concession amount of the HBC was first paid to the Applicant by cheque sent by letter dated 7 December 2007. The Applicant had paid the full amount of Stamp Duty and this payment of $5,244.00 was to reimburse him for the amount for which he was granted concession. Allowing time for postal delivery and processing of the cheque, the Tribunal orders that interest on this amount should first be calculated from 15 December 2007 as the Applicant would not have had access to these funds before that date.
In relation to the HBC – the Applicant is ordered to pay the reassessed amount of stamp duty in the sum of $5,241, plus penalty tax pursuant to subsection 31(1) of the TAA at a rate of 25%. The HBC decision under review, being the determination to refuse the Applicant’s objection to the HBC decision made on 26 September 2011, is varied in so far as interest is to be calculated from 15 December 2007 and the matter is remitted to the Respondent for calculation of the relevant amount. The decision under review is otherwise affirmed.

………………………………..
Ms W. Corby
Senior Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A

FILE NUMBER:

PARTIES, APPLICANT:

PARTIES, RESPONDENT:

COUNSEL APPEARING, APPLICANT

COUNSEL APPEARING, RESPONDENT

SOLICITORS FOR APPLICANT

SOLICITORS FOR RESPONDENT

TRIBUNAL MEMBERS:

DATES OF HEARING:

PLACE OF HEARING:

PART B

RECOMMENDATION:

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )

COMMENTS: