In February 2014, the taxpayer purchased a property under contract of sale for $500,000. As part of that transfer, the taxpayer also agreed to discharge the vendor from an obligation to pay to it a sum of $605,000 secured under a mortgage. At settlement, the taxpayer only paid duty based on the stated consideration of $500,000.
Following an investigation, the Commissioner formed the view that the consideration for the transfer was in fact $1,105,000 and issued an assessment for penalty at 25% and market interest.
On 24 July 2020 the Tribunal delivered its decision in favour of the Commissioner, confirming the assessment, finding the extinguishment of the debt constituted consideration for the transfer. The Tribunal also held there was no basis to reduce penalty tax or interest as it was not satisfied that reasonable care had been taken.