1 Under section 111(1) of the Taxation Administration Act 1997 (Vic), the reassessment of duty issued to the applicants on 2 September 2020 (assessment no. 23358929) is varied to an amount of $20,553.71 to reflect the remission of interest.

2 The application is otherwise dismissed.

Note**:** These written reasons consist of an edited transcript of reasons given orally at the conclusion of the hearing with references added in full, and with some editing for clarity.

1 In April 2017, Mr Zakir Shaikh and his wife, Ms Liane Anderson, acquired a residential property in Sandhurst (Relevant Property) to live in.

2 Ms Anderson was born in and remains a citizen of Australia. However, Mr Shaikh is a citizen of India and, at the time the Relevant Property was acquired, was permitted to stay in Australia under the terms of a 'Partner (Temporary) (Class UK)' visa, subclass 820 (Temporary Partner Visa). (Mr Shaikh became a permanent resident in October 2020 and has been approved to become an Australian citizen, although he is yet to have his citizenship ceremony.)

3 Prior to the transfer of the Relevant Property, Mr Shaikh and Ms Anderson each completed a Duties Form 62 - Purchaser Statement (Form 62) indicating that they were not a 'foreign natural person'. In Mr Shaikh's case, he says that he provided his Indian passport to his conveyancer who then sent him the completed Form 62 to sign. He says that the conveyancer did not give him any advice regarding duty. (It is noted that, during cross-examination, Mr Shaikh admitted that the form also incorrectly stated that he was an Australian citizen.)

4 Duty was originally assessed on the transfer of the Relevant Property on the basis that Mr Shaikh and Ms Anderson were not foreign natural persons. However, in September 2020 (after a period of investigation), the Commissioner of State Revenue (Commissioner) reassessed the duty on the transfer, imposing a further $21,691.57 (Reassessment) comprising:

• foreign purchaser additional duty (FPAD), at the (then) rate of 7% on Mr Shaikh's half share in the property, under section 28A of the Duties Act 2000 (Vic) (Duties Act); and
• interest, at the market rate, under section 24 of the Taxation Administration Act 1997 (Vic) (TA Act).

5 The applicants submit that the imposition of FPAD is 'unfair' and should be set aside for the following reasons:

• the failure of their conveyancer to provide advice to them about duty and FPAD in particular;
• the Form 62 being unclear;
• the terms of a Visa Entitlement Verification Online (VEVO) Entitlement Check, using the system made available by the Department of Home Affairs (Department), which indicated that the period of stay under Mr Shaikh's Temporary Partner Visa was 'indefinite';
• 'on moral grounds' given that Mr Shaikh is not an investor to whom the FPAD is directed, but rather bought the Relevant Property as a home to live in with his wife; and
• New South Wales provides an exemption from their foreign purchaser surcharge for people on a Temporary Partner Visa, and the website of the State Revenue Office (SRO) refers to an exemption from FPAD where a foreign person acquires a property with their spouse to be used as their principal place of residence (PPR) for at least 12 months.

6 This is now the third matter to come before the Tribunal relating to the application of FPAD to a person who is in Australia under a partner visa. At the start of the hearing, I confirmed that the Commissioner had made the applicants aware of my two previous decisions in Rudd and Noor v Commissioner of State Revenue (Rudd & Noor)[1] and Arshad and Tariq v Commissioner of State Revenue (Arshad & Tariq).[2] In both cases, arguments similar to those raised by the applicants in this proceeding were considered. Ultimately, in both cases, I:

• confirmed the imposition of FPAD on the basis that a provisional partner visa is not a permanent visa within the meaning of section 30(1) of the Migration Act 1958 (Cth), with the consequence that a person on such a visa is a foreign purchaser (for the purposes of the Duties Act) who is subject to FPAD, and there is no discretion to assess otherwise; but
• varied the assessments, or remitted them to the Commissioner, to remit any interest imposed on the basis that the 'information that is available on the SRO website regarding who is, and who is not, a foreign natural person falls well short' of the commitments in its Customer Service Charter to clearly and concisely explain legislation,[3] or a concession by the Commissioner that the remission of interest was appropriate.[4]

7 In this proceeding, the Commissioner also concedes that the interest which was imposed as part of the Reassessment ought to be remitted, but otherwise seeks that the imposition of FPAD be upheld on the same or similar basis as in the previous two proceedings.

8 For the reasons which follow, I will vary the Reassessment to remit the interest charged, but otherwise confirm the Reassessment on the bases that I am satisfied that:

• Mr Shaikh was a 'foreign natural person' at the time the Relevant Property was transferred to him and Ms Anderson;
• while there is an exemption now available for situations where a foreign natural person acquires a property with their spouse to use as their PPR, that exemption only commenced operation in 2018 (well after the applicants acquired the Relevant Property); and
• there is otherwise no discretion to waive or vary the application of FPAD having regard to any of the matters raised by the applicants.

9 Stamp duty is payable on the dutiable value of dutiable property that is the subject of a dutiable transaction, at the rates specified in Part 3 of the Duties Act.[5]

10 The general rate of duty depends on the dutiable value of the dutiable property.[6] However, additional duty is payable at a flat rate in relation to a dutiable transaction 'under which a land-related interest in residential property is transferred to a foreign purchaser'.[7] At the relevant time, the applicable rate of additional duty was 7%,[8] and is generally referred to as 'foreign purchaser additional duty'.

11 The phrase 'foreign purchaser' is defined to include a transferee that is a 'foreign natural person';[9] a phrase which is, in turn, defined in the same section to mean any natural person who is not:

• an Australian citizen;
• a New Zealand citizen who holds a particular category of visa; or
• 'the holder of a permanent visa within the meaning of section 30(1) of the Migration Act 1958 of the Commonwealth'.

It is only the last of the excluded categories of person that is relevant to this proceeding.

12 Section 30(1) of the Migration Act 1958 (Cth) (Migration Act) is found within Subdivision A of Division 3 which establishes general provisions about visas for non-citizens. Section 30 provides that there are two 'kinds of visas' that are available to non-citizens, being:

(1) A visa to remain in Australia (whether also a visa to travel to and enter Australia) may be a visa, to be known as a permanent visa, to remain indefinitely.

(2) A visa to remain in Australia (whether also a visa to travel to and enter Australia) may be a visa, to be known as a temporary visa, to remain:

(a) during a specified period; or

(b) until a specified event happens; or

(c) while the holder has a specified status.

13 It follows that a person on a permanent visa would fall within section 30(1) and so be excluded from FPAD. By contrast, a person on a temporary visa would fall within section 30(2) and so would be subject to FPAD in respect of any transfer of a residential property in Victoria.

14 As I have observed in the previous cases concerning FPAD, it is unfortunate there is no ready list within section 30 (or the Duties Act) that indicates which particular visas fall within the two kinds for which it provides. Instead, it is necessary to consider the classes of visas that are established under the Migration Act[10] or the Migration Regulations 1994 (Cth) (Migration Regulations).[11]

15 Of relevance to this proceeding, clause 1214C of Schedule 1 to the Migration Regulations provides for Temporary Partner Visas. It is found in Part 2 of that schedule, which deals with 'Temporary visas (other than bridging visas)'. There is only one sub-class being '820 (Partner)'.[12] It is relevant to note that, when a person applies for a Temporary Partner Visa, they must also apply for a permanent partner visa, being a class BS visa (or subclass 801 visa).[13]

16 Schedule 2 to the Migration Regulations sets out various matters relating to the visa sub-classes, including when they take effect and what conditions apply. In relation to the Temporary Partner Visa, clause 820.511 of Schedule 2 provides that it is a:

Temporary visa permitting the holder to travel to, enter and remain in Australia until:

(a) the holder is notified that his or her application for a Subclass 801 (Partner) visa has been decided; or

(b) that application is withdrawn.

17 Relevantly, there is no provision in the Duties Act which provides a discretion for the Commissioner to exclude a foreign natural person from the operation of the FPAD regime having regard to their application for a permanent subclass 801 visa, or any intention to seek to become an Australian citizen.[14]

18 In Rudd & Noor, I concluded that the provisional partner visa held by Dr Noor (an Iranian citizen) could not be regarded as a 'permanent visa' for the purposes of the Migration Act[15] and the definition of foreign natural person.

19 It is clear from the VEVO Entitlement Check dated 24 April 2017,[16] as well as the applicants' submissions[17] that, at the time of the transfer of the Relevant Property, Mr Shaikh was the holder of a Temporary Partner Visa.

20 While a Temporary Partner Visa is a different visa to the provisional partner visa considered in Rudd & Noor, the analysis is the same. That is, it is clear that a Temporary Partner Visa is not a permanent visa given it:

• is provided for in Part 2 of Schedule 1 to the Migration Regulations which deals with 'Temporary visas (other than bridging visas)';
• is expressly stated to be a 'temporary visa' in clause 820.511 of Schedule 2 to the Migration Regulations;
• only allows a person to remain in Australia until a specified event, namely the determination of the person's permanent partner visa or withdrawal of the application for such a visa, and hence falls within section 30(2) of the Migration Act; and
• was referred to as a temporary visa by the Federal Court of Australia in Basra v Minister for Immigration and Border Protection.[18]

21 For these reasons, I find that Mr Shaikh was a 'foreign natural person' and 'foreign purchaser' at the time the Relevant Property was transferred to him and Ms Anderson in April 2017.

22 In their submissions, the applicants refer to commentary on the SRO's website which indicates that:[19]

Exemption if you buy with your spouse or partner

If you are a foreign purchaser, you may be entitled to an exemption from additional duty if you purchase a principal place of residence jointly with your spouse/domestic partner who is an Australian citizen, permanent resident or New Zealand citizen who holds a special category visa. You must, however, live in the property as your principal place of residence for a continuous period of 12 months, starting within 12 months of becoming entitled to possession of the property. If there are good reasons, you can ask us to vary this requirement ...

23 This is a reference to the FPAD exemption which is available under section 69AJ of the Duties Act.

24 The Commissioner correctly observes the quote above omits an important notation at the end of the commentary on the SRO's website, namely that 'this exemption is available for transfers from 14 June 2018'.[20]

25 Section 69AJ was introduced into the Duties Act by section 5 of the State Taxation Acts Amendment Act 2018 (Vic) (Amending Act). The relevant section took effect from the day after the Amending Act received Royal Assent (ie. 13 June 2018);[21] after the date on which the Relevant Property was transferred to Mr Shaikh and Ms Anderson.

26 As the Commissioner submitted, the introduction of that exemption supports the view that, prior to the Amending Act receiving assent, there was no exemption for a foreign natural person by reason of their purchase of a PPR with an Australian citizen or permanent resident.

27 It follows that the exemption now found in section 69AJ of the Duties Act has no relevance to the application or otherwise of FPAD to the transfer of the Relevant Property.

Failure of conveyancer to provide advice about duty and FPAD

28 The applicants submit that, despite Mr Shaikh providing his Indian passport to their conveyancing company, the conveyancer did not provide any advice regarding stamp duty or make them aware of FPAD.[22]

29 The Commissioner responds that, '[a]ssuming that is true, it does not affect the operation of the Duties Act'.[23]

31 There is nothing in the Duties Act which would support some limitation as to the application of FPAD, depending on whether or not a transferee receives proper advice from their conveyancers.

32 As indicated during the hearing, if there are concerns regarding the advice (or lack of it) received, that is a matter to be taken up by the applicants with their conveyancer.[24]

33 The complaint of the applicants in this regard is that, while Form 62 refers to the Duties Act, it does not refer to the Migration Act or Migration Regulations and 'hence creates enough doubts and grey area[s]'.[25]

34 The Commissioner responds that the form is 'sufficiently clear in alerting persons to FPAD and to the definitions in the Duties Act', observing that it is 'the responsibility of taxpayers to be aware of their legal obligations'.[26] Further, the Commissioner contends that, even if the Form 62 is unclear, it 'does not affect the operation of the Duties Act'.

35 As already indicated (see [6]), in Rudd & Noor, I remitted the interest charged in that case because the information that the SRO provides about FPAD falls short of its commitment to clearly and concisely explain state tax legislation. To that extent, it may be accepted that there could be greater clarity in the guidance provided to taxpayers.

36 However, I agree with the Commissioner's contention that any such lack of clarity does not affect the operation of the Duties Act insofar as it relates to the imposition of the FPAD itself for the same reasons discussed in Rudd & Noor, namely that there is no estoppel against the Commissioner and, in any event, the applicants have failed to point to any representation made by the Commissioner which is sufficient to found a claim for estoppel.[27]

Moral ground: Acquisition of Relevant Property as the applicants' home was inconsistent with purpose of FPAD (and comparison to New South Wales)

37 In their submissions, the applicants refer to an article of a law firm which suggests that FPAD is 'intended to disincentivise foreign purchasers from investing in Victorian property'.[28]

38 Mr Shaikh submits that he 'moved to Australia in 2014 to be with my wife Liane Anderson to spend the rest of my [life] and have been part of the community since then'.[29] He notes that he is 'on [his] way to becoming a citizen' and that he is not an 'investor' to which the FPAD is directed.[30]

39 I can understand, and have sympathy for, the applicants' feeling that the application of FPAD is 'unfair' in its application to a person who has made Australia their home, but is yet to obtain a permanent visa.

40 In this regard, it is relevant to note that, in his second reading speech for the State Taxation Acts Amendment Bill 2018 (which led to the introduction of section 69AJ exemption into the Duties Act), the Victorian Treasurer made the following observations:[31]

The bill introduces an exemption from the foreign purchaser additional duty for foreign purchasers that jointly purchase a principal place of residence with their spouse/domestic partner who is not considered a foreign natural person (e.g. is an Australian citizen). One of the objectives of the foreign purchaser additional duty provisions was to ensure a fair and equitable contribution is made to state revenue by foreign buyers who otherwise may not pay tax in Victoria. This exemption recognises that in some circumstances temporary residents, who are foreign purchasers and who jointly purchase a home with their Australian spouse/domestic partner, have been living and working in Victoria for a number of years, meaning that they have been making a contribution to the Victorian economy and are sharing in the tax burden. Importantly, for the exemption to apply, the property must be the principal place of residence of the foreign purchaser and their spouse or domestic partner.

41 While the Treasurer's comments suggest that the Parliament has come to recognise the inappropriateness of applying FPAD to those who settle in Australia and make a contribution to the community (at least in respect of the purchase of their own home), it is clear the legislature chose to introduce the exemption to FPAD on a prospective basis only, and without any discretion for the Commissioner, or the Tribunal on review, to waive or vary the application of FPAD to transfers which took place prior to its introduction. This may be compared to the discretion vested in the Commissioner to modify the 12 month residence requirement in section 69AK where he is 'satisfied there is a good reason for doing so'.

42 The applicants also point to New South Wales providing an exemption from its equivalent of FPAD for people on Temporary Partner Visas.[32] This reflects the different choices made by the New South Wales legislature. However, it is self-evidently irrelevant to the application of the Duties Act.

Reference in VEVO Entitlement Check to Mr Shaikh's period of stay as 'indefinite'

43 The applicants contend that, having regard to the reference to Mr Shaikh's stay as being indefinite on his VEVO Entitlement Check (including the one dated 24 April 2017, which was contemporaneous with the transfer), 'it is incorrect to apply foreign duty'.[33]

44 The Commissioner responds that a VEVO Entitlement Check 'has no legal status' under the Migration Act or Migration Regulations and 'is irrelevant to the legal character of the visa held by Mr Shaikh'.[34] Further, the Commissioner submits that, even if the VEVO Entitlement Check was misleading, it does not change the operation of the Duties Act because the Commissioner was not responsible for any representation it contained and the doctrine of estoppel 'does not operate in a manner inconsistent with statute'.[35]

45 A similar concern as to the information provided on VEVO Entitlement Checks was raised by the applicants in Rudd & Noor.[36] In that case, I observed that 'it is beyond doubt that any reliance on a misleading representation by one person (in this case, the Department) cannot found an estoppel against another unrelated person (in this case, the Commissioner)'.[37]

46 In any event, as already noted (see [36]), there is no estoppel against the Commissioner in his administration of state taxes.

[1] [2022] VCAT 188.

[2] [2022] VCAT 391.

[5] Duties Act, s 18.

[6] Duties Act, s 28.

[7] Duties Act, s 28A.

[9] Duties Act, s 3.

[10] For example, there is a special category visa for New Zealand citizens in section 32.

[11] Migration Act, s 31(1).

[14] Compare the situation applicable in the case of a 'foreign corporation' (being another class of foreign purchaser): Duties Act, s 3E (discussed in South Wharf Towers Pty Ltd v Commissioner of State Revenue [2019] VCAT 64).

[15] [2022] VCAT 188 [24].

[17] Applicants' Statement of Contentions (undated) (ASC) [6].

[18] (2018) 74 AAR 417; [2018] FCA 422 [3].

[19] Ibid [11] (referring to https://www.sro.vic.gov.au/foreignpurchaser).

[20] Written Contentions of the Respondent dated 15 October 2021 (RSLC) [47].

[21] State Taxation Acts Amendment Act 2018 (Vic), s 2(1).

[24] See, to like effect, the Commissioner's submissions in Rudd & Noor [2022] VCAT 188 [51].

[27] Rudd & Noor [2022] VCAT 188 [39]-[42].

[28] ASLC [5(c)] (citing a website published by Rigby Cooke: https://www.rigbycooke.com.au/your-discretionary-trust-will-be-deemed-a-foreign-trust-from-1-march-2020/).

[31] Hansard, Assembly, 8 May 2018, 1139 (Hon T Pallas, Treasurer) (emphasis added).

[36] [2022] VCAT 188 [34].