TASKOVSKI AND COMMISSIONER FOR ACT REVENUE
[2007] ACTAAT 11
•25 May 2007
AUSTRALIAN CAPITAL TERRITORY
ADMINISTRATIVE APPEALS TRIBUNAL
CITATION:TASKOVSKI AND COMMISSIONER FOR ACT REVENUE [2007] ACTAAT 11 (25 MAY 2007)
AT06/92
Catchwords: First Home Owners Grant – failure to comply with condition that applicant occupy home as principal place of residence within 1 year after completion of eligible transaction – failure to notify Commissioner of non-compliance with residence requirements – failure to repay grant – whether grant paid because of dishonesty – amount of penalty to be imposed – relevant considerations.
Administrative Appeals Tribunal Act 1989, s 37
First Home Owner Grant Act 2000, ss 12, 13, 18, 20, 21, 23, 25, 26, 31, 47, 48,
Taxation Administration Act 1999, s 107
Principled Regulation: Federal and Civil Administrative Penalties in Australia (2002) ALRC 95
Calcaro v Chief Commissioner for State Revenue [2004] NSW ADT 158
Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24
Drake and Minister for Immigration & Ethnic Affairs (No 2) (1979) 11 ALD 440
Lumsden and Secretary, Department of Social Security (1986) 10ALN N225
Re MT and Secretary, Department of Social Security (1987) 11ALD 440
Tribunal:Mr M H Peedom, President
Date:25 May 2007
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT06/92
GENERAL DIVISION )
RE: SILVIA TASKOVSKI
ApplicantAND: COMMISSIONER FOR
ACT REVENUE
Respondent
DECISION
Tribunal : Mr M H Peedom, President
Date : 25 May 2007
Decision : The decision under review is affirmed.
…………………………..
President
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT06/92
GENERAL DIVISION )
RE: SILVIA TASKOVSKI
ApplicantAND: COMMISSIONER FOR
ACT REVENUE
Respondent
REASONS FOR DECISION
25 May 2007 Mr M H Peedom, President
The decision under review
This appeal was made against decisions of a delegate of the respondent, the Commissioner for ACT Revenue (“the Commissioner”) given on 4 December 2006 pursuant to provisions of the First Home Owner Grant Act 2000 (“the Act”). One of the decisions, made pursuant to section 23 of the Act, was to reverse a decision to approve an application by the applicant for a grant of $14,000 under the Act. The delegate also made decisions, pursuant to section 47(1) of the Act, to require the applicant to repay the grant; pursuant to section 47(2) of the Act, to pay a penalty of $7,000; and, pursuant to section 48 of the Act, to pay interest of $5,437.93.
The evidence
2. Pursuant to section 37 of the Administrative Appeals Tribunal Act 1989 the respondent lodged with the Tribunal a statement which set out the delegate’s findings on material questions of fact, referred to the evidence or other material on which those findings were based and gave the reasons for the decision under review (“the T documents”). The Tribunal has taken that material into account in arriving at its decision.
3. At the hearing of the appeal, the respondent submitted in evidence a schedule which outlined the bases upon which it undertakes a calculation of the penalty that should be imposed pursuant to section 47 of the Act and three “To let” advertisements in editions of ‘The Canberra Times’. No further evidence was submitted by either party.
The T documents
4. It appears from the T documents that the circumstances surrounding the decision to approve the grant under the Act to the applicant and the decisions under review were as follows.
5. On 6 September 2001 the applicant submitted a form of application under the Act for a first home owner grant, completed and signed by her and witnessed by a Justice of the Peace (“the form”).
6. The property in respect of which the grant was sought was a home unit at Block 2 Section 94 Division of Charnwood, the construction of which was completed on 30 January 2002 (“the property”). The contract for the sale of the property to the applicant was dated 10 August 2001. The applicant was represented by a firm of solicitors in relation to the contract of sale.
7. The form stated that:
The dwelling must be used as your principal place of residence within 12 months of the date of settlement, in the case of an established home, or for a new home, 12 months from the date construction is completed.
8. In response to a question “Will all applicants be occupying the established home as their principal place of residence within 12 months of either settlement or completion of construction?” the applicant ticked the “Yes” response option.
9. Declarations included in the form immediately above the space provided for insertion of the applicant’s name, contact details and signature included the following:
I declare that the information provided above is to my knowledge true and correct.
I understand that this addendum forms part of and is to be read in conjunction with the rest of my application for the First Home Owner Grant.
…………..
I undertake to notify the Commissioner for Australian Capital Territory Revenue if any of the eligibility criteria, as declared in this application, are not met. I accept that if the conditions are not met, I may not be entitled to receive or retain the grant.
10. On 2 July 2002 the application for the grant was approved and the grant of $14,000 was paid into the account nominated on the application form.
11. Settlement of the sale of the property occurred on 8 July 2002 and the transfer was registered on 16 July 2002.
12. On 13, 20 and 27 July 2002 notices appeared in ‘The Canberra Times’ advertising the property as a brand new property “available now” for rent at $240 per week. Raine & Horne, Belconnen, was specified as the real estate agent to contact in relation to the advertisements.
13. On 19 July 2002 the applicant signed an agreement appointing Raine and Horne Gungahlin as managing agent for the property. The agreement described the property as “new” and that the property was available indefinitely from 22 July 2002.
14. According to a search undertaken by one of the officers of the respondent at the Office of Rental Bonds, the property was tenanted from 7 August 2002 to 7 April 2003 by Mr A Rytir. From 5 April 2003 until 30 October 2003 the property was tenanted by R and H Forster. From 20 September 2003 until 15 August 2005 the property was tenanted by J Marriott.
15. According to enquiries made of the electricity authority for the Territory, an electricity meter was installed at the property in April 2002. Electricity to the property was connected in the names of the applicant and the first tenant, A Rytir, from April 2002 until 16 August 2002. Nineteen cents worth of electricity (including 2 cents GST) was consumed at the property during that time. From 16 August 2002 until 4 April 2003 electricity to the property was connected in Mr Rytir’s name. From 4 April 2003 to 25 June 2003 electricity was connected to the property in the name of H Forster. From 26 June 2003 to 15 July 2003 electricity was connected to the property in the name of M Neuhauser. From 27 June 2003 to 19 September 2003 electricity was connected to the property in the name of M Logan. From 19 September 2003 to 26 May 2005 electricity was connected to the property in the name of J Howell. From 27 May 2005 to 30 August 2005 electricity was connected to the property in the name of J Marriott.
16. On 7 March 2006 the respondent sent a letter to the applicant requesting that she provide a statutory declaration and documentary evidence of her residence in the property. In the absence of prior response, reminder letters were sent to her on 22 March 2006 and 4 April 2006.
17. On 19 April 2006 the applicant’s solicitor, Mr D Romano, made telephone contact with one of the respondent’s officers and advised that the applicant had moved from the address in Queanbeyan to which the letters had been sent and did not receive them directly. He requested a 4 week extension to provide the information that the applicant had been requested to provide.
18. On 23 May 2006, in a letter to the respondent’s office, Mr Romano advised that, following settlement of the purchase by the applicant of the property on 8 July 2002, the applicant took steps in the “next week thereabouts” to “bring the property up to speed and for her to move out of home; thereafter she took up occupation until 16 August 2002 when it became apparent that she was not going to manage financially unless she either sold the property or returned to the parents (sic) residence. She chose the latter. The property was rented for a short time, hoping that in the meantime things improved (sic). They did not. By this time the property was again vacant and in late April 2003 it was again rented”.
19. On 2 June 2006 a delegate of the respondent made decisions in the same terms as the decision under review and requiring the repayment of the grant and the payment of the penalty and interest to be made within 30 days.
20. In a letter dated 28 June 2006 the applicant’s solicitor stated that the applicant was prepared to repay the amount of the grant and a commercial rate of interest and that, if that offer was rejected, the letter should be treated as an objection to the decisions. He submitted that the decisions had no basis and that the applicant had not been given a proper opportunity to give her version of events relating to the decision.
21. By letter dated 5 September 2006 the applicant’s solicitor sent a letter “without prejudice – save as to costs” to the respondent sending a bank cheque in the sum of $14,000 said to comprise $14,000 as the amount advanced to the applicant and “a generous sum of $5,000” by way of interest. He said that the applicant asserted that the sum paid was sufficient to resolve the matter.
22. The schedule tendered in evidence on behalf of the respondent is entitled “First Home Owner Grant Act 2000 (“the Act”) – Penalty Schedule. Section 47 of the Act” (“the schedule”). It specifies rates of penalty for different types of conduct that may attract the imposition of a penalty under the Act. The rates are, broadly, made dependent upon the degree of culpability, if any, involved in the relevant conduct.
The law to be applied
23. The Act establishes a scheme to encourage and assist home ownership and to offset the effect of the GST on the acquisition of a first home by establishing a scheme for the payment of grants to first home owners.
24. To become eligible for a grant under the Act an applicant must be an individual and an Australian citizen or “permanent resident” (as defined by the Act); the applicant or his/her partner must not have received an earlier grant; the applicant or his/her partner must not have had a “relevant interest” in residential property; and the applicant must satisfy a residence requirement. The issue in this appeal relates to the residence requirement.
25. The residence requirement is expressed in section 12(1) of the Act in the following terms:
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 within 1 year after completion of the eligible transaction or a longer period approved by the Commissioner.
26. Section 13(4) of the Act specifies the conditions to be satisfied to determine the date for completion of the eligible transaction. It was not disputed in this case that the contract was completed on the date of settlement, that is, 8 July 2002. Under section 18A of the Act, at the time the grant was approved, the amount of the grant that was payable to an eligible applicant in respect of a “special eligible transaction” was $14,000. It was not disputed that the contract entered into by the applicant on 10 August 2001 was a special eligible transaction.
27. The payment of the grant in this case was made in advance of the applicant satisfying the residence requirement, in anticipation that she would do so. Provision for the payment of a grant on this basis is made by section 20 of the Act which provides:
20 Payment in anticipation of compliance with residence
requirements
(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)If a first home owner grant is paid to a person on the condition mentioned in subsection (2), the person must comply with the condition.
Maximum penalty: 50 penalty units.
(5) An offence against this section is a strict liability offence.
28. Section 21 of the Act empowers the Commissioner to impose conditions on the payment of a grant that the Commissioner considers appropriate.
29. Section 23 of the Act provides:
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.
30. Section 25 of the Act provides for the making of an objection to a decision of the Commissioner. Section 26 requires the objection to be stated fully and in detail and in writing and places the burden of showing that the objection should be upheld on the applicant.
31. Section 31 of the Act provides for an appeal to be made to the Tribunal against a decision of the Commissioner made on an objection.
32. Section 47 of the Act provides:
47 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.
33. Section 48 of the Act provides that interest is payable on the amount of a grant if the amount is repayable under section 20(2)(b) or section 47.
Submissions on behalf of the parties
34. At the hearing of the appeal the applicant was represented by her solicitor, Mr D Romano and the respondent was represented by Ms C Besemeres, of counsel.
35. Mr Romano conceded that the grant paid by the Commissioner to the applicant was repayable by her and said that she had repaid the grant together with a component for interest. He said that the only issue for the Tribunal to resolve was whether the Commissioner was able to impose a penalty and, if so, in what amount. He drew attention to the fact that the Act did not contain a mechanism for determination of the amount of any penalty imposed under the Act. He submitted that if there was a power to impose a penalty the determination of the amount of it should not take account of any perceived need to deter other recipients of grants under the Act from engaging in conduct that might attract the imposition of a penalty. The notion of deterrence, he submitted, only had relevance to conduct that was imposed in respect of a criminal offence. He further submitted that, for the purpose of section 47(2) of the Act, any dishonesty must be that which existed at the time of the making of an application for a grant or at the time of receipt of the grant but that any lack of candour on the part of an applicant during the investigation of a suspected failure to comply with the Act was a matter that could be taken into account in the calculation of a penalty. He submitted that a penalty of 20% to 25% would be an appropriate penalty in the circumstances of this case.
36. On behalf of the respondent, Ms C Besemeres submitted that the evidence before the Tribunal established that the respondent never had an intention to occupy the property as her principal place of residence or, alternatively, that she knew by 19 July 2002 that she would not comply with the residence requirement and was, therefore, in breach of the requirements of section 20(2) to notify the Commissioner accordingly and to repay the grant. She submitted that the penalty imposed was appropriate because of the applicant’s dishonesty in accepting the grant when she must have known that she would not meet the residence requirement and/or she failed to repay the loan as required by section 20(2) of the Act. She relied upon the decision of the Administrative Decisions Tribunal in Calcaro v Chief Commissioner of State Revenue [2004] NSW ADT 158. She submitted also that the penalty was in accordance with the schedule used by the Commissioner to determine the amount of the penalty that should be paid pursuant to section 47.
Reasons for decision
37. Having regard to the submissions made on behalf of the legal representatives of the parties, the issue to be resolved by the Tribunal is what penalty, if any, should be imposed on the applicant.
38. The power to impose a penalty is contained in section 47(2) and section 47(3) of the Act provided that the conditions contained within either of those provisions are met. The amount of the penalty in either case is, subject to the fixing of a maximum amount, within the discretion of the Commissioner. The exercise of the discretion is required to be made by reference to the subject matter, scope and purpose of the legislative scheme pursuant to which the decision-making power is to be exercised (Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24).
39. The adoption by the Commissioner of guidelines of the kind contained in the schedule referred to in paragraph 22 above is well recognised as a means of focussing the attention of a decision-maker on relevant considerations and better achieving consistency in decision-making provided that the guidelines are consistent with the statute conferring the decision-making power and do not fetter the proper exercise of the discretion conferred or prevent individual cases from being properly considered on their merits (Re Drake and Minister for Immigration & Ethnic Affairs (No 2) (1979) 2 ALD 634). As apparently mere departmental guidelines without legislative status, however, the schedule is relevant only as forming part of the background of facts of which the Tribunal ought to be informed when making its decision (Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225). While acknowledged as sometimes necessary to the administration of a large department, the Tribunal should take a guarded approach to their application (Re MT and Secretary, Department of Social Security (1987) 11 ALD 440).
40. A list of the useful factors which a court might take into account in determining the amount of a civil penalty was developed by the Australian Law Reform Commission following an analysis of considerations adopted by the courts in imposing civil penalties under the Trade Practices Act and Company Law (See Principled Regulation: Federal and Civil Administrative Penalties in Australia (2002) ALRC 95). Those factors were adopted by the New South Wales Administrative Decisions Tribunal in considering the amount of penalty to be determined under the New South Wales equivalent provision to section 47 of the Act (see Calcaro v Commissioner for State Revenue [2004] NSWADT 158). Those factors, which I accept as appropriate, included:
(a) the deterrent effect of the penalty;
(b) the nature and extent of the 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; and
(h)in the case of a natural person, the attitude of the offender.
41. Prior to a consideration of those particular factors, an initial question arises as to which of section 47(2) or section 47(3) of the Act applies. Although the maximum penalty under both provisions is the same, a finding of dishonesty within section 47(2) would ordinarily justify the imposition of a greater penalty than that attracted by the conduct described in section 47(3).
42. It is to be noted that for section 47(2) to apply there must be established a causal nexus between the payment of the grant and the applicant’s dishonesty. The payment in this case appears to have been made (on 2 July 2002) in reliance upon the information provided to the Commissioner in the form. The evidence, in my view, establishes that by, at least, 19 July 2002 (the date on which the applicant signed an agreement for a real estate agent to let the property indefinitely) she had formed the intention not to use the property as her principal place of residence within 12 months of the date of settlement. The evidence does not, however, necessarily justify a finding that the applicant had that intention at the date that she applied for the grant or on the date of payment of it. Accordingly, a finding that the grant was paid because of the applicant’s dishonesty is not open on the evidence and any penalty does not, therefore, fall to be determined under section 47(2) of the Act.
43. In this case, based upon the finding which I have made as to the applicant’s intention regarding the use of the property, she was obliged by the condition of the grant imposed by section 20(2)(b) of the Act to notify the Commissioner of that fact and to repay the grant by no later than 14 days after 19 July 2002. Her failure to do so authorised the imposition of a penalty pursuant to section 47(3).
44. In considering the various factors that are to be taken into account, in addition to the need for there to be a deterrent effect, I note the following matters.
45. The failure of the applicant to comply with the condition imposed by section 20(2)(b) of the Act occurred at a time that was in close proximity to the signature by her of a document which drew her attention to that obligation. It is not to be excused as attributable to some lapse of memory of an obligation imposed in the distant past. Her failure to comply with that obligation remained deliberately undischarged for a long period of time and was only (partially) rectified by her when drawn to her attention following the investigation by the Commissioner. Although the evidence does not disclose the extent to which she might have been given independent advice of her legal obligations in relation to the grant, apart from any such advice given by the Commissioner’s officers, she was legally represented on the purchase of the property and had advice available to her. There was no evidence of other such breaches by the applicant but the explanation conveyed to the Commissioner through her solicitor in the letter dated 19 May 2006 that she had occupied the property for a period until 16 August 2002 was, on my finding, untrue. The records of tenancy of the property and electricity usage make it clear, in my view, that she never took up occupation of the property after settlement.
46. In my opinion having regard to the above matters there is abundant justification for the imposition of a penalty of 50% of the maximum amount provided for by section 47(3) of the Act.
47. I note further that, under the schedule, the applicant’s failure to give a true response to the enquiries made on behalf of the Commissioner, would not justify the imposition of a penalty on 25% of the amount of the grant. That fact and the rental by her of the property during the 12 month period justify also support the imposition of a 50% penalty.
FORM 33
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Member's Staff
________________________________________________________________________
PART A FILE NO: AT06/92
APPLICANT: SILVIA TASKOVSKI
RESPONDENT: COMMISSIONER FOR ACT REVENUE
PARTY JOINED: N/A
COUNSEL APPEARING: APPLICANT: MR D ROMANO
RESPONDENT: MS C BESEMERES
PARTY JOINED:
SOLICITORS: APPLICANT: ROMANO SATSIA KORDIS LEGAL
RESPONDENT: ACT GOVERNMENT SOLICITOR
PARTY JOINED:
OTHER:APPLICANT:
RESPONDENT:
PARTY JOINED:
TRIBUNAL MEMBER/S: MR M H PEEDOM, PRESIDENT
DATE/S OF HEARING: 8 MAY 2007 PLACE: CANBERRA
DATE OF DECISION: 25 MAY 2007 PLACE: CANBERRA
_______________________________________________________________________
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION (X)
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