Wykrota v Chief Commissioner of State Revenue
[2019] NSWCATAD 106
•05 June 2019
Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Wykrota v Chief Commissioner of State Revenue [2019] NSWCATAD 106 Hearing dates: 29 May 2019 Date of orders: 05 June 2019 Decision date: 05 June 2019 Jurisdiction: Administrative and Equal Opportunity Division Before: R L Hamilton SC, Senior Member Decision: The respondent’s assessment is affirmed.
Catchwords: TAXES AND DUTIES-stamp duty concession- real and apparent purchaser- onus of proof Legislation Cited: Duties Act 1997
Taxation Administration Act 1996
Administrative Decisions Review Act 1997Cases Cited: Triantifilis v Chief Commissioner of State Revenue 98 ATC4484. Category: Principal judgment Parties: Mick Wykrota (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel:
Solicitors:
W Wawrzyniuk (Agent) (Applicant)
S T Richardson (Respondent)
Crown Solicitor (Respondent)
File Number(s): 2018/00382743 Publication restriction: Nil
REASONS FOR DECISION
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The issue at hand is whether the taxpayer applicant is entitled to a stamp duty concession when property was transferred into his name, on the basis that he was the real purchaser of the property who provided all the money for the purchase and improvement of the property.
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The Tribunal has jurisdiction in this matter pursuant to s96(1) of the Taxation Administration Act 1996 and s9 of the Administrative Decisions Review Act 1997.
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The taxpayer has the onus of proving his case on the balance of probabilities s100(3) Taxation Administration Act.
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I have found that the applicant taxpayer has failed to meet his burden of proof.
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The stamp duty concession is found at s55 Duties Act 1997 which provides in relevant part:
55 PROPERTY VESTED IN AN APPARENT PURCHASER
(1) Duty of $50 is chargeable in respect of:
(a) …
or
(b) a transfer of dutiable property from an apparent purchaser to the real purchaser if:
(i) the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and
(ii) the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.
(1A) For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.
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In 2013 the applicant entered into an arrangement with a Mr Sternhell concerning the purchase, sub-division and development of a property at Wheeler Heights in Sydney’s Northern Beaches.
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The property was purchased in the name of Mr Sternhell. The applicant stated that the 10% deposit on the exchange of contracts was paid by Mr Sternhell.
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The applicant argued that this payment was by way of loan to the applicant taxpayer by Mr Sternhell. However no loan documentation was in evidence which set out the terms of the “loan”.
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The applicant said in evidence at the hearing that it was part of an oral “gentleman’s agreement”.
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The balance of the purchase price was provided by a combination of a mortgage to RAMS by the taxpayer’s wife of her home, and by other funds which may or may not have been provided by the applicant. The applicant argued that funds provided by his wife were loans. There was no evidence of the terms of these loans.
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Another part of this oral gentleman’s agreement was that Mr Sternhell would be responsible for negotiation with council and liaison with neighbours concerning the sub-division and development. The taxpayer (a builder) would be responsible for the development of the property.
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Sub-division approval for three lots was ultimately obtained, but the sub-division has not been registered.
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The applicant taxpayer through his company undertook development work (a new house) on one of the three lots. Money was provided to the company for the building project, some at least of which came from the taxpayer’s wife’s account. There was no building contract or details of the reasons for payments to the company in evidence.
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There was a falling out between the applicant and Mr Sternhell which was settled by entry into a deed of release dated 12 January 2018.
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The deed recited that Mr Sternhell was a one-third owner of the property and that it had been agreed in 2014 that the taxpayer would buy out Mr Sternhell’s interest in the property.
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The taxpayer agreed to pay Mr Sternhell the sum of approximately $172,000.00 and Mr Sternhell agreed to transfer “his interests in the property” to the applicant as part of the settlement.
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It is the transfer of the property from Mr Sternhell’s name into the name of Mr Wykrota (dated December 2018) which is the subject of the disputed assessment under review.
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The respondent submitted that the arrangement between the applicant and Mr Sternhell was intended to be a commercial arrangement between them, not a case of real and apparent purchaser.
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The evidence supports the respondent’s submissions. In a number of the s58 documents various writing originating from the applicant refers to the arrangement as a joint venture or partnership. The applicant’s statutory declaration read in these proceedings also described the arrangement in this way.
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In his oral evidence the taxpayer explained the arrangement as being a “gentleman’s agreement”.
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The taxpayer submitted that he was the real purchaser and had provided all the money for the purchase from his own resources or from money lent to him.
Consideration
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The taxpayer has the burden of proof. Section 55 Duties Act requires the taxpayer to establish that he provided all the money for the purchase and improvement of the property.
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The taxpayer freely admits that Mr Sternhell provided the money for the deposit to purchase the property. He argues that this was by way of loan by Mr Sternhell to him. The taxpayer says that the loan was repaid in 2015 but did not provide any real corroborating evidence. There was in evidence a bank statement showing a further borrowing by Mr Sternhell from RAMS from which Mr Sternhell kept approximately $181,000.00 and paid the balance of the borrowed monies to the taxpayer or at his direction. This is in my view insufficient to establish that there was a loan arrangement between the taxpayer and Mr Sternhell.
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The taxpayer has failed to establish his claim. There is no corroborating evidence of a loan by Mr Sternhell to the taxpayer by way of the documents or, for example, by way of a statement from Mr Sternhell.
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The payment of approximately $172,000.00 to Mr Sternhell under the 2018 deed of release makes no mention of a repayment of any loan and is consistent with a joint arrangement of some kind.
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As a consequence of this finding the applicant has not met the test in s55 of the Duties Act. The test is strict and the onus is heavy -see Triantifilis v Chief Commissioner of State Revenue 98 ATC4484.
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There are numerous other deficiencies of proof that all the other payments for purchase and development were made by the taxpayer, but it is unnecessary to go into detail given my finding concerning the payment of the deposit by Mr Sternhell.
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The taxpayer was also unable to establish that the property was vested in Mr Sternhell upon some trust for him. There was no declaration of trust in evidence and any presumption of trust would in my view be dispelled by the payment of the deposit by Mr Sternhell and the evidence of the intention to establish a commercial arrangement to develop the property jointly.
Order
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The respondent’s assessment is affirmed.
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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
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: 05 June 2019
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