In Nikoiee v Commissioner of State Revenue [2018] VCAT 1425, the Tribunal had to consider whether a transfer of property from the Taxpayer’s sister to the Taxpayer was exempt under section 34 of the Duties Act 2000 (Vic) (Duties Act) invoking the apparent purchaser provision.

The Tribunal Member R Tang confirmed the decision and the assessment of the Commissioner of State Revenue (Commissioner) thereby rejecting the Taxpayer’s application.

On 25 May 2010, the sister of the Taxpayer, Ms Negar Nikoiee, entered into a house and land package with Devine Homes which was financed through a secured mortgage.

On 25 May 2015, Ms Negar Nokoiee executed a transfer document in order to transfer the property to the Taxpayer.  The transfer was never registered and the sister sold the property to a third party for $380,000. The net proceeds after adjustments and repayment of the loan were paid to the Taxpayer.

The transfer document was assessed to duty on the basis that it did not meet the requirements of the ‘apparent purchaser’ exemption under section 34(1)(b) of the Duties Act, to which the Taxpayer objected.

On 29 January 2016, the Commissioner disallowed the objection on the basis that the transfer from the sister to the Taxpayer was not a failed instrument under section 260 of the Duties Act, and that the transfer was not exempt under section 34(1)(b) on the basis that the Commissioner was not satisfied that the sister held the property on trust for the Taxpayer or that the Taxpayer had provided all of the money for the purchase of the property.

The Taxpayer relied on the following evidence:

  • a NAB bank statement showing a withdrawal of $30,000;
  • receipts of invoices for Council rates; and
  • a Westpac Fixed Rate Investment Loan.

The applicant alleged the NAB withdrawal was to pay for the deposit of the property and that she had funded the repayments of the Westpac loan taken out by her sister to fund the acquisition of the property. Loans repayments were made by the Taxpayer’s parents which were provided by the Taxpayer for this purpose. In evidence, the transaction documents for the property showed no deposit was payable. The Taxpayer then suggested that the withdrawal was for acquisition costs, before suggesting they were for renovations.

In relation to the Westpac loan, further examination led the Taxpayer to concede that the statement was inaccurate and that the statement may have been doctored. The Tribunal confirmed the Commissioner’s decision on the grounds that the Taxpayer had no credible evidence to discharge the onus of proving she provided the purchase money for the purchase of the dutiable property as required by section 34(1)(b) of the Duties Act.

This case serves as a reminder for the need to provide accurate and robust evidence when attempting to rely on an exemption from tax or duty. We consider that the Taxpayer should have applied for a private ruling prior to executing a transfer of land and incurring unnecessary duty.