The opportunity to claim a grant to assist with the purchase of a property will often be an important consideration for a buyer. Some property developers use the availability of the First Home Owner's Grant when marketing properties to prospective buyers.
In Gonzalez & Anor v Commissioner of State Revenue [2015] QCAT 65, the Queensland Civil and Administrative Tribunal considered the circumstances in which a person is entitled to the First Home Owner's Grant, and the possibility for it to be required to be repaid if it is later found that the relevant eligibility criteria were not established.
The original developer of a unit went into receivership, and the unit was sold to a subsequent developer, who then sold the unit to Mr and Mrs Gonzalez. Mr and Mrs Gonzalez purchased the unit using funds which included the First Home Owner Grant granted by the Commissioner of State Revenue pursuant to the First Home Owner Grant Act 2000 (FHOGA). However, following their purchase of the unit, the Commissioner required Mr and Mrs Gonzalez to repay the grant on the basis that the unit was not a "new home", and Mr and Mrs Gonzalez applied to the Queensland Civil and Administrative Tribunal to review the Commissioner's decision.
Pursuant to Section 10(1)(b) of the FHOGA, a grant is payable for an 'eligible transaction', which Section 5(1)(a) defines as a contract made for the purchase of a "new home".
Mr and Mrs Gonzalez submitted that because the seller did not occupy the unit and did not intend to occupy the unit and no other person had occupied the unit, the property was a new home.
However, the Tribunal found that the legislation requires that a "new home" is something that has not been previously occupied or sold as a place of residence, and that if either of those things are established then the property will not be a "new home". The Tribunal noted:
The Tribunal noted the purpose for which the unit was built from the Transfer document of the previous sale, which noted the "current land use" as "multi-unit" and not commercial. The Tribunal therefore found that the property was "previously 'sold' as 'a place of residence' – a place to live in or reside".
The consequence of this finding was that Mr and Mrs Gonzalez did not enter into an "eligible transaction" and were therefore not eligible for the First Home Owner Grant for a "new home".
Mr and Mrs Gonzalez contended that this outcome was anomalous with the intention of the FHOGA, which was to encourage first home owners. However, the Tribunal noted that in 2012 Parliament shifted its policy intent away from helping first home buyers as a whole by amending the definition of "eligible transaction" so as to restrict eligibility for the grant only to first home buyers who build or buy a "new home".
Mr and Mrs Gonzalez claimed that they would not have purchased the property if the Commissioner had not approved the grant and that the Commissioner had ample opportunity to reject the grant prior to the contract becoming unconditional. However, the Tribunal held that this does not mean that the Commissioner is prevented or stopped from reassessing eligibility when the initial assessment is based on incorrect information. The Tribunal stated that it was incumbent upon Mr and Mrs Gonzalez, as applicants for the grant, to have provided correct information to the Commissioner and conducted proper checks on the property that they were purchasing.
The Tribunal therefore confirmed the Commissioner's decision to disallow an objection to the decision to repay the grant.
First home buyers, real estate agents, property developers and advisors alike should all be aware of this decision which interprets the parameters of what amounts to an "eligible transaction" for the purposes of the FHOGA, as an incorrect application for a grant could result in a home buyer being required to repay the grant.
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