Williamson v Chief Commissioner of State Revenue

[2025] NSWCATAD 69

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Williamson v Chief Commissioner of State Revenue [2025] NSWCATAD 69

Hearing dates:

21 January 2025

Date of orders:

21 March 2025

Decision date:

21 March 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

J Sullivan, Senior Member

Decision:

The decision of the Chief Commissioner under review is affirmed.

Catchwords:

TAXES AND DUTIES — Dutiable transactions —Concession from duty under First home buyers assistance scheme — Reassessment — No exercise of discretion - Onus of proof not satisfied

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Duties Act 1997 (NSW)

First Home Owner Grant Act 2000 (NSW)

Interpretation Act NSW 1987 (NSW)

State Revenue Legislation Further Amendment Bill 2005 (NSW)

Taxation Administration Act 1996 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 83 ATC 4015

Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Deverich v Chief Commissioner of State Revenue [2010] NSWADT 268

Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614

Ferrington v Chief Commissioner of Taxation (GD) [2004] NSWADTAP 41

Giris v Federal Commissioner of Taxation (1969) 119 CLR 26

R v The War Pensions Entitlement Appeal Tribunal and another; ex parte Bott (1933) 50 CLR 228 at 256

Re Optimise Group Pty Ltd and Commissioner of Taxation [2010] AATA 782

Simpson v Chief Commissioner of State Revenue [2009] NSWADTY 55

Sobhani v Chief Commissioner of State Revenue [2009] NSWADT 198

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Kate Williamson (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Solicitors:
Kedron Legal (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2024/00232549

Publication restriction:

None

REASONS FOR DECISION

1. Kate Williamson is the Applicant. She applied to the Tribunal for a review of the decision by the Chief Commissioner of State Revenue (the Respondent) to reverse the concession from duty under the First Home Buyers Assistance Scheme (FHBAS) for her purchase of an apartment in Oatley NSW (Property).

2. The Applicant’s case is that the Tribunal should exercise the discretion to shorten (or waive) the 6 month residence requirement under the FHBAS because her decision to move out of the Property and/or live, instead, with her parents was caused by the combination of required remote work arrangements and COVID-19 lockdowns, which constitutes good reasons.

3. The Respondent’s case is that the Tribunal cannot be satisfied that there are good reasons to shorten or waive the residence requirement as the Applicant’s failure to comply with the residence requirement was not due to a change of circumstances after the purchase of the Property that was beyond her control.

4. I have found, for the reasons below, that the Applicant has not satisfied her onus of proof, and that the reassessment by the Respondent to duty, interest and penalty is confirmed.

Materials before the Tribunal

5. The Applicant filed an application to the Tribunal, written submissions (A1) and written submissions in reply (A2).

6. The Respondent filed two volumes of documents as required by s 58 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act) (R1), and written submissions (R2).

7. Page references are to the s 58 documents (R1)

Background to these proceedings

8. The Applicant bought the Property for $682,000. Contracts were exchanged on 6 April 2019, and settlement was 20 May 2019.

9. The Applicant claimed the duty concession on the basis that it was her first home, that she would move into the Property within 12 months of the settlement date, and that she would live there for a continuous period of at least 6 months.

10. After an investigation, the Respondent was not satisfied the Applicant met the “residence requirements” for the exemption claimed.

11. On 6 December 2023, the Respondent reassessed the Applicant to full duty, together with interest (market and premium rates) and penalty (20%) (Assessment). The total amount payable was $29,668.91 (p348).

12. The Applicant paid this amount to the Respondent, but she objected to the Assessment on 2 February 2024 (Objection). The Objection was disallowed on 24 April 2024.

13. The Applicant applied to this Tribunal for review on 24 June 2024.

The Evidence before the Tribunal

14. The Applicant did not provide a statement or affidavit. She did not give any oral testimony at the hearing. There were no statements from any other person.

15. Her solicitor, when asked, confirmed this was the case, and said he relied on the documents before the Tribunal. These documents included correspondence (and attachments) authored by the Applicant and her solicitor, as well as the Objection.

The Investigation and Residence Declaration

16. On 9 November 2023, the Respondent issued a Notice of Investigation to the Applicant, together with a Residence Declaration for her to complete and return with accompanying evidence.

17. Between 10 November 2023 and 30 November 2023, the Respondent obtained documents from Energy Australia, Newcastle Permanent Building Society Ltd, Westpac, Kamper Accountants, Australian Border Force and NSW Fair Trading.

18. On 12 November 2023, the Applicant completed and signed the Residence Declaration (p116-7) in which she:

1. agreed that: (i) she understood that to retain the first home benefits, at least one applicant had to occupy the home as their principal place of residence for a continuous period of at least 6 months, commencing within 12 months of settlement; (ii) she understood that if the residence requirement has not been met, she may be required to repay the first home benefits which may include penalty tax and/or interest; and (ii) she acknowledged that she may be liable for penalties for making false statements in the declaration;

2. said she started residing in the Property on 2 October 2019, and was still living in the Property; and

3. answered “No” to the question “Did you occupy another property as a residence during the above period?” and therefore did not complete the section “Reasons for not living in the property”.

19. The Residence Declaration was sent to the Respondent with a covering email also dated 12 November 2023, together with other documents including electricity, water and council bills, invoices for renovations and furniture, and some bank statements. In the covering email, she expanded on the responses in the Declaration, and said (excerpts, my emphasis):

“[The Property] was my primary residence from 2^nd Oct 2019 and it continues to be until the present day. (file: Residence declaration).

Electricity was connected under my account on the 23^rd Oct 2019 – Energy Australia

- Power was still connected to the tenant’s account until 23^rd Oct 2019.

…

From the 2^nd October 2019, the property became my primary residence. I thoroughly cleaned the property, completed some required maintenance and update work to the property, purchased household items and moved in my remaining belongings from this date.

[Evidence of updates completed to the property]

Purchase of furniture/household items

- New Bed – [Order confirmation]

- Other furniture (desk, console, bedside table) – Ikea (File: Bank Statements 1Jan2020 / 1Apr2020)

- Multiple transaction on my bank statements for the purchase of other household items File: Bank Statements 1Jan2020/1Apr2020 – transactions highlighted

- in later 2019, a family member passed away and I was given a large amount of furniture and household items (including – lounges, tvs, fridges, dining table, chairs and outdoor furniture).

- I work at a small appliance company and over the years have accumulated many appliances. Therefore, these item did not need to be purchased at the time of moving.

- Moving expenses: none incurred, as I moved with the help of family members.

See bank statements for other expenses (File: Bank Statements 1Jan2020 / 1 Apr2020)

- Woolworths – grocery

- Ikea – furniture and household items

- Sheridan – house items

- Myer – household items

Covid Pandemic:

- On the 16^th March 2020, I was sent home from work to isolate for 2 weeks due to a suspected covid close contact.

- After 2-3 days I had to relocated [sic] temporarily to my parents house ([Caringbah address])

- Internet had not yet been established at my property yet so I was unable to continue working from there during this time.

- During this 2 week period [assumed to be a reference to the period when was required to isolate], my workplace was shut down due to the global covid pandemic.

- Due to the ongoing uncertainty of the pandemic I remained temporarily staying at my family home so that I could continue to work remotely and so that I wasn’t alone and isolated in my property for the extended and unknown period of time that the pandemic continued.

- At this point, it was not possible to establish a new internet account at my property due the countrywide shortages and demand for setting up NBN.

- My property was not leased, rented or tenanted during this time. It remained vacant of people but with all of my belongings while I was unable to return to my property due to covid restrictions.

Mail: My property is an apartment and it is not uncommon for mail and packages to go missing or be damaged. This is why the majority of my mail is still directed to my family home in Caringbah.

With the above provided information and attached files, you will see that my property was my primary residence from 2^nd Oct 2019 and it continues to be until present day.”

…

20. On an incoming passenger card dated 28 December 2019, she provided her home address as Caringbah (p328).

21. The electoral roll showed her address as Caringbah from 9 August 2018 until 9 October 2021 (p5).

22. Her Drivers Licence showed her home address as Caringbah at all relevant times up to 2 November 2023 (p2).

23. Electricity, council and water notices for the Property were in her name and issued to her the Property address.

1. Electricity: connected in her name on 23 October 2019 (pp 78, 114). Bills showed usage for the period she said she was living there was effectively the same as when it was vacant (p123 when vacant, pp124-126 for the period 10 December 2019 to 10 March 2020, p129 for the period 11 March to 10 June 2020).

2. Water: charges were the same (within $2) for each quarter in the period from 1 October 2019 to 30 June 2020 (pp149-151).

24. Her home loan stated she was an “owner occupier” (p173).

25. Her 2019 ITR showed her address as Caringbah (p59), and her 2020 ITR showed her home and postal address as the Property (p66). But no record of the lodgement date was on the copy of the 2020 income tax return before the Tribunal, noting it was prepared by a tax agent.

26. Bank records for the relevant period (p147-8) – also addressed to her parents’ home: entries highlighted by the Applicant were said to be “close to Oatley or house-related purchases”. There were also purchases around the Caringbah area. There was a grocery purchase from Woolworths Mortdale on 27 February 2020 (p148; another on 7 March 2020).

The Assessment

27. On 6 December 2023, the Respondent issued the Assessment, advising the Applicant that the duty concession was reversed as the Applicant had failed to comply with the residence requirement.

The Objection and subsequent correspondence

28. On 2 February 2024 (p361) Kedron Legal lodged an objection to the Assessment on behalf of the Applicant. The grounds of objection were that the residence requirement should be modified in accordance with s 76(2)(a) of the Duties Act as the Applicant ceased residing at the Property in March 2020 due to the COVID lockdowns. It said (excerpts, my emphasis):

2. Our client was required to commence occupation of the Property on or before 20 May 2020.

…

4. The vendor vacated the Property on or about 2 October 2019.

5. Upon the vendor vacating the Property, our client commenced readying the Property for her occupation….

6. These [renovation] tasks took until approximately January 2020, and our client resided at her parents’ residence… during the undertaking of these tasks.

7. Our client’s mail was, and still remains as of today, directed to her Parent’s Residence, save for outgoings pertaining to the Property which are mailed directly to the Property. This is solely for convenience when having mail and packages delivered, as there is a lower possibility of packages, parcels and mail being delivered to a house rather than a block of units. This is a common practice among persons living in strata complexes.

8. Our client subsequently moved into the Property and occupied the Property as her primary place of residence in January 2020, which is within the twelve (12) month period commencing on the Completion Date.

9. Unfortunately, during the period from October 2019 until March 2020, our client was unable to establish internet services to the Property. Our client was working full time in the company office at the time, and establishing internet at the Property was not a priority. Attempts to connect the internet were delayed as there were waiting periods in obtaining NBN technicians to install the necessary hardware for connection to the internet due to the proximity to the Christmas period, and into the new year there were significant delays caused by the onset of the COVID-19 pandemic. As internet at the Property became essential for our client, the disruptions to services caused by the pandemic prevented internet being established at the Property. Accordingly, as of March 2020, the Property did not have reliable internet services.

…

12. …due to the delays in connecting internet at the Property, my client was unable to continue to work from home during her isolation period.

13. In order to maintain her employment, my client relocated to her Parents’ Residence as they had a reliable internet connection where she could continue to isolate and work. Our client attempted to hot spot her internet from her phone, however the connection was unreliable, and she was unable to effectively complete her work.

…

29. On 14 February 2024, the Respondent requested further information (p364):

“…

You advised that your client ‘subsequently moved into the Property in January 2020’ which is different from the Client initial declaration and the one she has maintained through the investigation that she has moved into the Grant Property from 2 October 2019 and reside there until at least 16 March 2020.

You also advised that ’from October 2019 until March 2020, your client was unable to establish internet services to the property’ and therefore request that a shorter period of residence being considerate. [sic]

…

Therefore, in order for us to consider a shorter residency, your client will need to provide the following information:

*   Correspondence and documents that shows your client had issues to connect internet services to the property during the period mentioned in your letter. (e.g. request for connection, letter from internet services in regards to issues,…)

*   Correspondence from her employer that her work moved remotely following the date she mentioned.

…”

30. In reply correspondence dated 11 March 2024 (11 March 2024 letter), Kedron Legal said (p378, emphasis added):

“1.We note that the previous tenants vacated the Property on 2 October 2019 consistent with our client’s previous advice to you. Our client considered the Property as her main residence on and from that date. That is, our client considered the Property hers with the intention of no longer leasing the Property to third parties and for her to move into the Property and call it her home.

2. After 2 October 2019, our client began moving her belongings into the Property and the only belongings that remained permanently in the Property belonged our client.

3. The property was occupied with our client’s belongings while cleaning, renovations and deliveries occurred.

4. Once the cleaning renovations and delivered [sic] were finalised in January 2020, our client began occupying the Property as her primary place of residence.

5. Our client’s position has always been consistent throughout.

From October 2019 until March 2020, our client was unable to establish internet services

6. Our client’s internet had not yet been connected. Prior to moving into the Property in January 2020, our client did not make any attempts to cone ct the internet as she was at the Property intermittently to carry out renovations and arrange furniture.

7. Our client was still working in the office when she moved into the Property and did not require internet at her residence. As a result, she did not connect it at the time.

8. Our client begun work-from-home isolation from 16 March 202020 (which will be discussed below). As industry shut down due to the pandemic, as we have previously advised, our client served the initial lockdown period at her parents’ residence on and from 16 March 2020 due to

(a)   The Property having no internet connection to allow our client to carry out her employment duties and her mobile phone was incapable of supporting a reliable internet connection.

(b)    Due to the significant uncertainty as to the length and extent of the lockdown, our client isolated with her parents to ensure that she had company and physical contact with others to avoid any adverse mental health issues associated with isolating alone.

…

Further attempts to connect internet from January 2021

14. When the initial lockdown period ended in or about January 2021, our client returned to the Property to continuing living in the Property as her primary place of residence, in which she continues to reside in as her primary place of residence.

15. We are instructed that even when our client returned to the Property in January 2021, it was still very difficult and sometimes impossible to establish new internet connections. For the first few months we are instructed that our client was hot spotting from her company phone and then for several months (approximately May 2021 to September 2021), our client had to use a portable Wi-fi system.

16. We enclose a report prepared by the CSIRO “Staying Connected” which illustrates the demand in procuring high speed broadband during the COVID-19 Pandemic sufficient to enable someone to work from home.

17. We further enclose two (2) articles relating to the shortage of materials during this period preventing internet connections.]

31. The 11 March 2024 letter was accompanied by some documents relating to the internet connection, which are discussed below.

The Objection Decision

32. As noted above, the Objection Decision was issued on 24 April 2024, disallowing the objection and confirming the Assessment to duty, interest and penalties.

Was there an intention to occupy the Property as her principal place of residence?

33. The Applicant lived with her parents in Caringbah prior to buying the Property. She continued to live there after it was purchased, because the Property was leased to the vendor from 20 May 2019 until 1 October 2019, when they vacated. It was not leased again after that date.

34. On 2 September 2019, the Applicant told her real estate agent (p118):

I won’t be needing you to advertise for new tenants, as I will be moving in.

35. I find it was the Applicant’s intention to occupy the Property as her principal place of residence after the tenants vacated.

36. I find that after the vendors moved out (October 2019), the Applicant moved furniture, belongings and other household items into the Property (some new furniture was ordered and delivered there), and carried out some renovation work: documents between October 2019 and January 2020 at pp135-139. Those matters are not relevantly in dispute.

Did the Applicant move into the Property and, if so, when?

37. I am unable to find, on the balance of probabilities, that the Applicant commenced to occupy the Property as her principal place of residence in January 2020, or from a particular date in that month.

1. That fact has not been conceded by the Respondent (R2 at [30]). Nor was it conceded in the objection decision, which referred to the claim made by the Applicant as to her period of occupation.

2. There is insufficient evidence of the nature and timing of her actual occupation to conclude that it was her “principal place of residence” (see Ferrington v Chief Commissioner of Taxation (GD) [2004] NSWADTAP 41 at [42]) for any specific period of time.

3. There is no evidence by way of a statement or affidavit from the Applicant, other than her Residence Declaration that referred to a commencement date of 2 October 2019.

4. There is no other objective evidence to support a date on which occupation commenced as her principal place of residence (e.g. change of address notified for her drivers licence or electoral roll, other correspondence, utilities usage is inconclusive).

The Applicant’s reasons for moving out of the Property

38. I accept the Applicant’s submission that she was required from 16 March 2020 by her employer to work remotely because of COVID-19 and the resulting lockdown. On 16 March 2020 she was advised by her employer that she had been a close contact of a suspected COVID infection, and was required to work remotely from that time (email 17 March 2020; p385). The other documents accompanying the 11 March 2024 also support that finding.

No internet access at the Property

39. Several statements extracted above had been made to the Respondent that the Applicant had been “unable” to establish or connect the internet at the Property, or that it had “not yet been established” when she made the decision to move to her parents’ house at Caringbah, or that it was “unreliable”. Upon the Respondent requesting documents to support a connection request, documents were supplied with the 11 March 2024 letter; however, they were general publications and articles relevant to issues experienced in Sydney when people were trying to get connected.

40. I accept the submissions of the Respondent that there was no evidence from the Applicant that she took any steps before or around that time to connect the internet to the Property, nor that she was waiting for a connection to occur. Indeed, that was the position presented in the 11 March 2024 letter (see extracts above).

41. Despite statements that the use of her mobile phone at the Property was unreliable this was not corroborated by any evidence from the Applicant herself, nor specifically referenced in her original correspondence to the Respondent. At the hearing, I was taken to the “internet data plan” which accompanied the 11 March 2024 letter (p386) – it was a 400GB data plan from Telstra (p386) dated 6 May 2021. It was indicated that her employer provided her with a company phone so that she could hotspot to an internet service if required. There was no evidence why this solution was unavailable in March 2020.

Mental health

42. It was also submitted by the Applicant that it was beneficial to her mental health to not be living alone at the Property during a lockdown period, which was unprecedented, required a “split-second” decision to be made, and assisted in respect of the decision that she made to move back home with her parents. I accept she may have chosen to live elsewhere for that reason. No other evidence was before the Tribunal regarding her state of mind at that time.

The Applicant moves “back in” to the Property

43. According to the Applicant’s submissions, she moved from her parents’ house “back in” to the Property “in or about January 2021”, or “around January 2021” (A2 at [4], [19], [32]).

44. Other than a reference to the month “when” she returned, I was unable to establish from the evidence presented that there was a particular date of recommencement of occupation of the Property as her principal place of residence in the month alleged, nor that it was the first opportunity for her to return.

CONSIDERATION

Jurisdiction

45. The objection decision was dated 24 April 2024 and the application to the Tribunal was filed on Monday 24 June 2024 (within 60 days allowing for the weekend per s 36 of the Interpretation Act NSW 1987 (NSW)).

46. Accordingly, the Tribunal has jurisdiction to conduct this administrative review under s 96 of the Taxation Administration Act 1996 (NSW) (TA Act), s 9 of the ADR Act and s 30 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).

47. The Tribunal “stands in the shoes” of the Respondent in conducting a merits review of the Assessment. The Tribunal’s task is to decide what the correct and preferable decision is having regard to the material before it, including any relevant factual material and any applicable written or unwritten law: ADR Act, s 63. 

Onus of proof

48. Importantly, the Applicant has the onus of proof: TA Act, s 100(3).  The standard of proof is the balance of probabilities. That means she must prove all matters necessary for the Tribunal to answer the statutory questions in her favour: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 (Cornish) at [36].

49. As also noted in Cornish at [27]:

“I think it is clear from the authorities that the onus of proof in relation to the main issues of fact is on the applicant (see Krew v Federal Commissioner of Taxation 71 ATC 4091) and that, if the applicant is unable to establish that it is entitled to the exemption under s 10AA of the [Land Tax Management] Act, the assessment must stand irrespective of any error in the Chief Commissioner’s assessment or his understanding of the facts. The latter is a principle of long standing (see Trautwein v Federal Commissioner of Taxation (1936) 56 CLR 63 and affirmed by the High Court in Federal Commissioner of Taxation v Dalco).”

50. Previous statements made by the Respondent in respect of the facts, or any alleged “acceptance” of them, do not bind the Respondent unless they have been conceded in these proceedings. As noted by Brennan J in Dalco (who handed down the principal judgment and with whom the other members of the High Court agreed) at 624:

“The manner in which a taxpayer can discharge that burden varies with the circumstances. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. Absent such a confining of the issues for determination, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment …”

51. The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. It must not, however, ignore the commonly accepted rules of evidence: as noted by Evatt J of the High Court in R v The War Pensions Entitlement Appeal Tribunal and another; ex parte Bott (1933) 50 CLR 228 at 256:

“Some stress has been laid by the present respondents upon the provision that the Tribunal is not, in the hearing of appeals, “bound by any rules of evidence”. Neither it is. But this does not mean that all rules of evidence may be ignored as of no account. After all, they represent the attempt made, through many generations, to evolve a method of inquiry best calculated to prevent error and illicit truth. No Tribunal can, without grave danger of injustice, sit then on one side and resort to methods of inquiry which necessarily advantage one party and necessarily disadvantage the opposing party. In other words, although rules of evidence, as such do not bind, every attempt must be made to administer ‘substantial justice’”.

52. And as Deputy President Forgie of the Administrative Appeals Tribunal explained in Re Optimise Group Pty Ltd and Commissioner of Taxation [2010] AATA 782 at [32]:

“[32] For all practical purposes, there is often little difference between the task of a court bound by the rules of evidence and that of the Tribunal in assessing the relevance and probity of material. Each must assess the weight that it gives to the pieces of evidence or other material that it has. Each must also consider the weight, if any, to be given to the failure of a person to produce evidence or material in its control or to call a witness who might be expected to have relevant evidence. When considering omission, the principles in Jones v Dunkel are, on their face, just as relevant in Tribunal proceedings as in court proceedings even though they are regarded as among the rules of evidence.”

53. Accordingly, although there is no statutory requirement for an applicant to produce as a witness any particular person or produce any documentary evidence (see Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 83 ATC 4015), it remains necessary for the Applicant to produce sufficient evidence to discharge the onus. Part of that evidence may, as here, comprise documents or correspondence in the s58 materials.

The relevant provisions in the Duties Act

54. The provisions set out below reflect the requirements in force at the relevant time.

55. The FHBAS, found in Part 8 Division 1 of the Duties Act, is intended to help people who are acquiring their first home. If the requirements are met, the acquisition of a first home is subject to a concession or exemption from duty: s 69.

56. Section 76(1) provided:

76   Residence requirement

(1)  The home must be occupied by the first home owner or one of the first home owners who is acquiring it as a principal place of residence for a continuous period of at least 6 months, with that occupation starting within 12 months (or such longer period as the Chief Commissioner may approve) after completion of the agreement or transfer. This requirement is referred to as the residence requirement.

(2)  The Chief Commissioner may, if satisfied there are good reasons to do so in a particular case:

(a)  modify the residence requirement by approving a shorter period of occupation by a first home owner, or

(b)  exempt a first home owner from the requirement to comply with the residence requirement.

…

57. Section 76A provided for approval of a FHBAS application in advance. Section 76A stated:

76A   Approval of application in advance of satisfaction of residence requirement

(1)  The Chief Commissioner may approve an application in anticipation of compliance with the residence requirement under section 76 if the Chief Commissioner is satisfied that each applicant required to comply with the residence requirement intends to occupy the home as his or her principal place of residence for a continuous period of at least 6 months, with that occupation starting within 12 months after completion of the agreement or transfer or within a longer period approved by the Chief Commissioner.

(2)  If an application is approved in anticipation of compliance with the residence requirement, the approval is given on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the end of the period allowed for compliance:

(a)  give written notice of that fact to the Chief Commissioner, and

(b)  pay the relevant duty to the Chief Commissioner.

(3)  The relevant duty is the difference between the total amount of duty that would have been payable on the transactions and instruments the subject of the application, if they had not been eligible under the scheme, and the total amount of duty (if any) paid in respect of those transactions and instruments.

(4)  A person who fails to comply with the condition prescribed by this section is guilty of an offence.

Maximum penalty: 50 penalty units.

(5)  A failure to comply with the condition prescribed by this section is a tax default for the purposes of the Taxation Administration Act 1996.

58. Section 79 provides that the Chief Commissioner may reassess the duty chargeable in respect of an agreement or transfer that is initially approved under the scheme if he forms the opinion that the agreement or transfer is not eligible under the scheme (because of failure to comply with the residence requirement or otherwise).

The discretions under s 76(2) of the Duties Act

59. If the residence requirement is not satisfied, the discretion in s 76(2) may allow the Respondent (and, here, the Tribunal) to shorten the period of six months or to waive the residence requirement completely if satisfied there are “good reasons” to do so. The nature of such discretions, in the context of the amendments to the First Home Owner Grant Act 2000 (NSW) (FHOG) regarding similar discretions in sections 12(3) and 12(4) of that Act, were explained in the Second Reading Speech of the State Revenue Legislation Further Amendment Bill 2005 (NSW) as follows (my emphasis):

“The bill also clarifies the circumstances in which the Chief Commissioner may exercise certain discretionary powers. Eligibility for the grant includes a residence requirement which states that the applicant must occupy the home as his or her principal place of residence for at least six months commencing within 12 months of purchase. The Chief Commissioner is given the power to extend the period of 12 months, to reduce the period of six months [equivalent to s 76(2)(a) of the Duties Act], or to waive the residence requirement completely [equivalent to s 76(2)(b) of the Duties Act].

The discretions are intended to allow the grant to be retained in circumstances where the applicant genuinely intended to occupy the home as his or her principal place of residence, but failed to do so due to a change in circumstances after the purchase of the home.”

60. In Sobhani v Chief Commissioner of State Revenue [2009] NSWADT 198 (Sobhani), Judicial Member Verick stated that the same principles would also apply to the Duties Act:

“The discretion is intended to allow the grant to be retained under the FHOG Act and FHP Concession to apply under the Duties Act in circumstances where the applicant had a real bona fide intention to occupy and use the home as his or her principal place of residence but failed to do so due to a change in circumstances after the purchase of the home. Generally speaking, an acceptable circumstance would be one outside the control of the applicant. Without placing any limitation, the circumstances would include the need for an applicant to move interstate or overseas to carry out work duties, the serious illness of an applicant after exchange of contracts preventing occupation and use of the property, or a financial difficulty, for example loss of the income-earning job, after purchase of the property.”

61. This approach to the discretion has been approved in a number of other cases. For example, in Deverich v Chief Commissioner of State Revenue [2010] NSWADT 268 the Tribunal stated at [48]:

“I think the discretion should be considered in cases where there is a bona fide attempt by an applicant to establish his or her first home and some impediment beyond the control of the applicant prevents the occupation of the property for a continuous period of six months. The discretion can be exercised at any time. But the Tribunal is entitled to consider the actual use and occupation of the property during the period of ownership. In this matter, the applicant was aware at the time he made the application for the grant that he would not, because of the nature of his employment, satisfy the required residence test.”

62. Both parties referred to the above comments of Verick JM in Sobhani in support of their positions.

1. In the Applicant’s view, the circumstances were outside the control of the Applicant because of the onset of the COVID-19 pandemic. This led to the Applicant being unable to undertake her work duties at the Property due to the absence of an internet connection (and whether or not she had sought to connect it was irrelevant); requiring her to vacate the Property and move to her parents’ home, where the internet was available. Moreover, it was submitted that the Applicant had until 20 May 2020 to move (again) into the property to recommence a fresh six month period of occupation as her principal place of residence, but was prevented by the ongoing and uncertain lockdowns from that occurring.

2. In the Respondent’s view, there was no relevant circumstance outside the control of the Applicant. It was submitted that the Applicant did not connect to the internet because she had moved to her parent’s house. This was a matter within her control, in contrast to a situation where she had tried to connect, could not connect, and then was left with no choice but to move to her parent’s house in order to perform her work duties. In other words, it was a voluntary choice made by the Applicant.

3. Nor, said the Respondent, was there any evidence as to the Applicant’s state of mind in support of any assertion that she was required to move to her parent’s house for her own mental health or because she was afraid to live on her own (a matter which the Applicant said was simply a question of adherence to the government directives issued at the time).

63. I do not agree with the Respondent’s submission that the discretion can only be exercised in circumstances beyond the control of the taxpayer. That may generally be the case. But, for example, making a decision to leave a home due to actual or threatened domestic violence arguably involves a voluntary choice whether to stay or to leave, and also choosing when to do so; but there is nonetheless a compulsion. And it would require the adducing of evidence sufficient to establish that compulsion to leave. Submissions as to what may have been intended, or occurred, are not evidence. The absence of a proper statement or oral testimony from the Applicant makes the Tribunal’s task more difficult.

64. I am aware the COVID-19 pandemic was unprecedented, and that it caused great uncertainty, and impacted upon the Applicant.

65. But I cannot be satisfied that:

1. the Applicant commenced occupation of the Property as her principal place of residence in January 2020 (nor any particular date in that month);

2. she was compelled to move out – either due to her mental state, or because she was unable to work from the Property due to the absence or unreliability of an internet connection, a matter that could only be remedied by moving to her parents’ house who did have an internet connection;

3. she was therefore unable to comply with the 6 month “continuous occupation” residence requirement, arising by a circumstance that was unforeseen at the time of her purchase of the Property; or

4. she moved back in as soon as the circumstances enabled reoccupation to commence, using an internet solution that was unavailable in March 2020.

66. As noted in Simpson v Chief Commissioner of State Revenue [2009] NSWADT 55 at [70]:

“In my view, the positive exercise of a discretion in such a case (where there is nothing more than a decision/choice made by an applicant) would defeat the object of the legislature in having a residence requirement (to be met within a certain timeframe) in the first place.”

67. The Applicant’s submissions regarding s 76(2)(a) (A1 at [2(a)]) requested “a modification to approve a shorter period of occupation for three months from 16 January 2020 to 16 March 2020”. The reference to 16 January 2020 is not grounded in any particular evidence.

68. But any exercise of the discretion under s 76(2)(a) to permit a “shorter period” first requires the Tribunal to find the (on the balance of probabilities) of the start and end date of the “continuous period” of actual occupation as the Applicant’s principal place of residence. And the period simply cannot be determined with the required specificity on the evidence before the Tribunal.

69. The Applicant relied, in the alternative, on the discretion in s 76(2)(b), in the event that the Tribunal could not conclude that the Applicant moved into the Property in January 2020.

70. The discretion in s 76(2)(b) operates upon different factual circumstances to s 76(2)(a) (which, as noted above, shortens the required 6 month period of occupation as a principal place of residence by reference to specific dates). In my view, the discretion in s 76(2)(b) would usually be considered in circumstances where the Applicant did not commence occupation as a principal place of residence at all, due to factors arising after purchase that prevented that from occurring. That was not the case presented to the Tribunal.

67. It follows that I cannot be satisfied that there were “good reasons” for the failure to comply with the residence requirement. Accordingly, I would decline to exercise the discretions in the Duties Act to shorten the period under s 76(2)(a), or waive the residency requirement under s 76(2)(b) of the Duties Act. For completeness, nor would I have allowed a “longer period” (ie an extension to the 12-month take up period) for the same reasons; in any event, her primary case was that she had occupied the Property as her principal place of residence for a period of time commencing within that 12 month period but it was not established on the evidence.

68. I therefore confirm the decision of the Respondent to reassess the Applicant for duty.

Interest and penalties

73. The Applicant made no written submissions in respect of interest and penalties. Before the Tribunal, the Applicant’s solicitor advised that he relied upon the same facts as in respect of the main issue in dispute.

74. The interest comprises the “market rate” and “premium rate” components, imposed under the TA Act. The penalty (20%) was imposed by s 26 of the TA Act after applying the reduction in s 29 reflecting the Applicant’s co-operation during the investigation.

75. There is a discretion to remit interest under s 25 of the TA Act. In this regard, each component of the interest should be considered.

76. The rationale for the market rate of interest has been accepted as was described as follows in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 at [60]:

“In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank’s Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The Tribunal [below] made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation.”

77. I see no reason to depart from this principle in the present case. It follows that there are no such grounds before me, and the assessment of interest at the market rate should stand.

78. Although the premium component is a form of penalty, I also find no basis for remission of the premium rate of interest.

79. In the circumstances, and given the issues found above in respect of the onus of proof, I cannot be satisfied that the Applicant took reasonable care, that the failure to meet the requirements were not within her control, or that there were any “special circumstances” or other matters that warrant the exercise of the discretion to remit the premium component in whole or in part. I have also had regard to the requirement under s 76A (2) to notify the Respondent of non-compliance with the residence requirement within 14 days of the period allowed for compliance; at which time she could have sought the exercise of the discretion prior to the issue of the reassessment. That did not occur, but if it had, I may have been more inclined to exercise the discretion.

80. For these same reasons, I also find that the Applicant did not take reasonable care, nor is there any other basis to warrant the remission of penalties under s 33 of the TA Act, either in whole or in part.

81. I confirm the decisions of the Respondent to not remit interest or penalties.

Orders

82. The correct and preferable decision is that the discretions sought should not be exercised. The decision under review, being the Assessment to duty, penalties and interest, is therefore affirmed.

83. I make the following order:

1. The decision of the Chief Commissioner under review is affirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 21 March 2025