Doumanis v Chief Commissionerof State Revenue

Adam obtained the First Home Owner Grant and moved into the property after settlement. His parents suggested that he should move back with them and rent out the property. Afterall, the rent can help Adam pay off the mortgage quickly. What a great idea, right?

Well, the case of Doumanis v Chief Commissioner of State Revenue [2012] NSWADT 59 (click the link) which is handed down today, 4 April 2012 suggests the opposite.


Residence Requirement

The legislation governing the first home buyer’s grant stated that those who received the FHOG grant, must purchase a property as their principal place of residence and live there continuously for at least 6 months.

A FHOG buyer is obliged to start the '6 months residence' within 12 months since the date he or she obtained that property.

In Doumanis v Chief Commissioner of State Revenue, Mr Doumanis purchased an apartment unit in Waverley under the First Home Plus Concession Scheme in January 2006. After a month of occupancy, he relocated back to live with his parents in San Souci. Five days after he moved out, Mr Doumanis leased the Waverley property for the next 3 years until it was sold.

The Chief Commissioner, following the investigation, formed the view that Mr Doumanis did not comply with the residence requirement and recalled the grant plus a penalty of $2,100.00.

Additionally, the Chief Commissioner issued a request to recover $15,292 (plus $3,966 interest) as Mr Doumanis was exempt from stamp duty as well as $1,351 (plus $345 interest) on the account of exemption from the mortgage duty.

The Administrative Decision Tribunal (ADT) had to decide whether or not the Chief Commissioner had discretion to allow a shorter period of occupancy after the expiration of the period for which Mr Doumanis was required to comply with the residence requirement. The short answer is no.

The ADT found that the legislation required Mr Doumanis to obtain the Chief Commissioner’s approval for any shorter period within the 12 months period after the purchase of the first home. Moreover, if Mr Doumanis needed more than 12 months to commence his residency requirement, the buyer had to get the approval before the first 12 months have lapsed.

The ADT also found that Commissioner’s request for refund was justified and Mr Doumanis was ordered to give back more than $20,000.
Sobhani v Chief Commissioner of State Revenue [2009] NSWADT 198 (click the link) was another case dealing with residence requirement.