1. The decision of the Respondent is affirmed save for the requirement that the Applicants pay the Respondent a penalty in the sum of $1,000.00, which sum is deleted from the decision.
2. Direct the Respondent to refund to the Applicants the sum of $1,000.00 and interest on that sum paid by the Applicants within 21 days of the date of order.
3. No order as to costs.

Note: These reasons are an edited transcription of reasons given orally at the conclusion of the hearing with background and references added.

1. This proceeding has come to the Tribunal by way of a referral from the respondent, the Commissioner of State Revenue, at the request of the applicants, Mr and Mrs Box. .
2. Mr and Mrs Box bought their first home, in Lake Street Wendouree, in their late 50s. At the time they lived in a house on a farm property in Streatham. Mr Box is a farm manager/station hand and for most of their long married life they have lived in the houses on-site that are often provided for managers by farm owners.
3. Mr and Mrs Box signed a contract of sale in April 2009. Before applying for the first home owner grant, Mrs Box inquired with the State Revenue Office whether they would still be eligible even though her husband's employment required him to live on the Streatham property. She also mentioned that the vendors wanted to stay on for a few months until their unit was completed. She received the reply that at least one applicant must reside in the house as their principal place of residence for a minimum period of 6 months, commencing within 12 months of settlement.[1]
4. Mr and Mrs Box received a first home owner grant on 25 June 2009. They received a grant of $17,000.00 in total (a grant of $7,000.00, the bonus of $3,000.00 and the 'boost' of $7,000.00).
5. On 26 November 2012, the Commissioner notified Mr and Mrs Box that he had reversed his decision to pay the grant and required them to repay the monies received, on the grounds that they had failed to comply with the residence requirement in section 12 of the First Home Owner Grant Act 2000 (Vic) (the Act). The Commissioner imposed a penalty of $1,000.00
6. The residence requirement is one of five criteria for the grant. It requires the applicant/s for the grant to occupy the home to which the grant relates as their principal place of residence for a continuous period of 6 months, commencing within the first 12 months after settlement of the purchase.
7. Mr and Mrs Box objected to the decisions, stating they had complied. On 24 June 2014, the Commissioner disallowed the objection. Mr and Mrs Box exercised the right, given to them by section 29 of the Act, to request the Commissioner to refer the matter to the Tribunal for review.
8. In such a proceeding, they are named as the applicants and, as objectors, have the onus of proving their case - that they complied with the residence requirement. [2]
9. It is not in dispute that Mr Box remained at the Streatham property, although he came to the Lake Street house on weekends. The issues are how long Mrs Box resided in the house and whether she occupied it as her principal place of residence.
10. Mrs Box says that their intention was that Mr Box would stay at the manager's house in Streatham until he retired which they expected to be some time in 2010, and she would move in to the Lake St house as soon as the vendors had vacated.
11. Their difficulty arises because the vendors did not leave the house until some time in February 2010 (the date is in dispute), and in July 2010, a residential tenancy agreement was signed leasing the house to tenants, with the lease to commence on 1 August 2010.
12. The Commissioner relied on various records from the real estate agency which managed the property for Mr and Mrs Box and utility connection records to contend that Mrs Box's residence was less than 6 months; and other records including evidence of low utility usage during the period mid- February to August 2010 to contend that it was not Mrs Box's principal place of residence during that period.

Principles to be applied: the six Ferrington principles

1. The New South Wales Administrative Decisions Tribunal Appeal Panel stated six principles for determining whether the principal place of residence criterion has been met, in their decision in Chief Commissioner of State Revenue v Ferrington.[3]
2. Those principles have been followed in numerous decisions of this Tribunal and are as follows:
   1. The words "principal place of residence" should be given their ordinary meaning in the context in which they appear.
   2. Consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling.
   3. The intention of the person concerned, gauged objectively, is relevant but not determinative of the issue.
   4. To occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose.
   5. The short length of a person's residence, while relevant, is not determinative of the issue
   6. The reasons for a person's departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances.
3. As observed by then Deputy President Macnamara in D'Amelio v Commissioner of State Revenue,[4] the first three principles are general commentaries as to how the inquiry should be approached. Principles 4-6 are substantive.

1. Much of the evidence related to the dates Mrs Box first occupied the property at Lake Street, and the dates she ceased to occupy it.
2. There were some anomalies in the information provided by Mrs Box at different times.
   • In her residency declaration, dated 8 October 2012, she stated she moved into the property on '4-11 February 2010' and moved out on 4 August 2010;
   • In her objection to the reversal decision, dated 4 January 2013, she said they took possession and occupancy on or around 11 February 2010, and the house was re-let from 11 August 2010;
   • In her request for referral, dated 9 August 2013, she said they 'took over the keys mid-February', in 'early August we received a lease agreement signed on 1 August' and she 'had two weeks to vacate the premises'.
3. The evidence about the start of Mrs Box's occupancy was unclear. Even though the leasing records state that the property was leased to 25 February 2010, and rent paid to that date, other, objective, evidence was to the effect that the tenants had vacated the property by 18 February 2010, when the property managers carried out an inspection, and found it 'vacant'.
4. Mr and Mrs Box both gave evidence that they remembered taking possession, with the keys, on 11 February 2010 because it was their wedding anniversary. They denied it was vacant on 18 February, and said it contained furniture sold to them by the vendors and other personal items.
5. I found both Mr and Mrs Box to be truthful and honest witnesses, but not good on dates. Electricity company records indicate the electricity was disconnected on 23 February 2010, and not reconnected, in Mrs Box's name, until 1 March 2010. Mrs Box's receipts for essential items of furniture, such as beds, refrigerator, lounge suite are all dated late February/early March, and tend to support late February/early March as the date Mrs Box physically moved in.
6. Even accepting that Mr and Mrs Box had the keys by 11 February and started to move furniture in at some point thereafter, they also have a real difficulty at the other end. On 17 July 2010, a new residential tenancy agreement was signed, to commence on 1 August 2010. The property manager's records show that rent was paid by the tenants from 1 August 2010.
7. The signing date, of 17 July 2010, is consistent with Mrs Box's evidence about why they decided to let the house, referred to below.
8. There was evidence in the form of a letter from the tenants that they were not able to move in until around 10 August 2010, although they don't say why there were not able to move in.
9. Mrs Box gave evidence that she started to move things out from 1 August. Whether or not this last date is in fact right, the objective fact is that the lease commencement date was 1 August 2010. From this date, the tenants had the right of exclusive possession. It is not clear what legal status Mrs Box had between 1 August and 10 August while she was moving things out, but whatever that status the property was no longer her principal place of residence.
10. From 1 August 2010, (if not earlier when the lease was signed) the necessary degree of permanence, under the fourth Ferrington principle, was lost. From that date, (if not earlier when the lease was signed) Mrs Box's physical connection to the property became temporary, and any occupation was for the purpose of removing belongings from the house.
11. That being so, even if there were clear evidence that Mrs Box started to occupy the house as her principal place of residence from 11 February 2010 (and the objective evidence is against this conclusion), she did not comply with the residency requirement. She was at least two weeks short of the six months required.
12. In the circumstances, it is not necessary to decide whether the property was in fact Mrs Box's principal place of residency while she was in occupation. For the sake of completeness, however, I considered it and made the following observations, which are also relevant to the question of whether a penalty should be imposed.

1. The Commissioner contended that while Mrs Box may have occupied the property for a period of time, it was not her principal place of residence during that period.
2. I was satisfied that Mrs Box's intention was for the Lake Street house to be her principal place of residence as soon as the vendors moved out, and to be her and her husband's permanent home in the long term. Their expectation was that Mr Box would be able to retire soon, and could join her then. I am also satisfied that, once she moved in, it had the necessary degree of permanence for her (the fourth Ferrington principle) until the decision to lease it out was made.
3. There was evidence in the form of a letter from a neighbour, Mr Quennell, that he frequently observed Mrs Box leaving and returning, that he and his wife were invited to meet Mrs Box's family, and from time to time had chats with them.
4. In her witness statement, Mrs Box described furnishing the home - and evidence in the form of receipts confirmed that all the important items such as beds, refrigerator and lounge suite had been purchased by late February 2010. She said that:

'at long last, I was able to hang photos where I wanted, and paintings etc without getting permission to do so. I was able to put blinds up, knowing the purchases were for us. I was able to buy nick nacks, and place them where I wanted.'

1. Mrs Box also described family celebrations held at the house - including a large extended family celebration at Easter and their son's engagement celebration. Family came to visit and stay with them. Their children described it as 'visiting home'.
2. It is clear in this case that the Lake Street property was house and home for Mrs Box.
3. The residency requirement is often misunderstood. The cases demonstrate that some people mistakenly see it as requiring only that they sleep at the house occasionally, with the only item of furniture being a bed, while carrying out all the usual activities of a householder - eating meals, showering, washing clothes - elsewhere.[5] It requires quite a lot more than an occasional, limited presence.
4. The low utility use was explained, in my view, by the objective evidence about Mrs Box's work. She is the Membership and Development Officer for a large charitable and social services organisation, with responsibility for the North-West geographical region, which stretches, she said, from Mildura to Apollo Bay. A letter from her employer confirmed her duties require substantial regional travel by car and overnight stays.
5. The period of occupation was short. As the fifth Ferrington principle tells us, while relevant, this is not determinative and a short period of occupation may still have the required degree of permanence. The reason for a person's departure must be both reasonably and adequately explained when considered objectively in the light of their personal circumstances (the sixth Ferrington principle)
6. I accepted Mrs Box's evidence about what changed for them in mid-July 2010. Their financial situation had become more and more difficult as a result of mortgage payments and other expenses, including an unexpected need for expensive radiotherapy treatment for Mr Box. Apart from their own mortgage, they have for some time made all the mortgage payments on Mrs Box's mother's home. By mid-July, the balance in their savings account was heading towards zero.
7. They realised they had a limited number of options. Neither wanted to sell the house. The only other option was to rent the house out. The objective evidence of the lease agreement, signed on 17 July 2010, supports Mrs Box's evidence that mid-July was the point where the decision was made. She said that after a conversation with the agents, a board went up and the house was let almost immediately because it is well located, close to schools and shops.
8. Their departure is reasonably and adequately explained, in my view. In this case, the short period of occupation does not indicate that their intention had been to re-let the property from the outset.

1. As noted in the Commissioner's statement of contentions, the principles relating to penalty and the factors to be considered are well established. The case of Gravina v Commissioner of State Revenue[6] sets out the principles and list eight factors to consider -
   1. The truthfulness of the original statements made by the applicant in his or her application for grant;
   2. The surrounding circumstances including the intention of the applicant in relation to the occupation and use of the property as his or her principal place of residence at the time when seeking the grant;
   3. The reasons for the failure to comply with the conditions of the grant;
   4. Whether the applicant has occupied the property as his or her principal place of residence;
   5. The candour of the applicant in his or her responses to inquiries;
   6. Whether the grant has been refunded;
   7. The deterrent effect of the penalty; and
   8. Penalty decisions in previous cases involving similar circumstances.
2. In comparison to other decisions of the Tribunal where a decision to impose a penalty has been affirmed, this case is different, in my view, to the usual situation the Tribunal considers.
3. Mrs Box was candid in her early inquiry to the Commissioner's office, before applying for the grant, about the fact that her husband would not be able to live there in the short term and that the vendors would be renting it back for a short time. I am satisfied her intention was to live in the house as her principal place of residence as soon as she could move in. She understood to some extent what was required and had a real intention of complying with the residence requirement. She furnished the house fully, and made it a home for her and for family to visit and share. She genuinely believed that she had complied with the residence requirement, but as noted above, was not strong on dates - Mrs Box had an inaccurate recollection of the date the lease was signed, and misunderstood the effect of it on when the required residency would end.
4. Mr and Mrs Box have repaid the grant and have paid the interest claimed and the penalty imposed by the Commissioner - a total payment of $21,984.92.
5. There is no doubt that general deterrence is important. The imposition of a penalty, in appropriate cases, serves as a warning to those who might think it clever to apply for the grant, intending to do the absolute minimum to comply with the residence requirement and then rent the property out as soon as six months ticks over.[7] But in this case, Mr and Mrs Box had all the right intentions. Mrs Box made the house a home, but she was thwarted by her inability to move in until February 2010, and then forced by changed circumstances to move out, some weeks short of the minimum.
6. In the particular circumstances, in my view a penalty is not appropriate. The penalty of $1000.00 and any interest paid on the penalty amount is to be refunded by the Commissioner. The decision to disallow the objection and require repayment of the grant is otherwise affirmed.

[1] Section 12(3) of the Act, which applies to joint applicants, provides that if at least one applicant complies with the residence requirement, the others are exempted from compliance.

[2] Section 32 of the Act

[3] [2004] NSWADTAP 41; 2004 57 ATR 170 at [42].

[4] [2012] VCAT 265 at [15].

[5] See, for example, D'Amelio and Sofocleous v Commissioner of State Revenue (Taxation) [2012] VCAT 265; Kyriakou v Commissioner of State Revenue (Taxation) [2011 VCAT 640; Mauro v Commissioner of State Revenue (Taxation) [2010] VCAT 1207.

[6] [2013] VCAT 347, at [33].

[7] See the observations of Macnamara J in D'Amelio at [15]