Meyers v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2022-02-18

The Applicant's case

Mr Meyers' general contention is that the assessment of duty is invalid because it results in a double-payment of duty by him. As he put it at the hearing: I consider that I have paid the stamp duty twice.
That is, Mr Meyers says that he effectively bore the payment of stamp duty at the full ad valorem rate (that is, the general rate) on the acquisition of the Property for his benefit by his superannuation fund in November 2013 and is now assessed with a second liability for duty on the transfer of the Property from LKM Services as trustee of the Fund to himself, the sole member of the Fund.
As I understand it, Mr Meyers relies on the following further contentions. 1. The Fund's constituent document; that is, the Trust Deed (as it applied both before and after its amendment in July 2012) makes it clear that all property in the Fund is held and is to be held on trust for the beneficiaries and he, Mr Meyers, is the sole beneficiary. 2. The purchase moneys for the acquisition of the Property by the Fund in November 2013 were provided by Mr Meyers from his designated Transfer to Retirement Income Stream (TRIS) account in the Fund, the moneys of the Fund having been allocated to him prior to that purchase. 3. From the time of its purchase by the Fund, the Property had been segregated in the Fund in his favour. 4. The stamp duty on the transfer of the Property to the Fund in November 2013 was effectively paid by Mr Meyers personally by reason of it being withdrawn from his TRIS account; and accordingly 5. The Chief Commissioner's assessment of duty the subject of these proceedings amounts to double taxation. 6. The resolutions of the Fund record that the Property was purchased for and is held for his sole benefit; 7. Significantly, certain resolutions of LKM Services as trustee, record that: House to be held for Mr Meyers until his retirement and then transferred to him (Memorandum dated 30 September 2013; page 213 of Court Book)… Purchase house at [address of Property] to be held in trust for Mr Meyers until he requests transfer at time of winding up fund (Memorandum dated 11 October 2013; page 213 of Court Book) 1. Those resolutions, considered in the context of the Trust Deed, constitute a declaration of trust for the purposes of the definition of that term for the purposes of Chapter 2 of the Duties Act, "Transactions concerning dutiable property", which appears in section 8 (3) in the following terms: (3) In this Chapter: "declaration of trust" means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration.

Respondent's case

The Chief Commissioner's case is as follows.

Application of section 57

The Chief Commissioner says that Section 57 does not assist Mr Meyers. The instrument or instruments being considered must constitute a declaration of trust over the Property. But the terms of the Superannuation Fund, either under the original trust deed dated 19 June 1998 or the Variation Deed of 1 July 2012, cannot constitute such a declaration of trust over the Property because the Property was not purchased owned by the Fund as at either of those dates; having not been purchased until November 2013. In any case section 57 has two cumulative requirements, neither of which has been satisfied. The property being transferred must be identical with that which is the subject of the declaration of trust and that duty must have been paid in respect of the declaration of trust.

Application of Section 55

The Chief Commissioner says that section 55 is also inapplicable. The application of that section and hence the availability of the concessional rate of duty which it allows, rests on the following elements: 1. one person (described in the section as "the real purchaser") must have provided the monies for the purchase of a property (here, the Property) and so is recognised as the beneficial owner of the property. Here Mr Meyers asserts that he was the real purchaser; 2. the property must have been purchased on behalf of, and title to it must be vested in, another person (described in the section as "the apparent purchaser") upon trust for the real purchaser. Here Mr Meyers asserts that the apparent purchaser was LKM Services and that it held the title upon trust for him as the real purchaser; 3. the real purchaser must have provided all of the purchase money. However, by operation of section 55 (1A), money provided by someone else will be regarded as having been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.
In particular, what is recognised at law as a "resulting trust" must have arisen.
Under such a trust, the apparent purchaser will be regarded as holding title to the property upon trust for the real purchaser, who provided the purchase money. Title "results back" to the real purchaser: see the discussion in Dal Pont "Equity and Trusts in Australia", 7th edition, 2019 at [26.45] (Dal Pont).
Significantly however, the presumption of a resulting trust can be displaced by evidence of the actual intention of the real purchaser at the time of the purchase: see Charles Marshall Pty. Ltd. v. Grimsley [1956] HCA 28; (1956) 95 CLR 353, at pp 364-5; Dal Pont at [26.95], [26.100].
It is clear that the relevant time to examine the characterisation of the trust is the time of purchase and here that must be the date of the Contract for Sale.
The Chief Commissioner says that no such resulting trust arose here, that section 55 has no application to any other sort of trust and that where, as here, a trustee of an existing trust purchases property out of trust funds, no resulting trust can arise in favour of a person on the position of Mr Meyers.
The Chief Commissioner refers to Mr Meyers' contentions that because the purchase funds were paid out of his TRIS he is taken to have provided the funds for the purchase and accordingly he is the "real purchaser" for the purposes of section 57. The Chief Commissioner says in response that no evidence has been presented to show that the entirety of the purchase money for the Property was paid from the TRIS or that such money was actually provided by Mr Meyers. The Chief Commissioner relies on Revenue Ruling DUT30 at [14] which provides: ..evidence is generally required to confirm that the real purchaser actually provided the purchase money for the trust property. This may consist of bank statements, copies of cheques etc. The evidence should be sufficient to demonstrate that the real purchaser actually provided the deposit as well as the balance of the purchase money. If any part of the purchase money was borrowed by the apparent purchaser (e.g., in the apparent purchaser's name as mortgagor) details of the loan arrangements and any indemnities given by the real purchaser should be provided, together with evidence of the source of any loan repayments made prior to the transfer.
The Chief Commissioner's says that, although Mr Meyers asserts that the purchase funds came from his TRIS account, he has provided no evidence of that, including in particular the sort of evidence contemplated by Revenue Ruling DUT 030, such as relevant bank statements and there is no evidence as to how the Property was accounted for, in the Accounts of the TRIS or otherwise. The Chief Commissioner points to the Fund's resolutions as demonstrating that funds for the purchase were provided by the Fund itself and not by Mr Meyers personally.
The Chief Commissioner further contends that even if Mr Meyers could establish to the required standard that the funds for the purchase of the Property came from the TRIS, that is insufficient to establish that he was the "real purchaser" for the purposes of section 57.
To that end the Chief Commissioner relies on the meaning of a TRIS given by the Superannuation Industry (Supervision) Regulations 1994 (Cth) at clause 6.01, read with Reg 1.06 (9A)(c), which demonstrate that the object of a TRIS is to provide a beneficiary with access to a non-commutable income stream from the relevant superannuation fund. A maximum of 10% of the pension account balance may be paid per annum, unless it is by way of commutation and income paid from the TRIS as a "pension", being a benefit derived from the fund. As the Variation Deed makes clear at clause 7.1, the Fund is at all times vested in the trustee, LKM Services.
Additionally, the Chief Commissioner contends that Mr Meyers has not established the existence of a repayable loan arrangement, so section 55 (1A) has no application.

Application of Section 60

The Chief Commissioner contends that the section has no application to the Mr Meyers' situation or the facts of this case. Although there are some provisions of Division 2 of Part 6 of Chapter 2 of the Duties Act relevant to dealings involving a self-managed superannuation fund (SMSF), such as 62A which allows a concession for a transfer of dutiable property from a member of to the trustee of the SMSF in certain circumstances, there is nothing in the Act which provides for a concession from duty for a transfer of property from the trustee to a member of the SMSF.

Mr Meyer's onus of proof and his opportunity to make his case

At the commencement of the hearing, because Mr Meyers was not legally represented, I spent some time explaining to him the onus of proof which he as the Applicant bears to establish any error in the assessment and in the decision under review, consistently with my outline of those matters at [18]- [19] above. Mr Meyers appeared to understand my explanation. I allowed him just under one hour to present his case by way of submissions in chief and a further 20 minutes to make submissions in reply to those of the Chief Commissioner.
I have carefully considered those oral submissions and the written material provided by Mr Meyers.
To reiterate what is said above, a central contention by Mr Meyers is that that he has been "double-taxed", in that he has had to bear stamp duty at the full ad valorem (general) rate on the acquisition of the Property, for his benefit, by his superannuation fund in November 2013 and is now assessed with what he regards as a second liability for duty on the transfer of the Property from LKM Services as trustee of that fund, to himself.

Conditions on the operation of section 57

Concessional duty on the Transfer will not be available by operation of Section 57, unless: 1. the Transfer was made under and in conformity with the trusts in that declaration of trust; and 2. the further conditions set out in sub-sections 57 (2) and (3) are satisfied and in particular, duty has been paid on the declaration of trust, or it is exempt from duty.
An absence of either of those factors will be fatal to a claim for concessional duty under the section.
The Trust Deed, being the Superannuation Fund's constituent document declares effectively (by operation of clause 1) that the Fund is held by the Trustee as trustee for the Members (as defined). That was effective on and from 10 June 1988 under the Trust Deed and it was continued on and from 1 July 2012 by operation of the Variation Deed, specifically by clause 1 read with Recital B. Each party to each of the two deeds is deemed to have made such a declaration. Mr Meyers was at all relevant times the only Member, so he is the sole beneficiary of the trust thereby created. As I understand it, Mr Meyers relies on those facts to satisfy the requirement that the Transfer be in conformity with the trusts in the asserted declaration of trust.
Section 8 (3) of the Duties Act defines the term "declaration of trust" for the purposes of Chapter 2 of the Act, which is titled "Transactions concerning dutiable property". So it is that definition and not any general notion of a declaration of trust which will apply when assessing the availability of this concession, the concession being contained in Chapter 2 of the Act. The definition is in the following terms: (3) In this Chapter - "declaration of trust" means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration. (Emphasis added)

The "substantial identity" test

As was made clear in Sportscorp Australia Pty Ltd v Chief Commissioner of State Revenue (NSW) (2004) 58 ATR 1, in order for section 57 to apply to a transfer of dutiable property, the land which is subject to the transfer must have the same substantial identity as the land which is the subject of the relevant trust. In that case Gzell J of the Supreme Court of NSW initially (at [53]), relied on that principle in applying section 55 of the Duties Act but subsequently, at [56]-[58], did the same in applying section 57.
The Transfer fails that test. At the time of the relevant declaration, which must have been the date of execution of each of the Trust Deed and the Variation Deed, being 19 June 1998 and 1 July 2012 respectively, the Property had not been purchased and it could not therefore have been as asset of the Fund.
Were it contended that the words in the section 8 (3) definition "or to be vested" capture property purchased at a time after the effective date of the instrument, which here were the dates of the Trust Deed and the Variation Deed noted above, that would not alter the result that the Transfer fails the substantial identity test. That is so because it is clear from cases such as DKLR Holding Co No 2 Pty Ltd v Commissioner of Stamp Duty (1982) 149 CLR 431 at 439 (DKLR) and Al-Saeed and Association Pty Ltd ATF Al-Saeed Educational and Welfare Trust v Chief Commissioner of State Revenue [2014] NSWCATAP 11 (Al-Saeed) that the property must be sufficiently identified at the time of the declaration of trust.
In Al-Saeed it was concluded that that there was sufficient identification of the proposed trust property in the trust deed itself for ad valorem duty to attach to the instrument. In DKLR, regard was had to minutes of contemporaneous directors' meetings which appear to have been held on the same day as the execution of the trust documentation in order to identify with precision the property and the estate conveyed. The property to be conveyed was found to be sufficiently identified.
By way of contrast, in the present matter the Trustee's minutes identifying the property are hardly contemporaneous. The Trust Deed was effective from 10 June 1998 and the Variation Deed effective from 1 July 2012, but the minutes of the Trustee which record resolutions to purchase the Property occur much later; the earliest being on 30 September 2013; nearly 15 months after the effective date of the Variation Deed and more than 5 years after the commencement of the Trust.

Should the Trustee's resolutions and the Contract for Sale be read in?

On the basis of the above facts and authorities and in the absence of anything persuasive in response from Mr Meyers, I am persuaded by the Chief Commissioner's submission that any contention by Mr Meyers that the various resolutions of LKM Services as trustee can be read in conjunction with the Contract for Sale so as to evidence a declaration of trust over the Property must fail.

Conclusion on this issue

It must follow that Mr Meyers has failed to discharge the onus of proof he bears in relation to this issue and accordingly I conclude that the concessional rate of duty provided for by section 57 was not available to him.

Availability of the section 55 concession

I have concluded that Mr Meyers has also failed to discharge the onus he bears to establish that the concessional duty under section 55 is available to him.
I have set out the provisions of section 55 at [13] above and its elements at [30] - [31], all of which must be satisfied, the onus for doing so residing with the Applicant. In summary, the elements involve: 1. the existence of a "real purchaser" who provided the purchase money and thereby stands to be recognised as the beneficial owner of the property; 2. the existence of an "apparent purchaser" who holds the legal title to the property; 3. the fact that the real purchaser provided all the purchase money, subject to the operation of section 55 (1A) in the case of loans; and 4. the existence of a resulting trust. The intention of the parties must be that the apparent purchaser holds title subject to the beneficial interest of the real purchaser
Mr Meyers bears the onus of establishing that the concession provided by this section applies to him and hence the presence of each of those elements.

Was Mr Meyers the real purchaser, or was the Fund?

In the Contract for Sale the Purchaser is identified on the front page as: LKM Taxation/Accountancy Services Pty Ltd as trustee for LKM Superannuation Fund.
The various minutes and records of the Fund provided to me demonstrate that at all relevant times the Property was and was treated as an asset of the Superannuation Fund and nothing I have seen persuades me that LKM Services was authorised to or in fact did act as the trustee for Mr Meyers personally.
I accept the Chief Commissioner's descriptions of the workings of a superannuation fund and of a TRIS and related submissions as more reliable persuasive on this issue that the documentation provided by Mr Meyers and his submissions.
It follows that Mr Meyers was not the real purchaser.
That finding is sufficient to defeat Mr Meyers' challenge to the decision and assessment under review, but for completeness I will deal with the remaining elements.

Was there an "apparent purchaser" as described?

LKM Services was the apparent purchaser as it was the registered proprietor of the Property and the transferor under the transfer. It held that position as trustee of the Fund.

Did Mr Meyers provide all the purchase money?

Mr Meyers has failed to discharge his onus of establishing that the whole of the purchase money was provided by him personally. The money came from the Superannuation Fund.
In so concluding, I accept the Chief Commissioner's submission that the test under section 55 is a strict one and the onus on the taxpayer of establishing this element is heavy. That was recognised by Senior Member Hamilton SC in Wykrota v Chief Commissioner of State Revenue [2019] NSWCATAD 106 at [26], in which he referred to the Court of Appeal's analysis in Triantafilis. I also agree with the Chief Commissioner's observation that the resolutions of the Trustee of the Superannuation Fund make it clear that the funds for the purchase were to be sourced entirely from the Fund, rather than from Mr Meyers personally.
I have set out at [36] above the extract of paragraph [14] of Revenue Ruling DUT30, which describes the type of evidence required to establish that purchase moneys have been provided by a real purchaser for the purposes of the section. Mr Meyers has not produced evidence of that description. He has not demonstrated that he had access, through the TRIS or otherwise, to the full amount of the purchase price at the time of the sale transaction or as to the broader issue, being whether he provided the whole of the purchase moneys.

Was there a resulting trust as contended by Mr Meyers

Because of my finding as to the first element, it must follow that Mr Meyers has failed to establish that the intentions of the respective parties were such as to create the resulting trust for which he contends: namely one in which he personally as real purchaser was the beneficiary.

Conclusions as to this issue

It must follow that section 55 is also unavailable to Mr Meyers.

Availability of the section 60 concession

At the hearing Mr Meyers put nothing to me in respect of the application of section 60. His documentary material and submissions take the matter little further. They contain only two brief references to the section in an emailed submission on 13 November 2021 in these terms: ….important material facts were completely ignored by the Objection Officer: Furthermore it was exempt from stamp duty under section 60. A superfund is not excluded from being a "declaration of trust(sic.)under sect 8 {3}… Furthermore it was exempt from stamp duty under section 60 (10). "Instruments relating to superannuation. No duty is chargeable under this Chapter on- (a) an instrument referred to in section 60 (1)(a), (b) or (c) that is first executed on or after 1 July 2001…"
Section 60 provides for a concessional rate of duty of $20 to be charged in relation to a small class of particular instruments relating to superannuation, being those specified in the section. They are, briefly, certain amendments to the governing provisions of a fund, instruments by which an employer agrees to participate in a fund and instruments which set up or amend custodial relationships for certain classes of fund.
No such instrument is under consideration here.
In all respects I find the brief written submissions from Mr Meyers on this issue cited above to be unpersuasive. I accept the Chief Commissioner's submission that section 60 has no application in respect of the duty liability of the Transfer.
It follows that Section 60 has no application to this matter.

Conclusions

Mr Meyers has failed to establish that concessional rate of duty available under any of sections 55, 57 and 60 of the Duties Act applies to the Chief Commissioner's assessment and decision under review.
I can perceive no other ground upon which concessional relief from duty could have been or is presently available and in any case Mr Meyers, who bears the onus in to do so, has not drawn any further such grounds to my attention.
It must follow that the orders below should be made. I order accordingly.

ORDERS 1. The Chief Commissioner's decision to refuse to assess the transfer of real property as liable only for concessional duty under either section 55 or section 57 of the Duties Act 1997 is affirmed. 2. The Chief Commissioner's assessment of duty at the general rate on the transfer is confirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 May 2022

REVENUE LAW- Duties Act 1997(NSW)

Taxpayer's onus of proof

It is of fundamental importance that under section 100 (3) of the Administration Act, in a review of this nature the applicant taxpayer, here Mr Meyers, has the onus of proving their case and that requires them to prove all matters necessary to enable the Tribunal to answer the statutory question in their favour. The requisite standard of proof is the balance of probabilities: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 ("Cornish") at [31]; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSW LR 481 ("B&L Linings"), per Allsop P at [87] and [104]; Gauci Federal Commissioner of Taxation (1975) 135 CLR 181; (1975) 8 ALR 155 ("Gauci").
In Levich Design Associates Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 215 at [27], the Tribunal, whilst acknowledging that the taxpayer's evidence must not be regarded as prima facie unacceptable and must be considered on its merits without any predisposition, re-emphasised the nature of applicant's onus and the standard of proof, as recorded in Cornish, B & L Linings and Gauci. The Tribunal was of the view that s 100 (3): … requires the applicant to prove or establish on the balance (preponderance) of probabilities all matters necessary to enable the tribunal to answer the statutory question in the applicant's favour, and all the facts on which the applicant relies claim the exemption. The legislation does not place any onus on the Chief Commissioner to show that the assessments were correctly made.

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