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[2022] VCAT 391
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2022-04-07
Tang AM
Original judgment source is linked above.
Review and Regulation List - Duties Act 2000 (Vic), s 3 ('foreign purchaser', 'foreign natural person'), s 28A - Migration Act 1958 (Cth), s 30(1) - Whether purchaser of property, who was permitted to enter and remain in Australia under a provisional partner visa, was a foreign purchaser at time of acquisition - Whether applicants were misled by State Revenue Office and, if so, whether principles of estoppel can apply in state tax review proceedings - Whether any discretion as to imposition of foreign purchaser additional duty - Concession as to remission of interest.
Arshad and Tariq v Commissioner of State Revenue (Review and Regulation) [2022] VCAT 391
1 Under section 51(2)(d) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the reassessment of duty issued to the applicants on 29 October 2020 (assessment no. 23770244) is set aside and remitted to the Commissioner of State Revenue for reconsideration to remit any interest which has accrued to date.
Note**: These written reasons consist of an edited transcript of reasons given orally at the conclusion of the hearing with references added in full, and with some editing for clarity.**
1 In March 2017, Mr Hassan Arshad and Dr Saman Tariq acquired a residential property in Craigieburn (Relevant Property) to live in.
2 Mr Arshad was born in Pakistan and has been an Australian citizen since 2014. Dr Tariq was born in Pakistan and, at the time the Relevant Property was acquired, remained a citizen of that country who was permitted to stay in Australia under the terms of a 'Partner (Provisional) (class UF) Partner (Provisional) (subclass 309) visa' (Provisional Partner Visa). She has since become a permanent resident (in around 2020).
3 Prior to the transfer of the Relevant Property, Mr Arshad and Dr Tariq each completed a Duties Form 62 - Purchaser Statement (Form 62) indicating that they were not a 'foreign natural person'. In Dr Tariq's case, this was based on advice from their conveyancer, who purportedly passed on information provided by the State Revenue Office (SRO).
4 Duty was originally assessed on the transfer of the Relevant Property on the basis that Mr Arshad and Dr Tariq were not foreign natural persons. However, in October 2020 (after a period of investigation), the Commissioner of State Revenue (Commissioner) reassessed the duty on the transfer (Reassessment), imposing:
5 The applicants submit that the imposition of FPAD more than three years after the acquisition is 'unreasonable' and inconsistent with the fact that Dr Tariq was entitled to Medicare benefits. Further, they contend that the Commissioner's approach to assessment of FPAD is inappropriate as the Commissioner ought to assess taxpayers' residency status before they acquire property in order to allow them to make informed decisions as to how they acquire property.
6 Mr Tran (who appeared for the Commissioner) indicated in his opening submissions that, in light of the Tribunal's decision in Rudd and Noor v Commissioner of State Revenue (Rudd and Noor),[1] the Commissioner would not be pressing interest and proposed that the Reassessment be remitted for reconsideration by the Commissioner to process the remission of any interest charged to date. The Commissioner otherwise submits that the Reassessment should be confirmed.
7 Accordingly, the only remaining questions in the proceeding are:
(a) whether Dr Tariq was a 'foreign natural person' at the time the Relevant Property was transferred; and
(b) if so, whether the SRO provided information which misled Mr Arshad and Dr Tariq, or whether any other concerns raised by the applicants can support the Tribunal making a different decision as to the application of FPAD.
8 For the reasons, that follow, those questions should be answered as follows:
(a) Yes, Dr Tariq was a 'foreign natural person' at the time the Relevant Property was transferred.
(b) In the absence of any discretion for the Commissioner (or the Tribunal on review) to assess FPAD in a different manner, or any estoppel being available against the Commissioner (if it could be proved), the decision to assess the applicants to FPAD in respect of the acquisition of the Relevant Property is the correct and preferable decision.
9 Accordingly, I will set aside and remit the Reassessment to the Commissioner for reconsideration as to remission of interest, but otherwise dismiss the application.
10 Under section 18 of the Duties Act, stamp duty is payable on the dutiable value of dutiable property that is the subject of a dutiable transaction, at the rates specified in Part 3. The general rate of duty is set out in section 28, with the rate depending on the dutiable value of the dutiable property.
11 Relevant to this proceeding, section 28A provides for additional duty in relation to a dutiable transaction 'under which a land-related interest in residential property is transferred to a foreign purchaser'. At the relevant time, the applicable rate of additional duty was 7%,[2] and is generally referred to as 'foreign purchaser additional duty'.
12 The phrase 'foreign purchaser' is defined in section 3, and includes a transferee that is a 'foreign natural person'; a phrase which is, in turn, defined (also in section 3) to mean any natural person who is not:
It is only the last of the excluded categories of person that is relevant to this proceeding.
13 Section 30(1) of the Migration Act 1958 (Cth) (Migration Act) is found within Subdivision A of Division 3 which establishes general provisions about visas for non-citizens. Section 30 provides that there are two 'kinds of visas' that are available to non-citizens, being:
(1) A visa to remain in Australia (whether also a visa to travel to and enter Australia) may be a visa, to be known as a permanent visa, to remain indefinitely.
(2) A visa to remain in Australia (whether also a visa to travel to and enter Australia) may be a visa, to be known as a temporary visa, to remain:
(a) during a specified period; or
(b) until a specified event happens; or
(c) while the holder has a specified status.
14 It follows that a person on a permanent visa would fall within section 30(1) and so be excluded from FPAD. By contrast, a person on a temporary visa would fall within section 30(2) and so would be subject to FPAD in respect of any transfer of a residential property in Victoria.
15 Unfortunately, there is no ready list within section 30 that indicates which particular visas fall within the two kinds for which it provides. Instead, it is necessary to consider the classes of visas that are established under the Migration Act[3] or the Migration Regulations 1994 (Cth) (Migration Regulations).[4]
16 Of relevance to this proceeding, clause 1220A of Schedule 1 to the Migration Regulations provides for Provisional Partner Visas. It is found in Part 2 of that schedule, which deals with 'Temporary visas (other than bridging visas)'. It is to be noted that an application for this class of visa 'must be made at the same time and place as an application for a Partner (Migrant) (Class BC) visa',[5] and that there is only one sub-class being '309 (Partner (Provisional))'.[6]
17 Schedule 2 to the Migration Regulations sets out various matters relating to the visa sub-classes, including when they take effect and what conditions apply. In relation to the Provisional Partner Visa, clause 309.511 of Schedule 2 provides that it is a:
Temporary visa permitting the holder to travel to, enter and remain in Australia until the end of the day on which:
(a) the holder is notified that the holder's application for a Partner (Migrant) (Class BC) visa has been decided; or
(b) that application is withdrawn.
18 Unlike the situation applicable in the case of a 'foreign corporation' (being another class of foreign purchaser), there is no discretion for the Commissioner to exclude a foreign natural resident from the operation of the FPAD regime having regard to the relevant circumstances of the matter.[7]
19 The Commissioner contends that, as Dr Tariq was in Australia under a Provisional Partner Visa at the time of the transfer, she was foreign natural person and, as such, FPAD is payable on her 50% share of the Relevant Property.[8]
20 The applicants disagree, noting the delay by the Department of Home Affairs in processing Dr Tariq's permanent residency visa and that, at the relevant time, Dr Tariq was entitled to Medicare benefits which they contend are only available to permanent residents.
(a) there may have been delay on the part of the Department of Home Affairs in the grant of a permanent visa to Dr Tariq; and/or
(b) Dr Tariq was entitled to Medicare benefits,[9]
is irrelevant to the question of whether she was the holder of a permanent visa for the purposes of the Migration Act and FPAD.
22 At the start of the hearing, I drew the attention of the applicants to my recent decision in Rudd and Noor which raised the same issue regarding the status of a holder of a Provisional Partner Visa for the purposes of FPAD.[10]
23 In that case, I analysed the Duties Act, the Migration Act and Migration Regulations and concluded that the Provisional Partner Visa held by Dr Noor:[11]
could not be regarded as a 'permanent visa within the meaning of section 30(1) of the Migration Act'. This is because it was not a visa that permitted Dr Noor to remain in Australia indefinitely; rather, it only permitted her to remain until a 'specified event', namely the determination (or withdrawal) of her application for a Partner (Migrant) (Class BC) visa. In the event that the latter visa was not granted (including by reason of withdrawal of her application for the visa), she would no longer be permitted to remain in Australia. Accordingly, it is clear that she held a temporary visa within the meaning of section 30(2) of the Migration Act.
24 It is clear from movement records maintained by the Department of Home Affairs[12] that, at the time of transfer of the Relevant Property, Dr Tariq was in Australia under a Provisional Partner Visa.
25 For these reasons, I find that Dr Tariq was a 'foreign natural person', and therefore a foreign purchaser, at the time the Relevant Property was transferred to her and Mr Arshad.
26 I agree with the Commissioner's submissions that:
(a) any delay on the part of the Department of Home Affairs in processing Dr Tariq's permanent visa; or
(b) any entitlement which Dr Tariq may have had to Medicare benefits,
are irrelevant to the nature of Dr Tariq's visa under the Migration Act (ie. a temporary visa) and her status as a 'foreign natural person' and foreign purchaser as defined in the Duties Act.
27 In their objection to the Reassessment dated 17 November 2020,[13] Mr Arshad and Dr Tariq contend that they were misled by the SRO into believing that no FPAD was payable. They say that, if they knew FPAD was payable, they would have purchased the property in Mr Arshad's name only.
28 Mr Arshad gave evidence that the conveyancer advised as to the amount of duty that should be paid, which he understood was based on the conveyancer's discussions with the SRO after Dr Tariq provided information as to her visa. However, the applicants did not call their conveyancer to give evidence and Mr Arshad accepted it was possible that she had not spoken with the SRO at all.
29 While this argument was not expressly put on the basis of estoppel, it is clear that, having regard to the nature of the objection (ie. the making of a representation that is relied on by another person to their detriment) and given that the applicants seek to set aside the Reassessment on the basis it is 'unreasonable', estoppel is the substance of this ground.
30 As previously noted, at the hearing, Mr Arshad raised a further concern about how the Commissioner and SRO administers the FPAD regime, in that the Commissioner or SRO does not provide sufficient information for taxpayers to make 'informed decisions' as to how to purchase properties. He contended the Commissioner should obtain information regarding 'the residency of taxpayers' and confirm their status under the FPAD regime before they purchase properties.
31 The Commissioner contends that there is insufficient evidence before the Tribunal that the applicants were misled by the SRO, noting that they carry the onus of proof.[14]
32 Further, Mr Tran (who appeared for the Commissioner) contended that, whatever the conveyancer did (to determine whether or not FPAD applied), does not change the operation of the FPAD regime or the Migration Act or Migration Regulations. He also submitted that the Commissioner has no discretion to assess otherwise than as provided in the Duties Act.
33 The evidence given by Mr Arshad as to what he was told by the conveyancer in respect of a purported conversation with the SRO is hearsay evidence. Of course, the Tribunal is not strictly bound by the rules of evidence.[15] Nevertheless, in circumstances where the applicants bear the onus of proof and have chosen not to call the person who could give a proper account, that is a relevant matter to be taken into account in considering the weight to be given to the evidence of Mr Arshad.
34 I am not satisfied on the evidence before the Tribunal that the SRO made any representation of the nature alleged. In Rudd and Noor, I discussed the information available on the SRO website in relation to FPAD.[16] In particular, the website advises that a person that has applied for a permanent visa 'remains a foreign natural person until the necessary visa has been granted to them'. It seems to me to be highly improbable that an officer of the SRO would give advice that is different to what is shown on the SRO website.
36 As to the concerns about imposing FPAD on taxpayers who are in Australia and able to access Medicare, I accept the Commissioner's submission that Parliament has chosen:
37 For these reasons, to the extent the applicants seek to have the Reassessment set aside based on representations purported to have been made by the SRO or wider concerns about the SRO's administration of the FPAD regime, I dismiss that ground.
38 In light of the Commissioner's concession regarding interest, which I consider appropriate in light of the concerns I raised in Rudd and Noor as to the information available to taxpayers to understand their exposure to FPAD, I will set aside the Reassessment and remit it to the Commissioner for reconsideration in terms of remitting any interest.
[3] For example, there is a special category visa for New Zealand citizens in section 32.
[5] Migration Regulations, Sch 1, cl 1220A(3)(c).
[7] Compare Duties Act, s 3E (discussed in South Wharf Towers Pty Ltd v Commissioner of State Revenue [2019] VCAT 64).
[8] Written Contentions of the Respondent dated 26 October 2021 (Commissioner's Submissions) [28]-[32].
[9] While not evidence as such, Mr Tran noted that his search of the Services Australia website suggested that some holders of temporary visas are entitled to Medicare benefits.
[10] The Commissioner had also provided the applicants with a copy in advance of the hearing.
[11] [2022] VCAT 188 [24].
[14] Commissioner's Submissions [35] (citing TA Act, s 110).
[16] [2022] VCAT 188 [31].
[17] [2011] VCAT 277 [32].
[18] [2019] VCAT 403 [56].
Arshad and Tariq
Commissioner of State Revenue