Harvey & Harvey v Chief Commissioner of State Revenue [2021] NSWCATAD 63
Background
The Applicants sought an administrative review of the Chief Commissioner’s decision that a concessional rate of duty under s.55 of the Duties Act did not apply to the transfer of a property from a trustee to the beneficiaries of the trust.
On 15 December 2016 Tiarco Holdings Pty Ltd (“Tiarco”) was registered as a company with Mr Harvey as its sole director and shareholder. On the same day the Tiarco Family Trust (“the Trust”) was settled by deed, with Tiarco appointed as the Trustee of the Trust. The Trust is a discretionary trust.
On 2 August 2018, $51,000 was transferred from Mr Harvey’s bank account into a bank account jointly held by the Applicants (Joint Account). On the same day $51,000 was withdrawn from the Joint Account.
On 3 August 2018, Tiarco entered into a contract for the purchase of a Property, at a price of $510,000. The purchaser on the contract was recorded as ‘Tiarco Holdings Pty Ltd as trustee for the Tiarco Family Trust’. The Contract recorded the deposit payable as $51,000 and the $51,000 withdrawn from the Joint Account was used to pay it.
On 9 August 2018, Mr Harvey signed, on behalf of Tiarco, a Purchaser/Transferee Declaration. In that document Mr Harvey declared as true and correct various statements, including that Tiarco was the purchaser/transferee of the Property, that Tiarco was acting as a trustee of the Trust and the Trust was a discretionary trust.
On 16 August 2018, $480,000 was transferred from Mr Harvey’s Account to the Joint Account. On the same day $479,255.37 was withdrawn from the Joint Account and used to pay the amount due on settlement of the purchase of the Property, and the purchase of the Property was completed. At the time the Applicants were managing a hotel in Tweed Heads South and could not immediately occupy the Property.
On 16 December 2019, Tiarco executed a transfer form for the transfer to the Applicants of all of Tiarco’s interest in the Property for $1. Tiarco sought an administrative review of the Chief Commissioner’s decision that the concessional rate of duty under s.55 of the Duties Act does not apply.
The Statutory Framework
Section 55(1) of the Duties Act 1997:
- Duty of $50 is chargeable in respect of:
- a declaration of trust made by an apparent purchaser in respect of identified dutiable property—
- vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or
- to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or
- a transfer of dutiable property from an apparent purchaser to the real purchaser if:
- the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and
- the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.
Submissions
The Applicants’ submissions may be summarised as follows:
- s.55(1)(b)(i) does not require a resulting trust;
- the Property had vested in Tiarco upon trust for the Applicants because:
- Tiarco purchased the Property in its capacity as trustee of the Trust;
- the Applicants were beneficiaries of the Trust;
- for the purposes of s.55(1)(b), the class of persons for whom the Property is to be held on trust may be wider than the real purchasers;
- alternatively, if s.55(1)(b) does require a resulting trust then there was such a trust because:
- a resulting trust arises from the Applicants having provided all the purchase moneys;
- it is not necessary to consider evidence of intention beyond the fact of the provision of the purchase moneys;
- Tiarco’s only involvement was as the apparent purchaser;
- the fact that Tiarco was already the trustee of a trust is irrelevant.
The Chief Commissioner’s submissions may be summarised as follows:
- s.55(1)(b) requires that as at the point of time of the dutiable transaction the subject of the analysis, the Property must already be ‘vested in the apparent purchaser upon trust for the real purchaser’;
- the reference in s.55(1)(b) to the concepts of ‘apparent purchaser’ and ‘real purchaser’ is necessarily a reference to resulting trusts: Truskett v Commissioner of Stamp Duties (1976) 6 ATR 1 at 5;
- a presumption of an intention to create a resulting trust may be displaced by evidence of a contrary intention;
- therefore, it is necessary to consider what the intention of the Applicants and Tiarco was prior to 16 December 2019 and most particularly at the time of Tiarco’s acquisition of the Property in August 2018;
- that intention was that the Property was to be held on trust for all the beneficiaries of the Trust. In particular:
- the acquisition was made by Tiarco on behalf of the Trust as appears from the Contract and other documents;
- the beneficiaries of the Trust are not only the Applicants but also various other persons;
- the Trust is a discretionary trust and none of the beneficiaries have any specific interest in any of the trust property, as is made clear by cll 3(a), 3(b), 3(g), 4(a), 5(a), 6(a), 22(a) of the Trust Deed.
The Chief Commissioner also submitted that the fact that the Applicants subsequently decided to live in the Property and that their intention when the property was purchased may have changed are irrelevant to the issues.
Decision
Senior Member Goodman assumed that s.55(1)(b)(ii) was satisfied and that the Applicants were the real purchasers of the property, for the purpose of considering s.55(1)(b)(i). Furthermore, in citing Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 51, Senior Member Goodman was satisfied that Tiarco was the apparent purchaser of the property.
Senior Member Goodman decided that the s.55(1)(b) reference to a trust is limited to a resulting trust, citing Truskett v Commissioner of Stamp Duties (NSW) (1976) 6 ATR 1 and Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1, which decided that the predecessors to s.55(1)(a) and (b) were only concerned with resulting trusts. He also noted that the Chief Commissioner had taken the view in its rulings over many years that both 55(1)(a) and (b) apply only to resulting trusts.
Senior Member Goodman considered that:
- the beneficial ownership of real property is commensurate with its legal ownership: Zhang v Metcalf [2020] NSWCA 228;
- absent a relationship between the two persons as would give rise to a presumption of advancement, it is presumed that the person(s) providing the purchase money did not intend the other person to take the property beneficially;
- absent evidence rebutting the presumption that the person(s) providing the purchase money did not intend the other person to take the property beneficially, a resulting trust arises in favour of the person(s) providing the purchase moneys: see Calverley v Green (1984) 155 CLR 242 at 246;
- the presumption is the starting point of a factual inquiry to objectively infer the intention of the parties from their conduct and is determined as at the date of purchase;
- the intention of the Applicants was not that Tiarco held the Property on a resulting trust for the Applicants, but instead that Tiarco held the Property on trust for all the beneficiaries of the Trust which include, but are not limited to, the Applicants;
- hence the presumption of a resulting trust is rebutted, and s.55(1)(b)(i) is not satisfied.
Senior Member Goodman was also not satisfied that the Property was vested in Tiarco on an express trust for the Applicants, nor did he find it necessary to decide whether s.55(1)(b)(ii) was satisfied.
The Chief Commissioner sought an order pursuant to s.101(1)(b) the Taxation Administration Act 1996, that the Tribunal make an assessment of duty on the transfer of the property to the Applicants in the amount of $19,282 plus interest. The Tribunal refused to do so on the following basis at [59]:
“…there is doubt as to whether s 101(1)(b) enables the Tribunal to make an assessment in place of the decision under review in circumstances where s 101(1)(b) might properly be read as enabling the making of assessments only in place of assessments and the making of decisions only in place of decisions.”
Orders
The decision under review is confirmed
https://www.caselaw.nsw.gov.au/decision/178331492c2799edbb06ca8f