De Re v Chief Commissioner of State Revenue [2014] NSWCATAD 24

Date of judgement 12 March 2014 Proceeding No. 136050
Judge(s) J Block, Senior Member
Court or Tribunal NSW Civil and Administrative Tribunal
Legislation cited Administrative Decisions Review Act 1997 (formerly Administrative Decisions Tribunal Act 1997)

Land Tax Management Act 1956
Catchwords Primary production exemption – onus of proof – consideration of cattle use, rental use and development use
Cases cited Ashleigh Developments Ltd v Chief Commissioner of State Revenue [2011] NSWADT 250

Ashleigh Developments Ltd v Chief Commissioner of State Revenue [2012] NSWADTAP 25

Cornish Group Pty Limited & Anor v Chief Commissioner of State Revenue [2009] NSWADT 191

Hope v Bathurst City Council (1986) 7 NSWLR 669

La Vie Developments Pty Limited v Shellharbour City Council [2010] NSWLEC 1277

Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867, 79 NSWLR 724

Leda Manorstead v Chief Commissioner of State Revenue ([2011] NSWCA 366

Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 408

Saliba v Chief Commissioner of State Revenue [2012] NSWADT 119



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:

  1. the rental use – during the relevant years there was a residence located on the Property, which was rented to tenants.  The residence is still leased and currently results in the derivation of rent of $260 per week.

  2. the development use – this encompasses the work engaged in and expenditure incurred by the Taxpayers or on their behalf in obtaining approval to subdivide the Property into 58 residential lots. By the end of the relevant years the Taxpayers had expended approximately $136,000 in respect of the development use.  It also encompasses the intangible use of the Property as land awaiting development.

  3. the primary production use – the Property was used (in conjunction with an adjoining property) to graze cattle belonging to one of the Taxpayers and his wife prior to the 2012 tax year, and in the 2012 tax year, belonging to both of the Taxpayers.  Actual numbers of cattle grazed and the carrying capacity of the land was only available for the overall use of the Property together with the adjoining property, but based on a notional allocation between the two properties it appeared that the Property was significantly under-utilised compared to its carrying capacity.  At the hearing, the Taxpayer’s representative conceded that the cattle use sustained accounting losses on a continual basis during the relevant years and the losses would have been significantly greater if they had taken into account rates and taxes, and remuneration for the Taxpayers’ services.    

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”:

  1. The dominant use of the Property must be primary production (s. 10AA(3));

  2. The Taxpayers’ primary production activities must have a significant and substantial commercial purpose or character (s. 10AA(2)(a));

  3. The Taxpayers’ primary production activities must be engaged in for the purpose of a profit on a continuous or repetitive basis (whether or not a profit is actually made) (s.10AA(2)(b)).           

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 ([2011] 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.

Link to decision

Elio De Re & Guiseppe De Re v Chief Commissioner of State Revenue [2014] NSWCATAD 24

Last updated: 20 August 2018