ROVERE and COMMISSIONER OF STATE REVENUE
[2011] WASAT 45
•22 MARCH 2011
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: FIRST HOME OWNER GRANT ACT 2000 (WA)
CITATION: ROVERE and COMMISSIONER OF STATE REVENUE [2011] WASAT 45
MEMBER: JUDGE T SHARP (DEPUTY PRESIDENT)
HEARD: 8 FEBRUARY 2011
DELIVERED : 22 MARCH 2011
FILE NO/S: CC 999 of 2010
BETWEEN: CRISPIN EILIF GORIENKO ROVERE
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
First home owner grant - Residence requirement - Power to waive the residence requirement entirely - Application to review decision to impose a penalty tax - Application of Commissioner's policy - Applicable principles in imposing penalty
Legislation:
First Home Owner Grant Act 2000 (WA), s 8, s 9, s 9A, s 10, s 11, s 12, s 13, s 13A, s 21, s 26(d), s 51(1)(b), s 52(2)
Interpretation Act 1984 (WA), s 19
Result:
The application is dismissed
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Ms R Panetta
Solicitors:
Applicant: N/A
Respondent: State Solicitor's Office
Case(s) referred to in decision(s):
Askraba v Commissioner State Revenue [2009] WASAT 58
Miller & Anor v Commissioner of State Revenue [2006] WASAT 336
Re Allam v Chief Commissioner of State Revenue (2005) 60 ATR 194
Re Calcaro and Chief Commissioner of State Revenue (2004) 56 ATR 560
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The applicant applied for and received a first home owner grant. The grant was paid to the applicant in advance of and subject to the applicant within 12 months of his purchase of the property in question occupying it as his principal place of residence for a period of six months. Due to a change in the applicant's employment circumstances, the applicant did not live in the property at all. Instead he rented it out and subsequently sold it. The Commissioner of State Revenue made demand for repayment of the grant, and the payment of a penalty. The applicant objected to the Commissioner's decision to do so.
The applicant considered that the Commissioner should waive the principal place of residence requirement and allow him to retain the grant.
The Tribunal considered the relevant provisions of the First Home Owner Grant Act 2000 (WA) and found that the Commissioner did not have the power to waive the residence requirement entirely, even if he wished to do so. Because the applicant had not complied with the residence requirement even partially, the Tribunal considered that the Commissioner's decision was correct.
The Tribunal also affirmed the Commissioner's decision that a penalty of an amount equal to 20% of the first home owner grant was appropriate and should be paid.
Facts
On 2 December 2005, the applicant concluded a contract for sale of land by offer and acceptance by which he agreed to purchase and Bernice Clayton and Graeme Clayton (Vendors) agreed to sell their property located at 2 Moran Street, Boulder (Property) for $118,000.
On 6 January 2006, the applicant applied for the first home owner grant under the First Home Owner Grant Act 2000 (WA) (FHOG Act) which was approved by the respondent (Commissioner) in January 2006, subject to the conditions set out in the FHOG Act.
The Commissioner summarised those conditions in a letter of approval sent to the applicant (Approval). Those conditions included:
1)All applicants must occupy the home to which the application relates as their principal place of residence for a continuous period of 6 months commencing within 12 months (or a longer time approved by the Commissioner of State Revenue) of the completion of the transaction. In the case of a contract to purchase an established home, the completion is the settlement date, while in the case of a building construction, the completion date is the date the home is ready for occupation.
2)If the residency condition is not complied with you must give written notice of the fact and repay the grant to the Commissioner within 30 days of the expiration of the residency requirement or the date it becomes apparent you will not be able to fulfil the requirement whichever is the earlier.
3)Please note that all FHOG applications are subject to scrutiny by the Office of State Revenue to confirm that an applicant has met the above conditions. FHOG recipients who fail to meet these conditions will be required to repay the grant and an additional penalty of up to 100% of the grant provided.
The Approval also contained the following information:
1)The Commissioner may consider requests in writing to exempt applicants from the residency requirement, provided at least one applicant occupies the home and the Commissioner considers there are good reasons to do so. Applicants must make the request for exemption prior to the expiry of the 12 month period.
2)The Commissioner may consider requests in writing to extend the 12 month period within which applicants must meet the residency requirement, should unforseen circumstances arise. Applicants must make the request for extension prior to the expiry of the 12 month period.
Settlement of the applicant's purchase of the Property took place on 27 January 2006 and the Commissioner under s 21(1)(a) of the FHOG Act authorised the payment to the applicant of the first home owner grant in anticipation of compliance with the residence requirements contained in s 13 of the FHOG Act.
Sometime in 2009, as part of the Commissioner's routine check for compliance with FHOG grant conditions, an investigator from the Office of State Revenue (Investigator) was appointed to conduct an investigation as to whether the applicant had occupied the property as his principal place of residence for a continuous period of six months or more.
Following receipt of a letter from the Investigator, the applicant telephoned the Commissioner and stated that:
•he was currently in Melbourne;
•he had not lived in the property;
•he had bought the property as Western Power (his employer at the time) had planned for him to move to Boulder and that he was intending to live in the property for the duration of his job in Boulder;
•however, Western Power went through a restructure and his deployment to Boulder was not realised;
•consequently, he rented the property to others and later sold the property in February 2008.
The applicant concedes that he did not occupy the property at all.
During the investigation, the applicant completed a statutory declaration dated 27 November 2009 which outlined again the reasons for him not moving into the property. It states amongst other things:
… At the time I was working for Western Power and there were many incentives to travel to rural WA as a career path from the call centre (where I was working) which I planned to take up. Unfortunately the company soon disaggregated, my role moved me to Synergy (the retail branch) and the jobs in Kalgoorlie were no longer available to me. When we moved to Adelaide Tce I sold that premise and purchased in close by Goderich St.
On 8 February 2010, the Commissioner wrote to the applicant requiring him to repay the grant, on the basis that he had not complied with the conditions under which the grant was paid. The Commissioner also imposed a penalty of an amount equal to 20% of the amount of the grant. An invoice was sent to the applicant stipulating that a total amount of $8,400 was due to be paid, made up of the amount of the grant, $7,000, and the penalty, $1,400.
On 22 February 2010, the applicant lodged with the Commissioner an objection to the demand for repayment of the grant and to the imposition of the penalty tax. On 25 May 2010, the Commissioner disallowed that objection.
The applicant subsequently applied to the Tribunal under s 31 of the FHOG Act for a review of the Commissioner's decision to disallow his objection.
The law
Under s 8 of the FHOG Act, a first home owner grant is payable if, among other things, an applicant satisfies the eligibility criteria set out in s 9, s 9A, s 10, s 11, s 12, s 13 and s 13A of the FHOG Act.
One of the eligibility criteria, and the one central to this proceeding, is the residence requirement contained in s 13 of the FHOG Act.
Section 13 of the FHOG Act provides:
1)An applicant for a first home owner grant must occupy the home as the applicant's principal place of residence for the required residence period.
2)For the purposes of subsection (1) the required residence period is
(a) a continuous period of at least 6 months; or
(b)if a shorter period is approved by the Commissioner under subsection (3) in relation to the applicant, that shorter period.
3)The Commissioner may approve of the applicant complying with subsection (1) for a period shorter than 6 months if there are, in the Commissioner's opinion, good reasons why the applicant cannot comply with subsection (1) for a period of 6 months.
4)The applicant must begin the required residence period within the takeup period.
5)For the purposes of subsection (4) the takeup period is
(a)the period of 12 months after completion of the eligible transaction; or
(b)if a longer period is approved by the Commissioner in relation to the applicant, that longer period.
Under s 21(1) of the FHOG Act the Commissioner may (and, in this case, did) authorise payment of the grant in anticipation of the residence requirement being met. If he does so, then it is subject to the conditions specified in s 21(2) of the FHOG Act, which provides:
A payment authorised under subsection (1) is made on condition that, if an applicant
(a) does not comply with the requirement under section 13(4);
(b)becomes aware that the requirement under section 13(4) will not be complied with; or
(c) having complied with the requirement under section 13(4)
(i)does not comply with the requirement under section 13(1); or
(ii)becomes aware that the requirement under section 13(1) will not be complied with,
the applicant must within 30 days after the relevant day
(d) give written notice of that fact to the Commissioner; and
(e)either repay the amount of the grant, or make an application under section 52(2) for the Commissioner to approve an arrangement for the repayment of the amount of the grant.
'Relevant day' is defined in s 21(3) of the FHOG Act and in this case is the day after the 'takeup period' ended. The 'takeup' period is defined in s 13(5) of the FHOG Act and is the period of 12 months after settlement of the applicant's purchase of the Property.
Applying the above provisions, and inserting the relevant dates, the applicant was therefore required to occupy the Property as his principal place of residence for a continuous period of at least six months beginning on or before 27 January 2007. If he did not do so, then by 27 February 2007 he was obliged to notify the Commissioner of this fact and also repay or make arrangements to repay the grant.
The parties' submissions
The Commissioner's submissions repayment of grant
The Commissioner submits that although he may under s 13(3) of the FHOG Act approve a shorter period than six months, the natural meaning of the language used in s 13(1) and s 13(2)(b) of the FHOG Act makes it clear that there must still be some period when the property concerned is the applicant's principal place of residence.
The applicant did not live in the Property at all and the Commissioner considers that it is beyond his power to completely waive the residency requirement contained in s 13 of the FHOG Act.
Consequently, because a condition of the making of the grant was not satisfied by the applicant (namely, the residence requirement contained in s 13 of the FHOG Act), then s 21(2)(e) of the FHOG Act requires that the applicant should, within 30 days, 'repay the amount of the grant, or make an application under s 52(2) for the Commissioner to approve an arrangement for the repayment of the amount of the grant'.
Accordingly, the Commissioner submits that he was correct in requiring the applicant repay the $7,000 first home owner grant.
The Commissioner's submissions penalty
The Commissioner submits that under s 21(5) of the FHOG Act, the Commissioner may by written notice impose a penalty on an applicant if the applicant does not repay or arrange to repay the amount of the grant, or make an application under s 52(2) of the FHOG Act for the Commissioner to approve an arrangement for the repayment of the amount of the grant, within the 30 day period.
Under s 21(5a) of the FHOG Act, the penalty which the Commissioner may impose is a penalty of up to 100% of the grant.
However, the Commissioner accepts that he has a discretion and in this case the Commissioner took account of the provisions of the FHOG Act and its own policy when fixing the amount of the penalty.
Under the Commissioner's policy guidelines, entitled 'FHOG Penalty Guidelines', the Commissioner provides its officers with guidance on the amount of penalty to be imposed in situations involving noncompliance with the residence requirements.
The policy guidelines reveal that a penalty of 20% of the amount of the first home owner grant should be imposed in cases where an applicant fails to reside in the property the subject of the grant for reasons beyond the control of the applicant.
The Commissioner accepts that in this case, the property was intended to be the applicant's principal place of residence and that his personal circumstances subsequently changed. Accordingly, the Commissioner accepts that the applicant's failure to reside in the property was not associated with any deliberate evasion so as to defeat the object and intention of the first home owner grant scheme.
The Commissioner also accepts that the applicant's failure to provide written notice to the Commissioner as required under s 21(2)(d) of the FHOG Act was not an intentional omission but a genuine oversight.
However, the Commissioner points out that if an investigation had not been conducted by the Commissioner's officers, the contravention may not have ever been discovered. The admission that the applicant had not moved into the property was only made after contact was made by the Investigator.
The Commissioner also points out that some two and a half years had elapsed from the end of the takeup period to the first time an admission was made by the applicant that he had not occupied the property at all as his principal place of residence.
The grant remains unpaid to this date, with recovery proceedings in the Magistrate's jurisdiction being suspended whilst the Tribunal's proceedings are on foot.
The Commissioner took into account the fact that the applicant had not 'intentionally contravened the FHOG Act' and also the applicant's cooperation with the Commissioner's officers.
Given all these factors, the Commissioner determined that only 20% of the maximum penalty that is permitted under the FHOG Act would be imposed.
The applicant's submissions
The applicant submits that his objection was 'disallowed' as opposed to 'rejected', and therefore contends that this somehow means that the Commissioner, in the applicant's words, 'would have excluded me from the residency requirements had they had the power to do so'. The Tribunal infers from this that it is the applicant's submission that an objection is 'rejected' at the very outset of the objection process only when it is entirely without merit. On the other hand, if the objection is 'disallowed' then this signifies that the objection has some merit but that it is beyond the statutory power of the Commissioner to allow that objection.
The applicant further submits that the circumstances of this matter are 'unique' and should therefore be treated differently from any other objection. He says, in effect, that the Commissioner would have found in his favour if he could.
The applicant concedes that, again in his words, the 'language of the FHOG does imply some occupancy period' but he maintains that this is not entirely clear. He considers that if he had occupied the Property for a period of a single day then the Commissioner 'would have wholly commuted the residency requirement'. He submits that it is clear that his circumstances reflect the intention of the Act and that therefore he should be entitled to retain the grant.
The applicant makes no submissions as to penalty, other than to say that there is no need for a deterrent when the act in question was unintentional. If the purpose of the penalty is to deter rather than to punish then, if it is found that the grant must be repaid, then this should be without penalty.
He says that the Commissioner only became aware that the applicant had not occupied the Property when the applicant had advised the Investigator that this was the case.
The Tribunal's response and conclusion
The Tribunal has concluded that s 13(3) of the FHOG Act requires that there has to be at least some period when the home in question was the applicant's principal place of residence. The Tribunal accepts that the Commissioner may under s 13(3) approve a shorter period than six months, but the ordinary meaning of the language used in s 13(1) and s 13(2)(b) of the FHOG Act clearly indicates that the Commissioner has no power to waive entirely the required residence period.
If there is any doubt as to the meaning of the provisions in question, s 19(1) of the Interpretation Act 1984 (WA) (Interpretation Act) allows consideration to be given to extrinsic materials for assistance. Section 19(2) of the Interpretation Act includes in that extrinsic material any speech made to a House of Parliament by a Minister on the occasion of the moving of a motion that the Bill containing the provision be read for a second time in that House.
It was stated in the course of the second reading of the First Home Owner Grant Amendment Bill 2004 (WA) (the bill which inserted s 13 of the FHOG Act as it currently stands and as it stood at the relevant time) the following in relation to s 13 of the FHOG Act:
… There is currently no minimum period of occupancy specified in the First Home Owner Grant Act 2000 (WA). The possibility exists for a person to defeat the intent of the first home owner grant scheme by obtaining the grant and living in the home for only a token period. The amendments include a requirement that an applicant must occupy the home as a principal place of residence for a continuous period of six months, commencing within 12 months after the completion of the eligible transaction. The Commissioner can approve a longer period in which to commence residence or a shorter period of occupation where there are good reasons for doing so. These provisions are consistent with those in other jurisdictions. The Commissioner cannot approve a period of no occupancy (emphasis added). Clearly, there is a requirement that a person occupy the home that is purchased subject to the first home owner grant. An applicant must reside in the home; however, the Commissioner can approve a longer takeup period. (Western Australia, Parliamentary Debate, Legislative Assembly, 1 July 2004, pp 4764 65 (J Kobelke).
Further, the words in s 13(2)(b) of the FHOG Act 'if a shorter period is approved by the Commissioner' can be contrasted with the words used in s 13(6) of the FHOG Act (which does not apply in this case) which opens with the words 'The Commissioner may exempt an applicant from the residence requirements if … '. Clearly, in the circumstances described in s 13(6), the Commissioner had a power to waive the residence requirement entirely, as opposed to merely approving a shorter period under s 13(2)(b).
On the evidence before the Tribunal, there is in any event nothing to suggest that the Commissioner would have reduced the required period of residence to one day and, indeed, counsel for the Commissioner expressly refutes that suggestion. However, because the applicant did not occupy the property at all, it is unnecessary to consider this issue.
The Tribunal does not consider that there is any significance to be placed on the Commissioner 'disallowing' the objection, as opposed to 'rejecting' it. Again, there is no evidence to support the applicant's view that the Commissioner would have exempted the applicant from the residence requirement if the Commissioner had the power to do so.
For completeness, the Tribunal notes that although the Commissioner did have the power to approve a takeup period longer than 12 months under s 13(5) of the FHOG Act, this power could not be exercised in favour of the applicant, as at the time when the Commissioner became aware that the applicant had not satisfied the takeup period requirement contained in s 13(4) of the FHOG Act, the applicant had already sold the property.
For these reasons, the decision by the Commissioner to disallow the applicant's objection to the Commissioner's decision to require repayment of the grant should be affirmed.
Turning now to the matter of the penalty applied, the Tribunal has previously recognised the appropriateness of the formulation of policies concerning the imposition of a penalty; see Miller & Anor v Commissioner of State Revenue[2006] WASAT 336.
The policy, 'FHOG Penalty Guidelines', appears to be a fair and transparent policy that seeks to afford equity and consistency amongst all applicants. It takes into account a variety of reasons for an applicant's failure to reside in the residence.
Case law has recognised that some of the factors to be considered when imposing a penalty include:
(a) the deterrent effect of a penalty;
(b) the nature and extent of a contravention;
(c) any loss or damage suffered, or gain made, as a result of the contravention;
(d) the circumstances in which the contravention took place, including the deliberateness of the conduct and the period over which it extended;
(e) whether professional advice had been obtained in relation to the contravention prior to the breach;
(f) Whether the person has previously been found by a court to have engaged in any related or similar conduct;
(g) the degree of cooperation with the authorities;
(h) in the case of a natural person, the attitude of the offender.
(See Re Calcaro and Chief Commissioner of State Revenue (2004) 56 ATR 560 at [51]; Askraba v Commissioner State Revenue [2009] WASAT 58 at [60]).
More specifically, cases that have involved an applicant failing to reside at the subject property under First Home Owner Grant legislation, suggest that the relevant factors, that may be taken into account in assessing the appropriateness of the imposition of a penalty, are:
(a) an intention of the applicant to move into the property;
(b) whether the applicant moved in;
(c) any loss or damage suffered, or gain made, as a result of the contravention;
(d) the circumstances in which the contravention took place, including the deliberateness of the conduct and the period over which it extended;
(e) whether professional advice had been obtained in relation to the contravention prior to the breach;
(f) whether the person has previously been found by a court to have engaged in any related or similar conduct;
(g) the degree of cooperation with the authorities;
(h) in the case of a natural person, the attitude of the offender.
(See Re Allam v Chief Commissioner of State Revenue (2005) 60 ATR 194, at [13]) (Re Allam).
Applying the factors mentioned above, the Tribunal is satisfied that the applicant originally purchased the property with the intention that it become his principal place of residence. The Tribunal also accepts that the applicant cooperated with the Commissioner's officers once it was discovered that the residence requirement had not been met. However, there is a need to deter others from not complying with the FHOG Act and from not repaying a grant when required.
In this case, the applicant failed entirely to comply with the residence requirements, which was a condition of the grant, due to the loss of anticipated work opportunities. The Commissioner accepts that this was an event that was beyond the control of the applicant.
A similar penalty of 20% was accepted as appropriate in Re Allam. That case involved an applicant who intended to occupy the property in question as his principal place of residence but due to financial difficulties following a failed business venture, was unable to do so. The grant in that case was retained for two years. Judicial Member Hole stated in that case at [14]:
… [that existing case law] disclose that where the person was honest, had an initial intention to move in then did not do so for discrete reasons, had retained the grant for approximately 2 years and arranged to repay the grant then a penalty interest of 20% was a suitable impost.
For the reasons above, the Tribunal concludes that the decision of the Commissioner to assess penalty at $1,400, being 20% of the penalty which could otherwise have been imposed under s 21(5)(a) of the FHOG Act, should be affirmed.
Orders
1. The decision by the respondent to disallow the applicant's objection dated 22 February 2010 is affirmed.
2. The application is otherwise dismissed.
I certify that this and the preceding [59] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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