APPLICANT AT 2/2025 v COMMISSIONER FOR ACT REVENUE

Tribunal: Senior Member M Hyman Date of Orders: 1 September 2025 Date of Reasons for Decision: 1 September 2025 Date of Publication: 9 September 2025 AUSTRALIAN CAPITAL TERRITORY ) CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 2/2025

BETWEEN: APPLICANT AT 2/2025 Applicant AND: COMMISSIONER FOR ACT REVENUE Respondent

TRIBUNAL: Senior Member M Hyman DATE: 1 September 2025

ORDER The Tribunal orders that:

1. The decision of the Commissioner for ACT Revenue that the applicant was liable for conveyance duty and penalty tax on the purchase of his home is set aside.

2. The duty and penalty tax paid by the applicant are remitted.

3. The application for remission of interest is dismissed for want of jurisdiction.

……………………………….. Senior Member M Hyman REASONS FOR DECISION Introduction 1. The applicant, who appears by the pseudonym Applicant AT 2/2025 following a confidentiality order made by the Tribunal on 7 April 2025 (the applicant), moved to Canberra in 2019, buying a house. He took advantage of the Home Buyer Concession Scheme (HBCS), on the basis that his income fell below the threshold for the scheme, so that he would not have to pay conveyance duty (conventionally known as “stamp duty”) on the purchase of the house. The respondent, the Commissioner for ACT Revenue (the Commissioner, or the respondent), reviewed the purchase, and decided that the applicant was not eligible for the concession; he had not included his “reportable fringe benefits amount” (RFBA) in his income when assessing his eligibility; if he had done so he would have been above the threshold. The Commissioner issued a notice of reassessment on 10 November 2023 requiring that the applicant pay a total of $108,308.33, comprising $69,462 in duty, $17,365.50 in penalty tax and $21,480.83 in interest. The applicant paid the amount in the notice, but he lodged an objection to the reassessment on 11 December 2023. On 10 December 2024 the Commissioner issued a reviewable decision and reasons statement, disallowing the objection to duty and penalty tax and partly allowing the objection to interest. On 3 January 2025 the applicant applied for review of the latter decision, under section 108A of the Taxation Administration Act 1999, (the TAA), which allows for review by the ACT Civil and Administrative Tribunal (the ACAT) of certain decisions.

2. The review application came before the Tribunal on 2 July 2025. The applicant appeared in person, and was represented by Mr B Buckland of Counsel. The Commissioner was represented by Mr M Wells of Counsel, instructed by Ms A Tykocinski of the ACT Government Solicitor’s Office. The applicant tendered a witness statement (Exhibit A1, dated 8 May 2025) but was not required for cross-examination. He called one additional witness, Mr Harry Edwards, a chartered accountant and tax agent, who also provided a witness statement (Exhibit A2, dated 5 May 2025). Mr Edwards appeared remotely, gave oral evidence and was cross-examined. The Tribunal had before it the application for review, the two witness statements with attachments, and the T-documents filed by the respondent (pages 1 to 280). The respondent tendered at the hearing a further three pages in A3 format inadvertently omitted from the T-documents and identified together as Exhibit R1.

Issues 3. There is essentially only one issue before the Tribunal, namely whether the house transaction undertaken by the applicant attracted duty. It is convenient for the purposes of this decision, however, to present the issues for resolution in a more disaggregated form: (a) whether the value of the fringe benefits received by the applicant was “income” for the purposes of determining his eligibility for the HBSC;

(b) if so, whether the amount to be used for deciding eligibility should be the amounts received or the “reportable fringe benefits amount” appearing on his tax return (i.e. the “grossed-up” amount); and

(c) if the applicant was not eligible for the concession, whether some or all of the penalty tax should nevertheless be remitted.

4. The treatment of the interest charged the applicant lies outside this Tribunal’s jurisdiction, and the application for remission of interest is accordingly dismissed. I understand that the Commissioner would normally adjust the treatment of interest, if necessary or appropriate, in line with this decision.

The legislative framework

5. Conveyance duty is raised under ACT tax law, but its legal framework at times calls on concepts established under Commonwealth tax law, and especially tax law applying to income. The tax law of both the ACT and of the Commonwealth 1 is accordingly relevant.

6. The TAA is the central legislative instrument for tax law in the Territory. The TAA lists the legislation that make up ACT tax law, including the DutiesAct1999 2 (Duties Act). It confers power on the Commissioner to make assessments and

1 The versions of both ACT and Commonwealth legislation cited in this decision are those in effect at the time of the purchase of the house by the applicant and his wife, i.e. in June 2020 2 TAA, s 4 3 reassessments, and to take actions related to assessments. Interest is payable on 4 default of a tax payment, and penalty tax is also incurred for tax defaults; both 5 penalties and interest may be remitted by the Commissioner. The Commissioner may, for tax purposes, require a taxpayer to provide information or produce 6 documents. A taxpayer may object to an assessment, and the burden of sustaining 7 an objection lies on the taxpayer. The Commissioner must make a decision on 8 an objection, either allowing it in whole or in part, or disallowing it. Some decisions are reviewable by the Commissioner, some are internally reviewable, 9 and some are reviewable by the ACAT. Decisions reviewable by ACAT include 10 decisions by the Commissioner not to remit penalty tax; decisions not to remit 11 interest are reviewable by the Commissioner only.

7. Under section 139 of the TAA, the Minister is given the power to determine the rate of tax or duty payable under a tax law. 12

8. The Duties Act imposes obligations to make payments of duty to the Territory. A transfer of dutiable property attracts duty, and dutiable property includes land 13 in the ACT and a Crown Lease. The dutiable value on which the duty is levied is the consideration for the transfer (subject to exceptions not presently 14 relevant). A person may lodge an objection to a decision assessing the amount 15 of duty, and the Commissioner’s determination of an objection is a decision 16 reviewable by the ACAT.

3 TAA, Part 3 4 TAA, ss 25, 30 5 TAA, ss 29, 37 6 TAA, s 100 7 TAA s 101(3); this requirement is strictly observed – see for example Li v Commissioner for ACT Revenue [2024] ACAT 24 8 TAA, s 104 9 TAA, ss 107, 107A 10 TAA, Schedule 1, s 1.2(d), (f) 11 TAA, Schedule 2, s 2.2(a) 12 Duties Act, s 5 13 Duties Act, ss 7(1), 10(1) 14 Duties Act, ss 18, 20(1), 21 15 Duties Act, s 252(a) 16 Duties Act, s 252AA

9. The Home Buyer Concession Scheme is created under sections 75 and 75A of the Duties Act and section 139 of the TAA. Since the scheme was introduced a series of instruments have set out the parameters for the scheme on a basis which has varied from time to time. It is common ground among the parties that the relevant instrument setting out the parameters of the HBCS in the period relevant to the applicant’s use of the scheme was the Taxation Administration (Amounts Payable – Home Buyer Concession Scheme) Determination 2019 (No 3) (Disallowable instrument D12019-271) (the instrument). The instrument identifies “eligible property” (including “a home”) and “eligible home buyer” (a transferee in relation to an eligible transaction). To be an eligible transaction the transfer of property must meet a substantial list of criteria; but it is accepted by the parties that only one of the criteria is at issue, namely that specified by section 6(1)(c) of the instrument: (c) the total gross income of all eligible home buyers and their domestic partners (if any) in the previous financial year— (i) is less than or equal to the income threshold; and (ii) reflects the usual income of each person;

10. Subsection 6(3) is the definitions provision for the section, and it includes the two relevant definitional provisions for present purposes, for “income” and for “income threshold”: income means income from all sources— (a) other than employment termination payments under the Income Tax Assessment Act 1997 (Cwlth), section 82-130, if the payments are made for years of service under a genuine redundancy payment; and (b) for a self-employed person—including the net trading profit or gain made in the ordinary course of carrying on the person’s business, but not including the business’s turnover. Examples—sources of income • benefits from a salary packaging arrangement • exempt income under the Income Tax Assessment Act 1997 (Cwlth), section 6-20 • maintenance payments • short-term higher duty payments • short-term second job payments income threshold means the amount listed in column 2 of table 1 opposite the total number of dependent children of all eligible home buyers and their domestic partners (if any) listed in column 1.

Table 1 Income thresholds column 1 column 2 total dependent children income threshold 0 $160 000 1 $163 330 2 $166 660 3 $169 990 4 $173 320 5 or more $176 650

11. Section 7 of the instrument sets the rate of duty for an eligible home buyer on an eligible transaction, for a home, as nil. Section 8 sets out how and when a person wishing to take advantage of the scheme my apply to the Commissioner.

The evidence

12. None of the essential facts of this matter are at issue. The dispute between the parties relates entirely to how the instrument and the Duties Act apply to the facts to determine whether or not the applicant and his wife were entitled to the benefits of the HBCS at the time of their application.

13. The applicant came to the ACT in 2020. He was married, without children, and in the previous financial year (the 2019 financial year) he had worked for two employers in NSW; his wife had not worked. The applicant and his wife bought 17 a house in the ACT for $1.53M, the date of the contract being 4 April 2020. The 18 date of registration of the transfer was 30 June 2020. The transfer form includes 19 a claim for a concession on duty, with the code “013”. A conveyance duty notice of assessment, dated 1 July 2020, accepts that the duty, assessed at $69,462, was 20 not payable because of the applicant’s concession, type 013, that is, the HBCS.

17 T-documents, pages 54-6 18 T-documents, page 56 19 T-documents, page 55 20 T-documents, pages 57-8

14. On 1 November 2023 the ACT Revenue Office issued a notice under section 82 21 of the TAA seeking information relating to the applicant’s HBCS concession. On 2 November 2023 the applicant responded, stating that his gross income in the 2019 financial year (the year before the house purchase) was $146,766.80, made up of salary payments from two employers plus small amounts of interest. He stated that his fringe benefits payments were sourced from his salary. He also 22 addressed other criteria for the HCBS. The applicant supplied his tax return, which confirmed the income reported by the applicant; it also included RFBA of 23 $20,560, which he had not declared as income in his application.

15. The Revenue Office prepared a summary report dated 9 November 2023 based 24 on the information submitted. The report drew the conclusion that the RFBA in the applicant’s tax return was not taken from the income streams he had identified, and should have been taken into account as a form of gross income in establishing whether he was entitled to the concession. If the RFBA of $20,560 was added to the salary and interest figure of $146,766.80, the total of $167,326.80 was above the $160,000 threshold for the scheme, for applicants with no dependent children. The report recommended that the applicant’s tax be reassessed, that he was not eligible for the HBCS, and that penalty tax and interest by applied. The ACT Revenue Office issued a Notice of Reassessment on 10 November 2023, assessing the applicant as not meeting the HBCS threshold, and accordingly liable for $69,462 in duty, penalty tax of $17,365.50, and interest of $21,480.83 from 30 May 2020 to 1 November 2023, making a total of 25 26 $108, 308.33. The applicant paid this amount on 1 December 2023.

16. On 11 December 2023 the applicant lodged an objection to the Notice of 27 Reassessment. The Commissioner’s reviewable decision and reasons statement in response, the decision presently under review in this decision, is dated 10 December 2024. The decision disallowed the objection to duty and penalty

21 T-documents, pages 63-5 22 T-documents, pages 73-4 23 T-documents, pages 75-9 24 T-documents, pages 80-8 25 T-documents, pages 91-3 26 T-documents, page 99 27 T-documents, page 100 tax, but partially allowed the objection to interest. The Commissioner’s delegate decided that interest was payable from 15 days after the date on which the transfer of title was registered with the Registrar-General, i.e. from 15 July 2020. 28 Accordingly, interest from 30 May to 15 July 2020 was remitted. The decision under review was otherwise confirmed. The applicant lodged an application for review of the Commissioner’s decision by the ACAT on 3 January 2025. 29

17. The applicant’s witness statement reiterates some of the facts set out above. The applicant notes the arrangements entered into with one of his employers to receive and to administer his salary packaging arrangement, which he says was available in recognition of the lower salary he received than if he had been in the private sector.

The evidence of Harry Edwards

18. As noted earlier, Mr Edwards appeared and gave evidence at the hearing. His documentary evidence consists of a letter to the applicant dated 5 May 2025 explaining how fringe benefits are taxed, how reportable amounts are calculated, how salary sacrifice operates for an employee, the amounts the applicant salary sacrificed in the 2019 financial year, the reduction in gross income effected by his salary sacrifice, the tax savings achieved by the salary sacrifice, and the effect 30 on his income if he had not undertaken salary sacrifice. Mr Edwards’s working out suggests that the applicant sacrificed $12,515.70 from his gross salary in the 2019 financial year (i.e. this was the amount in income before tax that he used to access the benefits); the tax savings from salary sacrifice in the financial year were $4,881; the reportable fringe benefits amount in the 2019 tax return was $20,560, and that corresponded to an amount in benefits received of $10,896, for the fringe benefits tax year; for the financial year from 1 July 2018 to 30 June 2019 (noting that the fringe benefits tax financial year runs from 1 April 31 to 31 March), the benefits received were $12,516.

28 Attachment to application 29 Exhibit A1 30 Exhibit A2 31 Exhibit A2

19. In evidence in chief, Mr Edwards explained that the fringe benefits amount reported on a tax return is for the FBT financial year up to 31 March; the figures for the last quarter of the standard financial year contribute to the tax return for the following year. Under cross-examination, Mr Edwards stated that he is a chartered accountant and taxation agent. He works mainly on Commonwealth taxation matters, such as income tax and FBT, but he admitted that he has no knowledge of ACT land tax matters or the operation of the HBCS. He also showed himself to be unfamiliar with critical sections of Commonwealth tax laws He made a reference to the RFBA of an employee whose employer is exempt from fringe benefits tax being 53% of that from a non-exempt employer, but was unable to identify the provision that draws that distinction. Under repeated questioning he attempted to explain more clearly the difference between gross and net income.

The arguments of the parties

20. The applicant conceded that his fringe benefits should have been included as income, but said that only the benefits received should be included in the calculation of “total gross income” for the purposes of the instrument. In support, 32 the applicant cited Jordan CJ in Scott v Commissioner of Taxation (NSW) , to the effect that the ordinary concept of “income” looks at receipts and what is to be received. Applying this concept, the applicant’s gross income included his gross salary figure and interest payments, but to that should be added only the amounts actually received as fringe benefits, because the larger “grossed up” figure included in the tax return was never received by the applicant.

21. In response to the respondent’s contention that the income figure for fringe benefits should include the tax benefit to the applicant from salary sacrifice, and the grossed up figure appearing as the reportable fringe benefits amount was a measure of that benefit, the applicant argued that any tax benefit went to net rather than gross income. For comparison, the applicant pointed to members of the defence forces who if serving overseas might under some circumstances be exempted from income tax; this affected not their gross income, which was unaffected, but their net income. Thus the “total gross income” specified in

32 (1935) 35 SR (NSW) 215, at 219 (Jordan CJ) section 6(1)(c) of the instrument cannot include tax benefits, which “can only 33 affect a person’s net income”. A tax benefit is not “income” because it is not earned or received or a gain realised or immediately realisable.

22. The applicant further argued that the examples used in section 6(1)(c) of the instrument – “benefit from a salary packaging arrangement” and exempt income under section 6-20 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) -were inappropriate extensions of the concept of “income” or “total gross income”, citing section 132 of the Legislation Act 2001 and a passage from Pearce and 34 Geddes’ Statutory Interpretation in Australia. The reportable fringe benefits amount appearing in the applicant’s tax return is not his income, first because it is not income in the ordinary sense of that word and second because it is not derived in a way that reflects the applicant’s received benefit.

23. The respondent’s central argument is that the phrase “total gross income” and the definition of “income” in the instrument reveal a clear intention to be comprehensive in terms of the range of income sources, and to ensure that each income source is included as a gross rather than net amount. The understanding of “income” should be in accordance with the “conceptions, principles and practices considered by courts in deciding whether income has been ‘derived’ by a taxpayer … and is not limited to receipts, but includes taxation benefits and 35 advantages”. The respondent cited Arthur Murray (NSW) Pty ltd v Federal 36 Commissioner of Taxation (Arthur Murray) and South Australia v 37 Commonwealth (South Australia) as supporting that concept of “income”.

24. In respect of the first potentially applicable example – “benefits from a salary packaging arrangement” – the respondent notes that the term “benefits” is broader than alternatives such as “payments” or “receipts”, and in itself justifies the

33 Applicant’s submissions in reply, 19 June 2025, at [5] 34 th Pearce, DC and CS Geddes, Statutory Interpretation in Australia, 10 ed, Lexis Nexis Butterworth, at [4.102] (p 238) 35 Respondent’s written submission, 11 June 2025, at [39] 36 [1965] HCA 58, at [4]-[5], (Barwick CJ, Kitto and Taylor JJ) 37 [1992] HCA 7, at [25]-[26] (Mason CJ, Deane, Toohey and Gaudron JJ) inclusion of the reportable fringe benefits amount of the applicant so as to reflect the taxation benefits of his salary packaging arrangement.

25. For the second potentially applicable example – exempt income under the ITAA 97 – the respondent points to the operation of the relevant provisions in the ITAA 97, the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTAA) and the Income Tax Assessment Act 1936 (Cth) (ITAA 36) to draw the conclusion that the benefits provided to the applicant were exempt from tax and therefore caught by the second applicable example.

Consideration

26. The present matter falls under the administrative review provisions of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act). In making a review decision, the Tribunal is regarded as “standing in the shoes” of the original 38 39 decision-maker, and may exercise any of the powers of the decision-maker. The tribunal, having considered all the evidence, must confirm, vary or set aside the decision under review; and if setting it aside, may substitute its own decision or remit the matter to the entity that made the decision, with directions or 40 recommendations. The review process is described as “merits review”, in which the tribunal makes a fresh decision, taking account of all the available evidence. The aim of the review process is to arrive at the “correct or preferable” decision – correct if only one lawful decision is available, and preferable if a discretion is 41 to be exercised.

27. Generally, there is no onus placed on either party in administrative review. Applications made under the TAA, however, place the onus on the taxpayer to 42 sustain an objection to the Commissioner’s ruling on an objection. It is accepted

38 Secretary, Department of Social Security v Hodgson [1992] FCA 338, at [26] (Hill J) 39 ACAT Act, s 68(2) 40 ACAT Act, s 68(3) 41 Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409, 419 (Bowen CJ and Deane J); Shi v Migration Agents Registration Authority [2008] HCA 31, at [40] (Kirby J); at [140] (Kiefel J) 42 TAA, s 101(3) that this onus continues beyond the internal review step and into the tribunal’s 43 administrative review process.

28. The present case turns entirely on a single issue: whether the “total gross income” established as the threshold for the HBCS should include the reportable fringe benefit amount of the applicant or not. If it is included, the applicant would be over the threshold; if not, he may be under the threshold and entitled to the concession.

29. The instrument requires that applicants for the scheme take into account their “total gross income”. The word “income” is given a meaning, but by indicating some of what is included under the term rather than by a conventional definition. “Income” is to include “income from all sources”, and there are several examples pointing to particular inclusions. Of those examples, the first two are potentially applicable in the present matter; no submissions were made suggesting that any of the other examples are relevant.

30. Section 132 of the Legislation Act 2001 deals with examples in legislation and statutory instruments. Subsection 132(1) reads as follows: (1) An example in an Act or statutory instrument— (a) is not exhaustive; and (b) may extend, but does not limit, the meaning of the Act or instrument, or the particular provision to which it relates.

31. It follows that the examples in the instrument have the potential to extend the meaning of “income” for the purposes of the instrument, but do not otherwise limit its meaning, or the meaning of the instrument more generally. It is common ground that two of the examples in the instrument are potentially applicable in this matter: benefits from salary sacrifice (the FB example), and exempt income under ITAA 97 (the exempt income example).

32. The respondent argues that in the FB example the meaning of “benefits” extends to taxation benefits and advantages, and is not limited to the benefits actually received; the applicant contends that neither example should be allowed to extend

43 Commissioner for ACT Revenue v 6 Doublebar; Commissioner for ACT Revenue v 4 Bloodfinch [2025] ACAT 55 the meaning of “income” in the way argued by the respondent. The applicant notes that the provision allowing an example to extend the meaning of a provision is permissive, not prescriptive; and that the inclusion of “may” recognises that a court may need to determine whether an expanded meaning contended for a by a 44 party should be accepted. The applicant further argues that while an example may extend the meaning of a provision, “this does not mean that an example can 45 be used to overturn the otherwise clear meaning of the provision”.

33. There are thus three pathways by which the applicant’s reportable fringe benefits amount could be caught: by application of the ordinary meaning of the phrase “total gross income” and, if called for, of the three words that compose it; second, through the FB example; and third, through the exempt income example. All three pathways require the exploration of the concept of “income”; that term has meaning outside the taxation context, but in the present instance the meaning within the taxation context is likely to be the most relevant. Understanding the concept of “income” in the taxation context requires examination of the Commonwealth’s legislative framework for income tax, the principal statutes being the ITAA 97 and ITAA 36. And because the fundamental question relates to the tax treatment of fringe benefits, the FBTAA and the separate statute imposing fringe benefits tax, the Fringe Benefits Tax Act 1986 (Cth) (the FB Tax Act), are also relevant.

Outline of relevant elements in Commonwealth tax law

34. The early sections of ITAA 97 provide guidance on the operation of the Commonwealth’s income tax system, and, in particular, on the different forms of income. The first classification of income is into “ordinary” and “statutory” income: ordinary income meets the usual understanding of income; statutory 46 income is income because one of the statutes says that it is income. For tax purposes both ordinary and statutory income are divided into assessable income, exempt income, and income that is neither assessable nor exempt – “non-assessable, non-exempt income”. Income is exempt from tax if one of the statutes

44 Applicant’s written submission in reply, 8 May 2025, at [12]-[14] 45 Applicant’s outline of submissions, 8 May 2025, at [27] 46 ITAA 97, ss 6-5, 6-10 47 declares it exempt, and similarly income is only non-assessable, non-exempt 48 income if a statute declares it to be so. The ITAA 97 does not refer to “gross income” (although the word “gross” is occasionally used, for example in the 49 context of the tax treatment of a debt forgiven by a creditor ); the nearest equivalent to the common understanding of “gross income” is “assessable 50 income”.

35. Certain entities, such as charities, government bodies and hospitals, are exempt from income tax; section 11-5 lists these bodies and identifies the provision exempting them from income tax (section 50-30 exempts hospitals). Section 11- 15 lists ordinary or statutory income that is exempt from tax, giving the provision (of either ITAA 97 or ITAA 36) that creates the exemption. Under the general heading “non-cash benefits” one entry is for “exempt fringe benefit”, with section 23L(1A) of the ITAA 36 identified as the exempting provision.

36. Section 23L(1A) of the ITAA 36 reads as follows: Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15-70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit is exempt income of the taxpayer.

37. The FB Tax Act is a brief statute imposing the fringe benefits tax on employers. The details and administration of the tax are left to the FBTAA. The FB Tax Act 51 and the FBTAA are to be read as one. Tax is imposed on the fringe benefits 52 53 amount of an employer for the year of tax, at a rate of 47%.

38. The FBTAA creates the tax regime for fringe benefits provided by an employer to an employee. The tax year for fringe benefits tax runs from 1 April to 54 31 March. The taxable amount of fringe benefits for an employer is calculated

47 ITAA 97, s 6-20 48 ITAA97, s 6-23 49 ITAA 97, s 245-75 50 ITAA 97, ss 6-5, 6-10, 6-15 51 FB Tax Act, s 3 52 FB Tax Act, s 5 53 FB Tax Act, s 6 54 FBTAA, s 5B by aggregating the benefits to each employee and multiplying by factors that take into account the rate of tax applied to fringe benefits and the application of goods 55 and services tax (GST) to the benefits provided. Certain institutions providing health services, including hospitals and ambulance services (benevolent 56 institutions), are exempt from fringe benefits tax. Liability to pay fringe 57 benefits tax falls on the employer. “Fringe benefit” is defined to exclude benefits 58 that are exempt from tax.

39. A person’s individual fringe benefits amount is that person’s share of the 59 employer’s aggregate fringe benefits amount. A person’s RFBA is calculated as the individual fringe benefits amount or amounts (where that is above $2,000 for 60 the year) multiplied by a grossing up figure. The calculation is given as follows:

40. Where an employee receives fringe benefits from an employer that is a benevolent institution under section 57A (and therefore exempt from fringe benefits tax), the fringe benefits are characterised as “quasi-fringe benefits”, and are added to any fringe benefits from other employers, for the purposes of establishing the 61 employee’s RFBA. The fringe benefits are regarded as provided to an employee 62 whether or not they are valued or of use to the employee – indeed, “whether or 63 not the provision of the benefit is, or is in the nature of, income”.

Some core concepts

41. Submissions from the parties, both written and oral, focused in part on the meaning of the words “gross” and “income”. At the hearing the parties agreed to 64 be guided on the first of these issues by Yates v Yates, a New Zealand case from

55 FBTAA, ss 5B, 5C 56 FBTAA, s 57A 57 FBTAA, s 66 58 FBTAA, s 136, at paragraph (g) of the definition of fringe benefit 59 FBTAA, s 5E 60 FBTAA, s 135P, and see the overview in s 135M 61 FBTAA, s 135Q 62 FBTAA, s 148 63 FBTAA, s 148(1)(g) 64 (1913) 33 NZLR 281 1913, arriving at the common understanding that “gross is the anthesis of net”. As noted earlier, the income tax Acts do not use the term “gross”, preferring “assessable” to describe income before deductions are applied and tax is imposed. Nevertheless, the term “gross” is a well understood concept, as an aggregate amount, of money or of other things. In the taxation context, it is widely understood that “gross” is used to describe amounts from which no deductions have been made and no tax yet levied; thus in the applicant’s tax return the untaxed salary from which no deductions have yet been made is identified as “gross payment” and interest payments are listed as “gross amounts” and “your 65 share” to recognise earnings of joint accounts.

42. The meaning of “income” in the instrument will be the ordinary meaning of that word except to the extent that the definition, including the examples, changes, or adds to, that meaning. As noted earlier, the definition works not by replacing the ordinary meaning of the word by a statutory meaning, but rather by pointing, both generally and by the particularity of the examples, to inclusions.

43. Not all of the case law on the meaning of “income” cited by the parties throws a great deal of light on the current matter, in my view. In Arthur Murray, for example, money was paid in advance for dance lessons, and held in a separate account until the lessons were given, at which point amounts were transferred to pay for the lessons. The question before the court was whether the amounts received but not yet earned were income for tax purposes; they were not because the amounts had not yet “come home” to the taxpayer. The case was cited by the respondent in support of its contention that “income” has a broader meaning than simply “amounts received”. In South Australia the High Court considered the concept of income in the context of the operation of section 114 of the Constitution, which prohibits the Commonwealth from levying tax on the property of a State, and vice versa. The Court referred to the practices of business and accountancy in deciding whether an amount of income has been “derived”. It is apparent from these cases that the question of when some amount of income has been earned, received or derived can vary considerably depending on the circumstances of the particular case. I do not find them especially helpful in

65 Exhibit A, pages 15-16 resolving the matters before me, although I accept the respondent’s point that caution should be used in universally aligning a simple concept like “receipts” with “income”.

44. An additional question is whether income – ordinary income - is always a monetary amount. Dictionary definitions tend to refer to monetary amounts – the Macquarie Dictionary defines “income” as “the returns that come in periodically, especially annually, from one’s work, property, business, etc.; revenue; 66 receipts”, but it is arguable that, especially since the introduction of fringe benefits tax, the common understanding of what constitutes “returns” has broadened to include non-cash benefits. Perhaps that is recognised by the heading to section 23L of ITAA 36, which refers to “… benefits in the nature of income”. The alternative – adopted by the respondent – is that the income referred to under section 23L of ITAA 36 is statutory income rather than ordinary income – that is, the effect of the section is to make the benefits income, which they would not otherwise be. The exempt income example would then have the effect of adopting the statutory meaning for the purposes of the instrument. In the end, in my view, nothing rests on this point; on either basis the non-cash benefits are income under the instrument.

Are the applicant’s exempt fringe benefits income for the purposes of the instrument?

45. It is not at issue that the applicant undertook salary sacrifice with one of his employers during the 2019 tax year (the fringe benefits tax year from April 2018 to March 2019) and did not receive any fringe benefits from the other employer. Both employers met the criteria to be exempt from FBT under section 57A of the FBTAA. Applying the definition of “fringe benefit” in section 136 of that Act, the benefits to the applicant were not fringe benefits, for statutory purposes; but they were clearly, nevertheless, of that character, and fell into the “quasi-fringe benefits” identified in section 135Q of the FBTAA. They were exempted from income tax by section 23L(1A) of ITAA 36, and the income was therefore exempt income, as identified by sections 11-15 and 6-20 of ITAA 97. But what, exactly,

66 Macquarie Dictionary Online, accessed 28 August 2025 was the income that was so exempted? The answer to that question becomes clearer if both subsections (1) and (1A) of section 23L of ITAA 36 are considered: 23L Certain benefits in the nature of income not assessable (1) Income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income of the taxpayer. (1A) Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15-70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit is exempt income of the taxpayer.

46. Subsection (1A) above exempts from income tax fringe benefits – or “quasi-fringe benefits” - from an employer exempt from FBT under section 57A of the FBTAA. But subsection (1) makes fringe benefits from any other kind of employer – in other words from the vast majority of employers – non-assessable non-exempt income, in other words income that, although not exempt, escapes being taxed. The reason, clearly enough, is that it has already been taxed in the hands of the employer. I am compelled to conclude that the income to which subsections 23L (1) and (1A) of ITAA 36 apply is the benefits as received by the taxpayer, i.e. the value of the non-cash benefits without grossing up. In the two subsections we see the outcome for the employee of the way in which the fringe benefits are subject to tax: the ordinary employer is taxed under section 66 of the FBTAA and the employee escapes being taxed because the income is declared to be not assessable and not exempt; the employer that is a benevolent institution is exempt from tax under section 57A of the FBTAA, and so the benefits in the hands of the employee are exempted from tax. The grossed up figure – the RFBA – is a component of the amount on which, except for exempt employers, the employer is taxed.

47. In section 23L of ITAA 36 there is no mention of a grossed up amount, nor a reference to terms used in the FBTAA such as “reportable fringe benefits amount”; nor of the “taxable value” of the employee’s benefits that the employer must use in determining the employee’s “individual fringe benefits amount” under section 5E of the FBTAA. And in sections 5B and 5C of the FBTAA “benefit” is used throughout to refer to the benefits as received by the individual, which are then aggregated and grossed up to produce the taxable fringe benefits amount on which tax is levied on the employer under section 66. “Benefit” receives a very broad definition in section 136(1) of the FBTAA, but once again, there is no reference to a requirement that the value be grossed up or that a taxable value is intended.

48. The disjunct between employer and employee for tax purposes in this context is reinforced by section 148 of FBTAA, which states that the benefits are provided to the employee (and therefore the employer is liable for tax on their grossed-up value) regardless of how they are received or valued by the employee. The employee’s perspective on the benefits is irrelevant to the tax liability of the employer.

49. Thus the applicant did indeed receive income that was exempt under Commonwealth income tax legislation, and is therefore caught by the exempt income example. But the amount of income was the cash value of the benefits received by him; that is what the income tax exemption in section 23L(1A) of ITAA 36 applies to. The exemption in section 57A of the FBTAA is an exemption not of income, but of the employer’s liability for fringe benefits tax. And I am satisfied that although the applicant did not take the value of his fringe benefits into account in assessing whether he qualified for the concession, he would still have qualified had he done so, provided he used the amount received rather than the grossed up figure. The figure for the FBT financial year, as calculated by Mr Edwards, was $10,896; for the conventional 2019 financial year it was $12,516. Neither figure has been challenged, and both produce a gross income 67 for the applicant that falls under $160,000.

50. It is at least implied in the respondent’s submissions that the amount to be taken into account for the purposes of the instrument is a gross amount, not the amount received by the applicant and exempted by section 23L of ITAA 36. For the reasons explained below, I do not accept that there is any “gross” equivalent of the amount received that can be used for the purposes of the instrument.

67 Exhibit A2, page 4 Is the applicant’s RFBA caught by the fringe benefits example?

51. The FB example in the instrument includes in total gross income the benefits of a salary sacrifice arrangement. It is the respondent’s contention that in this example the benefits to be taken into account go beyond the amounts received, or the immediate cash value of the benefits, to include the “tax benefits and advantages” that accompany such arrangements. If that is not done, and if “benefit” then has the meaning it has in the FBTAA – i.e. if “benefits” simply means the amounts received by the applicant - then the outcome for this second example is the same as for the exempt income example: the benefits were income but the applicant’s total gross income remained below the threshold for the HBCS.

52. There is no definition of “benefit” in the instrument, nor in the TAA or the Duties Act. As a result, the meaning of “benefit” in the instrument is the ordinary meaning of the term. The respondent contends that the effect of the example is to extend the meaning of “income” to include benefits such as tax benefits and 68 advantages.

53. It is clear that the provision of fringe benefits by an employer confers certain additional advantages on an employee: the benefits arrive in a tax-friendly form, in that if the employee had to procure the benefits with after-tax earnings they would come at a higher cost. The respondent is contending that those advantages should be quantified and included in the applicant’s total gross income. The applicant contends first, that the example should not be allowed to extend the meaning of “income” in the way argued by the respondent; and second, that the RFBA is not a measure of the tax benefits and advantages in any case.

54. I do not accept the applicant’s argument about the applicability of the example. As noted above, his claim is that although an example may extend the operation of a provision or the appropriate meaning of a word used in it, it may not apply that term or word to something outside its normal meaning. But the respondent’s contention is simply that a broader rather than narrower meaning should be given to the word “benefit” – that the word should extend to tax benefits and advantages,

68 Respondent’s written submissions, received 11 June 2025, at [45] and not only to the benefits directly received by the applicant. It appears to me undeniable that taxation benefits and advantages are a form of benefit to the person receiving them; and so the example is not in my view seeking to give the word “benefit” some abnormal or contradictory meaning.

55. Nor do I see the respondent’s argument as entirely lacking in merit. The threshold test for the HBCS is set in the broadest terms (“total gross income”; “income from all sources”) and the concession is made available under a taxation umbrella; it would be normal for any concessional advantages to be carefully limited. It is therefore at least arguable, in my view, that the word “benefit” should be read broadly. The meaning of “benefit” is inherently broad, and dictionary meanings extend to general ideas of advantage or to anything that is to the good of the party receiving it.

56. Nevertheless, in the context of a salary sacrifice arrangement, where an employee forgoes some part of their salary in return for non-cash benefits that are not subject to tax – i.e. fringe benefits – logic suggests that the benefits referred to in the example are those provided under the salary sacrifice scheme. There is nothing in the drafting that encourages a broader reading of “benefits”, or suggests that some advantage was intended other than the fringe benefits themselves. The connection to the FBTAA, with its focus on “benefits” as the fringe benefits received by employees, reinforces that view. In my view, there is no sensible basis for extending the meaning of “benefits” in the example to the tax benefits and advantages accruing to the applicant through the salary sacrifice arrangement.

57. If one were minded to read the term “benefits” more broadly – which I am not -how should the tax benefits and advantages to the applicant be reckoned? In my view the extent of any tax benefits and advantages conferred by the salary sacrifice arrangement would always be critically dependent on the taxpayer’s marginal rate of taxation. For a taxpayer on a low marginal rate of tax, the benefits of salary sacrifice would be considerably lower than for a person on a higher rate: for the person on the low rate, the difference between pre- and post-tax dollars would be small; for the person on the higher rate, it would be greater. That suggests that the value of the tax benefits and advantages of the salary sacrifice should be calculated by using the taxpayer’s marginal rate. Certainly I cannot see that the RFBA is a measure of those benefits and advantages, given that it is divorced from the particular circumstances of the taxpayer.

58. The respondent suggested that Mr Edwards had stated that the uniform grossing up rate used to derive each person’s RFBA was chosen to ensure “consistency of 69 outcomes”. I am unsure that Mr Edwards used those words, or words to similar effect, and in any case it is reasonably clear from the cross-examination of the witness that he is not an expert in the legislative aspect of taxation matters. No authoritative evidence has come forward to suggest why the Commonwealth has chosen to use a uniform grossing up factor to derive a person’s RFBA.

59. The evidence I have on the value of the salary sacrifice benefits to the applicant 70 comes from calculations made by Mr Edwards. That puts the direct value to the applicant at $10,896. No submissions have been made by the respondent for the grossing up of the value of the fringe benefits using the applicant’s marginal tax rate, even though the grossed up figure would almost certainly take the applicant over the HCBS threshold. The respondent has focused on the RFBA as the only gross equivalent of the value of the fringe benefits provided.

60. The difference between the fringe benefits tax year and the income tax year was touched on by the parties but it would be an exaggeration to say it was pressed. If the RFBA is to be included in calculating an applicant’s income, should that be the amount for the standard tax year – the financial year – or for the FBT tax year? The respondent pressed for the inclusion of the RFBA as appearing in the applicant’s 2019 tax return (i.e. the RFBA for the FBT tax year from 1 April 2019 to 31 March 2020), on the basis that this was the best available evidence, and that the Commissioner was not in a position to obtain a better figure. The applicant suggested that if a figure were to be included, it would need to be recalculated to record the benefits received from 1 July 2019 to 30 June 2020.

69 Transcript of proceedings dated 2 July 2025, page 43 70 Exhibit A2. The information from the company managing the salary sacrifice scheme, Maxxia, is for the conventional 2019 financial year, not for the FBT financial year (Exhibit A1, pages 20-25)

61. I can see nothing in the instrument that would allow the RFBA figure – if it is to be included – to be calculated on a different basis from any other element of gross income. But I do not need to decide this matter, because, in my view, the “benefits” of salary sacrifice referred to in the FB example are the non-cash benefits received by the applicant. The evidence on the value of the cash benefits, for either the FB tax year or the 2019 financial year, suggests that in both cases the applicant fell under the threshold for the HBCS concession.

Does the applicant’s “total gross income” include his RFBA?

62. Having concluded that neither of the examples leads to the inclusion of the applicant’s RFBA in determining the applicant’s eligibility for the concession, I turn to the question of whether the phrase “total gross income” itself, taking into account the definition of “income” in the instrument, includes that amount.

63. In “total gross income”, each word has its usual meaning unless the instrument gives it a different meaning: “total” has its usual meaning of including and summing all the sources of income; “gross” signals the use of income amounts before deductions and before tax; and, as noted earlier, “income” must have its usual meaning unless the definition gives it a different meaning. In the context of the introductory provisions of the ITAA 97 explored above, “income” here must mean “ordinary income” except to the extent definitional or other provisions incorporate some element of statutory income.

64. Turning then to the applicant’s RFBA, in my view this sum is neither “gross” nor “income”. If it is income, whose income is it? The amount is calculated for the purposes of levying tax on the employer; it is not the employer’s income, but it is referable to the employer rather than the employee: it is the employee’s share in the total outgoings on fringe benefits of the employer, grossed up in the prescribed way, on which the employer must pay the fringe benefits tax. It is the income of neither employer nor employee, never described by the FBTAA as “income”, and not having any of the properties of ordinary income.

65. The respondent contends that the use of “gross” captures the RFBA as the gross amount corresponding to the fringe benefits the applicant received. In my view, however, neither “gross” nor “net” sensibly applies to the reportable fringe benefits amount, or indeed to fringe benefits generally. In the taxation context “gross” and “net” belong in the world of income tax, where “gross” describes an amount before taxes are levied, and “net” afterwards. But fringe benefits are amounts, in the hands of the employee, that the Commonwealth has decided not to tax – either because they are exempt from tax under section 57A of the FBTAA, or because they are already taxed in the hands of the employer. They are neither net nor gross; they are income amounts to which those terms cannot be sensibly applied. In my view, there is no gross income figure that can be sensibly derived from the fringe benefits received.

66. The respondent’s documentation lays emphasis on the appearance of the RFBA in a taxpayer’s tax return, and on the use of that figure by the Commonwealth to determine a range of taxpayers’ entitlements and obligations. The T-documents include pages from the ATO website referring to numerous examples of this 71 practice, with some applications worked out. Based on the use of the RFBA as a form of “income” in these contexts the respondent contends that the RFBA can be regarded as part of a taxpayer’s gross income, more generally, and is therefore included in the definition of “income” in the instrument. I note, too, that the applicant’s tax return includes a mention of his RFBA in two places, first of all in the “salary, wages, allowances, tips, etc” section, where it is identified, but not 72 as assessable income, and second, under the heading “income tests” as one of a number of entries: not only RFBA but also “reportable employer super contributions”, “tax-free government pensions or benefits”, “target foreign income”, “net financial investment loss”, “net rental property loss”, and “child 73 support you paid”. And the applicant notes that because he was employed by a benevolent institution, the Commonwealth used only 53% of his RFBA in 74 determining eligibility for some benefits.

67. The quoted material from the ATO website lists twelve areas where the RFBA forms part of an eligibility, threshold or similar test (and several of the twelve include multiple entries, for example there are five different types of tax offset).

71 T-documents, pages 118-121 72 Exhibit A1, page 16 73 Exhibit A1, page 18 74 T-documents, page 103 The ITAA 97 includes a definition of “income test for surcharge purposes”, which defines income to be the sum of taxable income, reportable fringe benefits amount, reportable superannuation contributions and total net tax loss, all for the income year in question (adjusting for some minor issues not presently 75 relevant). That amount is then drawn on in the Medicare Levy Act 1986 (Cth) in 76 setting the threshold for the Medicare levy surcharge; in the Private Health Insurance Act 2007 (Cth) in determining entitlement to the private health 77 insurance rebate; and in ITAA 97 itself in setting the threshold for the tax on 78 concessional superannuation contributions by high income earners.

68. A similar process is used in the test for eligibility for Family Tax Benefit. A New Tax System (Family Assistance) Act 1999 (Cth) (the Family Assistance Act) includes an income test for eligibility, which uses the person’s “adjusted taxable 79 income”; adjusted taxable income is arrived at by adding to the person’s taxable income several amounts which are not subject to taxation, including the person’s “adjusted fringe benefits total”, reportable superannuation contributions, target 80 foreign income and tax free pension or benefit. “Adjusted fringe benefits total” is defined to mean the sum of all the employee’s reportable fringe benefit amounts received from all employers, including from employers exempt under section 81 57A of the FBTAA.

69. The repayment rate under the Higher Education Loan Program is set according to a person’s “repayment income” under the Higher Education Support Act 2003 (Cth); that amount is the sum of the person’s taxable income, reportable fringe benefits total, reportable superannuation contributions, total net investment loss, 82 and target foreign income (with some minor adjustments not presently relevant).

75 ITAA 97, s 995-1 76 Medicare Levy Act 1986 (Cth), ss 8B, 8C, 8D, 8G 77 Private Health Insurance Act 2007 (Cth), ss 22.30, 22.35, 22.40 78 ITAA 97, s 293-10 79 Family Assistance Act, Schedule 1, cl 28 80 Family Assistance Act, Schedule 3, cl 2 81 Family Assistance Act, Schedule 3, cl 4 82 Higher Education Support Act 2003 (Cth), s 154-5

70. The Commonwealth’s methodology is clear. In each instance a statute specifies those elements which go into the determination of income for the statutory purpose. Those elements include some amounts that fall outside the ordinary concept of income. These amounts become income for each statutory purpose by virtue of the provision deeming them to be income: they are statutory rather than ordinary income. The person’s RFBA is an example of that statutory income: it is income in each instance for the particular purpose of the relevant statute and only for that purpose.

71. In the instrument, however, there is no statutory provision enabling the treatment of a taxpayer’s reportable fringe benefits amount as part of the taxpayer’s income. The word “income” in “total gross income” has its ordinary meaning (except to the extent added to or modified by the definition in the instrument). The applicant’s reportable fringe benefits amount is not part of his income in the absence of a statutory provision deeming it to be his income. The amount of fringe benefits received is included in his income, but with that inclusion the applicant remains below the threshold for the HBCS and is entitled to the concession.

Conclusion

72. The applicant’s RFBA is not included in his total gross income, for the purposes of the instrument, because it is not a measure of income and not sensibly described as a “gross” amount. The benefits of the applicant’s salary sacrifice arrangement were part of his total gross income, but the amounts so included were the amounts the applicant received, not the RFBA. And, similarly, his salary sacrifice benefits were exempt income, but the amount of that income was the value of the benefits received in his hands. Calculated on that basis, the applicant’s total gross income was below the threshold for the HBCS.

73. The RFBA, generally, is used to determine an employer’s FBT liability. In the applicant’s case, his employers, being benevolent institutions, are exempt from FBT. The RFBA continues to be reported because it is used for various income tests, each of which is crafted for its particular statutory purpose. In each instance, the RFBA is statutory income for that purpose.

74. The applicant has met the burden placed on him by section 101(3) of the TAA: he has established, to my satisfaction, that his objection to the Commissioner’s reassessment should be sustained. The correct or preferable decision is that his total gross income in the 2019 tax year was below the Home Buyers Concession Scheme threshold, and that he was entitled to the concession. He and his wife are exempt from duty on the purchase of their home. It follows that the applicant is also not liable for penalty tax. Accordingly, I have made orders setting aside the decision under review and substituting a decision that conveyance duty and penalties are remitted.

.………………………… Senior Member M Hyman

Date(s) of hearing: 2 July 2025 Applicant: In person Respondent: Mr M Wells and Ms A Tykocinski authorised representatives