McTackett v Chief Commissioner of State Revenue

[2003] NSWADT 154

CITATION:	McTackett v Chief Commissioner of State Revenue [2003] NSWADT 154
DIVISION:	General Division
PARTIES:	APPLICANT Richard McTackett RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	023228
HEARING DATES:	12/03/2003
SUBMISSIONS CLOSED:	03/28/2003
DATE OF DECISION:	06/26/2003
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	first home owners grant - approval of application - First Home Owners Grant Act - first home owners grant - approval of application
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	A New Tax System (Goods and Services Tax) Act 1999 Administrative Decisions Tribunal Act 1997 First Home Owners Grant Act 2000
CASES CITED:	Stature Pty Ltd -v- Chief Commissioner of State Revenue [2002] NSWADT 271 Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Federal Commissioner of Taxation v Ryan (2000) 168 ALR 704) AGC (Investments) Ltd v FC of T 91 ATC 4180 Ambiance (Arncliffe) Pty Limited v Chief Commissioner of State Revenue [2002] NSWADT 206 FCT v Wade (1951) 84 CLR 105 Commissioner of Taxation v Ryan (2000) 201 CLR 109 Remuneration Planning Corporation Pty Limited v Federal Commissioner of Taxation (2001) 201 46 ATR 400
REPRESENTATION:	APPLICANT In person RESPONDENT D Martin, agent
ORDERS:	The decision by the Commissioner of State Revenue to deny Mr Richard McTackett the grant for a new home under the First Home Owners Grant Act 2000 is affirmed.

1 On 8 October 2002, Mr Richard McTackett applied to the Tribunal pursuant to section 28 of the First Home Owners Grant Act 2000 (“the FHOGA”) and section 38 of the Administrative Decisions Tribunal Act , 1997. Mr McTackett sought a review of the decision by the Commissioner of State Revenue (“the Commissioner”) to deny Mr McTackett entitlement to the grant for a new home under the FHOGA.

2 Mr McTackett had lodged an application for a grant of $14,000 under the FHOGA in regard to a property situated at 7/972-990 Old Princes Hwy Engadine (“the Property”). A grant of $7,000 was paid, however the Commissioner denied Mr McTackett entitlement to the additional grant of $7000 for a new home on the basis that when Mr McTackett purchased the Property it was not a new home.


Applicable Legislation

3 Mr McTackett has the right to apply for review of the Commissioner's decision pursuant to section 28 of the FHOGA. Insofar as is relevant to these proceedings section 28 of the FHOGA provides:
“28 Reviews by Administrative Decisions Tribunal

(1) An objector may apply to the Administrative Decisions Tribunal for a review of the decision (the original decision) to which the objection was made if:

(a) the objector is dissatisfied with the Chief Commissioner's determination of the objection, or

(b) 90 days have passed since the objection was lodged with the Chief Commissioner and the Chief Commissioner has not determined the objection.

(2) The applicant's and respondent's cases on an application for review are not limited to the grounds of the objection.

(3) The applicant has the onus of proving the applicant's case in an application for review. ...”

4 The amount of the grants available to eligible applicants is set out in sections 18 and 18A of the FHOGA. Those sections provide:
“18 Amount of grant

(1) The amount of a first home owner grant is the lesser of the following:

(a) the consideration for the eligible transaction,

(b) $7000.

(2) (Repealed)

18A Amount of grant for special eligible transactions

(1) The amount of the first home owner grant for a special eligible transaction is the amount payable under this section instead of the amount payable under section 18.

(2) If the commencement date of the special eligible transaction is after 8 March 2001 and before 1 January 2002, the amount payable is the lesser of the following:

(a) the consideration for the transaction,

(b) $14000.

(3) If the commencement date of the special eligible transaction is after 31 December 2001 and before 1 July 2002, the amount payable is the lesser of the following:
(a) the consideration for the transaction,

(b) $10000.

(4) In this section:

special eligible transaction - see section 13A.”

5 Section 13A of the FHOGA provides:
“13A Special eligible transactions

(1) Subject to subsection (6), an eligible transaction that is a contract for the purchase of a home (other than a contract for an "off-the plan" purchase) is a special eligible transaction if:

(a) the home is a new home, and

(b) the contract is made after 8 March 2001 and before 1 July 2002.

(2) Subject to subsection (6), an eligible transaction that is a comprehensive home building contract for a new home is a special eligible transaction if:
(a) the contract is made after 8 March 2001 and before 9 October 2001, and

(b) the building work starts within 16 weeks after the contract is made, or any longer period the Chief Commissioner may allow for delay caused by circumstances beyond the control of the parties, and

(c) the contract states that the eligible transaction must be completed within 12 months after the building work is started or, in any other case, the eligible transaction is completed within 12 months after the building work is started.

(3) Subject to subsection (6), an eligible transaction that is a comprehensive home building contract for a new home is also a special eligible transaction if:
(a) the contract is made after 8 October 2001 and before 1 July 2002, and

(b) the building work starts within 26 weeks after the contract is made, or any longer period the Chief Commissioner may allow for delay caused by circumstances beyond the control of the parties, and

(c) the contract states that the eligible transaction must be completed within 18 months after the building work is started or, in any other case, the eligible transaction is completed within 18 months after the building work is started.

(4) An eligible transaction that is the building of a new home by an owner builder is a special eligible transaction if:
(a) the commencement date of the eligible transaction is after 8 March 2001 and before 9 October 2001 and the transaction is completed before 1 May 2003, or

(b) the commencement date of the eligible transaction is after 8 October 2001 and before 1 January 2002 and the transaction is completed before 1 January 2004, or

(c) the commencement date of the eligible transaction is after 31 December 2001 and before 1 July 2002 and the transaction is completed before 1 July 2004.

(5) Subject to subsection (6), an eligible transaction that is a contract for an "off-the-plan" purchase of a new home is a special eligible transaction if:
(a) the contract is made after 8 March 2001 and before 9 October 2001 and either:
(i) the contract states that the eligible transaction must be completed before 1 May 2003, or

(ii) in any other case--the eligible transaction is completed before 1 May 2003, or

(b) the contract is made after 8 October 2001 and before 1 January 2002 and either:

(i) the contract states that the eligible transaction must be completed before 1 January 2004, or

(ii) in any other case--the eligible transaction is completed before 1 January 2004, or

(c) the contract is made after 31 December 2001 and before 1 July 2002 and either:

(i) the contract states that the eligible transaction must be completed before 1 July 2004, or

(ii) in any other case--the eligible transaction is completed before 1 July 2004.

(6) A eligible transaction that is a contract is not a special eligible transaction if the Chief Commissioner is satisfied that:
(a) the contract replaces a contract made before 9 March 2001, and

(b) the replaced contract was:

(i) a contract for the purchase of the same home, or

(ii) a comprehensive home building contract to build the same or a substantially similar home.

(7) For the purposes of subsections (2) and (3), building work starts when laying the foundations for the home begins.

(8) In this section:

contract for an "off-the-plan" purchase, of a new home, means a contract for the purchase of the home on a proposed lot in an unregistered plan of subdivision of land.

new home means a home that has not been previously occupied or sold as a place of residence, and includes a substantially renovated home and a home built to replace demolished premises.

(9) For the purposes of this section, a home is a substantially renovated home if:

(a) the sale of the home is, under the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, a taxable supply as a sale of new residential premises within the meaning of section 40-75 (1) (b) (Meaning of new residential premises), and

(b) the home, as renovated, has not been previously occupied or sold as a place of residence.

(10) For the purposes of this section, a home is a home built to replace demolished premises if:
(a) except for an eligible transaction that is a comprehensive home building contract for a home or the building of a home by an owner builder--the sale of the home is, under the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, a taxable supply as a sale of new residential premises within the meaning of section 40-75 (1) (c), and

(b) for an eligible transaction that is a comprehensive home building contract for a home or the building of a home by an owner builder--the home is, under the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, new residential premises within the meaning of section 40-75 (1) (c), and

(c) the home, as built to replace the demolished premises, has not been previously occupied or sold as a place of residence, and

(d) the owner of the home did not occupy the demolished premises as a place of residence before they were demolished.”

Background

6 The Property is a strata unit in a new building. Mr and Mrs Lamb (“the Lambs”) entered into a contract to purchase the Property from the developer off the plan i.e. while still in the construction stage. The Lambs’ contract is dated 20 April 2001. The purchase price was $235,000. At that stage the strata plan was not yet registered. The strata plan was registered on 28 November 2001.

7 Mr McTackett contracted to purchase the Property from the Lambs on 20 December 2001. The purchase price was $257,500. At this stage the strata was registered but the Lambs had not completed their purchase from the developer. The Lambs did not reside in the Property. The Property was transferred to Mr McTackett by transfer dated 13 February 2002. That transfer was registered on 16 May 2002. The transfer was, by direction of the Lambs, directly from the developer to Mr McTackett.


Mr McTackett’s case

8 Mr McTackett’s evidence is that he had depended on the grant to get sufficient funds to purchase the Property. He made several enquiries of the Office of State Revenue (“OSR”) prior to entering into the transaction to purchase the Property. He spoke to “Peter, Helena and Suzanne” regarding his application. He informed each of those people of the circumstances regarding the purchase. His evidence is that on each occasion he was advised that he would qualify for the additional $7,000 grant provided a Transfer by Direction was completed at the time of settlement, so that he was the first to appear on the Title after the developer. Mr McTackett’s evidence is that if he had been advised that he would not qualify for the grant he would not have entered into the contract to purchase the Property.

9 Mr McTackett argued that the Commissioner is estopped from arguing that he is not entitled to the additional grant because of the advice the staff of the OSR had given him prior to his entering into the transaction to purchase the Property. His evidence is that he had relied on that advice and proceeded with the purchase.

10 In written submissions to the Tribunal Mr McTackett argued:

“In my view the simple fact that the staff to whom I spoke gave me the information regarding the Transfer by Direction indicated to me that they knew what they were talking about. I would have imagined that staff that are employed by the OSR would have the knowledge regarding this particular grant and if they did not then they would be able to refer a client to someone who did.

Having been given this critical information and as a young first homebuyer I based my finances on receiving this additional grant to assist with my purchase. When I did not receive it I was then put into somewhat financial difficulty. As a result I had to borrow the money from my parents to make up my shortfall. Consequently I now not only have the debt of my mortgage repayments but I also have a loan to my parents that I have to repay.”

11 A letter dated 1 May 2002 from Mr McTackett’s solicitor to the OSR suggests that the solicitor had previously acted for another purchaser in similar circumstances to those of Mr McTackett. In that matter, the ultimate purchaser was able to get the extra $7,000 grant. That letter states:
“We acted for other purchasers within that same development and one of those purchasers was not able to go ahead and complete the purchase of the property because of changed financial circumstances, in the same way that Mr & Mrs Lamb, who had contracted to purchase this property, were not able to complete. In that other instance there was a transfer by direction, in exactly the same circumstances as in this instance, where the title to the property was never registered in the name of the original contracted purchaser, the title was only ever transferred direct from the developer to the ultimate purchaser, and that ultimate purchaser was able to get the extra $7,000.00 grant. This grant was made prior to Mr McTackett making application for the grant and as another purchaser in exactly the same circumstances as him was able to get the grant it is inequitable that he should not receive the grant.”
12 These quoted passages set out the essence of Mr McTackett’s case.

The Commissioner’s case

13 Mr Martin, for the Commissioner, argued that the Property had been previously sold to the Lambs as a place of residence. While the Lambs did not reside in the Property and they structured the transfer in such a way that their name would not appear on the title, this does not negate the fact that the Property had been sold by the developer to the Lambs as a place of residence. Mr Martin argued that the sale of the Property to Mr McTackett is the second sale of the Property. Therefore the home does not meet the definition of "new home" for the purposes of the FHOGA and for this reason there is no entitlement to the additional grant. The issue before the Tribunal is therefore that of estoppel.

14 With respect to Mr McTackett’s evidence regarding the advice he received from staff of the OSR, Mr Martin asserted that OSR staff endeavour to assist clients as much as possible, however they do not provide advice. This is something a client should obtain from their solicitor or accountant. He argued that there is no evidence to support Mr McTackett’s view that advice on the structure of the transaction would have been given by the OSR.

15 Mr Martin referred to two Tribunal decisions in support of his argument that the doctrine of estoppel does not apply to the circumstances of this matter. In Stature Pty Ltd -v- Chief Commissioner of State Revenue [2002] NSWADT 271 Judicial Member Verick stated at paragraphs 10 to 12:

“10 It is fairly basic to say that "moral and ethical grounds" have very little role in construing revenue statutory provisions. As submitted by the Chief Commissioner, there is a clear statutory duty on persons who fall within the Chief Commissioner's Gazette notification published under the provisions of s 12(1) of the LTM Act to lodge land tax returns by virtue of the provisions found in ss 12(1A) of the LTM Act. In the present matter the applicant failed to lodge the land tax returns for the relevant years. The assessments were made pursuant to information obtained by the Chief Commissioner through his compliance activity. The Chief Commissioner acted quite properly within the statutory framework of the law. Accordingly, it cannot be said that there was any denial of natural justice in this matter.

11 I also agree with the Chief Commissioner's submission that the doctrine of estoppel does not apply to prevent the Chief Commissioner from attending to his statutory duties. It is well established that the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commonwealth Commissioner of taxation assessing tax pursuant to the statutory duty so to do. (cf. Kitto J in Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 at 117 and approved by the High Court in several subsequent cases including Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466, Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 and Federal Commissioner of Taxation v Ryan (2000) 168 ALR 704). As stated by Hill J, very succinctly and unequivocally, in AGC (Investments) Ltd v FC of T 91 ATC 4180 at p. 4195:

"....there is no room for the doctrine of estoppel operating to preclude the Commissioner of Taxation from pursuing his statutory duty to assess tax in accordance with law. The Income Tax Assessment Act imposes obligations upon the Commissioner and creates public rights and duties, which the application of the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commissioner assessing pursuant to his duty so to do. The cases certainly support that view."
12 The accepted view is, therefore, clearly that no conduct on the part of revenue can operate as an estoppel against an obligation imposed by revenue legislation to assess for the correct amount of tax subject, of course, to any specific statutory provisions which prevent the revenue from exercising its statutory duties. In the present matter the Chief Commissioner has acted correctly within his statutory powers to make assessments where there was a failure on the part of a taxpayer to lodge land tax returns as required by the law. Accordingly, the doctrine of estoppel cannot assist the applicant to assert that the Chief Commissioner was not entitled in all the circumstances of the case to issue the assessments for land tax for the years in question.”
16 In Ambiance (Arncliffe) Pty Limited v Chief Commissioner of State Revenue [2002] NSWADT 206 Judicial Member Block referred to evidence regarding advice provided by an assessor with the Stamp Duty Information Line and stated at paragraph 32 to 35:
“32 … It may be thought that it is odd that a solicitor asked to give advice on a legal matter, should do so on the strength of a conversation with an unknown assessor who was, having regard to manner in which the conversation evolved, probably junior. There is of course nothing wrong with seeking advice from the Respondent's staff but in such event the solicitor would surely ensure that he was dealing with someone senior (and qualified) and who was known to him, and would in any event have checked that advice for its accuracy.

33 …It is my view in the first instance that any claim founded on an estoppel because of the conversation in May 2001 must fail because that conversation could not have been relied upon by the Applicant.

34 The Respondent (as indicated by the Respondent's submissions) is as unclear as I am as to whether the Applicant still relies on an estoppel claim. Apart from any other considerations (and even apart from those set out in clause 33) I agree with the contentions of the Respondent that no conduct of the Respondent could operate as an estoppel against the operation of the Duties Act; FCT v Wade (1951) 84 CLR 105 at 117 per Kitto J; Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 124; Remuneration Planning Corporation Pty Limited v Federal Commissioner of Taxation (2001) 201 46 ATR 400 at 405. As the Respondent says in clause 18 of the Respondent's submissions: "Estoppel in not available to release a party from an obligation to obey a statute or from an obligation to pay tax at a particular rate"”.

17 In summary, Mr Martin submitted that it was Mr McTackett and his solicitor, not the OSR, who formed the view that Mr McTackett was entitled to the additional $7,000 grant. The Commissioner refutes the allegation that any specific advice was given to Mr McTackett. Mr Martin also submitted that the doctrine of estoppel does not apply to prevent the Commissioner from carrying out his statutory duties in the administration of grants.

Findings

18 Pursuant to section 28(3) of the FHOGA, Mr McTackett has the onus of proving his case. In this regard, Mr McTackett must demonstrate that the Commissioner has made a mistake of fact or law.

19 In my view, the evidence adduced shows that there were two separate relevant transactions with respect to the Property. The first relevant transaction involves the Lamb’s contract to purchase the Property from the developer dated 20 April 2001. The second relevant transaction was Mr McTackett’s contract to purchase the Property from the Lambs dated 20 December 2001. The sale of the Property by the Lambs to Mr McTackett is therefore the second sale of the Property.

20 I note that there was an increase of $22,500 between the purchase price paid by the Lambs and that paid by Mr McTackett.

21 I agree with the Commissioner's submission that the Property does not meet the definition of "new home" because it had been previously sold as a place of residence to the Lambs. This characterisation is not negated by the Lambs’ structuring the transfer in such a way that their names would not appear on the title or by the fact that the Lambs did not reside in the Property. For this reason it is my view that Mr McTackett has no entitlement to the additional grant under the FHOGA.

22 I also agree with the Commissioner's submission with respect to Mr McTackett’s assertion that the Commissioner is estopped from arguing that Mr McTackett is not entitled to the additional grant. I agree with the Commissioner's contentions that no conduct of the OSR staff could operate as an estoppel against the operation of the FHOGA.

23 In my view, the doctrine of estoppel does not apply to prevent the Commissioner from attending to his statutory duties. Those duties require the Commissioner to apply the FHOGA without reference to "moral and ethical grounds". The doctrine of estoppel cannot operate to force the Commissioner to make a grant that would otherwise be precluded under the FHOGA. It follows in my view that the Commissioner would be required to decline Mr McTackett’s application for the further $7,000 grant regardless of whether OSR staff had given Mr McTackett wrong advice and regardless of whether Mr McTackett had relied on that advice. In any event, it is clear that Mr McTackett received advice from his solicitor in relation to the purchase of the Property.

24 In the present matter the Commissioner acted quite properly within the statutory framework and within his statutory powers. The evidence supports the Commissioner’s decision to decline Mr McTackett’s application for the further $7,000 grant. It follows in my view that the Commissioner’s decision was the correct and preferable one. Accordingly and for these reasons the decision under review should be affirmed.


Order


1. The decision by the Commissioner of State Revenue to deny Mr Richard McTackett the grant for a new home under the First Home Owners Grant Act 2000 is affirmed.