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Date of judgement | 16 July 2012 |
Proceeding number | 119054 |
Judge(s) | President O’Connor J Judicial Member Verick, Non-judicial Member Butlin |
Court or Tribunal | Administrative Decisions Tribunal Appeal Panel |
Land Tax Management Act 1956 Sub-sections 10AA(2) and (3)
STATE REVENUE - Land Tax - Non Rural Land - Primary Production Exemption - Appeal from Tribunal - Meaning of 'land' - Whether 'use' confined to actual physical use of land - Whether comparison involved in deciding the 'dominant use' is confined to actual physical uses - Tribunal held not so confined, and held that the dominant use was of a business nature unrelated to primary production - no error: Land Tax Management Act 1956, s 10AA(3). Tribunal's holding in alternative that the commerciality test is satisfied - considered, Land Tax Management Act 1956, s 10AA(2).
Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue [2011] NSWADT 250
Australian Football League v Commissioner of State Revenue [2004] VCAT 1882
Colusso and Ors v Chief Commissioner of State Revenue [2008] NSWADT 79
Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493
The Council of the City of Parramatta v Brickworks Ltd (1972) 128 CLR 1
Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278
House v The King [1936] HCA 40; (1936) 55 CLR 499
Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867
Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366
Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48
Reysson Pty Ltd v Chief Commissioner of State Revenue (RD) [2009] NSWADTAP 17
Saville v Commissioner of Land Tax (NSW) (1980) 81 ATC 4,373
Ashleigh Developments Pty Ltd (“the Taxpayer”) appealed against a decision of the Administrative Decisions Tribunal (“ADT”) that the use of its property in Milton (“the Land”) did not satisfy the dominant use test for the 2007 to 2010 land tax years. The Chief Commissioner of State Revenue (“Chief Commissioner”) cross-appealed against the decision that the primary production activity conducted by the lessee of the Land (“the Farmer”) satisfied the business tests for those tax years.
The ADT Appeal Panel, comprised of President O’Connor J, Judicial Member Verick and Non-Judicial Member Butlin, dismissed the appeal by the Taxpayer. The Appeal Panel also decided that it was not necessary to make a decision on the Chief Commissioner’s cross-appeal, but disagreed with the Tribunal’s conclusions in respect of some aspects of the business tests and indicated that the Tribunal’s conclusions regarding the application of the business tests are not authoritative for future, similar cases.
In 2006, the taxpayer purchased the relevant land (“Land”) from the Farmer, who continued to use the Land under lease for cattle grazing.
The Land was zoned residential and the Council granted approval to subdivide the Land into 157 residential lots. The taxpayer spent approximately $1.5 million on various fees related to ancillary processes associated with the future development and/or holding of the Land. However, the Taxpayer did not procure any physical works or improvements to the Land, the Land was not connected to services and no kerbs or gutters or road were laid. The only physical use of the Land was the Farmer’s cattle grazing, which the Farmer used in conjunction with 280 hectares of other land in the Shoalhaven area. The taxpayer contended the only “use” of the Land was the physical use of the Land by the Farmer, being commercial beef cattle grazing.
The Chief Commissioner contended the dominant “use” of the Land was the taxpayer’s use of the Land in the joint venture’s property development business as trading stock. The taxpayer was a partner of a joint venture in a property development business. A significant write-down in the value of the Land meant the holding of the Land as trading stock resulted in the joint venturers paying almost no tax on the joint venturers’ other activities.
The taxpayer sought an exemption for land tax on the basis the Land was used for primary production under s. 10AA of the Land Tax Management Act (“Act”). There were 4 issues:
While the use of the Land satisfied the commerciality and profit tests, as the dominant use test was not satisfied, the taxpayer was not eligible for the exemption.
The taxpayer appealed against the decision and the Chief Commissioner cross-appealed in relation to Judicial Member Frost’s reasoning at (3) and (4) above.
Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue (RD) [2012] NSWADTAP 25