GSE v Chief Commissioner of State Revenue

Background

1. The applicant was a citizen of the People's Republic of China and a permanent resident of Australia at all relevant times ("Applicant"). Her husband was an Australian citizen at all relevant times.
2. On 3 August 2019, the Applicant's husband entered into an agreement for the sale of certain land in New South Wales ("property") as purchaser. The land was residential land.
3. After making the agreement, the husband decided to make a transfer not in conformity with the agreement by adding his wife, the Applicant, as a joint tenant.
4. The Applicant made a Purchaser/Transferee declaration dated 13 September 2019 that she was an exempt permanent resident who will occupy the relevant property as her principal place of residence for a continuous period of 200 days within the first 12 months after the relevant "liability date".
5. The agreement was assessed for duty under Chapter 2 of the Duties Act 1997 (NSW) ("Duties Act"). It was completed on 25 October 2019. On this date, a transfer was made to the Applicant and her husband as joint tenants. The transfer was assessed under s 18(3) of the Duties Act as a transfer not in conformity with the agreement that qualified for fixed duty of $20.
6. The property was advertised on the market for rent in December 2019.
7. The evidence included a sales order dated 16 April 2020 for certain items of furniture to be delivered to the property.
8. The evidence also included certain copies of electricity accounts for the period commencing 29 October 2019 to 8 April 2020. There were also copies of electricity accounts in evidence for later periods.
9. On 9 May 2023, the Chief Commissioner issued a notice of investigation to the Applicant and her husband.
10. Following the investigation, the Applicant, although a permanent resident, was found by the Respondent not to be "ordinarily resident" in Australia as at the date of the agreement and also on the date of registration of the transfer, 25 October 2019. This was because she had been onshore for less than 200 days in the preceding 12-month period.
11. The Applicant was therefore taxed by the Respondent as a "foreign person" under the Duties Act. The Chief Commissioner determined that the Applicant was liable for surcharge purchaser duty on the share transferred to her. That share was 50%.
12. On 6 September 2023, the Respondent issued a duties notice of assessment for a total amount of $102,040.20. The surcharge purchaser duty assessed was $66,000. The Respondent also assessed interest of $22,840.20 and penalty tax at the reduced rate of 20%, being $13,200.
13. By email dated 11 September 2023, the Applicant and her husband requested reconsideration of the matter because they believed that there may have been additional information or circumstances that were not fully considered at the time of the assessment of surcharge purchaser duty. It appears that the taxpayer's request was treated as an objection.
14. The additional information included statements that the property was never used to earn income but was purchased solely to live in so that the Applicant's children could attend a nearby school. The Applicant also asserted in her evidence that she had moved into the property on 25 October 2019.
15. By letter dated 10 January 2024, the Respondent issued an objection determination notice. The objection was disallowed. The Respondent disputed that the Applicant had moved into the property on 25 October 2019 and submitted that the date on which she moved in was later, most likely in April 2020.
16. The Applicant during the relevant period had made numerous journeys to and from Australia. The journey dates were as follows. 1. 19 October 2019 (departure) to 31 October 2019 (return) 2. 23 November 2019 (departure) to 30 November 2019 (return) 3. 3 December 2019 (departure) to 18 December 2019 (return) 4. 26 December 2019 (departure) to 20 January 2020 (return) 5. 12 August 2020 (departure) to 1 August 2021 (return).
17. The question at issue was whether following the relevant liability date, the Applicant used and occupied the property in question as her principal place of residence for a continuous period of at least 200 days.

Applicant's rights of review

1. Where tax (including duty) has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) ("Administration Act"), allows rights of objection to a taxpayer dissatisfied with an assessment. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act). On the facts at hand, that determination happened by 23 October 2023.
2. A taxpayer who is dissatisfied with the decision made upon the Respondent's determination of an objection, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 (NSW) of the decision of the Chief Commissioner of State Revenue. These circumstances have arisen in the present matter as set out above, so bringing the matter within the jurisdiction of the Tribunal.
3. The onus of proving her case lies with the Applicant (s 100(3) of the Administration Act).
4. The Tribunal, dealing with the taxpayer's application, may do one or more of the following under s 101 of the Administration Act: "(a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit."

Consideration

1. Three matters arise for consideration. They are whether; 1. surcharge purchaser duty is payable 2. interest can be assessed; and 3. penalties can be assessed.

Duty

1. The Duties Act charges duty on "dutiable transactions" (s 8). The list of "dutiable transactions" that can be charged with duty includes an "agreement for the sale or transfer of dutiable property" (s 8(1)(b)(i)). "Dutiable property" includes "land in New South Wales" (s 11(1)(a)). That the agreement for sale of the property was a dutiable transaction was not in dispute.
2. Duty is applicable at the general rate set out in Division 2 of Part 3 of the Duties Act. Duty was assessed on or before 25 October 2019 at the general rate. That assessment is not in dispute.
3. Where an agreement for sale or transfer of land in New South Wales is completed, a transfer to the purchaser or purchasers usually occurs. Such a transfer occurred in the present matter. Where the transfer is made in conformity with the agreement, fixed duty of $20 is levied if the duty chargeable in respect of the agreement has been paid.
4. The transfer made to the Applicant was not in conformity with the agreement in question. This is because the Applicant was not named as a transferee in that agreement. The named transferee was her husband. However, under s 18(3) of the Duties Act, a transfer that is not made in conformity with an agreement may also qualify for fixed duty in certain circumstances. It provides as follows: "The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $20 if- (a) the duty chargeable in respect of the agreement has been paid, and (b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and (c) the transfer occurs at the same time as, or proximately with, the completion or settlement of the agreement, and (d) at the time the agreement was entered into, and at the completion or settlement of the agreement- (i) the purchaser under the agreement (other than a purchaser who purchased as a trustee) and the transferee under the transfer were related persons, …."
5. As a result, if at the time an agreement is entered into and at time a transfer occurs on the completion of the agreement, the purchaser under the agreement and the transferee under the transfer were related persons, fixed duty applies under s18(3). Who are "related persons" is defined in the dictionary of the Duties Act to include a person's spouse. As the Applicant was the wife of the named purchaser at the time the agreement was entered into and also as at the transfer being made on completion, the transfer to the Applicant as joint tenant was capable of being stamped with fixed duty under section 18(3).
6. In addition to duty assessed at the general rate, further duty may apply to a dutiable transaction in certain cases. Further duty is chargeable under Chapter 2A on an agreement for the sale or transfer or on a transfer of "residential related property" to a "foreign person" (s 104L of the Duties Act). That duty is called "surcharge purchaser duty". What is in dispute is, first of all, whether surcharge purchaser duty is assessable.
7. Ordinarily, where an agreement for sale or transfer at the time of execution falls within both Chapter 2 and Chapter 2A, the provisions of each chapter will apply. In other words, an agreement falling within Chapter 2 will be stamped under Chapter 2. If it also falls within Chapter 2A, it will be stamped additionally under Chapter 2A with surcharge purchaser duty. The duty charged by Chapter 2A is "additional to the duty charged by Chapter 2" (s 104G(2)). Where an agreement is brought to duty under each of Chapter 2 and Chapter 2A, it is therefore clear that two amounts of ad valorem duty are assessable.
8. In the present case, however, the agreement in question, at the time of execution, was brought to ad valorem duty only under Chapter 2. The transfer made on completion was as a consequence also dutiable under Chapter 2 with $20 duty by reason of s 18(3).

What was the effect of stamping of the transfer?

1. A preliminary question of statutory construction arises out of these circumstances. Section 18(3) stipulates "[the] duty" chargeable on a transfer. On one construction, the description of the fixed duty payable as "[the] duty" may indicate that this is the entirety of the duty chargeable on a transfer, once brought within s 18(3). The first issue before the Tribunal, therefore, is whether stamping of the relevant transfer under s 18(3) of the Duties Act with "[the] duty" stipulated by that provision will discharge the taxpayer's obligations to stamp the transfer. In other words, the question is whether, once that fixed duty has been paid, any further obligations to pay duty remain, including surcharge purchaser duty.
2. Chapter 2 applies generally to all transfers of land in New South Wales (subject to any available exemptions) and relevant agreements for sale or transfer, including transactions that are also captured by Chapter 2A. Chapter 2A applies to a more limited class of transfers made to a foreign person and relevant agreements.
3. Section 18 deals with the stamping of transfers made on completion of the agreements brought to duty under Chapter 2. Section 104X of Chapter 2A contains provisions similar to those in s 18 preventing the imposition of ad valorem surcharge purchaser duty on transfers made in conformity with an agreement and relevant transfers that are not in conformity, once the agreement itself has been stamped with the requisite surcharge purchaser duty.
4. Chapter 2A does not rely on s 18 to prevent the incidence of double duty where an agreement subject to surcharge purchaser duty has been stamped and is completed by transfer. Where an agreement subject to surcharge purchaser duty under Chapter 2A is completed, the transfer made on completion of the agreement will be stamped in accordance with the provisions set out in s 104X, where in conformity with the agreement and where not in conformity, under and subject to s 104X(3).
5. Having regard to the respective schemes set out in Chapter 2 and Chapter 2A, including the particular provisions in each chapter for stamping transfers, I am of the opinion that s 18(3) is not intended limit the operation of Chapter 2A. It operates to prevent within its terms, the incidence of double duty under Chapter 2. Although s 18(3) is not, in its literal tenor, expressed to be limited in its operation to Chapter 2, s 18(3) equally is not expressed to exclude the operation of any other provisions of the Duties Act charging duty. A construction that allows Chapter 2A to operate independently of s 18(3), in my view, better accords with the purpose of the statute, which is to tax foreign persons under the distinct regime set out in Chapter 2A, regardless of the application of duty under provisions within Chapter 2 to the same agreement or transfer.

Foreign person

1. Surcharge purchaser duty applies to relevant transfers of "residential related property". "Residential related property" includes certain "residential land" in New South Wales (s 104K(a)). That the property was "residential land" was not in dispute. Therefore, in the matter presently before the Tribunal, a liability for surcharge purchaser duty arises if the Applicant was a "foreign person".
2. A question arises as to what point in time a person must be a "foreign person" for surcharge purchaser duty to apply. Section 104J sets out the basis for determining that question. If the person is a "foreign person" when a liability for duty charged by Chapter 2 on the transaction arises, that person is taken to be a "foreign person". Under Chapter 2, liability for duty arises in the case of a transfer, when the transfer of dutiable property occurs (s 12(1)). There is no dispute that a transfer of the property occurred on 25 October 2019. A liability to duty therefore arose on that date. It follows that if as at 25 October 2019, the Applicant was a "foreign person", surcharge purchaser duty applies.
3. The applicable definition of "foreign person" is contained in Chapter 2A of the Duties Act. Section 104J in Chapter 2A provides that a "foreign person" means a person who is a "foreign person" within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth ("FATA"), as modified by section 104J of the Duties Act. Section 4 of the FATA relevantly defines a "foreign person" as an individual not "ordinarily resident" in Australia. Section 5 of the FATA goes on to provide as follows: "Meaning of ordinarily resident (1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if: (a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and (b) at that time: (i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law; or (ii) the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law".
4. The Applicant was not an Australian citizen on 25 October 2019 or before that time. The question therefore is whether she was a "ordinarily resident" in Australia on that date. Section 5 of the FATA sets out two requirements that a person who is not an Australian citizen needs to satisfy in order to be "ordinarily resident" in Australia. Firstly, the individual in question must have actually been in Australia during 200 or more days in the period of 12 months immediately preceding the time at which ordinary residency is tested. Secondly, the individual must be in Australia at the time their status is tested and their continued presence in Australia must not be subject to any limitation as to time imposed by law. Both of these requirements must be satisfied for the Applicant to prove that she was "ordinarily resident" in Australia (Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216).
5. The Respondent submitted that the Applicant's travel records showed that in the 12 months prior to each relevant date, she was in Australia for less than 200 days. This was not contested. It follows that the Applicant remained a foreign person as at 25 October 2019.

Exemption for certain permanent residents

1. Once a liability for surcharge purchaser duty arises (as in the present case), the Duties Act provides full exemption for certain permanent residents. That exemption is relevantly set out in s 104ZKA in the following terms: "Exemption for certain permanent residents in respect of principal place of residence (1) No surcharge purchaser duty is chargeable on a transfer, or an agreement for the sale or transfer, of residential-related property if each transferee under the transfer or agreement who would otherwise be liable to pay that duty is an exempt permanent resident. (2) A transferee under a transfer or agreement is an exempt permanent resident if - (a) the transferee is a permanent resident when a liability for duty charged by Chapter 2 on the transfer or agreement arises (or would arise but for a concession or exemption from duty under that Chapter), and (b) the Chief Commissioner is satisfied that the transferee intends to use and occupy the residential land to which the residential-related property relates as a principal place of residence in accordance with the residence requirement. (3) If there is more than one transferee under the transfer or agreement who is a foreign person (a foreign transferee) and the Chief Commissioner is satisfied that at least one, but not all, of those transferees is an exempt permanent resident - (a) surcharge purchaser duty is to be reduced in proportion to the share or shares in the residential-related property transferred to foreign transferees who are exempt permanent residents, and (b) none of those exempt permanent residents is liable to pay surcharge purchaser duty on the transfer or agreement. (4) The residential land must be used and occupied by the exempt permanent resident as his or her principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date. This requirement is referred to as the residence requirement. (5) The liability date is the date on which liability to surcharge purchaser duty first arose in respect of the share in the residential-related property transferred, or agreed to be transferred, to the exempt permanent resident".
2. The first requirement to be satisfied under s 104ZKA is that the Applicant was a permanent resident. There was no dispute that the transferee was a permanent resident at all relevant times. The second requirement to be satisfied is that the transferee intended to use and occupy the relevant land as her principal place of residence in accordance with the "residence requirement". What is in issue is whether the "residence requirement" was satisfied.
3. The Tribunal considered the meaning of what is a principal place of residence in Raissis v Chief Commissioner of State Revenue [2022] NSWCATAD 146. In this case, Dunn SM accepted that following reasoning. "(1) The phrase "principal place of residence" should be given its ordinary meaning in the context in which the phrase appears. (2) Consideration as to whether a person has been residing at 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) In order for there to be a finding that a particular person occupied a property as their principal place of residence their 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 duration of a person's residence is relevant but not determinative of the issue. A particular person's occupation of a home, while short, may have the requisite degree of permanence to it, but as the Appeal Panel put it at [42]: "But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or other passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence." (6) Significantly, the Appeal Panel noted that it is the nature of the occupation which provides the element of permanence. The fact that a period of actual occupation is short will in practice make it harder for the taxpayer to demonstrate that the occupation was as his or her principal place of residence, but it will not make such a conclusion impossible. (7) The reasons for a person's departure from the property must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances. In Bates the Tribunal thought that whether non-residence at the property resulted from matters entirely out of the control of the person was a factor to be considered. But in Ferrington, the Appeal Panel, whilst noting that "that is undoubtedly correct", cautioned that it should not be read as stipulating a requirement that the reasons for departure must be completely out of the relevant person's control".
4. It is not enough for the property to be shown to have been the intended principal place of residence of the Applicant. The "residence requirement" requires more. It specifically requires the property to have been used and occupied by the Applicant as her principal place of residence "for a continuous period of at least 200 days within the first 12 months after the liability date". In other words, the taxpayer will not satisfy the residence requirement simply because after the liability date, there was an intention to use and occupy the relevant premises as a principal place of residence. What is required is actual use and occupation for the prescribed period of time.
5. What "use" and "occupation" meant were considered by Higgins SM in Sar v Chief Commissioner of State Revenue [2024] NSWCATAD 246. She said, at [62]-[63]: "The words 'use' and 'occupy' are not defined in the Duties Act and should be given their ordinary meaning in the context in which they appear in the Duties Act. These words, as noted above, are used in s 104ZKA(4) of the Duties Act in the context of an exemption to surcharge purchaser duty, where the foreign purchaser of the residential land the subject of that duty is an exempt permanent resident and has 'used' and 'occupied' the residential land as his or her principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date (for example the contact date). Whether a person has 'used' and 'occupied' the residential land as his or her principal place of residence within the meaning of s 104ZKA(4) is ultimately a question of fact: De Marco v Chief Commissioner of State Revenue [2013] NSWCA 86 (De Marco) at [72] and Ghali v Chief Commissioner of State Revenue [2013] NSWCA 340 (Ghali) at [30]".
6. What is required is both "use" and "occupation". That use and occupation must be "continuous" for the requisite period. Possession alone is unlikely to amount to use and occupation (Sar, at [66]).
7. The 200-day period of use and occupation need not commence on the liability date. However, it must run within the period of 12 months commencing from the liability date.
8. Failure to satisfy the requirement for continuous use and occupation for the required 200 days will prevent exemption from being claimed, even if the evidence otherwise shows the requisite intention for the property to be used and occupied as a principal place of residence and possession the property.
9. The Applicant submits that she moved into the property on 25 October 2019, (although other parts of her evidence referred to a different date in December 2019). She says that she lived there by herself until April 2020.
10. If she moved into the property on 25 October 2019, the Applicant must show that she used and occupied the property until at least 11 May 2020.
11. If use and occupation began at a later date, that later date can be no later than 9 April 2020 if the test of 200 days of continuous use and occupancy within a year of the liability date is to be satisfied.
12. The Respondent relied on evidence contained in certain invoices for electricity consumption that showed a low usage of electricity from 29 October 2019 to 8 April 2020. The daily usage shown was at levels of less than 3KW, compared to a normal average use of 10-12kw daily for a single person, indicated by the Applicant's provider of electricity. The Respondent further submitted that even during periods when the Applicant was overseas between 29 October 2010 and 8 April 2020, as evidenced by her travel records, the usage of electricity remained constant. The Respondent invited the Tribunal to draw the inference that for the period from 25 October 2019 to 8 April 2020, the property remained unoccupied.
13. The Applicant's evidence was that the low usage of electricity was explained by the fact that she used electricity only minimally. She gave evidence that the appliances she used included a microwave oven, a fridge and her mobile phone when it was being recharged. She gave evidence that she had a laptop computer but did not use it. She also gave evidence that she purchased her meals from outside and did not cook. The Applicant also submitted that there is no legally required minimum level of electricity consumption.
14. The Applicant also produced two written statements from witnesses in support of her submission. One was described as being from a friend and the other from a neighbour. The friend gave evidence through an audio-visual link. She was unable to say whether or not the Applicant had moved into the property in October 2019. She was unclear as to what the actual date was but thought it was at the end of the 2019 year or during the first quarter of 2020.
15. The written statement provided by her neighbour stated the Applicant had purchased the property and lived there "ever since". The statement contained no information as to the exact date on which the Applicant moved into the property. The neighbour was not available to give further oral evidence.
16. The Applicant also said in an email to the Respondent dated 17 August 2023 that residence began on 25 October 2019 and that because "the house was full of undergrowth and the house was not good enough for our liking to move in, we decided to renovate the house which started on 28 January 2020 and finalised at 3 July 2020".
17. There was no evidence from other members of the Applicant's family or the persons carrying out the renovations as to whether or not the Applicant was living at the property from 25 October 2019 as she submitted.
18. The Respondent also submitted that given the periods of travel undertaken by the Applicant during the period after 25 October 2019 when she claimed to be living at the property, she could not be said to have used or occupied the property "continuously" as required for the purposes of s 104ZKA.
19. On the evidence at hand, I find that the Applicant has not proved on the balance of probabilities that she used and occupied the property for the period she claims. It is likely that residence did not begin until sometime after early April 2020 at the earliest, when electricity usage increased to levels that indicate use and occupancy. The Tribunal notes the Applicant's submission that there is no required minimum usage of electricity. Nevertheless, the Tribunal may take into consideration the evidence before it of levels of consumption of electricity, as a matter relevant to the determination of whether or not the property was occupied between 29 October 2010 and 8 April 2020.
20. The evidence also shows that an order for furniture for the property was not made until 16 April 2020, consistent with use and occupation of the property sometime after early April 2020.
21. The evidence given by the Applicant's friend and neighbour was also uncertain as to when use and occupancy began. Neither witness said that occupant began on 25 October 2019. The Applicant's friend thought it was later.
22. If the Applicant's occupation and use of the premises commenced in early April 2020, the requirements for use and occupation for 200 days within the year commencing 25 October 2019 will not be satisfied. She left Australia on 12 August 2020 and remained overseas for a period of nearly a year. The days between early April and 12 August 2020 fall well short of the required 200-day period. I do not think that in these circumstances she could have used and occupied the property continuously for 200 days within the year commencing 25 October 2019. Even if the test of 200 days of continuous use and occupancy could be satisfied notwithstanding brief absences, the period of absence after 12 August 2020 was substantial.
23. The Applicant submitted that that there was no legislation that restricted an overseas permanent resident from travelling overseas. This may be so. However, while no such legal prohibition may exist, the question is whether as a matter of fact, the Applicant was absent from the country for a long enough period to prevent her for satisfying the requirement for continuous use and occupation of the property for the required 200-day period. That requirement on the facts of the matter has not been satisfied.
24. The Applicant gave evidence that her absences from the country were required to take care of parents overseas and that the inability to return to Australia until August 2021 came about on account of travel restrictions then in place during the COVID-19 pandemic. I accept her evidence as to the reasons for her absence. There is, however, no relief allowed under the legislation for circumstances such as this, even if beyond the control of the Applicant, to excuse a person from satisfying the requirements of residency under s 104ZKA.
25. The Applicant provided certain evidence as to her personal situation, including evidence of domestic abuse she was subjected to at the hands of her husband. She said that this was why she lived by herself at the property. She gave evidence that there was later a reconciliation with her husband and the family began living together at the property later in 2020.
26. The Respondent questioned aspects of the Applicant's evidence as to the domestic abuse she endured. This notwithstanding, I accept and believe the Applicant's evidence as to events surrounding the domestic abuse that took place. However, her explanation of her situation does not assist me in determining this matter or affect the finding of fact I have made that she began her use and occupation of the premises after early April 2020.

Was there a prior agreement?

1. Submissions were made by the Respondent that the liability date could be as early as the date of an agreement the Respondent asserted had been made between the Applicant and her husband sometime after 3 August 2019. The evidence of such an agreement is found in a statutory declaration made by the Applicant's husband on 19 August 2019. That statutory declaration states that the Applicant's husband "agrees to transfer half of his title of the property to the Wife".
2. An agreement for the sale or transfer of land in New South Wales of the kind asserted by the Respondent would be subject to surcharge purchaser duty. Such an agreement will also be subject to duty under Chapter 2 absent exemption. In the case of an agreement for sale or transfer of dutiable property, liability will arise when the agreement is "entered into" (s 104N).
3. However, there was no evidence of writing of the kind required by s 54A or 23C of the Conveyancing Act 1919 (NSW) to allow enforcement of such an agreement. Writing in the form an agreement, memorandum or note of the kind required under s 54A would be necessary to satisfy the requirements of that provision. The Supreme Court of Western Australia, in considering comparable provisions applying in Western Australia, has come to different conclusions as to whether an agreement needs only to satisfy the provision equivalent to s 54A or whether it also needs to satisfy the provision equivalent to s 23C. In Parker v Manessis (1974) WAR 54 and Redden v Wilks & Registrar of Titles (1979) WAR 161, the Court considered that on the facts of these cases, both provisions needed to be satisfied. However, in Monte v Buongiorno (1978) WAR 49, the Court expressed disagreement with this view and said that only the provision equivalent to s 54A needs to be satisfied.
4. An agreement signed by the party disposing of property should generally satisfy both s 54A or 23C. However, whether only s 54A or both s 23C and 54A need to be satisfied, or whether both provisions are required to be read in context together, there was no writing in evidence in the present case to satisfy the requirements of the Conveyancing Act 1919.
5. It is unclear whether the statutory declaration in evidence, ostensibly created to evidence the matters it describes, can, in the circumstances at hand, itself answer the description of an agreement, memorandum, note or other writing of the kinds required by the relevant provisions of the Conveyancing Act 1919. A statutory declaration is ostensibly created to put matters into evidence and not to effect a transaction or memorialise or otherwise document an agreement, absent evidence to the contrary. I find nothing in the evidence to indicate a purpose of the statutory declaration other than what it is ostensibly intended to do, namely put the matters it deposes into evidence. Hmelnitsky J in Oliver v Renwick Street Pty Ltd; Scahill v Parker [2024] NSWSC 346 recently considered the difficulties that come about in trying to rely on an affidavit as a means of satisfying the statute of frauds, finding that the affidavits under consideration in that case were insufficient compliance with s 23C.
6. The evidence includes a direction dated 19 August 2019 given by the Applicant's husband to "transfer half of my share to my wife". The Applicant was not a party to the direction. The direction further states that it is intended to "carry out this transfer and Duties Act 18.3". This is presumably a reference to section 18(3) of the Duties Act.
7. The direction, on its face, does no more than what it purports to do, namely to direct a transfer of the kind contemplated by s 18(3). Such a direction does not, of itself, create or take effect as an agreement between the purchaser and transferee in whose favour the direction is made in the absence of further evidence.
8. There was also no evidence of whether there was an intention to create legal relations of the kind required to give effect to a binding agreement and what consideration (if any) was given or agreed to be given (Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424). Although in the context of domestic arrangements, there is a rebuttable presumption that parties do not intend to be bound where the parties at the relevant time were not separated, an agreement between them may be more easily enforced where the relationship between the parties has broken down (see Popiw v Popiw (1959) VR 197). There was evidence of conflict between the Applicant and her husband. The Applicant also asserted that she had a "right to acquire" a 50% interest in the property. There was, however, insufficient evidence of what had transpired between them to determine whether the circumstances were such that there was or was not any enforceable agreement.
9. In these circumstances, it is unclear whether a binding agreement of the kind brought within the charging provisions of the Duties Act could have come into existence.
10. However, it is not necessary for me to decide whether or not an agreement between the Applicant and her husband came into effect before 25 October 2019. This is because even if there were such an agreement, and the liability date as a result arose before 25 October 2019, the requirement for use and occupation for the requisite 200 day period will not be satisfied for the reasons set out above, on the basis that use and occupancy could not have begun until early April 2020 at the earliest.
11. The Applicant asked for a waiver of surcharge purchaser duty. The Applicant however did not make any submissions explaining why, under the Duties Act or the Administration Act, such a waiver should be granted. It is well established that there is no discretion under the Duties Act or the Administration Act for the Respondent or the Tribunal to grant an exemption from surcharge purchaser duty where the statutory criteria for levying that duty are met (Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238, at [30]; van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283, at [43]).
12. As regards questions of fairness of the outcomes under a taxation law, the High Court in Commissioner of Taxation v Ryan (2001) 201 CLR 109 said: "But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any "policy" or "general intention" unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of "fairness" or "justice" do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted."
13. The Tribunal has applied this principle in numerous cases, confirming that there is no discretion to relieve a taxpayer of a tax liability on grounds of unfairness (Findlay v Chief Commissioner of State Revenue [2023] NSWCATAD 80, at [31] and the cases referred to there; Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222; Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261; Faytrouni v Chief Commissioner of State Revenue [2023] NSWCATAD 26, at [48]-[50]; Fleuren v Chief Commissioner of State Revenue [2024] NSWCATAD 177).
14. The consequence of the Applicant remaining a foreign person at the date of the transfer of the property is that the assessment of surcharge purchaser duty stands and is affirmed.

Interest

1. In circumstances where a tax liability has not been discharged within the required period, a tax default arises. That a tax default has arisen is not in dispute. The Respondent submitted that the tax default in the present matter, namely non-payment of surcharge purchaser duty when due, allowed him to assess interest and penalty tax on the unpaid surcharge purchaser duty. The Applicant disagrees.
2. The Respondent can assess interest at both the market rate and the premium rate (s 21 and 22 of the Administration Act). He has done so. The Assessment made included interest calculated at both rates.
3. The Respondent, however, has certain statutory powers to remit interest (s 25 of the Administration Act). That power is discretionary. The Chief Commissioner may issue guidelines setting out how interest must be remitted. If guidelines are issued, interest must be remitted only in accordance with the guidelines.
4. Section 25 in its current form came into effect on 1 February 2024. The provisions allowing for the use of guidelines for remittal of interest took effect from that date. No guidelines have been issued on or after that date. The Respondent sets out in Practice Note CPN 024 ("CPN 024") his earlier guidelines as to how he will exercise his powers of remission. These guidelines were issued in June 2022 but remain current. Relevantly, they provide as follows: "When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid. The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only. …….. Circumstances outside the control of a taxpayer Where there is evidence that the default was outside the control of the taxpayer (or their representative), the Chief Commissioner may remit interest. Events over which a taxpayer has no control include but are not limited to: a. natural disasters such as fire or flood b. computer system breakdowns including third party systems such as electronic funds transfer systems c. illness or death of a principal taxpayer d. Revenue NSW fault affecting receipt of payment, including processing problems e. circumstances where it is impossible to lodge or pay on time (excluding financial incapacity including hardship) In cases of financial incapacity, taxpayers may apply for relief in the form of an extension of time to pay, including an instalment arrangement Reasonable care taken by the taxpayer Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to): a. being honest and forthright when dealing with the Chief Commissioner b. cooperation with the Chief Commissioner c. the default is attributable to calculation errors d. making diligent efforts to understand and comply with the law e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer's obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements g. applying any relevant revenue rulings in good faith h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party. Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration. Note: Remission of the premium rate will only occur in special circumstances".
5. Bathurst CJ in Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd (2020) [2020] NSWCA 126 ("Downer EDI") considered the reach of the power in s 25 of the Administration Act to remit interest. His Honour did not think there was a relevant limit on the power of the Chief Commissioner to remit interest in s 25 of the Administration Act.
6. Each of the components of interest assessed, however, requires specific consideration. Those components are made up of interest assessed at the market rate and interest assessed at the premium rate.
7. The rationale for the market rate of interest is described as follows in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 ("Incise Technologies") and why it should be waived only rarely. The Tribunal said, at [60]: "In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank's Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The Tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation".
8. The approach of the Respondent, set out in CPN 024, is that where the circumstances of non-payment were beyond the control of the taxpayer, remission of interest assessed at the market rate may be justified. The Tribunal in Incise Technologies laid emphasis on fault on the part of the Respondent as grounds for remission. This was a factor that was also found to be of relevance in Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21, at [27].
9. The Applicant as the taxpayer, remained responsible at all times to discharge her liabilities for taxation, including surcharge purchaser duty. There is no evidence of circumstances outside of her control giving rise to her tax default. There is also no evidence of fault on the part of the Respondent.
10. It is well accepted that interest at the market rate should rarely if ever be waived, because to do so would be to devalue the amount of tax payable. I see no reason to depart from this principle in the present case in light of the matters set out above, in particular, the absence of fault on the part of the Respondent. It follows that the assessment of interest at the market rate is affirmed.
11. The purpose of the premium rate of interest differs from that of the market rate of interest. While the market rate compensates the Respondent for the time value of money that is paid late, the premium rate of interest extracts from the taxpayer something more. It is in the nature of a penalty (Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [443] per Emmett AJA). That difference informs the varying approaches to remission of each kind of interest. While remission of interest assessed at the market rate should be rare, the circumstances in which interest assessed at the premium rate can be remitted are not as restrictive, even if they may need to be "special circumstances".
12. That taking reasonable care is a relevant consideration in determining whether or not interest at the premium rate should be assessed, alongside various other considerations, is well accepted (Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249, at [106]). What "reasonable care" to comply with taxation obligations means has been described as follows in Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227, following RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue 2004 NSWADT 64, at [95]: "In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other enquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law."
13. The decision of Richmond J in Golden Age is also relevant in considering remission of the premium rate of interest, having regard in particular to its penal character. His Honour held, in accordance with the decision in Downer EDI, that s 25 of the Administration Act, conferred on the Commissioner a broad discretionary power which is not subject to any limit. He went on to say, at [99]-[104]; "Section 25 of the TAA, both before and after its re-enactment, confers on the Commissioner (and on the Court standing in the place of the Commissioner under s 101) a broad discretionary power which is not subject to any limit: Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 at [151]. In the case of an unconfined discretionary power of this nature, the considerations which are relevant to its exercise are determined by reference to the subject matter, scope and purpose of the relevant statute, including the particular provision conferring the discretion: Sanctuary Lakes Pty Ltd v Commissioner of Taxation (2013) 212 FCR 483; [2013] FCAFC 50 at [227] per Griffiths J (Edmonds J agreeing); Giris Pty Ltd v Federal Commissioner of Taxation ([1969] HCA 5; 1969) 119 CLR 365 at 384 per Windeyer J. In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19, the Appeal Panel observed at [60]-[61] that the market rate component is intended to compensate the Commissioner for not having the benefit of the tax payment from the time it was due, and so approximates the ordinary lending interest rates, whereas the premium rate is a form of penalty which operates as a disincentive to taxpayers to delay tax payments. The view that the premium component is penal in nature has been accepted in later decisions, see eg. Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [443] per Emmett AJA. In my view it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion. ……… In Incise Technologies, the Appeal Panel identified (reflecting a submission made by the Commissioner in that case) four cumulative criteria which are relevant to the exercise of the discretion under s 25: (1) All principal tax that is owing and not in dispute has been fully paid; (2) There has been cooperation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments; (3) Such cooperation has occurred prior to any investigation being commenced by the Commissioner or, at the very least, within a reasonable time after the request for information had been made by the Commissioner; and (4) There has been no wilful default by the taxpayer in not paying tax on time. The Appeal Panel noted in Incise Technologies at [63] that the first of these criteria could be clarified to be "all principal tax that has been assessed and is not in dispute has been fully paid at the time of the request for remission of interest" and that while they were all relevant and appropriate matters for consideration, they were not exhaustive. That the four criteria are not exhaustive has been confirmed in subsequent cases, eg. Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [179] and Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 at [105]- [106]".
14. The Court in Golden Age affirms the approach to remission set out in the earlier cases and concludes that it was appropriate to remit the premium component in full, in circumstances where all four of the above criteria were satisfied. The taxpayer was found to have taken reasonable care. The taxpayer had sought advice from a firm of solicitors and acted upon that advice. Non-payment of tax had occurred as a result of an oversight by the advisor.
15. In the matter at hand, there was oral evidence of some advice having been taken. The Applicant said that she was aware that she needed to use and occupy the property for the required 200-day period. However, there was no further evidence of the content of the advice before the Tribunal and whether it was followed or not.
16. I am therefore unable to find that the Applicant has discharged the onus of proof to show that reasonable care was taken. I am able to distinguish the facts of Golden Age from those of the present case on the basis that in Golden Age, there is evidence of advice having been taken and acted on. The assessment of interest at the premium rate is therefore affirmed.

Penalty tax

1. The Respondent's power to assess penalty tax arises under s 26 of the Administration Act. It is imposed in addition to interest. The Administration Act expressly provides that the imposition or remission of interest is not relevant to the imposition or remission of penalty tax (s 33(2); see also s 25(4)).
2. The amount of penalty tax payable for a tax default is relevantly set at a default rate of 25% of the amount of tax unpaid (s 27). The Respondent has the power to make certain variations to the amount of penalty tax. He may increase the amount of penalty tax in certain circumstances based on the degree of culpability of the taxpayer that are not presently relevant. The Respondent in addition has the power to reduce the amount of penalty tax by 20% if, after the Respondent informs the taxpayer that an investigation relating to the taxpayer is to be carried out and before it is completed, the taxpayer discloses to the Respondent, in writing, sufficient information to enable the nature and extent of the tax default to be determined (s 29). This happened and the rate of penalty tax was reduced to 20%.
3. The Respondent's guidelines as set out in CPN 024 are as follows: "Penalty tax is generally imposed after all the facts and circumstances surrounding the tax default are considered. In certain circumstances the Chief Commissioner may increase the rate of penalty tax or determine that no penalty tax is payable. A liability to penalty tax arises when a tax default occurs. Penalty tax is in addition to interest. The amount of penalty tax is 25% of the amount of unpaid tax or 50% if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth. The Chief Commissioner may increase the amount of penalty tax to 75% of the unpaid tax if the tax default was caused wholly or partly by the intentional disregard of the taxation law. Penalty tax may be reduced if a taxpayer makes or voluntary disclosure of a tax default before or during an investigation. ….. The Chief Commissioner also has a general discretion to remit penalty tax by any amount in such circumstances as the Chief Commissioner considers appropriate (s 33 of the TAA). Where there is evidence that the taxpayer (or their representative) took reasonable care to comply with the taxation law, or the tax default occurred solely because of circumstances beyond their control (excluding financial incapacity), the Chief Commissioner will usually determine that no penalty tax is payable".
4. The Respondent has a power to determine that no penalty tax is payable in respect of a tax default under s 27(3)(a). He may exercise that power if satisfied that the taxpayer or a person acting on behalf of the taxpayer, took "reasonable care" to comply with the taxation law. The Respondent did not use his power to remit penalty tax. In the absence of reasonable care having been taken by the Applicants ([97] above), I do not think that s 27(3)(a) has application in the present circumstances.
5. Section 27(3)(b) of the Administration Act provides that the Respondent may determine that no penalty tax is payable if the tax default occurred solely because of circumstances beyond the control of the Applicants or a person acting on behalf of the Applicants. Section 27(3)(b) explicitly requires that the tax default be "solely" caused by circumstances beyond the control of the Applicants.
6. The evidence does not allow for a conclusion to be drawn that the Applicant's tax defaults were caused "solely" by circumstances beyond her control. I have found that the tax defaults in question arose for reasons other than matters outside the control of the Applicant (see [97] above). That the relevant power can only be exercised when the tax default was caused "solely" by circumstances beyond the control of the Applicants, clearly precludes its operation. I am therefore of the opinion that the power of remission allowed under s 27(3)(b) has no application in the present matter.
7. A separate power to remit penalty tax is allowed under s 33 of the Administration Act. The Court of Appeal in Downer EDI considered that the power of remission under s 33 was not limited either expressly or by necessary implication by the mandatory reductions required by ss 28 and 29 of the Administration Act. Bathurst CJ said: " …. it does not seem to me that the power in s 33 of the TAA to remit penalty tax "in such circumstances as the Chief Commissioner considers appropriate" is limited either expressly or by necessary implication by the mandatory reductions required by ss 28 and 29. These mandatory reductions are a relevant matter for the Commissioner to take into account in considering whether to exercise the power to remit in s 33 but they do not limit that power. As the Chief Commissioner pointed out, in Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue Ward CJ in Eq stated at [301] that except in special circumstances, the general discretion under s 33 should not be exercised beyond the limits in ss 27(3) and 29 when the circumstances giving rise to a remission under s 27(3) of the TAA had not been made out. However that was a matter of discretion not power".
8. The discretionary powers set out in s 33 remain broad and unfettered. In light of the broad and unfettered character of the discretion, no fixed rule can be brought to bear precluding an exercise of discretion in all circumstances where there has been an absence of reasonable care. Despite the broad and unfettered discretion allowed under s 33, limits on its exercise nevertheless can arise, in that that discretion cannot be exercised in a way that defeats the fundamental legislative objectives of the penalty scheme.
9. In the circumstances of the matter, I do not consider that a full or partial remission of penalty tax under s 33 ought to be made. The absence of reasonable care on the part of the Applicant is not determinative but it is relevant and on the facts at hand, persuasive.
10. The Respondent has assessed penalty tax at the default rate of 20%. He has not imposed penalty tax at higher rates applicable where the taxpayer's degree of fault goes beyond a lack of reasonable care. I consider that the Respondent was correct in doing so, on the basis of the evidence before the Tribunal.

Hardship

1. The Applicant also made representations that she did not have the funds to pay the amount of the assessment in this matter. The Tribunal does not have jurisdiction to determine the matter on the basis of hardship (Loomes v Chief Commissioner of State Revenue [2014] NSWCATAD 133). Division 5 of Part 10 of the Administration Act establishes and empowers a Hardship Review Board to deal with cases in which the exaction of the full amount of tax would result in serious hardship for the person or the person's dependants. The remaining avenue available to the Applicant would therefore be an application to the Hardship Review Board.

Conclusions

1. For the reasons set out above, the assessment of the Respondent is confirmed.

Orders 1. The assessment of the Respondent under review is confirmed. 2. Pursuant to ss 64(1)(a) and (c) of the Civil and Administrative Tribunal Act 2013, the publication or broadcast of the names of the Applicant, her husband and her children contained in evidence is prohibited.

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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 October 2024