Man penalised for claiming FHOG while living offshore

An Australian Capital Territory Civil & Administrative Tribunal decision has upheld a 25% penalty imposed on a property buyer over a First Home Owners Grant (FHOG) dispute.

Yesterday, it was found that Mr MD Masud Karim, who had been given the First Home Owner Grant and First Home Owner Grant Boost, totalling $21,000, was required to give back the funds, interest and face a penalty as he had not resided in the premises.

The tribunal noted that it was not a deliberate intention on Karim’s part to defraud.

In January 2009, Karim entered into a contract for sale for a block of land. In July, he then entered into a home building contract to construct a dwelling on the site.

In August, he then lodged an application for the grants where he said that he, as the applicant, would be occupying the home as his principal place of residence for six months within 12 months of completion.

However, in September 2009 he left Australia for Bangladesh, with the application not yet determined. He has not returned to Australia, citing better employment opportunities for himself in Bangladesh.

In November he was told that his application was approved. He did not update his NSW driver’s licence from his previous Lakemba address, nor his bank accounts, nor put himself on the ACT electoral roll. He was, however, the addressee for the electricity and natural gas bills.

His wife and children moved into the house in January 2010, where she used her address and enrolled her children at the local school.

In May 2010, she appointed a property manager to rent the house and act as agent for rates and land tax, where it was rented to other people until July 2010 when she and the children moved to Bangladesh.

In October 2010 Karim sold the house. He said that he was unable to service the mortgage with his current income and the rent.

Despite his wife and children living in the property, and Karim’s submission that it was his primary place of residence in Australia despite himself living in Bangladesh, Tribunal said that he must have lived in the house himself as the applicant.

Instead, Tribunal advised the better course of action would have been to not accept the grant, or notify the respondent within 14 days that he would not meet the residency requirement. Possibly, an extension of the time for the grant may have been provided for the unexpected situational change.

In effect, the Tribunal agreed with the submission of the respondent that those who receive the grant accept it on a “conditional bases” that means they are expected to exercise diligence to ensure they either meet the conditions of the grant or return the funds.