Pascuzzo v Chief Commissioner of State Revenue

Applicant's right of review

1. Where duty has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) ("Administration Act"), allows rights of objection to a taxpayer dissatisfied with an assessment (which includes a reassessment). This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act).
2. A taxpayer who is dissatisfied with the decision made upon the Respondent's determination of an objection, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 ("NSW") ("ADR Act") of the decision of the Chief Commissioner of State Revenue.
3. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.
4. The onus of proving his case lies with the Applicant (s 100(3) of the Administration Act).
5. The Tribunal, dealing with the taxpayer's application, may do one or more of the following under s 101 of the Administration Act: "(a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit."

Consideration

1. The Duties Act 1997 (NSW) ("Duties Act") charges duty on certain transactions, described by that act as "dutiable transactions" (s 8(1) and (2)). They include transfers of dutiable property and agreements for the sale or transfer of dutiable property (s 8(1)(a) and (b)). "Dutiable property" includes land in NSW (s 11(1)(a)). Where an agreement for the sale or transfer of land in NSW is executed, that agreement bears ad valorem duty. Any transfer made in conformity with the agreement is subject to a fixed duty if the duty chargeable in respect of the agreement has been paid (s 18(2)).
2. The Duties Act, however, allows concessions and exemptions from duty for certain dutiable transactions. The exemptions include an exemption that benefits first home buyers. The terms of that exemption are set out in Part 8 of Chapter 2 of the Duties Act. The scheme was, at the relevant time, expressed to be "intended to help people who are acquiring their first home" (s 69). It continues to be expressed to have that purpose.
3. There is no dispute that the agreement for sale or transfer of the apartment the subject of these proceedings was dutiable as a "dutiable transaction" absent exemption. The question for determination in this matter is whether or not the exemption allowed under Part 8 benefiting first home buyers applied to that agreement, so relieving the Applicant from the liability for duty that would otherwise apply.
4. Qualifying for exemption requires satisfaction of a number of requirements. One of the requirements is known as the "residence requirement". The dispute between the parties is about whether or not this requirement was satisfied. For the "residence requirement" to be satisfied, the Applicant must have occupied the apartment as his "principal place of residence" for a continuous period of at least 6 months, commencing within 12 months of the settlement of the agreement for the sale or transfer of the apartment.
5. The issues before the Tribunal for consideration are the following; 1. Did the Applicant occupy the apartment as his "principal place of residence" for a continuous period of at least 6 months commencing within 12 months of the settlement of the agreement for the sale or transfer of the apartment? 2. Whether the Applicant was liable to penalty tax and if so, whether it should be remitted in whole or in part? 3. Whether the interest assessed should be remitted in whole or in part?

Occupation of apartment

1. The issue for determination is whether or not the Applicant occupied the apartment as his "principal place of residence" for the required time under s 76 of the Duties Act as it stood at the relevant time. The provision as it applied at that time provided as follows: "(1) The home must be occupied by the first home owner or one of the first home owners who is acquiring it as a principal place of residence for a continuous period of at least 6 months, with that occupation starting within 12 months (or such longer period as the Chief Commissioner may approve) after completion of the agreement or transfer. This requirement is referred to as the residence requirement. (2) The Chief Commissioner may, if satisfied there are good reasons to do so in a particular case: (a) modify the residence requirement by approving a shorter period of occupation by a first home owner, or (b) exempt a first home owner from the requirement to comply with the residence requirement".
2. There are two relevant requirements that need to be satisfied under s 76. The first goes to the nature of the occupancy of the property in question. That occupancy must answer the description of the first home buyer's "principal place of residence". Secondly, there is a temporal requirement. That requirement is for that occupancy to run for the prescribed period. The temporal requirement in turn has two elements. First of all, the occupancy must be for a continuous period of at least 6 months. Secondly, that six month period must commence within 12 months of the date of settlement. Section 76 as it now stands requires that the period of occupancy be for a continuous period of at least 12 months. What was required at the relevant time, was occupancy for a continuous period of at least 6 months.
3. The first question is whether the apartment during the required period answered the description of the Applicant's "principal place of residence". The Duties Act does not provide a definition of "principal place of residence". However, the case law contains guidance on what is a principal place of residence. That term takes its ordinary meaning in the context in which it appears (Black v Chief Commissioner of State Revenue [2011] NSWADT 66, at [82]).
4. The cases generally consider the meaning of "principal place of residence" as a whole phrase. There, however, are two relevant elements contained within the phrase. The first is that of "residence". The second is that the relevant property must be the "principal" place of residence. The notion of principal place of residence, in other words, "acknowledges that a person may reside at more than one place …... It provides that only one of those places however can constitute the "principal" place of residence" (Black, at [81]). In the present case, where the Applicant spent a considerable amount of time at both the family home and the apartment, the matter for determination includes the question of which was the "principal place of residence" during the relevant period.
5. Consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of circumstances relating to the occupation of the dwelling. The intention of the person concerned is relevant. However, it needs to be gauged objectively, but is not determinative of the issue (Tobin v Chief Commissioner of State Revenue [2009] NSWADT 188, at [45]). In Black, the Administrative Decisions Tribunal described at [82] what a principal place of residence is, in the following terms: "….. consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling ... …. the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue ... …. to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose ... …. the short length of a person's residence, while relevant, is not determinative of the issue. ... This is so since a recipient's occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible .... …. the reasons for a person's departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances ... In Bates the Tribunal said that "whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant" was a factor to be considered. While that is undoubtedly correct, it should not be read as stipulating a requirement that the reasons for departure must be entirely out of that person's control. The facts in Gaines illustrate that there are circumstances, peculiar to the individual concerned, which may, objectively viewed, adequately and reasonably explain a person's decision to move out of a property, but which are not entirely out of the person's control".
6. The Administrative Decisions Tribunal then summarised the following factors going to the determination of whether premises were someone's principal place of residence, at [84]: "a. the amount of time that the residence is occupied and the pattern of occupation (McIlroy (supra) at [46]-[47]); b. the listing of the address of the person, for official purposes such as on a licence or on an electoral roll (although it is noted by the Tribunal that these are not necessarily conclusive evidence that the address is the principal place of residence) (Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP at [50], McIlroy (supra) at [47].) c. respective rights in respect of the two properties (Mesiti (supra) at [61]). d. relative location of clothing, furniture and possessions (Mesiti (supra) at [61]; Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 at [21]). e. where family members reside (Mesiti (supra) at [61], McIlroy (supra) at [46]). f. the strength of ties and connection with the residence (Mesiti (supra) at [61], McIlroy (supra) at [46]). g. utilities usage (Tobin v Chief Commissioner of State Revenue [2009] NSWADT 188 at [49], Yen Cheng (supra) at [21]. h. the address to which bills are sent (Tobin (supra) at [48]). i. the nature of insurance held for each property (Tobin (supra) at [18]). j. where the person eats, drinks and sleeps (Yen-Cheng (supra) at [19]-[21]). k. where a person entertains friends (Yen Cheng (supra) at [21])".
7. The parties made submissions to the Tribunal that referred to a number of cases considering what is a principal place of residence. While each particular matter will turn on the particular facts of the case, I set out below the approach taken in each of these cases in determining the question in issue.
8. In Mohamed v Chief Commissioner of State Revenue [2012] NSWADT 169), the taxpayer's use of the property she claimed to be her principal place of residence was limited. The Administrative Decisions Tribunal described the taxpayer's lifestyle in the following terms, at [31]-[34]: "Ms Mohamed herself explained how little time she actually spent in the property. But she also emphasised that she slept there most nights. It was her home. I believe her, and I believe her sister. However, despite believing them, I would reject Ms Mohamed's claim if the objective evidence cast sufficient doubt on their version of events as to make it implausible. It does not. The electricity consumption is consistent with the lifestyle she has described, in a property with no air conditioning, no heating and no hot water. And as far as the water consumption is concerned, once it is accepted that accounts disclosing 2 kilolitres of water consumption (initial meter reading of 659; final reading of 661) may actually reflect use of virtually 3 kilolitres (if the final reading represents 661.99 and the initial reading represents 659.01), the objective evidence does not undermine Ms Mohamed's claims. The water usage is extremely low, but so it should be, in the circumstances she has described. The spreadsheets Ms Mohamed produced to analyse the electricity and water consumption need to be seen for what they are - attempts to demonstrate how her claimed use of the property could fit within the consumption levels, rather than precise, minute-by-minute tracking of flushing the toilet, and filling and boiling the kettle".
9. In Mohamed, the lender financing the purchase of the property was told that when the taxpayer was planning the purchase of the property in question, it would be tenanted rather than owner-occupied. The Tribunal found that this was of no consequence because she did not appoint a managing agent to arrange for the lease of the apartment until after the required period of residence.
10. Within the taxpayer's period of occupation of the property of a little over seven months, she was overseas for two months. The Chief Commissioner did not base his case on a proposition that such an absence was in itself enough to cause her to fail to meet the residence requirements but did submit that it was a factor relevant in the overall determination. The Administrative Decisions Tribunal agreed but did not regard the length and nature of her absence as negating her entitlement. The Administrative Decisions Tribunal went on to find that the premises in question remained the taxpayer's principal place of residence.
11. The Respondent's submission is that the circumstances in Mohamed can be distinguished from the facts of the present matter on the basis that in that case, the Tribunal was not presented with a taxpayer who was using two residences, thereby giving rise to the need to determine which residence was the principal place of residence between the two. I am not convinced that this is a relevant basis for distinguishing Mohamed. The limited use of the premises claimed to be the principal place of residence in the case occurred in circumstances where the taxpayer was spending time elsewhere, including at her own family's home nearby. While the question in that case is not specifically whether the property in question or her family home alternatively was the taxpayer's principal place of residence, the particular question was whether her limited use of the property she claimed to be her principal place of residence prevented her claim for exemption. The limited use of the apartment by the Applicant is also a matter of relevance in the present case. However, the decision in Mohamed does not determine the decision in the present case. Each case needs to be determined on the particular facts of the case.
12. The Respondent's submission is that the facts of the present case are more like those in Black. That case concerned the question of whether the taxpayer was entitled to claim exemption from land tax for what he claimed to be his principal place of residence. The Applicant's residence at the property he claimed to be his principal place of residence at Caringbah was relatively short, being three months. Significant amounts of time continued to be spent by the taxpayer in another property at Cronulla during that three-month period. The taxpayer's usual routine was to visit the Cronulla property most days after work, feeding cats living there, to work on the property (by painting and redecorating it) and then to work in his claimed principal place of residence at nights.
13. The taxpayer in Black appears to have kept irregular hours, sometimes working late into the night as a writer, but spent most of his time at the other property. He also went to his workplace during the week. The evidence was that "it appeared to the Tribunal that the occupation of the Caringbah property was brought about for the contingent / temporary purpose of keeping the Applicant's options open depending on what occurred with the property market and the Global Financial Crisis rather than as a result of any conscious choice by him to permanently "relinquish" the Cronulla property as his principal place of residence and to instead adopt the Caringbah property as his permanent principal place of residence", at [85]. During the entire time that the taxpayer said he was living at the Caringbah property, there was in existence an exclusive agency agreement for the sale of the Caringbah property (at [85]). I will consider Black below, at [107].
14. Whether or not exemption applied was a question that also fell for determination in Bulgak v Chief Commissioner of State Revenue [2015] NSWCATAD 237. The particular question for determination in that case was whether, in circumstances where the taxpayer spent little time at the premises in question, other than to sleep and to renovate the property, he had established that the property was used by him as his principal place of residence within the meaning of the "residence requirement".
15. The taxpayer worked and studied for long hours each day, generally eating his meals at his workplace or by obtaining takeaway food to consume at the property. Due to the renovation of the property, he did not use the bathroom or kitchen to any great degree and essentially, he used the property to sleep. He did little socialising at the property. The taxpayer took with him to the property from his family home all of his personal items that he needed to live. Other than for brief periods, he resided only at the property during the relevant period.
16. The Tribunal said that the question as to whether or not the taxpayer resided in the property as his principal place of residence, "(to be determined objectively, but having regard to the lifestyle of the applicant and his subjective intention in residing in the apartment) is a question of degree" (at [166]). The Tribunal went on to find that the taxpayer established that he did reside in the property during the relevant period as his principal place of residence.
17. The Applicant needs to establish on the balance of probabilities the facts necessary to show that he occupied the apartment as his principal place of residence for a continuous period of 6 months. That occupation must start within 12 months after 23 May 2019, the date of settlement of the agreement for sale or transfer of the apartment. The Applicant's case is that he commenced occupation of the apartment as his principal place of residence in April 2020. This is a time which falls within the period of 12 months commencing on 23 May 2019. The onus is on the Applicant to prove that after the date he says he commenced occupation, he occupied the apartment as his principal place of residence for a continuous period of at least six months.
18. The Applicant's case is that he did occupy the apartment as such, for a continuous period up to at least early 2021 and therefore satisfies the "residence requirement" set out in s 76. Whether or not this was the case is the matter for determination by the Tribunal on the evidence before it.
19. The Respondent's submission is that during the relevant period, the Applicant had two residences, namely the apartment and the family home. In the Respondent's submission, having regard to the ways that the two properties were used by the Applicant, the better view is that the family home was his principal place of residence and the apartment used by the Applicant was an ancillary or secondary residence. I consider below the question of whether or not the apartment was the Applicant's principal place of residence during the relevant period, taking into account a number of indicia set out below and the evidence before the Tribunal relevant to those indicia and as otherwise relevant.

amount of time and pattern of occupancy

1. The evidence at hand was that during the period of claimed occupation, the Applicant slept at the apartment. However, he spent a considerable amount of time elsewhere.
2. Following the beginning of the COVID-19 pandemic, the Applicant made arrangements for working from home for three to four days of the week. However, he established his home office at the family home rather than at the apartment. It appears that he did so, in part, because the facilities available at the family home were better suited to setting up his home office.
3. The Applicant's evidence was that he would sleep at the apartment on work days. He would prepare a light breakfast such as toast or cereal at the apartment. He would then go to work. On days he worked at his employer's premises, after working there usually by 5:30 PM, the Applicant would leave his employer's premises and return to the apartment and eat leftovers for dinner or would otherwise go to the family home for dinner.
4. On the days he worked from the family home, he would eat breakfast there. His evidence was that on the days he worked at the family home, he typically finished the work day between 5:30 and 7:00 PM, joined the family for dinner and returned to the apartment.
5. Before the time when his shower was renovated, he often showered at the family home. However, after the renovation, he almost exclusively showered at his own apartment.
6. On weeknights, his evidence is that he would typically "unwind" at the apartment by either watching TV, being on his phone or playing games. On occasions, he would also spend time with his partner. This was time either spent out, at her family residence or occasionally at his residence.
7. The Applicant's evidence was that during the period in question, he restricted his social engagements, having regard to the circumstances of the COVID-19 pandemic and his own increased risk due to his health condition. He would play board games with his friends which were hosted at one of his friend's homes each week and sometimes at the apartment. This happened a number of times on a weekday or on weekends during the period in question.
8. Weekends were often spent either with his partner or his family. He always returned to his apartment in the evening.
9. The Applicant's evidence was that the kitchen at the apartment was operational but the stove top was rarely used. He used the microwave at the apartment and other kitchen appliances.
10. In circumstances where the time spent during the week at the family home was mostly for work, I do not think that the time spent by the Applicant there during working hours can determine, or carry much weight, in making the determination of what his principal place of residence was. To the extent that he spent time during working hours at the family home, he did not use it as a residence.
11. Had the Applicant not been working from home at the family home, an alternative would have been to attend his employer's premises for the entirety of the working week. On the evidence, the apartment appears to have been less suitable than the other alternatives for use as a workspace, including on account of the carrying out of renovations. Whether he worked from his employer's premises or from the home office he had established at the family home, the Applicant would, regardless, have been absent from the apartment for work.
12. There is evidence that when he was not working at the family home, the Applicant took meals with his family and also had his laundry washed at the family home by his mother. I do not think that this, of itself, is sufficient to make the family home his principal place of residence. Most of the time spent at the family home appears to have been when he was working.
13. The evidence is that when he was not working, the Applicant, as well as spending time with his family, engaged in various social activities including visiting his partner's parents' residence and on occasions, inviting friends to the apartment for social events. He also used the apartment to prepare some meals such as breakfast and eat leftovers for dinner. It was also where he slept.
14. What is a person's principal place of residence will not turn on a set of fixed criteria that apply with uniformity and without distinction to each and every person. Making a determination of the question on the basis of a hypothetical minimum amount of time that must be spent at a residence or by relying on data as to the average usage of utilities, will not allow the individual circumstances of each person to be taken into account. Determination of what is a person's principal place of residence needs to take account of the particular lifestyle and circumstances of the first home buyer (Mohamed, at [30]-[33]; Bulgak, at [152]).
15. For a young person in the circumstances of the Applicant, close continuing engagement with their family immediately after moving from home may not be unusual (eg see Mohamed, [18]-[19]). Equally, the Applicant's evidence was that he spent time outside the apartment socialising with his friends on weekends and on week-nights and with his partner's family. These are circumstances that may result in more limited use of a person's residence, compared to those of a person living in a long-established home. A young person who has just moved out of home will not have the same lifestyle as that of a settled family or a single person living in an established home. However, a lifestyle that involves spending less time at home should not be a circumstance that prevents or hinders the person's principal place of residence from being characterised as such.

Address

1. The evidence is that about the time the Applicant moved into the apartment, he applied to ServiceNSW to have his address recorded as that apartment. He also applied to have his address changed to that of the apartment for the purposes of the electoral roll on or about 7 August 2020. The updating by the Applicant of the electoral roll to show his address as the apartment is a factor supporting his submission that the apartment was his principal place of residence at this time. While these matters do not mean that use and occupation within the meaning of the legislation is occurring (Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57), they remain a relevant consideration.
2. The address to which bills for utilities in the evidence were sent was the apartment. This is a factor favouring the conclusion that the apartment was the Applicant's principal place of residence, although not determinative.

clothing, furniture and possessions

1. The Respondent submits that during the period after April 2020, the Applicant appeared to have taken no steps to purchase the household items and furniture that would be required at the apartment in order for him to live independently of his parents.
2. The evidence is that the Applicant initially moved into the apartment bringing with him what he describes as the "bare essentials", including a bed, a television, a mini-fridge and some toiletries. He also gave evidence that he later purchased a microwave, toaster, sandwich press, kettle, extendable dining table, linen and towels for the bathrooms and a fan for cooling. As regards the Applicant's cooking and laundry, his mother's evidence was that "it took time for him to establish these facilities at his new residence".
3. The Applicant gave further evidence that the immediate purchase and installation of a washing machine and dryer was not possible, in circumstances where the laundry had to be renovated before installation.
4. The relative location of clothing, furniture and possessions is a consideration to be taken into account in determining where a person's principal place of residence is. What the Applicant brought with him when he first moved into the apartment was limited but sufficient to allow him to live at the apartment. That he was able to do so accords with his submission that the apartment became his principal place of residence, even if substantial parts of his possessions may have remained at the family home.
5. The evidence is that over time, the Applicant acquired further items to furnish the apartment and use there. The Applicant, in other words, when he moved into the apartment, initially had a limited number of household items and over time, acquired further items.
6. In circumstances where a first homeowner is beginning occupation of their first home, I do not think that the "residence requirement" contemplates that the first home buyer needs to acquire immediately the full complement of items to be used for long-term occupation of the home. This may be more likely to happen over a period of time, in circumstances where the finances of the first homeowner may be limited. There was evidence in the present case of such financial limits.
7. The Applicant moved in initially with the bare minimum he required and progressively acquired more household goods. These circumstances are not inconsistent with the situation of a first homeowner and Applicant's claim that he moved into his apartment in April 2020 as his principal place of residence,

utilities usage

1. The Respondent relies on the low electricity usage of the apartment as evidence that it was not occupied as the Applicant's principal place of residence. The Respondent particularly relies on there being no evidence to show that the apartment was heated during the winter period in 2020. In the Respondent submission, it was very unlikely that the Applicant was staying at the apartment for any material amount of time during the period from 6 June 2020 to 2 September 2020. The Respondent also points out that the low energy usage coincides with the time that renovations were being undertaken to the bathroom and laundry of the apartment.
2. The electricity usage was as follows: Period Average Daily Usage Cost 20 April 2020 to 5 June 2020 4.68kw $104.90 6 June 2020 to 2 September 2020 0.75kw $87.29 3 September 2020 to 8 December 2020 1.76kw $119.48 9 December 2020 to 11 March 2021 4.52kw $179.48

1. There is a significant increase in electricity usage after the above periods.
2. Amounts paid for water supply appear constant during the period in question.
3. The Applicant's submission is that that low electricity usage is explained by the limited number of appliances he had at the apartment during the period in question at the beginning of his occupation of the apartment. He provides data as to the daily electricity consumption referable to each of those appliances and the periods of use. Without needing to decide on the accuracy of each particular data set for each appliance or item, I am satisfied that the Applicant has produced an adequate explanation for his low use of electricity. The low electricity usage is consistent with the evidence about the Applicant's lifestyle, involving spending less time at his home than say the occupant of a more established household.
4. The Applicant gave evidence that he had little need for heating because it was easy for him to wear a jumper and a rug without the need for a heater. I accept that the Applicant during the period, may have had less for need for heating than occupants of a more established household who spent more time at home. He also gave evidence that the Air conditioning was not serviced for a time.
5. I accept the Respondent's submission that low energy consumption is a factor that can go against the conclusion that premises are being occupied as a principal place of residence. However, the Applicant in my opinion, has explained adequately that low usage.

where a person eats, drinks and sleeps

1. The evidence is that the Applicant slept at the apartment during the period in question. The Respondent's submission is that the only activity he could have undertaken at the apartment was sleeping and this was insufficient to make it his principal place of residence.
2. It is accepted that the fact that the taxpayer has for a period slept at a property does not make that property his or her principal place of residence. A whole indicium of matters must be considered (Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99, at [65]).
3. I accept that the mere fact of sleeping at the apartment is insufficient to allow it to be the principal place of residence of the Applicant. The whole of the circumstances need to be taken into account in making the determination. The fact that the Applicant slept at the apartment, however, remains a relevant matter.

where a person entertains friends

1. The evidence is that there was limited use of the apartment during the period in question compared to that of a more established household. However, there is evidence that the apartment was used at times by the Applicant to entertain his friends. It appears that this may have happened both on weekends and during weekdays after work, even if that use was limited.

Renovations

1. The Respondent made certain submissions as to the lack of facilities during periods of renovation and the resulting absences of the Applicant from the apartment at the time. This submission was that these circumstances were factors going against the proposition that the apartment was the Applicant's principal place of residence. The lack of functioning bathroom facilities was, in the Respondent submission, a reason why the Applicant could not be expected to be physically present at the apartment for any material amount of time, and therefore he would not be using it as his principal place of residence.
2. In the Applicant's submission, the renovations carried out did not prevent him from using and occupying the apartment. The renovations were sequenced such that there was a bathroom available at all times. The only period he did not have shower facilities was for a period of five days.
3. Preparation for renovations in the immediate future is not inconsistent with occupation of the apartment, albeit of a contingent nature (Black, at [85]). The requirement set out in s 76 however is one for "continuous" occupation during the relevant 6 month period. The Applicant's evidence was that he did not have showering facilities for five days while renovations were carried out and that during this period he showered at the family home. However, he had continuous use of a toilet at all times.
4. I do not think that these circumstances are sufficient to prevent the Applicant from satisfying the test of continuous occupation. If he was absent from the apartment for short periods, the reasons are reasonable and adequate, namely the carrying out of renovations. Longer absences which are reasonable have been found not to prevent a property from being continuously occupied as a principal place of residence (see [41] above).

Lending arrangements

1. The Respondent relies on the evidence of the arrangements with the lender funding the purchase of the apartment initially as an investment property rather than as the Applicant's home. The Respondent's submission, as I understand it, is that if the intention was for the apartment to be an investment property, it could not be the Respondent's principal place of residence.
2. The Applicant's evidence was that the initial loan was taken out on the basis that the apartment was an investment property. The loan notes were not changed from the initial pre-approval but there was no bank policy that restricted him from changing the categorisation of the loan from that of an investment loan to an "owner occupier" loan when necessary. The Applicant's evidence was that the loan was not categorised as an investment loan because it had been rented out initially. Upon notifying the lender of his occupation of the apartment, the Applicant says that the process was begun to change the loan to "owner occupier" and bring his partner on to the loan with him.
3. A mortgage broker who advised in connection with the loan to the Applicant to purchase the apartment gave evidence. He said that the initial discussion with the Applicant was about a loan to both the Applicant and his partner. He said that the Applicant could not service the loan on his own as an owner occupier. In addition, his partner's income did not satisfy the credit criteria. As a result, the strategy was for the Applicant to take an investment loan supported by guarantees from his parents and later add his wife as a borrower. The intention was for the Applicant to move into the apartment when he could afford the repayments. The strategy also involved renting the apartment until such time as the Applicant could afford the loan repayments. The Applicant's evidence is that he intended to have his partner added to the loan and for both to move to the apartment at some time in the future as their home. When this happened, the evidence was that the loan would be converted to that of "owner-occupier" and the Applicant's partner would be added as a borrower.
4. These circumstances, in my opinion, are consistent with an intention for the apartment to be acquired as a principal place of residence of the Applicant and his partner (later his wife) rather than as an investment property. I note in particular the mortgage broker's evidence as to the unaffordability of repayments and the need for a parental guarantee. These are factors that appear inconsistent with the conclusion that the intention was that of acquiring an investment property on commercial terms.
5. In mid to late 2020, the process was begun to have the loan rewritten, adding the Applicants' partner as a borrower and removing both his parents as guarantors. This happened in April 2021 in accordance with the timeframe of the lender and its procedures.
6. The Applicant has adequately explained why the loan taken to acquire the apartment needed to be categorised as an investment loan at the time of the purchase. It needed to be so categorised on account of the use of the apartment for rental. This in turn formed part of the arrangements to fund the acquisition of the apartment, with the intention of using it as the Applicant's principal place of residence.

respective rights in respect properties

1. The rights of the Applicant in respect of the apartment were those of the owner, as from the date of settlement. The assumption of ownership from April 2020, is not inconsistent with an intention to occupy the premises as a principal place of residence.
2. Whether the property in question is a principal place of residence is not determined by the fact of ownership but on the facts as a whole. Where for example a property is acquired as an investment and rented, it is unlikely that it will be the owner's principal place of residence during the period of rental. Neither party made submissions in regard to this consideration. I do not place any weight on this consideration but note this in passing.

Conclusion

1. I am of the opinion that the Applicant has discharged the burden of proof in establishing the facts showing that the apartment was his principal place of residence during the period commencing April 2020 and ending 14 January 2021. He needs to do so on the balance of probabilities and has done so.
2. The relevant matters going to the determination of this matter include the evidence as to the time the Applicant spent at the apartment and his use of the apartment at those times. The Applicant slept at the apartment during the period in question. While sleeping at the apartment will not of itself be sufficient to establish that it was his principal place of residence, that he did so is consistent with the submission that it was his principal place of residence. Contrary to the submission of the Respondent that this was all he did at the apartment, he also used kitchen facilities to prepare his breakfast on some days of the week and also used the apartment for entertaining friends on occasions. He also used the facilities in the apartment for his own recreation, including using the television and gaming console.
3. Taking into account the lifestyle of the Applicant, expectations as to how much time the person may spend at home, should not be determined having regard to the time the occupant of a more established home may spend at their residence. I do not for this reason think that the limited time spent at the apartment prevents the Applicant from claiming that the apartment was his principal place of residence during the period in question.
4. While the Applicant furnished the apartment initially with what he describes as "bare essentials", his evidence was that this was sufficient to allow him to commence occupation and live at the apartment. He subsequently acquired more furnishings and items for the apartment. On the evidence, the Applicant furnished the home sufficiently to allow him to begin living there in April 2020 and subsequently acquired further household goods.
5. I accept the Respondent's submission that low electricity usage may be a factor going against the conclusion that premises are a principal place of residence. However, I am satisfied with the explanation provided by the Applicant for low usage, referable to his limited needs and lifestyle at the time his occupation of the apartment commenced.
6. The time the Applicant spent at the apartment after initial occupation, his low levels of electricity consumption and more limited ability to furnish fully their home when he moved in, do not, in my opinion, prevent his claim that the apartment was, during the relevant time, his principal place of residence. These are not indicia that should be assessed against average criteria applicable to all home-owners generally or the circumstances of someone living in a more established home.
7. The purpose of Part 8 is "to help people who are acquiring their first home". It does this by allowing the relevant concession and exemption for first home buyers. Criteria that may not necessarily be relevant to a person in the circumstances of a first home buyer should not be applied in a way that denies access to the relevant exemption and concessions. The provisions of the Duties Act allowing the relevant concession an exemption should be construed in accordance with and not against the statutory purpose.
8. I do not think that the terms of the loan funding the acquisition of the apartment prevent a conclusion from being reached that the apartment was acquired in 2020 as the principal place of residence of the Applicant. The Applicant has adequately provided an explanation as to why the loan had to be taken out as an investment loan, having regard to his own financial circumstances and those of his partner, who became his wife. He did so with the intention that the apartment was to become his principal place of residence.
9. The context for the categorisation of the loan as an investment loan was also the initial rental of the apartment. There is nothing in Part 8 that prevents a home buyer from renting a property, as long as the "residency requirement" is satisfied. I accept that rental of a property may in some circumstances evidence an intention that the property was not intended to be the principal place of residence of the buyer. The Applicant has, however, provided an adequate explanation as to why rental was necessary having regard to his financial circumstances. The receipt of rental income before he took up occupancy was part of an arrangement to fund the transaction which resulted in his acquisition of his first home (see [92] above).
10. The Respondent relies on Black to support his submission that the "residence requirement" has not been satisfied. While there are certain similarities between the case at hand and the facts considered in Black, there are also important differences that serve to distinguish that case from the present case. The Tribunal found that in that case, the property in issue was bought for the contingent/temporary purpose of keeping the taxpayer's options open depending on market conditions. The taxpayer also had at the relevant time appointed an exclusive agent to sell the property in dispute. In the present case, there is no evidence of such an intention. On the contrary, the evidence was that at the time of acquisition of the apartment, the intention was to use the property as the Applicant's principal place of residence. These matters are sufficient to distinguish the facts of Black from those of the present case. Each case nevertheless needs to be determined on the basis of the particular facts of the case.
11. On the facts before the Tribunal, I am satisfied that the occupation of the apartment in April 2020 and thereafter, acquired the required degree of permanence to become the principal place of residence of the Applicant from the time occupation began. That is a matter that goes to the determination of whether or not the Applicant satisfied the "residence requirement" set out in s 76. That is the particular question in dispute. Having regard to the matters set out at [92] - [107] above, I find that the Applicant has established that he has satisfied the "residence requirement".
12. It follows that the assessment the subject of these proceedings should be revoked.
13. Section 76 allows the Respondent certain discretions. They include a discretion to extend the start of the 12 month period after which occupancy must begin. There is also a discretion to exempt a first home buyer from the "residence requirement" altogether. Having found that the Applicant has satisfied the "residence requirement", there is no need for me to consider whether or not the relevant discretion should have been exercised. However, I observe in passing that if the circumstances and evidence set out above were not to allow for the "residence requirement" to be satisfied contrary to my findings, there appear to be good grounds for the Respondent to consider exercise of one or more of the discretions allowed under s 76. However, that matter does not require further consideration.
14. Having found that the assessment in question should not stand to the extent that it is based on the Respondent's claim that the "residence requirement" had not been satisfied, there is no need for the Tribunal to consider whether or not penalty tax and interest should have been assessed.

Orders 1. The assessment under review is revoked.

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: 25 February 2025