Reading the Fine Print – When the First Home Owner Grant and First Home Buyers Duty Exemption does not apply:
The issue in this case was whether a First Home Owner Grant and First Home Buyers Duty Exemption could apply to a non-permanent resident of Australia.
This case concerned multiple attempts made by the applicant to obtain the First Home Owner Grant under the provisions of the First Home Owner Grant (New Homes) Act 2000 and a First Home Buyers Duty Exemption under the Duties Act 1997.
The applicant was disputing the following decisions made by the Chief Commissioner of State Revenue:
- The decision to reject the applicant's application for a First Home Owner Grant; and
- The decision to revoke the First Home Buyer Duty Exemption which had previously been granted.
The applicant and his wife were both born in Afghanistan.
The applicant's wife is an Australian citizen who moved to Australia as a young child. The applicant is not an Australian citizen, having come to Australia on a spouse visa in 2015.
The applicant's wife was not a party to the Contract for Sale, was not named as a transferee on the Transfer and was not an owner of an estate in fee simple in the property that they had acquired.
The First Home Owner Grant was introduced to offset the effect of GST on home ownership. It provides first home owners with a one-off payment to purchase a residential property to live in.
The First Home Buyers Duty Exemption is a government initiative that exempts first home buyers from paying stamp duty for homes valued up to $650,000.
Issues in the Proceedings
The Tribunal had to decide whether the applicant was entitled to the Grant and Exemption.
The Tribunal identified three main issues and one potential issue that required consideration:
- Whether the applicant was a permanent resident of Australia and eligible for a First Home Owner grant;
- Whether the decision to revoke the First Home Buyer duty exemption should be upheld; and
- Whether the Tribunal should take into account the "Government policy issue" of housing affordability.
- Whether the applicant's wife had ownership of the acquired property.
The Tribunal confirmed the rejection of the applicant's application for a First Home Owners Grant and upheld the Chief Commissioner's decision to revoke the First Home Buyers duty exemption, making the applicant liable for stamp duty.
The issue of permanent residency
The applicant claimed to be a permanent resident. In his first Home Owners Grant application, he was the sole applicant. However, in his second Home Owners Grant application, he applied with his wife as joint applicants.
The applicant claimed that as he had not been advised by the Department of Home Affairs that his application for permanent residency had been rejected, he assumed that it had been granted.
However, the Tribunal found that although his residency situation was akin to permanent residency, "quite simply, he was not a permanent resident".
The duty exemption issue
The Tribunal relied on the provisions of the Duties Act in their analysis of this issue.
Section 73(5) of the Duties Act provides that persons who are not Australian citizens or permanent residents are ineligible for the duty exemption.
However, section 73(6) states that if there is more than one purchaser or transferee under an agreement, and at least one of them is a first home owner who is an Australian citizen or permanent resident, the other purchasers or transferees are exempt from compliance with section 73(5). This means that an application for the duty exemption only requires one party to be an Australian citizen or permanent resident.
Irrespective of the above exception, section 73(6) of the Duties Act was irrelevant in this case. The applicant's wife was not registered as a purchaser under the Contract for Sale, or as a transferee under the Transfer. This meant that although she was an Australian citizen, she was not eligible under the exception.
The government policy issue
The Tribunal found that a vague statement of government policy regarding the affordability of housing did not undermine the decision of the Chief Commissioner. As a result, the Tribunal was not satisfied that there was a relevant government policy in place.
The issue of ownership – the applicant's wife
The Tribunal found that the applicant's wife positively contributed by looking after their child, which allowed the applicant to work and pay the loan payments for the property.
However, it was never demonstrated that these domestic contributions were intended to constitute an equitable interest in the property for the applicant's wife.
As a result, there was no evidence that the applicant's wife had contributed to the purchase price of the property, and was therefore deemed ineligible for the First Home Owners Grant and the First Home Owner duty exemption.
The Tribunal highlighted that even if the applicant's wife had obtained an equitable interest in the property, this did not make her an owner of the land in fee simple.
The First Home Owners Grant and First Home Buyers Duty Exemption are two extremely beneficial schemes for individuals entering into the property market.
However, there are strict eligibility requirements that must be adhered to.
This case should serve as a reminder to potential homeowners to be wary of their residency status and to ensure that at least one applicant is a purchaser under the Contract for Sale.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.