Harris v Chief Commissioner of State RevenueO'Shea v Chief Commissioner of State Revenue
Judgment (3 paragraphs)
[1]
REASONS FOR DECISION
The parties recognise that this matter concerns a narrow issue: whether the home purchased by the applicants was a "substantially renovated home" which would make them eligible for a first home owners grant for a new home under the First Home Owner Grant (New Homes) Act 2000 (the Act), which the respondent has denied.
The applicants' submissions contend for a positive answer.
The respondent's reply is that the applicants have failed to adequately establish the extent of the renovation; and even if the material supplied is taken at its highest the works undertaken did not qualify the home to be a substantially renovated home.
This matter concerns a decision of the Chief Commissioner but there are the same objection rights as if he had made an assessment (s 86(1)(b) of the Taxation Administration Act 1996 (TAA)).
The jurisdiction of the Tribunal to review is to be found in s 96 of the TAA, and s 9 of the Administrative Decisions Review Act 1997.
The taxpayer bears the burden of proof on the application for review of the decision (s 100(3) of the TAA). This is particularly salient here.
The evidence consists of the materials in the s 58 documents tendered by the respondent. The applicant did not call witnesses.
The applicants purchased their home in Armidale NSW from Mr and Mrs Eggert by a contract dated 28 May 2018. They applied for a first home owners grant for new homes which was refused on the basis that the renovations to the home were not considered to be a substantial renovation. The renovations were performed by Mr Eggert.
The relevant provision of the Act is s 4A which states:
4A New homes
(1) A new home is a home that has not been previously occupied or sold as a place of residence, and includes a substantially renovated home and a home built to replace demolished premises.
(2) A substantially renovated home is a home that:
(a) has been created through renovations in which all, or substantially all, of a building is removed or replaced (whether or not the renovations involve the removal or replacement of foundations, external walls, interior supporting walls, floors or staircases), and
(b) as renovated, has not been previously occupied or sold as a place of residence.
(3) A home is a home built to replace demolished premises if:
(a) the home has been built to replace demolished premises on the same land, and
(b) the home, as built to replace the demolished premises, has not been previously occupied or sold as a place of residence, and
(c) the owner of the home did not occupy the demolished premises as a place of residence before they were demolished.
Mr and Mrs Eggert had apparently purchased the home in unrenovated condition and renovated themselves and sold it to the applicants.
The applicant submitted to the Chief Commissioner a letter from Mr Eggert dated 21 January 2019 which was in the s 58 documents.
That letter states:
"I confirm that I was the previous proprietor together with my wife [name] of [address of property] Armidale NSW 2350.
Whilst we owned the property, the home was substantially renovated, in that substantially most of the building was replaced/upgraded. The renovation works are shown by the enclosed "before" and "after" photographs which were taken before and after the renovations respectively.
By way of summary, the substantial renovations included (but were not limited to):
• removing numerous internal non-loadbearing walls;.
• erecting new internal walls to change the layout of the house and add a new room;
• completely renovating the whole inside of the house, which included removing old fixtures and fixed floor coverings, gyprocking some areas of walls and ceilings, inserting new fixtures and appliances;
• polishing floorboards and inserting new fixed floor covering throughout the whole property;
• relocating mains pressure hot water system from internal to external
• demolishing the front fence and erecting a new fence in its place;
• demolishing the water tank out the back of the house;
• painting the whole house externally and internally; and
• extensive yard and garden maintenance (removing old garden and replanting new garden).
The home was not previously occupied or sold as a place of residence after the renovations until I sold it to (the applicants)."
No supporting documents, such as invoices for building materials were included.
The applicants also submitted to the Chief Commissioner a collection of undated photographs of the inside and outside of the home before and after the renovation. The photographs do not state any date as to when the photographs were taken. The applicants submitted to the Tribunal a USB stick of 4 further photos but it is not clear who took those photos. There were also undated photographs of the interior of the home during the renovation process.
There were also before and after floor plans in the section 58 documents which the respondent helpfully marked to show the extent of the internal alterations that had been made during the renovations.
It appears that Mr Eggert supplied these photographs and floor plans to the applicants. Mr Eggert was not a witness in the proceedings.
No other supporting documents (for example a Development Application, certificate of compliance, certificate of occupancy, home warranty insurance and so on) were in evidence.
Although the Tribunal is not bound by the rules of evidence (s 38(2) of the Civil and Administrative Tribunal Act 2013) the jurisdictional facts sufficient for a decision must be established and the applicant bears onus of doing this (s 100(3)). The Tribunal must be satisfied in the first place that there is sufficient evidence upon which it can adjudicate since it must be able to say that the applicant's eligibility has been established, and that the decision under review is arguably incorrect.
The case of Pandanas Qld Pty Ltd v Chief Commissioner of State Revenue; Harris v Chief Commissioner of State Revenue; O'Shea v Chief Commissioner of State Revenue; Brown v Chief Commissioner of State Revenue [2017] NSWCATAD 106 is relevant to the onus of proof. The case involved the new home grant scheme under the Duties Act 1997. It arose out of redevelopment of a property which had been a motel and had been converted into residential units. The Tribunal held that the applicants had not met the onus of proof. The Tribunal said:
"[20] … the applicant bears an onus to prove on the balance of probabilities all of the factual matters necessary to enable the Tribunal to answer the relevant statutory questions in its favour…
[28] I am not satisfied that the evidence establishes that on the balance of probabilities the works performed to renovate the motel satisfy the statutory requirements to be described as substantial renovations so as to fall into the statutory definition of a new home. As I see it, the evidence does not establish that all or substantially all of the building was removed or replaced. The applicants bear the onus of proof in this matter as I have mentioned above and am not satisfied that the onus has been discharged."
The respondent's submissions stated in paragraph 46:
"the extent of the renovations are matters that the applicants are required to prove to discharge their onus of proving that their purchase of the property was an "eligible transaction". The applicants are, therefore, required to prove that "most or all of the house was removed or replaced' in the renovations that occurred prior to their purchase of the property."
Where the apparent maker of the documents, Mr Eggert, has not been called as a witness so that he can explain the materials supplied to the Tribunal by the Chief Commissioner which he in turn has received from the applicants, I do not consider that the applicants have discharged the burden of proof.
This is enough to dispose of the matter.
However it may be useful to address the second limb of the Chief Commissioner's argument. The Chief Commissioner submitted that even if it be accepted that the applicants' materials were sufficient to establish the jurisdictional facts they do not mean that the home meets the definition of a substantially renovated home.
The definition of a "substantially renovated home" requires "a home that has been created through renovations in which all, or substantially all, of a building is removed or replaced (whether or not the renovations involve the removal or replacement of foundations, external walls, interior supporting walls, floors or staircases)".
The applicants were unable to say at the hearing if the renovations involved removal or replacement of any of the foundations, external walls, internal supporting walls, floors (except removal of bathroom floor tiles) or staircases. The letter from Mr Eggert and the photographs suggest that none of these elements were removed or replaced.
The applicants' submissions rely on the words in parentheses in s 4A of the Act (i.e. "whether or not the renovations involve the removal or replacement of foundations, external walls, interior supporting walls, floors or staircases") which they say qualify the requirement that all or substantially all of the building must be removed or replaced for the home to be regarded as substantially renovated. I regard the removal or replacement of all or substantially all of the building as the primary test.
The applicant's argument cannot carry the weight that they seek to load onto it. It is not possible to say all, or substantially all of this building has been removed or replaced. Although it may not be necessary for all five elements of the building to have been removed or replaced for a home to be regarded as substantially renovated, when it appears that none of those five elements have been removed or replaced in any material sense (and the original roof has remained the same) the statutory requirement is not satisfied.
The applicants also argue that the whole of the interior and exterior of the home had been "affected" by the renovation. The only items that they could point to as removed or replaced were some dividing walls in the interior of the home, some gyprock, and fixtures and fittings (for example new kitchen cupboards and a new stove, new sink and taps, new bath and shower recess and new bathroom tiles, and new fixed floor coverings).
These items do not represent all or substantially all of the building.
Another submission by the applicants was that if the subject home had been a strata unit the works would have qualified as the removal or replacement all of all or substantially all of a "building". This argument by analogy cannot be accepted. The Tribunal must deal with the building the subject of the grant claim.
The respondent's submissions address the legislative history of the provisions designed to assist first home buyers, and the narrowing focus over time of those provisions to assist persons who purchased new homes.
The respondent drew attention to analogous provisions of the Commonwealth GST Act (s 195-1 and s 40-75(1)(b)) and s 83 of the Duties Act 1997 which was under consideration in Pandanas referred to earlier. The respondent also drew attention to similar provisions for first home owner grants for new homes in the provisions of legislation of other States. The respondent also provided a copy of the GST Ruling 2003/3 dealing with the Australian Taxation Office's interpretation of the meaning of "new residential premises" and what that Office regards as substantial renovations.
These provisions and materials are of interest but do not determine the question. There have been no decisions of Courts or Tribunals which would bind or relevantly inform the Tribunal on the central question.
The respondent referred to words in paragraph 4A(2)(a) that "a substantially renovated home is a home that has been created through renovations…" (Underlining added).
The respondent says that by using the word "created" the legislation shows that the intent was to limit eligibility for the grant to what are commonly referred to as "new homes" (for example built from the ground up on a clear site) and to those which are virtually equivalent where all or substantially all of the building has been removed or replaced.
There is force to this argument. The applicants' reply is that the photographs indicate that the home was "unlivable" due to building rubble during the renovations.
Apart from the evidentiary problems faced by the applicants I do not regard their argument as a convincing response.
If it could be proven that the building was truly uninhabitable (say due to the removal of external walls, or the roof, or the floor), the argument might be stronger.
In summary on the material before me I do not regard the home as being a substantially renovated home within the meaning of s 4A(2)(a) of the First Home Owner Grant (New Homes) Act 2000.
[2]
ORDER
1. The Chief Commissioner's decision is affirmed.
[3]
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: 12 December 2019