|Transfer Duty and Transfer of Dutiable Property under a Will or Intestacy|
In the case of Ferguson v Commissioner or State Revenue  WASAT 179, the State Administrative Tribunal of Western Australia upheld the Commissioner's objection to the assessment of duty.
Mrs. Lane left her home to the taxpayer and his sister under her will. During Mrs. Lane's life, she gifted a property to the taxpayer's sister. The taxpayer and the taxpayer's sister asserted that although the property was to pass to both the taxpayer and his sister under the will, the intention of Mrs. Lane was that the home passed solely to the taxpayer, as the sister already received a property. As a result, the transfer of land conveyed the property to the taxpayer alone. The Commissioner assessed the duty on the transfer of land and calculated the duty on one half of the value of the property.
The taxpayer objected to this assessment and argued that nominal duty should apply to the entire transfer, as the transfer was in accordance with the testamentary wishes of Mrs. Lane. The Commissioner disallowed the taxpayer's objection.
There were two issues before the Tribunal:
a. whether the Commissioner was bound by comments made by an officer of the State Revenue Office to the taxpayer; and
b. whether section 139 of the Duties Act 2008 (WA) (Duties Act) applied to the transfer of the whole property or only to a half interest in the property.
The taxpayer argued that, at the time of lodgement of the transfer of land, an officer of the State Revenue Office stated that the transfer would attract nominal duty only and therefore the Commissioner must be bound by that representation.
The Tribunal agreed with the Commissioner's response to this issue. Although the officer may have provided the taxpayer with this advice, the imposition of duty on a transfer is a statutory duty and therefore the Commissioner is obliged to make an assessment for duty regardless of any advice to the contrary. The Tribunal noted that raising revenue is for the benefit of the public and as such, the Commissioner cannot be estopped from issuing an assessment.
Section 139 of the Duties Act provides that nominal duty will be charged on a transfer of dutiable property under a will or intestacy.
The taxpayer argued that section 139 applies to the transfer of the whole property as the transfer to the taxpayer was consistent with the testamentary wishes of Mrs. Lane.
The Tribunal did not have jurisdiction to account for Mrs. Lane's testamentary wishes and could only consider the terms of the will. The Tribunal pointed out that section 139 applies only "to the extent" a transfer gives effect to a distribution of a deceased estate. The Tribunal concluded that two dutiable transactions existed. Nominal duty applied to the transfer from Mrs. Lane to the beneficiaries under the will. Ad valorem duty was payable on the portion of the property that was transferred from the taxpayer's sister to the taxpayer because the exception in section 139 of the Duties Act did not apply to this transfer.
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Published on our website on Feb.17, 2011