|Date of judgement||08 May 2014|
|Proceeding number||126002, 126100 and 136053|
|Judge(s)||A Verick, Senior Member|
|Court or Tribunal||NSW Civil and Administrative Tribunal|
TAXES AND DUTIES - Land Tax – whether land exempt from taxation as land used for primary production - whether the applicant failed to discharge onus of proof – whether the applicant failed the dominant use test
The taxpayer sought a review of the Chief Commissioner’s decision to assess the taxpayer for land tax with respect to the 2010, 2012 and 2013 years for rural land owned by the taxpayer (“the subject land”). The taxpayer claimed that the dominant use of the subject land was the maintenance of horses and cattle and it was therefore entitled to an exemption under s 10AA of the Land Tax Management Act 1956 (“the Act”).
Senior Member Verick agreed with the Chief Commissioner’s submission that the taxpayer had failed to discharge its onus of proof. Senior Member Verick noted that the notional carrying capacity, when compared with the claimed use, led to the logical conclusion that the primary production use was not sufficiently substantial to prevail over the proposition that the land was unused.
The taxpayer claimed that all of the subject land was used for the maintenance of horses for the purposes of breeding and training, during the relevant years. The taxpayer claimed in its land tax objections and applications for exemption that during the relevant period:
It was agreed that the land was “rural land” for the purposes of s.10AA(4) of the Act. The issue was whether the dominant use of the subject land was the maintenance of animals for the purpose of selling them or their natural increase or bodily produce under s.10AA(3)(b) of the Act. The only evidence relied upon by the taxpayer was an affidavit of Mr Barry Anstee and his oral evidence. In the affidavit Mr Anstee stated that:
At the hearing an additional claim was made by Mr Anstee that the ponies were being trained for coach driving.
The Chief Commissioner claimed that the subject land was substantially unused. The Chief Commissioner filed an expert statement by Geoff Mills, Senior Ranger, working with the then Cumberland Livestock Health and Pest Authority. Mr Mills’ evidence was that the notional carrying capacity of the land was 46 400kg steers, 35 cows & 35 horses.
Senior Member Verick referred to Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue  NSWSC 867 (“Leda’) in which Gzell J set out at paragraphs 69-76 of his decision the principles to be considered in determining “dominant use”. His Honour stated in that passage that dominant in its ordinary meaning connotes the ruling, prevailing or most influential use.
Senior Member Verick had regard to the principles regarding unused land and dominant use. He cited a passage from Roden J in Saville v Commissioner of Land Tax (1980) 12 ATR 7, which Gzell J also cited with approval in Leda, that the use must be “sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land”. Senior Member Verick also referred to the decision of Helsham J in Greenville Pty Ltd v Commissioner of Land Tax (1977) 7 ATR 278 and concluded that the cases make it clear that the “dominant use” of land is not necessarily to be determined by reference to the sole physical activity conducted on the land. The non-use of part of the land is a relevant factor when only some part is being used for a primary production activity.
Senior Member Verick agreed with the Chief Commissioner’s submission that the taxpayer had failed to discharge its onus of proof. Senior Member Verick noted that Mr Anstee’s evidence was unsubstantiated and found that, even if the evidence had been accepted, the application would fail. The notional carrying capacity, when compared with the claimed use, led to the logical conclusion that it was not sufficiently substantial to prevail over the proposition that the land was unused land in the relevant tax years.
The Taxpayer’s application was dismissed and the assessments were affirmed.