Teebee Holdings Pty Ltd ATF Teebee Property Trust v Chief Commissioner of State Revenue [2017] NSWCATAD 338

Date of judgement 20 November 2017 Proceeding No. 2016/00378517
Judge(s) RL Hamilton SC, Senior Member
Court or Tribunal Administrative and Equal Opportunity Division l
Legislation cited Interpretation Act 1987

Land Tax Management Act 1956

Taxation Administration Act 1996

Valuation of Land Act 1916
Catchwords TAXES AND DUTIES - Revenue law - Land Tax - primary production exemption - dominant use of land - cultivation for purpose of sale - significant & substantial commercial purpose or character - purpose of profit on a continuous or repetitive basis - s10AA Land Tax Management Act 1956 - meaning of rural land - relevance of Property Identifier (PID) in relation to parcel of land
Cases cited CDPV Pty Ltd v Commissioner of State Revenue [2016] VSC 322

Greenville Pty Ltd v Commissioner of Land Tax (1977) 7 ATR 278

Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867

Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 23 upheld on appeal [2013] NSWCA 408

Metricon Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 332; upheld on appeal CCSR v Metricon Pty Ltd [2017] NSWCA 11

Triston Pty Ltd v CCSR ([2017] NSWCATAD 100)

Vartuli Pty V CCSR [2014] NSWSC 678 upheld on appeal [2015] NSWCA 372


The Applicant, Teebee Holdings Pty Ltd (“the taxpayer”) as trustee for Teebee Property Trust (“the Property Trust”), brought review proceedings in respect of land tax assessed on land situated about 2km from the town of South West Rocks in the Kempsey Shire (“the Land”). The Land comprised two lots (Lots 35 and 36) each zoned partly RU2 (rural landscape – 14 hectares), partly E2 (environmental conservation approximately 31 hectares) and partly R1 (general residential – 24 hectares).

The Land was purchased by the taxpayer in 2012. Trees had apparently been planted by the previous owner, which continued to grow during the relevant years. Following the sale of the Land to the taxpayer, the previous owner continued to store ‘earth moving equipment’ and to use a shed until 2014. The previous owner did not pay rent, but performed services of slashing the undergrowth free of charge using the stored equipment. The services were estimated to save the owner $13,000 to $15,000 per year.

The taxpayer lodged a development application and plans for subdivision for part of the Land zoned R1 to create 29 residential lots but the application was refused by the Council.

In 2015 the taxpayer transferred Lot 35 to itself as trustee of a complying superannuation fund – the AB Tall Bennett & Co Pty Ltd Staff Fund (“the Superannuation Fund”).

In 2016 a boundary adjustment was made which added a small part of Lot 36 to Lot 35 and as a result there was a new deposited plan (DP 121449), but the lot numbers stayed the same. In 2016 the Valuer General assigned new property identification numbers (“PIDs”)to the lots: Lot 35 – PID 3921478 and Lot 36 – PID 3921479.

The taxpayer’s position was that the Land was zoned rural, and tree farming was the dominant use of the land during the 2013 to 2016 land tax years.

Zoning of the Land

The Tribunal followed the decision in Triston v Chief Commissioner of State Revenue [2017] NSWCATAS 100 which concerned land consisting of 3 lots, each of which had dual zoning (RU2 – rural landscape and R2 – low density residential). The Tribunal in Triston ruled that a parcel of land could not be classified as rural land for the purposes of s. 10AA unless all of the land had a rural zoning. Therefore the commerciality tests applied to the entire parcel.

In the alternative, the Taxpayer submitted that the Tribunal should exercise the Chief Commissioner’s discretion under s.10AA(4) because the sub-section used “zone” in the singular, and the land did not have a single zoning. However Senior Member Hamilton did not consider there was room for an exercise of discretion because the Interpretation Act and general principles of Interpretation provided that the singular includes the plural. Therefore the discretion only applied when the land is not zoned at all. In this case all of the land was zoned.

Dominant Use of Land

The uses of the Land in the 2013 and 2014 land tax years were tree farming and the storage of earth moving equipment. In the 2015 and 2016 land tax years the storage of earth moving equipment had ceased.

The Chief Commissioner argued that the economic value to the owner of storing equipment meant the dominant use of the land was storage.

The Tribunal determined that the storage was not the dominant use because it utilised a relatively small area (“a couple of hundred square metres”) out of a total of 73 hectares, and a lack of positive income, as opposed to a savings in cost.

The Tribunal applied the decision of the Court of Appeal in Chief Commissioner of State Revenue v Metricon Pty Ltd [2017] NSWCA 11 that “references to use of land refers to present use of the land.” As such the Tribunal determined that the potential use of the Land for subdivision and housing development and the applications made by the taxpayer concerning development which had not been granted did not constitute a current use for the purposes of s. 10AA.

The Tribunal found the evidence concerning the use of the Land for tree farming contradictory and unsatisfying in some respects. The taxpayer submitted that it was contractually obliged to continue the tree farming by the agreement for the purchase of the Land. However the Tribunal rejected this argument on the basis that the contract only required the purchaser to warrant that it intended to carry on a farming business on the Land and would have that intention at the time of supply of the Land (for GST purposes).

The Tribunal concluded that the trees were being cultivated for a purpose other than for sale, the land was largely unused, and the dominant use of the Land was therefore not tree farming.

Commerciality test

As the Land is not zoned rural, the use of the Land had to satisfy the commerciality test in s10AA(2) of the LTMA.

Senior Member Hamilton considered the following factors:

  • the intensity of the operation being conducted, including the size and carrying capacity;

  • the number of trees and their quality and species.

  • the resources committed to the operation including the land, the man hours, plant and equipment etc;

  • the profitability or expectation of profit including the history of the operation, and the reasons for any lack of profit;

  • the rate of return on capital value, although this may not be as useful in this case as it was in Vartuli Pty Ltd v CCSR [2014] NSWSC 678 at [88], [90] and [137];

  • whether any profit contributed to the user’s income in a real and not trifling way (Vartuli Pty Ltd v CCSR [2014] NSWSC 678 at [129]).

Senior Member Hamilton formed the view that the commerciality test was not satisfied having regard to the following factors:

  • The evidence of the taxpayer’s director indicated that he had little knowledge of what trees were actually on the Land or their value [57];

  • The evidence suggested the land had 598 assorted trees whose height exceeded 2 metres, planted in 71 rows on about 9 hectares of the total of 73 hectares [53];

  • The amount of work performed was limited to 1 hour per week by the caretaker and 14 days per annum of slashing and weed control [60].

  • There was no business plan in evidence apart from a 2013 proposal which was not implemented at that time [58] & [59].

  • There were no sales of timber and no evidence that the tree farming would ever be profitable [63].

Other Submissions by the Taxpayer

Validity of Assessment

The taxpayer submitted that the notice of assessment for Lot 35 for the 2016 land tax year was invalid as the taxpayer was not referred to in its capacity as trustee of the Superannuation Fund but as trustee for the Property Trust.

The Tribunal noted that the Taxpayer’s name on the assessments was correct, nothing turned on the incorrect reference to the Taxpayer’s capacity, and it was the trustee’s responsibility to correct the record [69]. The Tribunal remitted the 2016 assessment to the Chief Commissioner for reassessment of the taxpayer in its capacity as trustee of the Property Trust and the Superannuation Fund.

Until March 2016 the two lots comprising the parcel were in the same deposited plan and had a single PID. In March 2016 a small part of Lot 36 was consolidated with Lot 35 by a boundary change. The Valuer General then issued new notices of valuation of Lot 35 dating back to 2012, with new PIDs, noting that the date the valuation was made is after the valuing year, and the land value shown may not be the land value used for land tax purposes. The taxpayer submitted that the new valuations equalled the taxable value of the land.

The Tribunal noted that the assessments in dispute were issued on 26 January 2016 and the new valuations were issued on 9 June 2016 with the new PIDs. Therefore, at the time the assessments were issued the reference was to the correct PID, and the assessments made before the issue of the new PIDs were valid [72].


The Taxpayer submitted that interest at market and premium rates should be remitted. However, the Tribunal concluded that Mr Tall appeared to have relied upon his understanding of how the previous owner was treated for land tax rather than taking care to obtain appropriate advice.

The Tribunal noted that net remission of 2013 interest had been implemented, and held that no exceptional circumstances had been established or compelling evidence presented to warrant further remittance of interest.


The Application is dismissed in respect of the 2013-2015 land tax years and the assessments confirmed.

The assessment for 2016 is set aside and remitted to the Chief Commissioner for the issue of new assessments to the taxpayer reflecting its ownership of the land in the capacity of trustee of two trust funds as at 31 December 2015.

Link to decision

Teebee Holdings Pty Ltd ATF Teebee Property Trust v Chief Commissioner of State Revenue [2017] NSWCATAD 338

Last updated: 7 December 2017