McCarthy & McCarthy v Commissioner of State Revenue [2022] QCAT 342

Queensland Civil and Administrative Tribunal|2022-10-04

TAXES AND DUTIES AND HOME BUILDERS GRANT - ADMINISTRATIVE DIRECTION - where homeowners entered a contract for building work - whether a substantial renovation contract - whether an eligible home builder transaction

[1] Prior to the hearing of this application on 28 July 2022, Mrs McCarthy was listed as the only applicant. At the hearing, Mrs McCarthy advised that it was the intention of both Mrs and Mr McCarthy that Mr McCarthy also be an applicant, as the application relates to a grant application for work done on a property owned jointly by them. It seems that a lack of space on the Tribunal's application form resulted in only Mrs McCarthy's name being listed as an applicant, and that the issue had not been addressed before the hearing. It was agreed between the parties, and the Tribunal finds, that Mr McCarthy is a person whose interests may be affected by this proceeding. Mr McCarthy was contacted, and he advised that he was aware of the hearing and was available to take part, and that he wished to be joined as a party. Consequently, I have made an order that Mr McCarthy is joined as a party to these proceedings.[1]

[2] Mrs and Mr McCarthy have lodged an application to review the decision of the Commissioner of State Revenue to refuse payment of the HomeBuilder Grant to them. The original decision to refuse the application was made 12 January 2021. The applicants lodged an objection to that decision, and on 23 March 2021 a decision was made confirming the original decision on the basis that the transaction for which the grant was sought was not "an eligible home builder transaction"[2] because it was not a "substantial renovation contract".
[3] Mrs and Mr McCarthy are homeowners. On 8 July 2020, they signed a building contract for work on their property consisting of:

(a) An extension of the outdoor living area;

(b) Updated garage door and windows;

(c) Updated entry way;

(d) Installation of outdoor blinds;

(e) Replacement of a section of pool fencing after the adjoining outdoor living area was raised as part of (a); and

(f) Building a brick front entrance with electric gates, including installation of new security cameras and intercom system connected to the existing dwelling by power and a data communication cable.

[4] The respondent determined that not all of the works meet the eligibility requirements of the First Home Owner Grant and Other Home Owner Grants Act 2000. To be eligible for a $25,000 grant, the contract must fall within the Administrative Direction Australian Government HomeBuilder Grant - Queensland.[3]
[5] The respondent refers in its submissions to an Administrative Direction made on 31 July 2020, and a further Administrative Direction made on 6 January 2021. The respondent submits that the operation of the original Direction is saved in regard to the applicants' accrued rights.[4] However, the later version was in force at the time of the original decision on 12 January 2021. The law as at the date of the original decision is the law to be applied by the Tribunal.[5]
[6] The Administrative Direction (under the heading "Background"), states that the grant is "available to eligible owner-occupiers who build a new home or substantially renovate an existing home..."
[7] Pursuant to the Administrative Direction, homeowners may apply for grants if they enter into "eligible transactions". An eligible transaction includes a substantial renovation contract made by the freehold owner of a home in Queensland if the contract commencement date is between 4 June 2020 and 31 March 2021.[6] It is agreed that the contract was entered into during that time, and that the applicants are the freehold owners of the home.
[8] The Administrative Direction defines a "substantial renovation contract" as a contract for the renovation of an existing dwelling which substantially alters the existing dwelling and improves the accessibility or safety or liveability of the property (although this need not involve the removal or replacement of foundations, external walls, interior walls, floors, roofs, or staircases).[7]
[9] The Administrative Direction provides that a "substantial renovation contract" does not generally include:

(a) a contract for the construction of a standalone granny flat, swimming pool, tennis court, or a structure not connected to the home such as an outdoor spa, sauna, shed or standalone garage; or

(b) a contract relating to a renovation that is primarily cosmetic in purpose such as landscaping, painting or recarpeting.[8]

[10] If the substantial renovation contract is for at least $150,000, and other eligibility criteria are satisfied, the homeowner is entitled to a grant of $25,000.[9]
[11] In refusing the application for the grant, the respondent has excluded from consideration the cost of building the brick front entrance with electric gates. The original decision also excluded the cost of changes to the pool fence, although no decision has been made in relation to that work in the objection decision. I am satisfied that the alterations to the pool fence were necessitated by and incidental to the construction of the new outdoor living area.
[12] It is not contested that:

(a) the substantial renovation contract must both be a contract for the renovation of an existing dwelling which substantially alters the existing dwelling and improve the accessibility or safety or liveability of the property;

(b) the outdoor living area extension and the garage and entry updates meet the criteria for a "substantial renovation contract" as they substantially alter the existing dwelling;

(c) all items included in the contract improve the accessibility or safety or liveability of the property; and

(d) if the front gate works are excluded from the calculation of the cost of the contract, it does not meet the requirement to be for at least $150,000.

[13] The respondent submits that the proper approach for the Tribunal is to consider each part of the overall contract and exclude items which do not meet the criteria set out in the Administrative Direction. Works that do not substantially alter the existing dwelling should, the respondent submits, be excluded from consideration. It submits that this is the proper approach because:

(a) alterations must be to the dwelling itself - it is not sufficient that alterations are made to the property which are external to the dwelling;

(b) the front gate and entrance are some 20 metres away from the house, and fall into the category of construction which is generally not included - "a structure not connected to the home such as an outdoor spa, sauna, shed or standalone garage";

(c) improvements to the "home" (not the property) are the focus of the Act, although it is conceded that while "home" is defined, "dwelling" (the term used in the relevant paragraph) is not;

(d) Considering the purpose of the Act as a whole, the focus of the Act is upon new home building or substantial home renovations, not peripheral works; and

(e) that interpretation is in line with the FAQs page on the Commonwealth Treasury Website which states:

Q: What if a renovation contract includes works that are eligible and ineligible? E.g. the contract covers eligible substantial renovations to the existing dwelling and ineligible landscaping and outdoor works?

A: The State or Territory Revenue Office must be satisfied that at least $150,000 worth of renovations is being used to improve the accessibility or safety or liveability of the dwelling.

[14] I do not propose to take the FAQ material into account. It is not part of the legislation or Administrative Direction produced under the legislation. It does not reflect the Administrative Direction which sets out the position in Queensland, requiring that the contract improves the accessibility or safety or liveability of the property.
[15] The applicants submit that:

(a) The term "substantially alter" is not clearly defined;

(b) It is artificial to consider each piece of work under the contract separately. It is arguable that any particular piece of work does not "substantially alter the existing dwelling", although each piece of work does alter the existing dwelling in some way;

(c) The Administrative Direction refers to "a substantial renovation contract" and defines it as "a contract for the renovation of an existing dwelling which substantially alters the existing dwelling". As reference is made to "a contract", the Tribunal should consider the whole contract, and not the individual parts of it;

(d) When the contract is considered as a whole, it provides for works which substantially alter the existing dwelling (noting that that term is not defined);

(e) Specifically in relation to the front gate:

(i) the works did alter the existing dwelling as they involved cutting through both external and internal walls to install the cabling for the security system;

(ii) the front gate is not in the same category of contracts generally not included (a contract for the construction of a standalone granny flat, swimming pool, tennis court, or a structure not connected to the home such as an outdoor spa, sauna, shed or standalone garage) because the contract covers more than the front gate work alone, and because the front gate is "connected to" the existing dwelling;

(iii) the front gate is connected to the existing dwelling by means of a cable running some 20 metres from the gate to inside the home. There is no definition of "not connected to the home" contained in the Administrative Direction. A broad interpretation is appropriate, and the cabling is sufficient to make a finding that the front gate is connected to the home;

(iv) the government approved the first iteration of the Administrative Direction on 30 July 2020, after the contract had been signed on 8 July 2020. The applicants entered the contract in the genuine belief that it met the eligibility criteria, bearing in mind that the Administrative Direction was not yet publicly available and there was limited access to government resources to provide advice prior to construction beginning.

[16] The respondent submits that only the value of alterations to the house itself should be included when determining whether the applicants entered into an eligible transaction, and the cost of work done external to the house should not be included. The respondent submits that inclusion of the cost of the front gate area means that the contract is not a "substantial renovation contract".
[17] I do note that paragraph 19 of the Administrative Direction does not necessary exclude a contract from being a substantial renovation contract if a particular structure is not physically connected to the "existing dwelling" or "home". Paragraph 19 states that a substantial renovation contract "does not generally include" contracts for the construction of a structure not connected to the home, with some examples provided. To that extent, I am satisfied that there is some discretion to include contracts for standalone structures, or structures not connected to the existing dwelling.
[18] The respondent submits that if the contract is considered as a whole, it must be rejected because it does not meet the necessary criteria. The respondent submits that it has considered the application in the way most favourable to the applicants in including items which do meet the criteria.
[19] I must determine whether the contract should be considered as a whole, or some parts of the contract are able to be excluded from consideration if they do not meet the criteria.
[20] The applicants submit that there is nothing in the Administrative Direction to suggest that the contract should be considered in a piecemeal fashion.
[21] I take into account that there is no indication in the Administrative Direction that the approach taken by the respondent was contemplated. There is no reference, for example, to "a contract or part thereof". There is no paragraph which excludes from consideration those parts of the contract which relate to works which do not alter the dwelling.
[22] The Administrative Direction provides that a substantial renovation contract is not an eligible transaction if the consideration is less than $150,000. "Consideration" is defined "for a substantial renovation contract - the total consideration payable under the contract". That definition does not provide for the excision of particular items under the contract which are not substantial alterations to the existing dwelling.
[23] I am satisfied that the contract must be considered as a whole. The contract is a contract for the renovation of an existing dwelling, and substantially alters the existing dwelling. Significant changes have been made to the dwelling pursuant to the contract, including removal and replacement of the existing garage doors, installation of a garage window, changes to the entry (removal of a cupboard and removal and replacement of existing front door unit), and attachment of a large covered area to the side of the house, with decking, lighting, fan, pizza oven, and attachment of outdoor blinds.
[24] I do not need to consider whether the front gate structure considered in isolation substantially alters the existing dwelling. I accept the applicants' submissions that any particular part of the contract may not meet that definition. For example, the changes to the entry, when considered in isolation, may not substantially alter the existing dwelling. When the contract is considered as a whole, however, it has had the effect of a substantial alteration to the existing dwelling.
[25] Accordingly, I am satisfied that the contract is a substantial renovation contract.

[2] s 25Q(3) and s 25R First Home Owner Grant and Other Home Owner Grants Act 2000 (Qld) ('FHOGOHOGA').

[3] s 25Q(2) and the Schedule dictionary FHOGOHOGA.

[6] Paragraph 1 Administrative Direction Australian Government HomeBuilder Grant - Queensland.

[7] Paragraph 19 Administrative Direction Australian Government HomeBuilder Grant - Queensland.

[8] Paragraph 19 Administrative Direction Australian Government HomeBuilder Grant - Queensland.

At a glance

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Judgment (25 paragraphs)

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