Kumar v Commissioner of State Revenue (Review and Regulation) [2025] VCAT 695

The Tribunal confirms the reassessment of the applicants to duty, made by the Commissioner of State Revenue on 12 December 2022 (by Notice of Reassessment no. 30916673), imposing additional duty on the transfer to the applicants of a property in Avondale Heights, together with penalty tax and interest.

1. In August 2017, Mr Mukesh Kumar and his wife, Mrs Nirja Kumari (whom I refer to collectively, without intending any disrespect, as the 'Applicants') entered into an 'off the plan' contract of sale to purchase a residential property in Avondale Heights in Victoria ('Relevant Property') for $830,000, which was later increased to $847,493 (to reflect certain upgrades and other variations).[1] At the time the couple lived and worked in Western Australia but had a desire to move to Victoria.
2. Normally, the duty payable on the acquisition of a property of equivalent value would be $45,920. However, when the contract was completed in May 2019, the Applicants only paid duty of $13,416 by claiming:
   • the off-the-plan concession ('OTP Concession') in section 21(3) of the Duties Act 2000 (Vic) ('Duties Act'); and
   • the principal place of residence concession ('PPR Concession') in section 57J of the Duties Act,

1. A requirement for both Duty Concessions is that the transferee of the land concerned 'occupies the land as the transferee's principal place of residence ... for a continuous period of at least 12 months commencing within the 12 month period immediately after the transferee became entitled to possession of the land' ('Residence Requirement').
2. Mr Kumar's evidence was that he and his wife always intended to occupy the Relevant Property as their principal place of residence. However, he conceded that they did not in fact take up occupation until late 2023.
3. The Commissioner of State Revenue ('Commissioner') conducted an investigation as to the Applicants' compliance with the Residence Requirement and, on 12 December 2022, reassessed the Applicants to duty of $32,504[2] ('Reassessment') on the basis that they had not satisfied the Residence Requirement.
4. In addition, the Commissioner imposed penalty tax of $29,253.60 and interest of $712.12 under the Taxation Administration Act 1997 (Vic) ('TA Act'). Penalty tax was imposed at a rate of 90% (rather than the default rate of 25%) as the Commissioner:
   • was satisfied that the tax default 'was caused wholly or partly by the intentional disregard of the [Applicants] of a taxation law';[3] and
   • considered that the Applicants had taken 'steps to prevent or hinder the Commissioner from becoming aware of the nature and extent of the default in whole or in part'.[4]
5. On 28 September 2023, the Applicants requested that the matter be referred to the Tribunal for review as the Commissioner disallowed their objection to the Reassessment.[5]
6. The Applicants seek that the assessment of additional duty be set aside on the basis that:
   • it is sufficient, for the purposes of the Residence Requirement, that they had intended to reside at the Relevant Property but were prevented from doing so as a result of the COVID-19 pandemic (which they describe as a 'force majeure' event); or
   • the Commissioner ought to have exercised (and the Tribunal on review should exercise) the discretion in section 57L of the Duties Act to extend the time for the Applicants to commence their occupation of the Relevant Property to late 2023 (i.e. to when they moved into the property).
7. Mr Kumar admits to having made some 'mistakes' in his dealings with the Commissioner, i.e. in terms of providing information that was not correct. Despite this, the Applicants also seek that the penalty tax and interest be remitted (in whole or in part) to nil or some lesser amount.
8. For the reasons which follow, I am comfortably satisfied and find that:
   • the Applicants did not occupy the Relevant Property as their principal place of residence (or at all) for a continuous period of 12 months commencing within 12 months of its acquisition (i.e. by May 2020) and therefore did not satisfy the Residence Requirement;
   • having regard to all of the circumstances, there is no 'good reason' to exercise the discretion in section 57L to extend the time to start the necessary period of occupation to late 2023; and
   • having regard to the Applicants' conduct during the investigation and in respect of the objection and review process, the penalty tax has been appropriately imposed at the rate of 90% and there is no basis for remission of the penalty tax or interest.
9. As such, I have confirmed the Reassessment.

August 2017 to May 2019: Applicants purchase the Relevant Property

1. As already noted, the Applicants entered the contract to acquire the Relevant Property, then known as 'Lot 1 on proposed plan of subdivision PS746175Y/SW', in August 2017.
2. It was an 'off the plan' acquisition in the sense that settlement was to occur 21 days after the latter of (a) the registration of a plan of subdivision for the larger property of which the lot formed part and (b) the issue of an occupancy permit for the house to be constructed on the property.
3. The contract included a special condition ('SC 23')[6] relating to duty. It provided that, where the particulars of sale provided an estimated dutiable value, it:

assumes that the concession from duty in relation to "off-the-plan" sales (where construction of improvements is to occur after the date of the contract of sale of land) ... may apply ... if the Property is to be the Purchaser's principal place of residence, and if the Purchaser otherwise meets the relevant criteria under the [Duties Act];

1. Further, the special condition noted that the vendor made 'no representations or promises as to the amount of duty payable' and that the Applicants had 'made [their] own enquiries and investigations' as to their entitlement to the OTP Concession.[7]
2. In the particulars of sale, the Applicants ticked a box to indicate that the Relevant Property would be their principal place of residence.[8] The developer (Frasers Property) in turn included the estimated dutiable value of the property (i.e. the value of the land, excluding the house to be constructed on it).
3. In the contract, the Applicants identified a conveyancer as acting for them in respect of the purchase of the Relevant Property. Mr Kumar's evidence was that the conveyancer had explained the requirements for the OTP Concession and PPR Concession to him (and his wife), including the Residence Requirement.
4. Once the house was built and the contract was ready for settlement, the conveyancer prepared (and, on 29 April 2019, electronically signed) forms for duty purposes that were submitted to the State Revenue Office ('SRO'). This included a transferee statement for each of the Applicants indicating that they were claiming both Duty Concessions and that they intended to occupy the Relevant Property as their principal place of residence from 29 April 2019.[9] The Applicants also (physically) signed transferee statements containing the same representations.[10]
5. Based on the claiming of the Duty Concessions, the SRO 'Duty Estimate Statement' (issued on 15 May 2019) calculated the estimated duty payable at settlement (on 17 May 2019) to be $13,416.[11]

June 2019: Applicants let the Relevant Property to tenants

1. Despite what the Applicants indicated in the forms submitted to the SRO, they did not enter into occupation of the Relevant Property on 29 April 2019 (or otherwise immediately following settlement).
2. Instead, the documentary evidence suggests that, between 21 and 29 May 2019, Ace Real Estate ('Agent') advertised the property for lease.[12] That campaign was successful and, on 3 June 2019, the Applicants (through the Agent) entered a residential tenancy agreement ('RTA') letting the Relevant Property to a third party tenant ('Initial Tenant') for 12 months starting on 15 June 2019.[13]
3. During the Commissioner's investigation as to the Applicants compliance with the Residence Requirement, an officer from the SRO contacted the Initial Tenant and received a copy of email correspondence passing between the Initial Tenant and the Agent from around the time the RTA was entered. It that correspondence the Initial Tenant described a 12 month tenancy as 'suboptimal', given he and his family were renting in order to be closer to his daughter's school. This led him to request a three year term.[14] Despite the RTA providing for a term of 12 months, the Initial Tenant expressed his hope that it would 'turn into a long term commitment for both parties'.[15]
4. Shortly after entry into the RTA, it appears there was also discussion between the Agent and the Initial Tenant regarding gas and electricity. In an email sent on 4 June 2019,[16] the Initial Tenant responded to the Agent as follows:

As discussed regarding utilities, I don't have a problem having those in the landlord's name but it is important to me to receive the bills or a scan of those monthly so I can keep track of my spend/ due dates, etc, as well as having the ability to change those providers when needed, which I'm happy to do myself so it doesn't create extra admin work for the landlord or to you.

Initially, I would like to have the house connected by the attached providers for Gas and Electricity in a nonlock in contract, with more details in the attachment.

1. The parties then implemented that arrangement as evident from the following material in the Tribunal Book:
   • first, on 3 June 2019, Dodo Power & Gas wrote to Mr Kumar to thank him for 'joining Dodo' and providing a detailed gas plan disclosure statement;[17] and
   • second, the material provided by the Initial Tenant to the SRO demonstrates that the Initial Tenant reimbursed Mr Kumar (through the Agent) for at least some of these expenses (although Mr Kumar gave evidence suggesting that he was left out of pocket for some or all of the utilities).[18]
2. For completeness, it is noted that further leases were entered by the Applicants with different tenants in June 2020 and August 2022.[19] Further, the Relevant Property was listed for sale by the Agent between May 2020 and September 2022.[20]

July to October 2023: Applicants move to Victoria

1. Mr Kumar is an engineer and says he secured a job in Melbourne on 24 July 2023.[21] This is consistent with the documentary evidence suggesting he had secured Airbnb accommodation in Balaclava for the period from July to October 2023.[22]
2. In his evidence, Mr Kumar explained that he and his family could not immediately occupy the Relevant Property because it was tenanted (by the third tenant: see [25]) and, although the tenant had stopped paying rent, it was necessary to seek an order for possession from VCAT before they could do so. That order was made on 24 October 2023, requiring the third tenant to vacate the property on 30 O[23]ober 2023.23 Mr Kumar says he and his family moved in shortly thereafter.
3. Mr Kumar emphasises that he and his family still reside at the Relevant Property, more than 12 months later.

Information provided by the Applicants during the SRO investigation(s)

1. The SRO wrote to the Applicants on 5 October 2022 indicating that the Commissioner was seeking to confirm their eligibility for the OTP Concession and any other duty concession obtained.[24] In the letter, the relevant officer reiterated that, to retain the benefit of the Duty Concessions, a transferee must satisfy the Residence Requirement and observed that '[i]nformation obtained by the SRO indicates you may not be entitled to the [OTP] concession as you did not meet ... the residence requirement'. The Applicants were 'encouraged to make a voluntary disclosure if [they did not] dispute this information'.
2. Mr Kumar sent a reply by email on the same day, providing invoices for utilities relating to the Relevant Property (including Dodo Gas and Electricity) observing that he and his wife had paid those expenses 'during our residence there'.[25] Later that day, he sent a further email stating that he lived at the property 'from June 2019 to Aug[ust] 2020 and beyond' and attached Dodo electricity invoices for that 'continuous period'.[26]
3. On 8 November 2022, the Commissioner issued the Applicants with a notice of reassessment ('Initial Reassessment') imposing additional duty of $32,504 in respect of their acquisition of the Relevant Property.[27] The notice also provided for penalty tax of $1,625.20, which an accompanying letter indicated had been applied at a rate of 5% based on the Applicants' voluntary disclosure.[28]
4. The following day (i.e. 9 November 2022), Mr Kumar sent a response to the Commissioner noting the Applicants had 'sent all information for continuous use of [the Relevant] property for 12 months', re-forwarding the October 2022 email with links to the utilities invoices,[29] and asking the Commissioner to provide the evidence on which the Initial Reassessment had been made.[30]
5. As a result, on the same day, an officer from the SRO sent an email to Mr Kumar indicating that the Commissioner had withdrawn the Initial Reassessment and 'reopened and referred [the matter] for a formal investigation in order to review the information [he] provided'.[31] An accompanying letter reiterated that the Applicants were being given a (further) 'opportunity to review and make a voluntary disclosure confirming [their] entitlement to the PPR and [OTP] concessions', expressly noting that the TA Act allows the Commissioner to impose penalty tax of up to 90 per cent, but that this could be reduced to 20% by 'taking advantage of the voluntary disclosure opportunity'.[32]
6. It seems that Mr Kumar also spoke to the SRO officer on 9 November 2022 (which Mr Kumar said he could no longer recall).
7. It is apparent that there was some discussion regarding the information held by the SRO because, in a contemporaneous email (sent on 6 December 2022),[33] the SRO recounts Mr Kumar advising him that:
   • The [Relevant] Property was placed on the market for rental for 7 days by [the Agent] but was removed because it was a mistake.
   • The rental bond lodged against the Property was incorrect and was an error.
   • [Mr Kumar] occupied and resided at the Property, on [his] own, and used it as [his principal place of residence from] around June 2019 for about one year (12 months).
   • While at the Property, [he] rented a number of rooms out in an AirBnB type arrangement.
   • [He] had lodged ATO Rental income against the Property to reflect this income. This was calculated based on an average [he] had received.
8. In follow up emails Mr Kumar sent to the SRO officer on 11 and 14 November 2022,[34] Mr Kumar confirmed that he and his wife 'had occupied and used the property as [their] Principal Place of Residence (PPR) from first week of June 2019 for a continuous period of at least 12 months' and a portion of the house:

was given for any stay to friends and their families, may be some week 3 days or 4 days or weekends to group of friends/their guests. [They] used to get $150 to $200 per night depending upon factors of timing, nights, seasons. Most of time friend of friends will ask for room and pay cash for stay.

Information provided by the Applicants in the objection and review process

1. It was not until they lodged their February 2023 objection to the Reassessment,[35] that the Applicants requested that the Commissioner extend the time for them to satisfy the Residence Requirement. In that document, the Applicants stated:

- We had [an] intention to live in [the Relevant] property before [the] end of June 2020 to meet the [Residence Requirement].

- We had to rent [the] property for 6 months in June 2019 and started looking for job[s] ... [and were] planning to move before end of June 2020.

- Meanwhile [a] 1 in 500 event happened with Covid 19.

- Then [the] National Code of practise started and emergencies in [Western Australia] and [Victoria] were imposed with restrictions in movement and we were not able to get new employment and move to Avondale Heights.

- This led to our issues with Covid at home and multiple issues....

- Now emergency has since been lifted in late 2022.

- We request [the Commissioner] to give us time till end of 2023 to move in property. This is according to [the conditions for the Residence Requirement] which gives 1 year time to move in.

...

- Regarding penalty [tax], we have been sent notices to [the] wrong addresses, [and] have been phoned and threatened by SRO[,] which has led to wrong information [being] supplied in distress.

1. In their submissions for this proceeding, the Applicants largely reiterated the above matters,[36] noting that they had 'already moved' into the Relevant Property in late October 2023 and would have resided in the property for more than year by the time it the matter came on for hearing.
2. Then, in their submissions in reply,[37] the Applicants suggested that, despite renting the property in June 2019:

[t]here was [a] verbal agreement between [the Initial] tenant, agent and us that once [Mr] Kumar gives [the] tenant [a] request to move out of [the] property before May 2020, [the] tenant will vacate [the] property subject to being paid [a] disturbance allowance of 2 weeks rent and [the] bond being released.

1. In relation to the penalty tax, the Applicants again suggested that 'wrong information [had been] supplied in distress' (dues to notices being sent to the wrong address and the SRO making threats). However, they added a further justification, namely that they also 'had calls from Scammers calling [them] to give money to settle this case, which led to confusions (sic) and stress'.
2. Shortly before the hearing, Mr Kumar sought leave to file a witness statement made by him, purported to be made on behalf of both himself and Mrs Kumari, dated 10 July 2025 ('Kumar WS').[38] While the witness statement was largely consistent with the Applicants' objection, Mr Kumar provided some further details as follows:
   • At the time the Applicants settled the contract to acquire the Relevant Property, they 'resided in Western Australia' at a property in East Cannington ('East Cannington Property').[39]
   • On the Agent's advice, they 'leased the [Relevant] Property on short-term agreements to maintain it while [Mr Kumar] sought suitable employment in Victoria'.[40] Further, he maintained there was 'a clear verbal understanding with [the Agent] and [the] tenants that the lease could be ended on reasonable notice and compensation when [the Applicants] were ready to relocate'.[41]
   • Between 2019 and 2020, Mr Kumar 'actively sought work in Victoria, making more than 30 job applications in good faith to enable [their] move'.[42]
   • Due to emergency measures associated with the COVID-19 pandemic, they could not 'secure new employment in Victoria', 'legally move interstate from Western Australia to Victoria' or 'terminate the tenancy and relocate'.[43]
   • Once the emergency measures were lifted (in late 2022), they 'made all reasonable arrangements to relocate'.[44]
   • As of July 2025, they had lived in the Relevant Property 'for approximately 18 months and intend to remain [in the property as their] permanent family home'.[45]
   • They 'acted in good faith and took all reasonable steps to meet [their] obligations within the constraints of emergency health orders' and 'did not occupy any other property as a principal place of residence' or 'claim any other [principal place of residence] exemption in Victoria or elsewhere'.[46]

1. In examination in chief, Mr Kumar confirmed the truth and accuracy of his July 2025 witness statement and indicated that there was nothing he wished to correct.
2. In cross-examination, Mr Kumar was taken to the information that he had provided to the Commissioner during the SRO investigation, including the utility invoices in his name and the statements that he and Mrs Kumari had lived in the Relevant Property as their principal place of residence from settlement, that it had been mistakenly listed for rental and that they had only rented out a room or rooms on an Airbnb basis to family and friends.
3. While Mr Kumar admitted that the information provided and statements made during the investigation were incorrect, he maintained they were mistakes rather than lies he had told so that the Applicants could avoid their duty obligations (or were otherwise deliberately misleading).
4. Mr Kumar sought to explain the incorrect statements based on the stress of COVID-19 and in dealing with the SRO, the immediacy of his responses to the SRO inquiries and that English was not his first language.
5. Mr Kumar was also cross-examined regarding the information he had provided during the objection and review process, particularly the various discrepancies between that information and the documentary evidence. For example, he was asked about the suggestion that the lease to the Initial Tenant was for 6 months or was otherwise a 'short term' arrangement given that the RTA, on its face, provided for a term of 12 months. In particular, Mr Kumar was asked about the inconsistency between:
   • his suggestion that the Initial Tenant had agreed to early termination of the tenancy in the event that Mr Kumar was to move to Victoria and paid him some compensation; and
   • the contemporaneous correspondence between the tenant and the Agent in June 2019, in which tenant indicated he was seeking a longer term commitment of 36 months.
6. Mr Kumar sought to explain the apparent discrepancy on the basis that he was not copied into the communications between the Agent and the Initial Tenant about the term of the lease and had never spoken to the tenant at all.
7. Mr Kumar ultimately conceded that, rather than there having been an agreement with the tenant as indicated in his submissions - and maintained in his witness statement - the Agent had simply told him that he could seek to end the RTA early if and when Mr Kumar and his wife sought to move from Western Australia to Victoria.
8. Further, in response to a question from me, Mr Kumar confirmed that he and his wife owned the East Cannington Property in which they lived (and also owned two adjacent lots that were leased to tenants after a subdivision). However, while he accepted that he did not pay land tax in Western Australia in respect of that property, he denied having claimed the principal place of residence exemption from stamp duty elsewhere.
9. In re-examination, Mr Kumar proffered his 'sincere apology' to the Commissioner for the incorrect information he had provided under stress, accepting it was somewhat 'childish' to respond in the manner he did. However, he suggested that he provided the right information to the Commissioner once he understood matters better.
10. In closing submissions, Mr Morgan (counsel for the Commissioner) submitted that the Tribunal should find that Mr Kumar told lies to the Commissioner, contending that the erroneous information that he had provided was not mere 'slips or errors'. Rather, they were 'calculated lies, made up for the purpose of getting out of duty' and, as such, fraudulent. Mr Morgan also submitted that Mr Kumar's apology ought to be given no weight as it was only proffered after Mr Morgan indicated that he would be making submissions that there had been no apology by the Applicants.
11. Although Mr Morgan accepted the Tribunal's suggestion that the principle from Briginshaw v Briginshaw[47] applies to the allegation that Mr Kumar has lied,[48] he submitted that this was a case where the Tribunal could reach a state of comfortable satisfaction in this regard.

Did the Applicants satisfy the Residence Requirement between May 2019 and May 2020?

1. The Residence Requirement is set out in section 57K of the Duties Act and insofar as relevant provides:

(1) It is a requirement for the purposes of the matters specified in subsection (1A) that the transferee occupies the land as the transferee's principal place of residence -

(a) ... for a continuous period of at least 12 months commencing within the 12 month period immediately after the transferee became entitled to possession of the land ...

(1A) For the purposes of subsection (1), the following are specified -

(a) a PPR concessional rate;

...

(c) an adjustment of consideration under section 21(3) or (4) [i.e. the OTP Concession].

1. While the phrase 'principal place of residence' is not defined, at the time, section 57H provided that, in 'determining whether land is occupied as the principal place of residence of a person, account must be taken of every place of residence of the person, whether in Victoria or elsewhere'.
2. In their reply submissions, the Applicants contend they satisfied the Residence Requirement because they had intended to commence occupation by June 2020 and their absence was 'temporary in nature' as a result of COVID-19 (which they describe as a force majeure event).[49]

(While Mr Epstein (counsel for the Applicant) had indicated, at the start of the hearing that this matter was 'not pressed', Mr Kumar indicated that it was a matter that he wished the Tribunal to determine. The Commissioner refers to this a 'ground 3' in his written contentions and suggests that, as it was not raised in the Applicants' objection to the Reassessment, requires the Tribunal to grant leave to raise this ground under section 109 of the TA Act. To the extent necessary, such leave is granted.)

1. In closing Mr Morgan observed that, in their objection, the Applicants accepted that they did not physically live at the Relevant Property until late 2023. He submitted that 'occupy' has its ordinary meaning, namely where a person eats, sleeps and lives and that, for the Applicants to succeed on this ground, it would be necessary for the Tribunal to interpret the word 'occupy' to extend to situations where a person does not in fact occupy premises. He suggested that such a contention is 'gainsaid' (i.e. contradicted) by section 57L(1)(b) which gives the Commissioner a discretion to 'determine that a temporary absence from residence does not break the continuity of residence' for the purposes of meeting the Residence Requirement. That discretion would be unnecessary if a person could be seen to occupy premises during a temporary absence.
2. The Tribunal has previously considered that a person can continue to occupy a property as their principal place of residence, despite being physically absent for an extended period. For example, in Gao v Commissioner of State Revenue,[50] the Tribunal found that the applicant had occupied a property as his principal place of residence over a period of 12 months despite the fact he 'only physically occupied' it for around 74 days by reason of having moved to Sydney to work. However, this was in a situation where the applicant:
   • actually moved into the property at the start of the period and returned to it on a number of occasions over the 12 month period;
   • provided evidence of his (unsuccessful) attempts to find a job in Melbourne so that he could return to that home;
   • had not established any permanent home in Sydney in the period, instead living in short term rental accommodation; and
   • did not lease or otherwise part with possession of the property during that period.
3. By contrast, in the present case, the Applicants:
   • owned a home in Western Australia at which, on their own evidence, they resided;
   • did not commence physical occupation of the Relevant Property until 2023, well after the 12 month period to do so had expired; and
   • parted with possession of the property almost immediately after settlement by leasing it to the Initial Tenant under a 12 month RTA. Relevantly, the RTA granted the tenant exclusive possession of the property for a 12 month fixed term which finished after the period in which the Applicants had to commence to occupy the property in order to satisfy the Residence Requirement.
4. In these circumstances, I find that the Applicants did not commence occupation of the Relevant Property as their principal place of residence (or at all) during the 12 month period from May 2019 to May 2020 and, as such (and subject to any exercise of the discretion in section 57L of the Duties Act), failed to meet the Residence Requirement.

Is there 'good reason' to vary the Residence Requirement?

1. Section 57L of the Duties Act gives the Commissioner a discretion to 'extend the period in which residence must begin' for the purposes of the Residence Requirement, '[i]f satisfied that there is a good reason for doing so'. As the Tribunal has all of the functions of the Commissioner in undertaking a review,[51] it is open for the Tribunal to (re-)exercise that discretion if it the Tribunal is satisfied that there is good reason to do so.
2. In closing submissions for the Applicants, Mr Epstein submitted that the Tribunal should exercise the discretion to vary the Residence Requirement in this case to extend the period in which the Applicants are required to commence occupation of the Relevant Property to late 2023 (i.e. to coincide with when they took up residence).
3. Mr Epstein noted that Mr Kumar accepted that he had made mistakes, for which he was apologetic, suggesting that this was because COVID-19 'threw him off his edge'. However, it was suggested to be 'unnecessary and extreme' to impose duty in circumstances where the 'whole world had turned upside down' and the Applicants were seeking to move 'from the most restricted to the second most restricted state'.
4. In closing submissions for the Commissioner, Mr Morgan accepted that 'in theory', the section 57L discretion could be exercised to allow the Residence Requirement to start five years late but submitted it would be a 'very unusual case', and only where 'good reason' is shown.
5. Mr Morgan identified five matters that point away from a favourable exercise of that discretion as follows:

(a) The Applicants' inability to meet the Residence Requirement arose from their 'own choice to rent the Relevant Property for the first 12 months', making it 'impossible' for them to commence occupation as required. In this regard, it was submitted that the Tribunal ought not accept that Mr Kumar's 'lie' as to the existence of an arrangement with the Initial Tenant allowing the lease to be terminated early. Further the Applicants' submissions concerning the impact of COVID-19 is irrelevant because the RTA was entered into in June 2019 'long before COVID-19' and, further, there is no evidence before the Tribunal that Mr Kumar had applied for jobs in Victoria at the time.

(b) It is 'fairly clear' that the Applicants were treating the Relevant Property as an investment property. While it was conceded that the Applicants may have had a 'long term plan to live there', that intention was not consistent with:

• the purpose of the concessions: i.e. to benefit those who reside in a property 'straight away or in a short period of time'; or
• the nature of the discretion, which is intended to provide relief where the failure to satisfy the Residence Requirements arises from circumstances beyond a taxpayer's control (as opposed to 'a decision to rent').

(c) Exercising the discretion in the present situation would be 'contrary to the purpose of the concessions'.

(d) The Applicants had not put forward any proper reason why the discretion should be exercised to benefit them. Further, insofar as Mr Kumar raised:

• the impact of COVID-19, that happened 'a long time later'; and
• the difficulties he encountered in finding employment in Victoria in 2019, he has not provided any evidence as to his attempts to do so (by contrast with the evidence of applying for jobs in the Victorian public sector in 2023).

(e) Mr Kumar's 'conduct in dealing with the SRO', in which he made 'continual mistakes' or 'lied' is a matter which 'wholly undermines' the request for favourable exercise of the discretion.

1. A like discretion was considered in Beech v Commissioner of State Revenue.[52] The proceeding concerned the discretion in section 43B of the Duties Act, relating to an exemption from duty for the transfer of a property between spouses to reduce the period of time that the applicants had to reside in the applicable property in order to satisfy an equivalent residence requirement.
2. In determining to exercise the discretion in that case, I made clear that the Commissioner's submissions, to the effect that the discretion should only be exercised where a taxpayer establishes that there was an 'unforeseen or unavoidable event' preventing compliance with the residence requirement, placed an 'impermissible gloss on an otherwise broad discretion'.[53] Rather, having regard to the Supreme Court's decision in Challenger Listed Investments Pty Ltd v Commissioner of State Revenue, I found that the Commissioner (and the Tribunal on review) is 'compelled to consider ... everything which may bear relevantly and probatively both for and against the exercise of the discretion ... by reference to the statutory criteria'.[54]
3. The essence of the Applicants' argument for the favourable exercise of the discretion in section 57L is that they had intended to move to Victoria and commence their occupation of the Relevant Property as their principal place of residence by May 2020 (i.e. within the 12 month period), but were unable to do so as a consequence of the COVID-19 related restrictions on movement within Australia, as well as the impact that the pandemic had on Mr Kumar's ability to find employment in Victoria.
4. Unfortunately for the Applicants, the evidence before the Tribunal does not support the underlying premise of their contentions.
5. In terms of intention, by their transferee statements (see [18]), the Applicants represented to the Commissioner that they intended to occupy the Relevant Property immediately (i.e. in May 2019). As the COVID-19 pandemic was not declared as a national emergency until March 2020, there was nothing preventing them from giving effect to that intention, if it were held. Further, there is no evidence before the Tribunal as to the lack of suitable engineering positions in Victoria at that time.
6. While it may be accepted that the COVID-19 restrictions made such a move more difficult (and perhaps even impossible) by May 2020, there is no evidence before the Tribunal to corroborate any change in the Applicants' intentions or the reasons for it.
7. Further, even if those matters could be explained, it is relevant to observe that the Applicants did not seek the exercise of the discretion at the time at which their intention changed or became stymied. Rather, the first time that they requested the favourable exercise of the discretion was in February 2023 (see [37]), almost three years after the usual period to commence occupation expired.
8. Moreover, rather than seeking the favourable exercise of the discretion in October 2022, when it was (or should have been) obvious to the Applicants that they had not (and could not) satisfy the Residence Requirement, they chose to present material (in the form of the utilities bill) to disguise that failure and support a submission that the Residence Requirement had been met.
9. In these circumstances, I consider there is no good reason to exercise the discretion in the present case and decline to do so.

Was penalty tax properly imposed at the rate of 90% and should it be remitted?

1. Under section 29(1) of the TA Act, a taxpayer is liable to pay penalty tax if a tax default occurs. A tax default is defined as the failure to pay a tax (including duty), in accordance with a tax law (including the Duties Act).[55]
2. The default rate of penalty tax is 25% of the amount of tax unpaid.[56] However, this can be increased or reduced to reflect an assessment of a taxpayer's culpability.
3. Relevantly, under section 30(2), the Commissioner can increase the penalty tax to a rate of 75% if he is 'satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a taxation law'.
4. Further, under section 32(1), the amount of penalty tax 'is to be' increased by 20% if, after an investigation is commenced, a taxpayer has taken 'steps to prevent or hinder the Commissioner from becoming aware of the nature and extent of the default'.
5. Under section 35, the Commissioner may remit penalty tax by any amount 'in such circumstances as [he] considers appropriate'. As with the discretion under section 57L, the Tribunal may (re-)exercise that discretion upon review.
6. In closing, while Mr Epstein accepted that the Applicants had provided erroneous information to the Commissioner, he suggested they were 'just a normal person's mistakes'. He submitted that the Tribunal has a discretion to remit any penalty tax and that it should be exercised in the present case given the Applicants had 'no track record of tax evasion or misleading anyone' and, noting the impact of COVID-19, they should 'be given a break'.
7. By contrast, Mr Morgan submitted that the conduct of Mr Kumar was at the 'highest level of egregiousness' in that he had acted in a 'deliberate' and 'calculated' manner to mislead and lie to the Commissioner in order to get out of paying duty.
8. In this regard, Mr Morgan submitted that while the Applicants had 'purchased an investment property', Mr Kumar had taken 'immediate steps to make it look like the Applicants lived [at the Relevant Property]' and then 'continued to say untrue things' and 'lie' to the Commissioner.
9. In particular, Mr Morgan highlighted Mr Kumar's conduct in producing the utilities invoices to the SRO, despite not living at the Relevant Property and being reimbursed by the tenant for some or all of the cost. He suggested that the only reason to have the utilities invoices in his name was to 'create a paper trail of residence' and, as such, this evidenced a 'consciousness of guilt'. Similarly, Mr Kumar's payment of the utilities, and production of banking records, were 'further false evidence'.
10. Mr Morgan submitted that the conduct plainly amounts to 'intentional disregard' of the Duties Act.
11. Further, Mr Morgan submitted that Mr Kumar engaged in 'active hindering' of the Commissioner following the commencement of an investigation by:
    • repeating rather than correcting the erroneous information previously provided, such as when he re-presented the 'misleading' utilities invoices; and
    • telling positive lies, such as suggesting that they had rented rooms on Airbnb style arrangements to family and friends, which was a 'clear fabrication' to address the rental income shown on the Applicants' tax returns.
12. Mr Morgan submitted that this was not an appropriate case in which to exercise the discretion to remit the penalty tax given the following matters (some of which overlap with the submissions in relating to the additional duty):
    • The transferee statements provided by the Applicants to the Commissioner indicated an intention to occupy the Relevant Property immediately, which was a lie.
    • The Applicants persuaded the Initial Tenant to put the utilities in Mr Kumar's name. Not only was it 'dishonest to mislead the Commissioner' in this way, it also exposed the Initial Tenant to risk in allowing himself to be drawn into a 'dishonest scheme'.
    • When the Applicants were first contacted by the Commissioner (through the SRO), they were given the opportunity to make voluntary disclosure, but instead 'chose not to do so'.
    • The Applicants provided the utilities invoices addressed to Mr Kumar 'knowing full well' that they reflected use of the Relevant Property by the Initial Tenant and would 'potentially mislead the Commissioner to think the Applicants lived at the property'.
    • Mr Kumar 'invented a false story' about the Airbnb style arrangements to explain the rental income reported for tax purposes, which was 'completely untrue'. Further, he told other lies such as the suggesting that the Agent had made a mistake in listing the property for rental, and that the Agent had received the rental bond from the Initial Tenant 'in error'.
    • Until prompted by Mr Morgan, Mr Kumar had provided 'no apology for his lies' and made attempts to minimise his responsibility for his own conduct by referencing distress and that notices had been sent to the wrong address. Given that the correspondence had also been emailed to Mr Kumar, and he responded almost immediately, the complaint was 'only true in the most technical of senses'. Further the Commissioner denied having threatened Mr Kumar.
13. Lastly, Mr Morgan submitted that the Applicants' level of culpability was 'very high' and submitted that the imposition of penalty tax at a rate of 90% was 'necessary to discourage others from lying to and misleading the Commissioner'.
14. In Price Street Professional Centre Pty Ltd v Federal Commissioner of Taxation,[57] Collier J suggested that a finding that a taxpayer has engaged in 'intentional disregard' of a taxation law (in that case, relating to federal income tax), requires:

an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer so as to flout the [tax law].

1. In Driver Group Pty Ltd v Commissioner of State Revenue,[58] Judge Macnamara observed that, if the evidence showed that the taxpayer had 'sought exemption under [the Duties Act] knowing that such exemption was not available, an intentional disregard of the Duties Act would be demonstrated'. However, in that case, as the taxpayer's witnesses were not aware of the requirements of the particular exemption in issue, His Honour found the taxpayer had not engaged in intentional disregard by claiming it.
2. In the present case, Mr Kumar admitted in cross-examination that the Conveyancer had explained the need to satisfy the Residence Requirement in order to claim the Duty Concessions. Despite this, the Applicants signed the transferee statements indicating that they intended to immediately live in the Relevant Property as their principal place of residence when it is evident they intended to lease it out.
3. Further, I consider it clear on the evidence that Mr Kumar took active steps to create the impression that the Applicants had meet the Residence Requirement, i.e. by making an arrangement with the Initial Tenant to have the utilities invoices issued in his name (while expecting the Initial Tenant to reimburse him for the cost) and immediately producing those invoices to the Commissioner when questioned.
4. I am comfortably satisfied that this conduct amounts to intentional disregard of the Duties Act and therefore that the Commissioner was correct to impose penalty tax at the rate of 75%.
5. In Seeby Pty Ltd v Commissioner of State Revenue,[59] the Tribunal drew a distinction between taking steps to prevent or hinder the Commissioner becoming aware of the nature and extent of a tax default (on the one hand) and a taxpayer who is 'not as co-operative as it perhaps could have been' (on the other). In setting aside the 20% penalty tax uplift in that case, it was observed that the taxpayer had provided information (in that case a valuation) which identified the 'nature' of the tax default, while the 'extent' of the default was a matter for the Commissioner to determine (by either accepting the taxpayer's valuation or obtaining his own).
6. A mere failure by a taxpayer to take up an opportunity to make voluntary disclosure would be insufficient to be regarded as a step taken to prevent or hinder the Commissioner in becoming aware of the nature and extent of a tax default. This is consistent with the decision of Deputy President Block in Ciprian and Ors v Commissioner of Taxation,[60] where he observed that the equivalent penalty applicable to federal income tax 'connote[s] something active as opposed to something passive' and found that conduct that amounted to 'stonewalling' was insufficient to attract the penalty.
7. However, in the present case, I am satisfied that the Applicants took active steps to effectively 'throw the Commissioner off the lead'. In particular, in October and November 2022, Mr Kumar sent the SRO copies of the utilities invoices as evidence that the Applicants had occupied the Relevant Property as their principal place of residence between May 2019 and May 2020. Of course, as they now accept, they were in fact living and working in Western Australia.
8. In my view, this was not a case of honest mistake. In circumstances where Mr Kumar could provide no reasonable explanation for having the utilities in his own name while the property was rented out,[61] I consider that he engaged in a calculated deception. A more likely explanation is that he, or someone he consulted, was aware that the Commissioner routinely seeks utilities data when assessing compliance with the Residence Requirement under the Duties Act and other state tax legislation.
9. Although the provision of the utilities invoices did not prevent the Commissioner from becoming aware of the nature and extent of the default, it certainly hindered him in doing so. So much is evident from the need to check the records of the Residential Tenancies Bond Authority to determine that the property was leased during the relevant period and then contact the Initial Tenant to understand the arrangements relating to the utilities.
10. It is notable that, even in the lead up to the hearing, Mr Kumar prepared and sought to rely on a witness statement which maintained that the Applicants had an understanding with the Initial Tenant that he would vacate early if the Applicants provided compensation. However, when cross-examined, he conceded that there was no such understanding and simply an assurance from the Agent that an application could be made to this Tribunal to obtain an order for possession.
11. In these circumstances, I am comfortably satisfied that the Applicants took steps to hinder the Commissioner from becoming aware of the nature and extent of a tax default and the uplift in the penalty tax from 75% to 90% was correct.
12. In terms of remission, it is relevant to observe that the penalty tax regime is already calibrated in a manner to reflect a taxpayer's culpability. As Mr Morgan observed, the culpability of the Applicants is 'very high' and this is reflected in the imposition of penalty tax at the rate of 90%.
13. While I accept that there is nothing to suggest that the Applicants have a track record of tax evasion, I do not consider it accurate to characterise their conduct as a 'normal person's mistake' as Mr Epstein suggested.
14. Similarly, I do not accept Mr Epstein's submissions that it is 'unnecessary and extreme' to impose a significant penalty because of the impact of COVID-19. While it may be accepted that many people were stressed and uncertain as a result of the pandemic and/or the restrictions that were imposed by governments around Australia to limit its spread, this cannot justify the taking of deliberate steps to avoid one's tax liability.
15. In Box v Commissioner of State Revenue,[62] Senior Member Wentworth noted that the principle of general deterrence can be important in state tax matters, observing that:[63]

[t]he imposition of a penalty, in appropriate cases, serves as a warning to those who might think it clever to apply for the [first home owner] grant, intending to do the absolute minimum to comply with the residence requirement and then rent the property out as soon as [the then applicable period of] six months ticks over.

1. It stands to reason that the need for general deterrence is even more important in a case where a taxpayer has been found to have intentionally disregarded a taxation law and/or taken steps to prevent or hinder the Commissioner becoming aware of the nature and extent of a tax default. As Mr Morgan correctly observed, in a case like the present, it is necessary to impose a significant penalty to 'discourage others from lying and misleading the Commissioner'.
2. Although Mr Kumar provided an apology to the Commissioner when giving his evidence, there is reason to doubt his level of remorse or insight in circumstances where:
   • the apology was only proffered after Mr Morgan had identified the Applicant's failure to apologise as a matter going to the appropriate penalty;
   • any apology is inconsistent with the manner in which he conducted this proceeding, including to maintain the contention that the Applicants met the Residence Requirement, despite his counsel (appropriately) conceding that point; and
   • he continued to reject any suggestion that he had lied or been dishonest and otherwise sought to minimise his conduct by suggesting that his conduct and actions were brought about by external stressors, including COVID-19.
3. Having regard to these matters, I do not consider it appropriate to remit the penalty tax.

1. Under section 28 of the TA Act, the Commissioner may also remit interest payable by a taxpayer 'in such circumstances as the Commissioner considers appropriate'. As with the discretion to remit penalty tax, this discretion may be (re-)exercised by the Tribunal on review.
2. The parties' submissions for and against remission of interest were essentially the same as for penalty tax.
3. The interest imposed under the Reassessment (and which continues to accrue, as the Applicants have yet to pay the additional duty) was based on the market rate of interest.
4. It has been observed by the Tribunal that the market rate of interest reflects the time value of money in terms of the tax which was properly due but not paid to the Commissioner.[64] In this context, the market rate of interest will only be remitted if a 'proper basis' to do so is established, such as excessive delay on the part of the Commissioner.[65]
5. In my view, and having regard to the discussion concerning remission of penalty tax, no proper basis for remission has been established and, as such, I decline to exercise the discretion to remit the interest.

[1] Tribunal Book ('TB'), tabs 21 and 22.

[2] Reflecting the difference between the normal duty and the duty which had in fact been paid.

[3] TA Act, s 30(2), which provides for a penalty tax rate of 75%.

[4] TA Act, s 32(1), which provides for the penalty tax rate to be increased by a further 20%.

[8] TB, 57 (under the heading 'Estimated Dutiable Value').

[12] Property report by Core Logic dated 7 June 2023 ('Core Logic Report'): TB, 786.

[14] Email dated 3 June 2019, at 3.45pm: TB, 369-370.

[15] Email dated 4 June 2019, at 1.42pm: TB, 367.

[16] Email dated 4 June 2019, at 2.14pm: TB, 367.

[36] Submission of Mukesh Kumar and Nirja Kumari served on 17 May 2024 ('AS') [5].

[37] Second Submission of Mukesh Kumar and Nirja Kumari dated 6 October 2024 ('AR').

[38] The Tribunal had made standard orders providing that, after the Tribunal Book was filed, no further documents could be filed without leave. The Commissioner did not oppose that application and I granted leave at the start of the hearing.

[47] [1938] HCA 34; (1938) 60 CLR 336. The principle is that, where a serious allegation is made in civil proceedings, 'the Tribunal must feel an actual persuasion of its occurrence or existence before it can be found'.

[48] See Green v Commissioner of State Revenue [2018] VCAT 640 [17]-[18].

[50] [2020] VCAT 577 [66]-[78].

[51] Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 51(1)(a).

[52] [2023] VCAT 1363.

[54] Ibid (citing Challenger Listed Investments Pty Ltd v Commissioner of State Revenue [2010] VSC 464; (2010) 80 ATR 630 [27]).

[57] [2007] FCA 345; (2007) 66 ATR 1 [43].

[58] [2013] VCAT 1151 [84].

[59] [2021] VCAT 180 [176].

[60] [2002] AATA 746 [22(k)].

[61] In this regard, although Mr Kumar claimed that he entered them at a time when he still intended to move in immediately, that explanation is contradicted by the advertising of the property for rental before the agreement with Dodo Electricity and Gas was entered.

[62] [2015] VCAT 330.

[64] See, for example, Wilkinson v Commissioner of State Revenue [2024] VCAT 807 [173].

[65] Tran v Commissioner of State Revenue [2025] VCAT 581.