|Date of judgement||2 January 2019|
|Proceeding number||2018/38448 and 2018/192181|
|Judge(s)||S Higgins, Senior Member|
|Court or Tribunal||New South Wales Civil and Administrative Tribunal|
TAXES AND DUTIES – assessment for land tax – land used for primary production – whether applicants’ land is exempt from land tax under s 10AA(2) of the Land Tax Management Act 1956 – whether use of land for the applicants’ cattle business had a ‘significant and substantial commercial purpose or character’
These proceedings concerned the review of the Chief Commissioner’s decision to assess land owned by the applicants, Mr John Craig and Ms Jeanette Shuttle, at Goulburn, New South Wales (“the Land”) as being liable to land tax for the 2013 – 2017 land tax years.
The key facts are:
The key issue in dispute in this matter was whether the Land was eligible for the ‘primary production’ exemption from land tax under s. 10AA of the Land Tax Management Act 1956 (“LTM Act”). This issue involved a consideration of whether the applicants’ use of the land satisfied the following two requirements in order for that exemption to apply:
The applicants contended that the Land was used for ‘primary production’, and that this use satisfied the ‘commerciality test’ during the relevant years.
The applicants submitted that their cattle operation had a significant and substantial character or purpose because it was being conducted efficiently and utilising labour effectively. Further, the applicants submitted that profits were not determinative of the statutory test in s 10AA(2)(a) of the LTM Act. In relation to s. 10AA(2)(b) of the LTM Act, the applicants relied on the fact the business had been operating for 63 years on a continuous and repetitive basis, and so demonstrated permanence, and although the land size and the cattle operation was small, it was run to maximum capacity and put to its best use as a cattle operation to maximise profits.
The Chief Commissioner did not concede that the Land was used for ‘primary production’ as defined in s. 10AA(3)(b) of the LTM Act, and submitted that, based on the following factors, the applicants’ cattle operation did not have a significant and substantial commercial purpose or character:
Further, the Chief Commissioner submitted that as the applicants derived no net income from the Land, it was difficult to accept that they held their Land for the purpose of profit on a continuous or repetitive basis.
The Tribunal found:
The Tribunal was satisfied that the only use of the Land was for the purpose of the applicants’ cattle business, meaning that the dominant use of the Land was for the maintenance of cattle within s. 10AA(3)(b) of the LTM Act. In this regard, Senior Member Higgins found that the fact Mr Craig “enjoyed going to the Land where his parents are buried” was “not a use of the Land in any relevant sense” (at ).
The Tribunal was not satisfied that the applicants’ primary production use of the Land had a significant and substantial commercial purpose or character. In reaching this finding, Senior Member Higgins referred to the observations of Gzell J in Maraya Holdings v Chief Commissioner of State Revenue  NSWSC 23 to conclude that “the operation when objectively assessed cannot be described as an operation that is of ‘the more serious and weighty’ kind” (at ). Senior Member Higgins identified the following key factors as distinguishing the applicants’ operation from one that has a significant and substantial commercial purpose or character:
Importantly, Senior Member Higgins made this finding notwithstanding that she was satisfied that the applicants’ business was a genuine business that has been run efficiently and effectively for a number of years. Further, Senior Member Higgins indicated that the fact the Land was categorised as ‘farm land’ for rating purposes was of no relevance to determining whether the applicants’ use of the Land had a significant and substantial commercial purpose or character under s 10AA(2)(a) of the LTM Act.
Accordingly, the Tribunal found that the ‘primary production’ exemption was not available in respect of the Land.
The decisions under review were affirmed.