List of legislation: ACT Civil and Administrative Tribunal Act 2008, s.68

First Home Owner Grant Act 2008, ss. 20, 23, 47, 48 & 49

Tax Administration Act 1999, ss. 25, 26, 29, 30, 31 & 37

List of Regulations: Taxation Administration (Amounts Payable-Eligibility-Home

Buyer Concession Scheme) Determination 2008 (No 1), s.5

List of cases: Calcaro v Commissioner for State Revenue [2004] NSWADT

Chief Commissioner of State Revenue v Farrington (GD) [2004] NSWADTAP 41

Davey v Commissioner for ACT Revenue [2008] ACTAAT 30

COMMISSIONER FOR ACT REVENUE

1. The decision of AT 12/24 under review is confirmed.
2. The decision of AT 12/50 under review is confirmed.

1. These are two applications for review of decision which were heard together on 21 August 2012. They concerned decisions relating to a grant paid to the applicant under the First Home Owner Grant Act 2000 (the FHOG Act), and an assessment of concessional duty under the Tax Administration Act 1999 (the Tax Act) and the Taxation Administration (Amounts Payable-Eligibility-Home Buyer Concession Scheme) Determination 2008 (No 1),(the Determination). The application under the FHOG Act was matter AT 12/50, and the application under the Tax Act and the Determination, was numbered AT 12/24.
2. Much of the evidence given by the applicant related to both matters; however, consideration of the applications required the tribunal to apply principles prescribed by the two different Acts.
3. The different applications will be dealt with separately as appropriate within these reasons.

1. On 16 October 2008, the applicant entered into a contract for the purchase of the property to which the Tax Act application related. The purchase was settled on 10 December 2008.
2. On 19 November 2008, there was an initial assessment of duty payable for the purchase of $10,875.00. This was a non-concessional assessment.
3. On 13 November 2008, the applicant signed an application for a home buyer concession (HBC) under the Determination. The application contained a declaration to the effect that the applicant would reside in the home as her principal place of residence for a continuous period of 6 months; that period to commence within one year of the transfer of the property to her.
4. Approval was given and concessional duty in the amount of $20.00 was assessed. The Notice of Reassessment included a statement that the concession was made on condition of observance of the residency condition referred to above.
5. The property was transferred to the applicant on 10 December 2008.
6. On 5 October 2011, the applicant was told of an investigation into her compliance with the conditions of the grant of the concessional assessment of duty.
7. The applicant had not taken up residence in the property. It had initially been licensed to a friend, and then leased to tenants.
8. In a letter dated 26 October 2011 to the Commissioner's office, the applicant requested exemption from the residency requirements. She agreed that the requirement had not been complied with.
9. On 7 November 2011, a delegate of the Commissioner decided to reassess the duty payable by the applicant (the original decision). The basis of the original decision was that the applicant had not complied with the residency requirement, noting that any request for extension or exemption from that requirement had to be made before 10 December 2009. There was a reassessment of the duty payable. In addition, penalty tax was imposed on the applicant pursuant to section 30 of the Tax Act, at the rate specified under section 31(1) of the Act. Interest was also imposed.
10. The applicant objected to the original decision and an internal review was conducted. In a decision dated 20 March 2012, the applicant's objection was disallowed in full and the original decision was confirmed. The delegate's reasons for decision pointed out that a decision to refuse to remit interest under section 29 of the Act is listed in Schedule 2 to the Act as a decision that can only be reviewed by the Commissioner. Hence, this part of the delegate's decision is not in fact reviewable in these proceedings.
11. The application for review of decision to ACAT in AT 12/24 challenged the HBC duty reassessment under the Tax Act, the imposition of penalty tax, and imposition of interest.

1. On 16 October 2008, the applicant signed an application for a grant under the FHOG Act in respect of the property transaction referred to above. The grant application was made on the same day as the signing of the contract for purchase.
2. In the signed application form the applicant ticked a box 'yes' to the following eligibility criterion:
   1. Will each applicant be occupying the home as their principal place of residence for a continuous period of 6 months commencing within 12 months of completion of the eligible transaction?
3. The form contained a declaration to the same effect just before signature.
4. On 2 December 2008, payment of the First Home Owner Grant (FHOG) was approved in sum of $14,000.00. This was made up of the grant of $7,000.00 and the FHOG Boost of $7,000.00.
5. The letter of approval stated that the grant was conditional on compliance with the residential requirement. It also stated that there was no provision for extension of the residency requirement once the relevant period had expired.
6. On 5 October 2011, the applicant was told of an investigation into her compliance with the conditions upon which the grant was made.
7. In the letter of 26 October 2011, previously referred to, the applicant requested exemption from the residency requirement of the FHOG Act, and agreed that the condition had not been complied with.
8. In an original decision made on 7 November 2011, the delegate of the Commissioner reversed, pursuant to section 23 of the FHOG Act, the earlier decision to make the grant and the grant boost to the applicant. He relied on section 20 of the Act. He found that the applicant had not complied with the residency requirement and had applied for exemption outside the time limit specified.
9. A penalty was also applied pursuant to section 47(2) of the Act, and interest imposed pursuant to section 48. Section 47(2) permits the respondent to impose a penalty in the case of an applicant's dishonesty.
10. Following the applicant's objection, a review was conducted. The review decision was dated 20 March 2012 and confirmed the original decision with one variation. The delegate relied on section 47(3) to impose a penalty rather than section 47(2) of the Act, pointing out that the obligation to pay had arisen under section 47(1)(b). The variation of the original decision removed any suggestion that dishonesty on the part of the applicant had been the basis for imposition of the penalty.
11. The applicant's application for review of decision numbered AT 12/50 was dated 21 June 2012. It challenged the reversal of the grant and imposition of penalty and interest.

1. In relation to the HBC, the residential requirement is found in section 5 of the Determination_._ The section also contains the time limit confining discretion to the period for compliance itself. Section 5 relevantly provides:

(1)(b) at least one applicant named in the grant, transfer or agreement for transfer of the subject property as the grantee or transferee must:

(i) reside in the home for a continuous period of 6 months; and

(ii) start that residency period within 12 months of:

1. completion of the transfer for an eligible property; or
2. the date of the Certificate of Occupancy following completion of construction of the residence on the eligible vacant block;

(2) In spite of subsection 5 (1), the Commissioner may if he or she is satisfied that there are good reasons to do so:

(a) approve a residency period shorter than the 6 months specified in subparagraph 5 (1) (b) (i);

(b) exempt the applicant from the requirement to reside in the home for the continuous period of 6 months specified in subparagraph 5 (1) (b) (i);

(c) extend the time specified in subparagraph 5 (1) (b) (ii) for an applicant to meet the residency requirement; or

(d) exempt the applicant from the requirement in paragraph

(3) The discretions of the Commissioner for ACT Revenue set out in paragraphs 5 (2) (a), (b) and (c) can only be exercised:

(a) where an applicant is unable to reside in the property because of a compulsory or unforeseen circumstance eg work or health related issues; and

(b) when the request for approval or for an exemption from the requirement or for an extension of time or is lodged before the period of time for compliance with the residency requirement has elapsed.

1. Section 30 of the Tax Act imposes penalty tax. It provides:

30 Penalty tax in relation to certain tax defaults

(1) If a tax default happens, the taxpayer is liable to pay penalty tax in addition to the amount of tax unpaid.

1. The rate of penalty is prescribed under section 31(1) of the Tax Act.

(1) The amount of penalty tax payable in relation to a tax default is 25% of the amount of tax unpaid, subject to this division.

1. Later subsections provide for higher rates of penalty in certain circumstances. Sub-section 31(6) gives the Commissioner discretion to decide not to impose penalty tax. It says:

(6) No penalty tax is payable in relation to a tax default if the commissioner is satisfied that -

(a) the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the tax law; or

(b) the tax default happened solely because of circumstances beyond the taxpayer's control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person's or the taxpayer's control) but not amounting to financial incapacity.

1. Section 37 gives the Commissioner discretion to remit penalty tax.

The commissioner may remit all or part of an amount of penalty tax payable by a person if satisfied that -

(i) the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; or

(ii) the circumstances that resulted in the liability for penalty tax were exceptional; and

(b) it would be fair and reasonable to remit all or part of the penalty tax.

1. Liability to pay interest is provided for in Section 25.

(1) If a tax default happens, the taxpayer is liable to pay interest on

the amount of tax unpaid calculated on a daily basis from the end of the last day for payment until the day it is paid at the interest rate from time to time applying under this division.

1. Section 26 provides for the rate at which interest is calculated.
2. Section 29 gives the Commissioner discretion to remit interest in certain circumstances.

(1) The commissioner may remit all or part of the market rate component or the premium component of interest, or both, if -

(a) the commissioner has determined that no penalty tax is payable under section 31 (6); or

(b) the amount of penalty tax has been reduced under section 32 or section 33; or

(c) penalty tax has been remitted in whole or in part under section 37.

Note The commissioner's decision refusing to remit interest in accordance with a taxpayer's application is a commissioner-reviewable decision (see s 107, def commissioner-reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).

(2) The commissioner must not remit the market rate component unless the commissioner is also satisfied that the circumstances are exceptional and justify the remission.

1. Part 2 of the FHOG Act sets out the conditions for eligibility of an applicant for a grant. Division 2.2 sets out a number of eligibility criteria. Criterion 5 (in section 12) is the residence requirement.

(1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant's principal place of residence for a continuous period of at least 6 months.

(2) However, if the commissioner is satisfied there are good reasons to do so, the commissioner may -

(b) exempt the applicant from the requirement to comply with subsection (1).

(3) The period of occupation required under subsection (1), or the shorter period approved under subsection (2) (a), must start within 1 year after completion of the eligible transaction to which the application relates or a longer period approved by the commissioner.

(4) The commissioner may give an approval or exemption under this section within 18 months after completion of the eligible transaction to which the application relates.

(5) If an application is made by joint applicants and at least 1 (but not all) of the applicants complies with the residence requirements, the non-complying applicant or applicants are exempted from compliance with the residence requirements.

1. At the time that the applicant applied for her grant, the time limit in sub-section (4) was set at 12 months after completion of the eligible transaction, in this case, settlement of the purchase. The section has since been amended to expand the period to 18 months.
2. The applicant was paid the grant before she was required to comply with the residence criterion, so that Section 20 is relevant.

20 Payment in anticipation of compliance with residence

(1) The commissioner may authorise payment of a first home owner grant in anticipation of compliance with the residence requirements if the commissioner is satisfied that each applicant intends to comply with the residence requirements.

(2) If a first home owner grant is paid in anticipation of compliance with the residence requirements, the payment is made on condition that, if the residence requirements are not complied with, the applicant must within 14 days after the relevant date -

(a) give written notice of that fact to the commissioner; and

(3) The relevant date is the earlier of the following:

(a) the end of the period allowed for compliance with the residence requirements;

(b) the date it first becomes apparent that the residence requirements will not be complied with during the period allowed for compliance.

1. Section 47 of the Act enables the Commissioner to require the applicant to repay an amount paid to the applicant and to impose a penalty.

47 Power to require repayment and impose penalty

(1) The commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if -

(b) the commissioner reverses the decision under which the amount was paid for any other reason.

(2) If, because of an applicant's dishonesty, an amount is paid by way of a first home owner grant, the commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty of not more than the amount the applicant is required to repay.

(3) If an applicant (or former applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the commissioner may, by written notice, impose a penalty of not more than the amount the applicant is required to repay.

1. Section 48 imposes a liability to pay interest, and defines the rate payable when section 20(2)(b) or section 47 applies.

(1) A person is liable to pay interest under this section on the amount of a first home owner grant paid to the person if the amount is repayable under section 20 (2) (b) or section 21 (2).

(2) A person is liable to pay interest under this section on an amount paid to the person on an application for a first home owner grant if the amount is repayable under section 47.

(3) Interest under this section is to be calculated on a daily basis from -

(a) if the amount is repayable under section 20 (2) (b) - the relevant date as defined in section 20 (3); or

(b) if the amount is repayable under section 21 (2) - the day the notice mentioned in section 21 (2) (a) is given to the commissioner; or

(c) if the amount is repayable under section 47 (1) - the date the amount was paid to the applicant.

(4) For this section, the interest rate is the interest rate mentioned in the Taxation Administration Act 1999, section 26.

1. There is discretion to remit interest in section 49(6).

(6) The commissioner may remit or refund all or part of an amount of interest paid or payable by a person.

1. Section 68 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) sets out the powers of the Tribunal on review.

(1) This section applies if the tribunal reviews a decision by an entity.

(2) The tribunal may exercise any function given by an Act to the entity for making the decision.

Note A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations (see Legislation Act, s 104).

(ii) remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal.

1. The first application made by the applicant was signed on 18 April 2012 and filed the same day. The grounds for the application were set out as an annexure. A great deal of supporting material was attached to the statement of grounds. It was apparent that the grounds and supporting material were intended to apply to both applications. The applicant relied on the contentions set out below.
2. She entered into the contract for purchase of the property on 10 October 2008. She moved to Melbourne to take up a job in the Victorian Public Service that commenced on 27 October 2008. This was after she negotiated with the employer for increased salary on the basis of an appointment that she had obtained in the ACT. She said she had tried to return to Canberra, but was unable to find employment on acceptable terms.
3. In a letter to the respondent of 5 January 2012, the applicant said of her move to Melbourne:

Further, I accepted the job offer in Melbourne since I felt I was stagnating in my career and desperately needed to take action. Hence, it wasn't done voluntarily but under duress.

1. At the hearing, the applicant said that she wished to pursue a career in data warehousing. Opportunities were limited in the ACT. A possible opening in the ACT was not on terms that were acceptable to her. She was able to obtain a suitable job in Melbourne. The job in Melbourne had the same income as the job available in Canberra, however, she opted to move to Melbourne to pursue what she thought was a career with long term advantages.
2. She said that she had unsuccessfully attempted to find employment in the ACT since that time.
3. I am satisfied that the applicant made a considered decision to accept employment out of Canberra in order to advance her career. This not only involved moving outside the Commonwealth employment system in which she had obtained equivalent salary employment, but took her to another state and city; away from the residential property purchase which was partly funded by an ACT scheme. She has never returned. I cannot agree that her decision was made under duress. It was a voluntary decision made in the interests of her career.
4. At about the time that she applied for the grant and for the duty concession, the applicant engaged a solicitor who she says did not make her aware of her responsibilities. She says that he did not tell her about the residency condition, or the period during which she could have requested exemption etc. She complained to the Law Society about the solicitor, but only after being notified of the investigation and its consequences. The solicitor, in his reply to her complaint, pointed out that by the time the FHOG application was made, the applicant was resident in Melbourne. There is no information available to me about whether the Law Society took any further action in relation to the complaint and if so, what the outcome of the action was.
5. There is insufficient information to draw any conclusion about the relevance of the applicant's submissions about her solicitor, to the decisions that have been made.
6. The applicant's mother became ill during 2009. The applicant said that she had to take carer's leave from her employment to visit her mother overseas. Neither the nature of her mother's illness nor its severity, is clear. The results of a stress test electrocardiogram done on 20 June 2009 are attached to the applicant's grounds for application. The indication for the test was 'shortness of breath'. The results sheet indicates that the target heart rate was reached, that it was a positive treadmill test, and that the subject had shown 'Good Exercise Tolerance'. The applicant's trip overseas, which was to take place at the end of 2009, was planned much earlier. The tickets for her flights were paid for on 15 June 2009, so there was clearly no emergency involved. Her manager's letter of 4 January 2012 indicates that the applicant was concerned and fearful about her mother's condition before leaving for overseas.
7. Although the evidence indicates that the applicant was concerned for her mother's health, the evidence supplied does not indicate a serious condition, and the planning for the trip does not indicate haste to visit the mother. The mother was evidently fit to travel to Melbourne in early 2010. This matter does not seem to me to be of significance in relation to the applicant's failure to take action in relation to the residency requirements within time, or to the imposition of a penalty and interest.
8. The applicant also relied on a period of distress resulting from deterioration in her relationship with her partner following her return from her overseas trip. This was after the expiration of the period for compliance under the Determination and I therefore do not regard it as relevant to the reassessment of duty. It was however, within the period referred to in section 12 of the FHOG Act.
9. In a letter to the respondent of 2 July 2012, the applicant asks the rhetorical question :

What circumstances are exceptional? Circumstances which make a person call [a counselling service] 6/7 time a day are not 'exceptional'?

1. As part of her evidence, the applicant produced her telephone records for the relevant period. The records do not show the frequency of calls to the counseling service asserted by the applicant. The Tribunal accepts that this was a distressing time for the applicant, however, she appears to have remained at work and there is no evidence of other dislocation of her routine.

1. Both parties filed a list of authorities, and addressed these in their submissions. I will not deal with them in detail, but mention the following.
2. First, the case of Chief Commissioner of State Revenue v (GD) [2004] NSW ADTAP 41, and later cases, establish that an intention to reside in premises does not satisfy a residential requirement. Actual residence is required.
3. Secondly, Senior Member Hatch in an ACT case of Davey v Commissioner for ACT Revenue [2008] ACTAAT 30 referred to a line of cases having their origin in the earlier case of Calcaro v Commissioner for State Revenue [2004] NSWADT 158. He set out a number of matters taken from the earlier cases that are relevant to considering whether a penalty should be applied. Eight considerations were identified of which the first three are relevant to this application.

(a) the deterrent effect of the penalty;

(b) the nature and extent of the contravention;

(c) any loss or damage suffered, or gain made, as a result of the contravention.

1. In relation to the amount of concessional duty, the period during which it was open to the applicant to ask the respondent to give an extension or exemption, was long gone by the time she made her request.
2. As to penalties, a number of matters must be considered. The factors that are relevant to the imposition of a penalty under the Tax Act are also relevant to the consideration of penalty imposed under the FHOG Act.
3. Consistent with what was said in Davey and Calcaro, it is appropriate that a penalty be imposed for its deterrent effect. The applicant has never resided in the unit. It has been occupied by tenants other than for a relatively brief period of occupation by a friend. Counsel for the respondent calculated that she had received thousands of dollars of rent since the grant was made, however that must be considered in the context that the residential requirement is for six month period of residence only. The applicant's default was unearthed by an investigation and it is only recently that she has taken practical steps to recognise her obligations.
4. She has put forward a number personal matters which she submits have either prevented compliance with the residence requirement, or have justified or explained non-compliance.
5. In relation to the penalty provisions of the Tax Act for the purposes of application AT 12/24, section 37 relating to remission requires:
   • (a) that the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; and,

• (b) exceptional circumstances.

6. Although the applicant has put the argument that she was prevented from compliance with the residential requirement, I do not agree that the difficulties that she refers to have made it impossible to comply with the condition. It does not seem to me that her evidence of attempts to find satisfactory employment in the Territory amount to reasonable steps to comply with the residential requirement for the purposes of section 31 of the Tax Act, nor to mitigate the effects of the circumstances leading to non compliance as provided for in section 37.
7. She submits that non-compliance was driven by circumstances beyond her control for the purposes of section 31(6). Certainly the triggers for the circumstances she refers to: the illness of her mother; and the behaviour of her partner were beyond her control, however, they did not actually prevent compliance and appear to have been less intrusive than stated.
8. Finally, the circumstances she refers to were not exceptional, however defined, being of a type not uncommonly encountered by people during their lifetime.
9. The decision made by the delegate in so far as it relates to interest, is not subject to review in these proceedings.
10. Therefore pursuant to section 68 of the ACAT Act, I confirm the decision under review in matter AT 12/24.

AT 12/50 - The FHOG Act - The First Home Buyers Grant

1. Pursuant to section 20 of the FHOG Act, the grant having been paid to the applicant in anticipation of the residence requirement, she was obliged to advise the respondent of her failure to comply with the requirement and repay the grant within 14 days of the expiration of the 18 month period referred to in section 12. The period expired before her request for action by the respondent under section 12(2), and it is not possible to comply with her request made in the letter of 26 October 2011.
2. In paragraph 59 above, I have referred to imposition of a penalty under the Tax Act. The respondent's discretion under the FHOG Act is broader than the discretion given in the Tax Act; however, the factual circumstances in which the discretions are to be exercised are the same. For the reasons given above, it is appropriate that a penalty be imposed. The applicant took no steps to repay the grant until the investigation was instituted and imposition will have a deterrent effect. The rate at which it was imposed under the FHOG Act by the delegate is consistent with the rate imposed under the Tax Act, and also is consistent with the rates imposed in other jurisdictions.
3. In regard to interest, it is payable under section 48(1) of the FHOG Act, since the grant is repayable as the result of reversal under section 47(1) (b). In my view, the matters advanced by the applicant do not provide a reasonable basis for remission of interest pursuant to section 49(6). She has had the benefit of the capital amount of the grant, and has earned income from the property by renting it out.
4. Therefore pursuant to section 68 of the ACAT Act, I confirm the decision under review in matter AT 12/50.

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