|Date of judgement||12 March 2014|
|Judge(s)||J Block, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal|
Primary production exemption – onus of proof – consideration of cattle use, rental use and development use
In these proceedings, the Taxpayers sought review of the Chief Commissioners’ decision to disallow an objection by the Taxpayers against an assessment of land tax requiring the Taxpayers to pay land tax for their property at Goonellabah (“the Property”) in respect of the 2008 to 2012 land tax years (“the relevant years”).
The Taxpayers’ family have owned the Property and used it to graze beef cattle since 1947. The Taxpayers contended that the Property should be exempted from land tax on the basis that it was used for primary production.
The Chief Commissioner accepted that there was a relevant primary production use for the purposes of s.10AA of the Land Tax Management Act 1956 (“the Act”), but disputed the Taxpayers’ claim that this was the dominant use of the land.
The Tribunal considered that during the relevant years the Property had at least three uses as follows:
During all relevant years the Property comprising approximately 13 hectares of land was zoned Residential 2(a), Industrial 4(a), Special Uses (Road Widening) 5 and Recreation 6(a)(6), and was not ““rural land” for the purposes of s.10AA.
Therefore, s. 10AA(2) of the Act applied to the Property for the relevant years such that the Taxpayers must satisfy each of the following criteria or “limbs”:
In respect of the first limb (the dominant use test) the Tribunal noted that only the primary production activities on the Property were relevant, so that activities on the adjacent property were not relevant.
The Tribunal referred to the decision in Leda Manorstead v Chief Commissioner of State Revenue ( NSWCA (3), noting that if the land is used for one or more of the primary production purposes listed in s.10AA(3)(a)-(f) and is also used for other purpose, it is necessary to enquire whether primary production is the dominant use. This is a matter of fact and degree.
The Tribunal considered that the dominant use was either the rental use or the development use, but decided that it did not have to decide which was the dominant use because it was ‘abundantly clear’ that it was not the primary production use. Moreover, the Tribunal noted that the cattle use of the property did not satisfy the other limbs of the test, in any event.
The Tribunal was of the view the Chief Commissioner was correct in submitting that the Taxpayers had not established that the dominant use of the property was the primary production use.
The Chief Commissioner's decision was confirmed.