FHOGA019.1.1—Instalment contracts

1. The First Home Owner Grant Act 2000 (the FHOG Act) provides that the first home owner grant (the grant) is payable on application if the applicant (or if there are two or more applicants, each of the applicants) complies with the eligibility criteria and the transaction for which the grant is sought is an eligible transaction and has been completed.¹ 
2. A contract for the purchase of a home is completed if the purchaser becomes entitled to possession and the purchaser’s title to the land is registered.² 
3. Instalment contracts for the sale of land are contracts under which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to a transfer of the title.³
4. Usually, a purchaser under an instalment contract is not entitled to a transfer of title until one of the following events occurs:
   1. the final instalment is paid
   2. one third of the purchase price has been paid and one of the parties to the contract requires a transfer to the purchaser with a mortgage back to the vendor as security for the unpaid purchase price
   3. the purchaser pays the balance of the purchase price at some other time (e.g. using funds borrowed from a financial institution).
5. The Commissioner may authorise payment of the grant before the completion of the eligible transaction if satisfied that it is appropriate in the circumstances.⁴
6. The Commissioner may also attach conditions to the payment of the grant.⁵ 
7. This Public Ruling clarifies when the grant will be paid to a purchaser prior to completion of an instalment contract, assuming other conditions of payment of the grant are satisfied.

Conditional payment prior to completion

8. The Commissioner will exercise the discretion⁶ to pay the grant to a purchaser under an instalment contract prior to completion of the contract if all of the following circumstances exist:
   1. The contract has been in existence for at least one year.
   2. The purchaser is not in default under the contract so that the vendor has no right to cancel the contract.
   3. The purchaser has occupied the home as their principal place of residence under the contract.
   4. The purchaser has paid to the vendor an amount of not less than $7,000 or an amount which is equal to at least 10% of the purchase price, whichever is the greater. In calculating the amount paid to the vendor, any of the following can be taken into account:
      1. any deposit paid by the purchaser to the vendor
      2. any interest paid by the purchaser to the vendor
      3. any other amounts which have been paid and deducted from the balance of the purchase price.

Conditions of payment

9. A grant paid prior to completion of an instalment contract will be paid subject to the following conditions:
   1. The contract will be completed and will not be cancelled or terminated.
   2. Following payment of the grant, the purchaser will meet the residence conditions:
      1. For contracts entered into before 1 January 2004, the residence condition is that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract.⁷
      2. For contracts entered into on or after 1 January 2004, the residence conditions are that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract for a continuous period of at least 6 months.⁸
   3. Within 14 days of non-compliance with conditions (a) or (b), the purchaser will notify the Commissioner of non-compliance and will repay the grant.

Procedure

10. Where a purchaser under an instalment contract claims payment of the grant under the terms of this Public Ruling, the application must be supported by a statutory declaration from the purchaser detailing compliance with the matters referred to in paragraph 8. This statutory declaration should also include a statement of the purchaser’s intention in relation to the matters referred to in paragraphs 9(a) and (b).
11. Where the Commissioner imposes the conditions in paragraph 9, the purchaser must agree in writing, before payment of the grant, to notify the Commissioner and repay the grant in accordance with paragraph 9(c).
12. It is an offence under the FHOG Act for a person not to comply, without reasonable excuse, with a condition imposed by the Commissioner under the FHOG Act.⁹ 
13. Where the person fails to repay the grant under the conditions of the grant the Commissioner may as an alternative to prosecution, impose a penalty of up to 100% of the amount of the grant.¹⁰ 
14. It is also an offence under the FHOG Act for a person to:
    1. give to the Commissioner or an authorised officer under the FHOG Act a document containing information or
    2. state anything to the Commissioner or an authorised officer under the FHOG Act
       
       that the person knows is false or misleading in a material particular.¹¹
15. Where the grant is paid in error because of the provision of such false or misleading information in relation to the application for the grant, the Commissioner may:
    1. require the grant to be repaid¹² 
       
       and
       
    2. as an alternative to prosecution, impose a penalty of up to 100% of the amount of the grant paid in error.¹³
       

13. This Public Ruling takes effect from the date of issue. 

 

David Smith
Commissioner of State Revenue
Date of issue 24 February 2009

Public Ruling	Issued	Dates of effect
		From	To
FHOGA019.1.1	24 February 2009	24 February 2009	Current
Supersedes Practice Direction FHOG 2.2	18 October 2004	18 October 2004	23 February 2009