|Date of judgement||8 February 2016|
|Proceeding number||AP 15/45786|
|Judge(s)||Dr J Renwick SC, Senior Member|
Prof G Walker, Senior Member
|Court or Tribunal||NSW Civil and Administrative Tribunal Appeal Panel|
CIVIL AND ADMINISTRATIVE TRIBUNAL – STATE TAXES - Appeal Panel – Land Tax Management Act – Land used for purpose of beekeeping – no question of law arising from finding below that land did not qualify for exemption from land tax– appeal dismissed
Codlea Pty Ltd (“the taxpayer”) appealed the decision of the Tribunal, which confirmed land tax assessments made by the Chief Commissioner of State Revenue (“Chief Commissioner”).The Tribunal found that the taxpayer’s use of the relevant land for beekeeping did not, for any of the land tax years in question (2012-2014), meet the requirements for the primary production land exemption for non-rural land under the Land Tax Management Act 1956 (the Act).
Specifically, the taxpayer did not meet the commerciality requirements for the exemption to be available under s 10AA(2)(a) and (b), even though the dominant use test in s 10AA(3)(d) of the Act was satisfied by the land being used for keeping bees for the purpose of selling their honey.
The taxpayer asserted an appeal as of right on three questions of law, or alternatively, if those questions were of fact, or mixed fact and law, sought leave to appeal on certain grounds: see Civil and Administrative Tribunal Act 2013, s 80(2)(b).
The Chief Commissioner submitted that the taxpayer had identified no questions of law, and should otherwise be denied leave to appeal.
The Appeal Panel agreed with the Chief Commissioner in relation to each ground of appeal and concluded that there were no questions of law identified in the Notice of Appeal, so that there was no appeal as of right on any ground, nor would leave be granted to appeal.
The taxpayer argued, in its first ground of appeal, that the Tribunal misconstrued the phrase “that use of land…is engaged on for the purpose of profit” in s 10AA(2)(b) of the Act.
The taxpayer argued that “the Tribunal should have properly construed s.10AA(2)(a) as enquiring into whether the beekeeping use of the land, as opposed to the holding of the land for future potential development, “is engaged in for the purpose of profit”. This would necessarily have led it to find that the council rates referred to at  to  were a cost of holding the land for the desired purpose of development, not a cost of beekeeping. Accordingly, it would have found that the rates were not properly subtracted from the beekeeping income for the purposes of s 10AA(2)(a), and that a “significant sum” () was projected on reasonable grounds as the annual profit from the beekeeping operations, thus satisfying s 10AA(2)(a)”.
The Appeal Panel held that the first ground of appeal must fail. While this ground sought to enunciate a question of law, it did so on a false premise because the Tribunal did not in fact misconstrue the words in s 10AA(2) but posed for itself the correct question of “whether the beekeeping use of the land” fell within relevant statutory definitions at paragraphs 60, 74 and 76.
The taxpayer argued, in its second ground of appeal, that the Tribunal misconstrued the phrase “significant and substantial commercial purpose or character” in s 10AA(2)(a) in its reasons, and particularly at , by “eliding” it with the question of whether the beekeeping activity fell within the “sideline”, or instead the “commercial”, categories put forward by Mr White (the beekeeping expert).
Alternatively, the Tribunal did not discharge its duty of determining whether the beekeeping activities had a significant and substantial commercial purpose or character within s 10AA(2)(a). Its only finding in this regard was the finding at  that the Tribunal accepted Mr White’s evidence that the activities fell within his “sideline category”. This did not answer the statutory question.
The Appeal Panel held that the second ground also must fail as the factual conclusions about Mr White’s evidence amply supported the legal conclusion that the beekeeping operations did not meet the statutory test: that there had been no profit, there was no likelihood of one in the near future, and therefore it failed to meet the indicators set out in Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue1 that the business was set up with the aim of generating a profit year-to-year over a succession of years. Thus there was no question of law here.
The Appeal Panel held that even if it were wrong about this and were minded to grant leave to appeal, it accepted the submissions of the Chief Commissioner that because the business never made a profit, but always a loss, and because it had no profit making potential, it did not meet the statutory test.
The Appellant argued, in its third ground of appeal, that it was unclear if the Tribunal’s finding that the beekeeping was “not a commercial arrangement” was based on the fact that Mr Fraser (the appellant’s director) was performing general repairs to the hives and not being compensated for such works. The appellant sought leave to adduce new evidence as to the value of Mr Fraser’s services.
The Appeal Panel rejected this ground of appeal holding that it was an attack on a factual finding and that a proper reading of the reasons below indicated that the conclusion that s 10AA(2)(b) was not satisfied by the appellant in relation to its beekeeping activity, was based on the matters identified by Mr Hillig, the independent accountant.
The Appeal Panel held that even if it were wrong as to this, the Chief Commissioner was correct to say such evidence would not alter the conclusion that the loss from the beekeeping activities actually took place.