van der Zanden v Chief Commissioner of State Revenue

Submissions of the Parties

1. Mr van der Zanden made several submissions to advance his position that he should not be liable for surcharge purchaser duty. In summary, these submissions were to the following effect: 1. He and his partner had made an offer to purchase the property by email dated 10 June 2016. This offer should be considered to be the relevant dutiable date. 2. Liability for the surcharge purchaser duty should not arise before the date of assent of the legislation which introduced it. As noted above, the date of assent for the State Revenue Legislation Amendment (Budget Measures) Act was 28 June 2016. To underline his submission in this regard, Mr van der Zanden supplied an historical or point in time version of the Duties Act for the period to 27 June 2016 which showed that Chapter 2A was not inserted by that date. 3. He was not advised that he had a liability to purchaser surcharge duty by either his legal representatives acting on the conveyance or by Revenue NSW. I do not intend to address this submission as it Mr van der Zanden's liability is not determined by reference to advice he received nor is his liability influenced by statements made by Revenue NSW. 4. In any event, he was at the time of exchange of the contract for sale, a person ordinarily resident in Australia within the definition prescribed by Duties Act, s 104J as the bridging visa which allowed him to reside in Australia provided that his continued presence in Australia was not subject to any limitation as to time imposed by law.
2. The Chief Commissioner submits that Mr van der Zanden's liability to the surcharge purchaser duty arises because at the date of the dutiable transaction (being the exchange of the contract) the Duties Act, Chapter 2A was in effect and Mr van der Zanden met the definition of a foreign person since he was on a temporary visa which imposed a limitation as to time on his continued presence in Australia.

Applicable Law

1. The surcharge purchaser provisions in the Duties Act are contained in Chapter 2A. That chapter was inserted by amending legislation the State Revenue Legislation Amendment (Budget Measures) Act 2016 (NSW), Schedule 1.
2. The date of assent of the State Revenue Legislation Amendment (Budget Measures) Act was 28 June 2016. Again, there is no dispute about this.
3. The State Revenue Legislation Amendment (Budget Measures) Act, s 2 provided: 2 Commencement (1) Schedule 1 is taken to have commenced on 21 June 2016. (2) This Act (except Schedule 1) commences on the date of assent to this Act.
4. The Duties Act, Schedule 1, cl 120 provides that a duty charged by Chapter 2A is charged on surcharge duty transactions that occur on or after the commencement date of that Chapter or as otherwise provided by that clause.
5. The Duties Act, s 104L provides that surcharge purchaser duty is chargeable on a transfer or agreement for the sale or transfer of residential-related property to a foreign person. This is referred to in the legislation as a "surcharge duty transaction".
6. The Duties Act, s 104N sets out the imposition of the surcharge purchaser duty on transactions that are not transfers. Relevantly, an agreement for sale or transfer is a surcharge duty transaction and the duty is imposed when the agreement is entered into. The duty is imposed on any foreign person who is a purchaser or transferee.
7. Mr van der Zanden, as the applicant, bears the onus of proof; Taxation Administration Act 1996 (NSW), s 100(3). Specifically, Mr van der Zanden must establish to the usual civil standard of proof, that he is not liable for the purchaser surcharge duty. Relevantly, he needs to establish that he was a person ordinarily resident in Australia at the time of the dutiable transaction.
8. In this case the applicant's onus bears lightly upon him. The facts were largely uncontroversial and there are no issues of credit. Mr van der Zanden appears to have fully co-operated with the Chief Commissioner's investigation and the issues which fall to be determined are largely those of statutory interpretation and construction.

What is the surcharge duty transaction?

1. As noted above, the Duties Act, s 104N provides for the imposition of the surcharge purchaser duty on transactions that are not transfers and that an agreement for sale or transfer is a surcharge duty transaction with the surcharge duty being imposed when the agreement is entered into.
2. Also as noted above, Mr van der Zanden made a submission that the email exchange offering to purchase the property sent on 10 June 2016 was the surcharge duty transaction since Duties Act, s 104N provides for the entry into an agreement. The email is evidence of an offer being accepted but there is no passing of consideration and it is clear that the parties intended that their exchange by email was to agree to enter into a formal written contract which was then exchanged on 24 June 2016.
3. Accordingly, I find that the surcharge duty transaction was the exchange of contracts that took place on 24 June 2016.

The date of effect of the Duties Act, Chapter 2A

1. This issue can be dealt with simply by reference to the clear words of the legislation. State Revenue Legislation Amendment (Budget Measures) Act, s 2 provided that the provisions in Schedule 1 which were inserted into the Duties Act as Chapter 2A were taken to have commenced on 21 June 2016.
2. The provisions imposing the surcharge purchase duty were applicable from 21 June 2016. The date of assent has been specifically excluded and is, therefore, irrelevant.
3. There is a general presumption that laws are introduced with prospective and not retrospective effect. In Maxwell and Murphy (1957) 96 CLR 261 at 267, Dixon CJ stated that; The general rule of the common law is that a statute changing the law, ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events
4. In submissions, the Chief Commissioner refers to a decision of the Full Court of the Supreme Court of Victoria in R v Marshall & Ors [1986] VR 19 at 24 where Brooking J stated that: … Acts of Parliament on occasion achieve their desired retrospective effect, … by providing that the Act as a whole or some section of it shall be deemed to have come into operation on a day already past. …
5. The presumption, and its ability to be countered by clear legislative intention, has been long recognised in federal revenue matters; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 167-168, 209, 217-218; Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (2017) 251 FCR 40 at [141].
6. In this case there has been a clear intention in legislation that the Duties Act, Chapter 2A was to have effect on and from 21 June 2016.
7. Accordingly, I find that Mr van der Zanden and his partner exchanged contracts with the vendor to purchase a residential property on 24 June 2016, when the Duties Act, Chapter 2A was in effect and that chapter applied to the transaction.

Ordinarily Resident for the purposes of Duties Act, Chapter 2A

1. It has been observed in other decisions, and correctly so in my respectful opinion, that the concept of "ordinarily resident" is solely governed by the words of the Foreign Acquisitions and Takeovers Act, s 5 as adopted by the Duties Act, s 104J; Lawrence v Chief Commissioner of State Revenue [2022] NSWCATAD 266 at [35] and Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216 at [50].
2. Duties Act, s 104J defines "foreign person" for the purposes of Chapter 2A in the following terms: (1) In this Chapter - foreign person means a person who is a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section. … (2) The definition of foreign person in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth is modified as follows - (a) an Australian citizen is taken to be ordinarily resident in Australia, whether or not the person is ordinarily resident in Australia under that definition, …
3. In summary, the Foreign Acquisitions and Takeovers Act 1975 (Cth), s 5 provides that an individual is not a foreign person if, though not an Australian citizen, they are ordinarily resident in Australia at a particular time. Being ordinarily resident requires, relevant to this case, two conditions; 1. Firstly, that the person has been in Australia for 200 days or more in the 12 months immediately preceding that time, and 2. Secondly, that the person's continued presence in Australia is not subject to any limitation as to time imposed by law.
4. As recounted above, on 24 June 2016, the date of the surcharge duty transaction, Mr van der Zanden was not an Australian citizen. By that date, he had been granted a bridging visa while his application for a partner visa was being determined.
5. There was no dispute in this case that Mr van der Zanden fulfilled the first condition of being "ordinarily resident" by being in Australia for 200 days or more preceding the date on which the contracts were exchanged. The Chief Commissioner has expressly conceded this in submissions.
6. The principal issue in these proceedings is whether Mr van der Zanden's continued presence in Australia on 24 June 2016 can be said to be subject to any limitation as to time.
7. Mr van der Zanden submitted the bridging visa allowed him to work, pay income tax and receive health care and there was no express date set by when this visa would expire and that he had come to Australia, applied for a partner visa and intended to live and establish his family here.
8. It is correct that there was no expressed date nominated for when Mr van der Zanden's bridging visa was to expire. Instead, the terms of his bridging visa provided that he was allowed to: … remain lawfully in Australia until 28 calendar days after you are notified of a decision on your application for a Partner (temporary) (class UK) Partner (subclass 820) visa.
9. I note that the subclass 820 visa was granted to Mr van der Zanden in 2017. The Chief Commissioner, in Ruling G009 issued on 20 December 2016, has stated that a person who holds a subclass 820 visa will be treated in the same way as a person who holds a permanent resident visa. Given the facts of this case, the Chief Commissioner's ruling is not relevant to the matters to be determined here.
10. In Li v So [2019] VSC 515 the plaintiff was in Australia on a temporary resident visa. The plaintiff, in that case, contended that the Migration Act 1958 (Cth), s 30(2)(a) provided three bases by which a temporary visa might be limited being: 1. a specified period; or 2. until a specified event; or 3. while the visa holder had specified status.
11. The plaintiff in Li contended that of the three bases, only the first contained temporal limitation and that, since her visa authorised her to remain in Australia until a specific event happened, she fulfilled the definitional requirements of being ordinarily resident in Australia. Croft J at [96] found that: … I do not accept the plaintiff's submission regarding the appropriate characterisation of s 30(2)(a) of the Migration Act 1958 (Cth). I consider all three conditions contemplated by s 30(2)(a) render the holder of a temporary resident visa "a person whose presence in Australia is subject to a limit imposed by law". Irrespective of the precise event which terminates the holder's right to remain in Australia, all three conditions render the holder subject to a temporal limitation. Such is inherent in the very nature of a "temporary resident visa".
12. Similarly, in Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67 at [42] - [45], the Tribunal considered whether the applicant was entitled to stay indefinitely in Australia when he held, at the relevant time a class 309 visa which was later converted to a class 100 visa. The class 309 visa was issued to Mr Hashim while his application for a permanent visa was being processed. The class 309 visa provided he could stay in Australia until his permanent visa application was decided or the application was withdrawn. In that case, the Tribunal found that holding a class 309 visa meant Mr Hashim was, at the relevant time, not entitled to stay indefinitely in Australia, rather he was entitled to stay until a specified event happened.
13. While different provisions and visas are involved in this case, the decisions in Li and Hashim are authorities for the proposition that Mr van der Zanden's presence in Australia was subject to a limitation as to time - that limitation being when a specific event happened, being the determination or withdrawal of his visa application.
14. It is clear from its title and the bridging visa grant notice which was before the Tribunal in these proceedings that the bridging visa was provided to Mr van der Zanden while his application for a different visa was being determined. On a fair reading of the visa and the grant notice the visa was subject to a limitation as to time. The authorities which are set out above are consistent with this finding.
15. Consequently, I find that Mr van der Zanden was a foreign person for the purposes of the Duties Act, Chapter 2A and he has been properly assessed as being liable to pay the surcharge purchaser duty.

Conclusion

1. The particular circumstances of this case have naturally given rise to an understandable regret on Mr van der Zanden's part. This has no doubt been intensified by: 1. the fact that it was not until years later that the Chief Commissioner detected the failure to pay the duty and 2. the fact that had Mr van der Zanden and his partner exchanged contracts on the residential property before 21 June 2016, his liability to surcharge purchaser duty would not have arisen.
2. There will always be negative outcomes for some individuals when new legislation is imposed, particularly revenue legislation. The fact of a negative or unfortunate outcome does not enliven any power to remit or reduce the liability; Strathavon v Chief Commissioner of State Revenue [2017] NSWCATAD 200 at [22].
3. Nor, in the circumstances of this case, can such outcomes be ameliorated by the Tribunal having regard to particular individual circumstances. There is no discretion available to the Chief Commissioner or the Tribunal where the statutory criteria are met giving rise to a liability of this kind; Barsoum v Chief Commissioner of State Revenue [2020] NSWCATAD 282 and Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238.
4. The law applies in this case in a manner that is relatively straightforward and uncontroversial. The Chief Commissioner has remitted interest in this case which, in my respectful opinion, was an appropriate action.
5. For those reasons, the assessment of surcharge purchaser duty to which notice was given on 30 June 2021 should be confirmed under the Taxation Administration Act, s 101(a).

Orders 1. The assessment of surcharge purchaser duty contained in the notice of assessment dated 30 June 2021 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: 23 August 2022