DW Tolson Management Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 173

Date of judgement 01 June 2017 Proceeding No. 2015/00383434
Judge(s) RL Hamilton SC
Court or Tribunal Administrative and Equal Opportunity Division
Legislation cited Land Tax Management Act 1956

Taxation Administration Act 1996
Catchwords REVENUE LAW - land tax - primary production-propagation of mushrooms for sale - s 10AA Land Tax Management Act 1956
Cases cited Caruana v Chief Commissioner of State Revenue(CCSR) [2011] NSWADT 183

CCSR v Metricon Qld Pty Limited [2017] NSWCA 11

Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114

Educang Limited v Brisbane City Council [2002] QSC 374

Leda Manorstead Pty Ltd v CCSR [2010] NSWSC 867

Leda Manorstead Pty Ltd v CCSR [2011] NSWCA 366

Leppington Pastoral Co Pty Ltd v CCSR [2017] NSWSC 9

Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1

Southern Estates Pty Ltd v FC of T (1967) 117 CLR 481


The taxpayer owns a parcel of land at Londonderry, which is zoned “Rural Small Holding”, and leased to a commercial mushroom grower, Beckhart Pty Ltd (“Beckhart”), who uses the Londonderry Land in conjunction with two other parcels of land in Vineyard and Ebenezer. The land at Vineyard comprises a mushroom growing facility which produces approximately 54 tonnes of mushrooms each week and grows approximately 15% of the total mushroom production in NSW for sale to retailers. The mushroom stems (mushroom by-product) were removed from Vineyard and taken to the land at Ebenezer.

The Ebenezer land was used by Beckhart to maintain cattle during calving, but mostly to consume mushroom by-product. The Londonderry Land was used by Beckhart to rotate cattle from the Ebenezer and Vineyard parcels of land as part of good husbandry practices. The Londonderry Land was also the Londonderry of a development application (DA) lodged with the Penrith City Council for the development and construction of a new mushroom growing facility for Beckhart/Elf Mushrooms.

The Taxpayer sough a review of the Chief Commissioner’s decision not to exempt the land as primary production land on the basis that it was integral to the mushroom production business.

Taxpayer’s submissions

The Taxpayer submitted that the cattle were maintained on the three sites solely for the purpose of the disposal of mushroom by-product, notwithstanding that mushroom by-product was not fed to the cattle grazing on the Londonderry Land. The cattle were weaned on the Londonderry Land and rotated.

Alternatively, the Taxpayer submitted that the Londonderry Land was being dominantly used for the propagation for sale of mushrooms because of the activity involved in gaining the approvals necessary for the development of a new mushroom growing facility.


In relation to the Taxpayer’s submission that the Londonderry land was used in conjunction with the other land for the purpose of growing mushrooms, the Tribunal accepted (at [24], [26]-[27]) that:

  1. the exemption in s10AA(3)(f) of the Act “does not apply in a restrictive fashion only to that part of the land physically used for and upon which are erected mushroom propagation facilities”,

  2. land used for associated activities (such as staff parking and other amenities, administration, storage, loading docks and access roads), as well as surrounding land upon which the cattle are grazed, would be part of the mushroom propagation facilities;

  3. mushroom propagation is a process which involves the preparation of mushroom growing medium and the raising of mushrooms, as well as the disposal of waste products. In this regard the mushroom eating cattle were found to be “akin to waste disposal ‘machines’ and the land upon which they are situated while operating as such could be said to be used for mushroom propagation in the sense of being part of the process by which propagation occurs”; and

  4. “the Ebenezer land, which is principally used for the disposal of mushroom by-product by feeding it to cattle is also being used as part of the process for the propagation for sale of mushrooms”.

However, the Tribunal determined that the connection between the use of the Londonderry Land and the process of mushroom propagation was too remote, in circumstances where the cattle were not fed mushroom by-product on the Londonderry Land.

In relation to the planning and approval for a new mushroom growing facility on the Londonderry Land, the Tribunal (at [42]) cited with approval the decisions in Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867 and Leda Manorstead v Chief Commissioner of State Revenue [2011] NSWCA 366, which required that a use of the land needed to be a present use and “not some notional or potential future or contemplated use”.

The Tribunal determined that even though there had been a lot of money and time invested in obtaining consents and conducting investigations, no earthworks were conducted in the land tax years in dispute, and the dominant use was not for the propagation of mushrooms for sale. The Tribunal noted the finding in Caruana v Chief Commissioner of State Revenue [2011] NSWADT 183, where expenditure and effort in seeking the necessary consents was held not to be a use of the land in question.

The Tribunal also concluded that the cattle were not maintained for the purpose of selling them, or their natural increase or bodily produce, but were maintained for the purpose of disposing of mushroom waste elsewhere after they had rested on the Londonderry land


The Chief Commissioner’s assessments were confirmed.

Link to decision

DW Tolson Management Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 173

Last updated: 12 July 2017