Moore v Chief Commissioner of State Revenue [2018] NSWCATAD 88

Date of judgement 19 April 2018 Proceeding No. 2017/00141473
Judge(s) R Hamilton SC, Senior Member
Court or Tribunal New South Wales Civil and Administrative Tribunal
Legislation cited Land Tax Management Act 1956

Taxation Administration Act 1996
Catchwords TAXES AND DUTIES – Land tax – Primary production exemption- dominant use of land- meaning of secondary production
Cases cited Caruana v Chief Commissioner of State Revenue [2011] NSWADT 183

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

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

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


The subject land is approximately 1117 square metres and covers two adjacent lots.  Lot 1 is about 500 square metres and has a 250 square metre shed which is rented to a tenant. The Applicant uses the residue of Lot 1 for parking and deliveries. There is also a shipping container and dumpster bin for rubbish on Lot 1. Lot 2 is about 620 square metres in area. This lot has a large warehouse used in the primary production business. The ground floor is about 312 square metres and the mezzanine floor is about 268 square metres. The warehouse is used to store seeds, prepare seeds by washing them, to sprout seeds in low light conditions on stacked vertical racks, for a packing area and a cool room to hold sprouts for sale, for office space, and an amenities area. The area is also used in a seed roasting business by the Applicant, which only covered 1 square metre of the property.

Until April 2015, there were two greenhouses on lot 2, greenhouse A and greenhouse B. In early 2015 greenhouse A was badly damaged by a storm, and as a result, a vertical racking system was installed in the undamaged greenhouse. This allowed the same quantity of snow pea sprouts to be produced, in half the previous space. The floor area inside the warehouse is used for sprout production and associated activities. The area for sprout production consists of 6 or 7 stacked drums. The former greenhouse A was left unused except for parking on the hard standing and storing pallets.

The Applicant is only one of four licensed sprout producers in NSW. For four years preceding the 2016 land tax year, the Chief Commissioner treated the land as exempt primary production land.


The Applicant submitted that the physical area devoted to production, the activities such as rubbish bins, storage and parking, the intensity of the sprout production, the financial results of the various uses and the time and labour committed by the Applicant would satisfy all relevant tests for the dominant use of the land to be considered as primary production.

The Respondent submitted that the various lots of land should be identified and balanced against each other. The Chief Commissioner identified the uses of lot 2 as:

  • Sprout production;
  • Uses ancillary to sprout production;
  • Seed roasting; and
  • Uses ancillary to seed roasting.

The various uses of lot 1 were described as:

  • Rental of warehouse 1;
  • Ancillary uses to rental of warehouse;
  • Access over lot 1 to lot 2; and
  • Minor storage for benefit of activities on lot 2.

The Chief Commissioner submitted that it was incorrect to take the aggregate area covered by the various levels of stacking growing racks, as the ‘rack area’ could not exceed the ‘land area’.

The Chief Commissioner also submitted that packaging sprouts constituted secondary production and that the packaging area cannot be regarded as used for primary production. The case Caruana v Chief Commissioner of State Revenue [2011] NSWADT 183 (“Caruana”) was relied upon.

In response the Applicant submitted that the packaging was a condition of his license to produce sprouts and to maintain the hygiene of the process, and that there was no transformation of the sprout product which took place.


  1. Uses of the land

The Tribunal, in reaching its decision stated that it would not be useful to break down the various uses of the land into smaller parts; rather, a common sense approach should be used. As such, ancillary uses which form part of the leading use should be taken into account, citing D W Tolson Management Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 173. The Tribunal considered that the dominant use test should not be constrained to look only at the area devoted to sprout growing racks. Rather, the area used for parking, rubbish, loading and unloading goods, storage, administration and amenities, space used for packing and cool storage of sprouts all should be considered. Although Lot 1 was dominantly used by the tenant and not for primary production, the Tribunal considered the land as a whole and it was considered that Lot 1 provided benefit to Lot 2.

  1. Secondary production

The Tribunal held that packing and cool storage of sprouts for sale did not constitute secondary production. Unlike the case in Caruana, the Tribunal found that no change was made to the sprout product by packaging it, as it was simply packaged in accordance with health regulations in the form which it is produced after it has been washed. Thus, the primary product was not transformed.

  1. Weighing the factors

The Tribunal found that the only change in the situation from the previous four years, where the Chief Commissioner had granted the primary production exemption, was the fact that greenhouse B was double stacked due to the damage to greenhouse A, which provided extra parking and storage on lot 1 for the business.

The Tribunal also economic return from the uses of the land was also taken into account. Lot 1 produced gross annual rent of 19% of total income from the subject land. Lot 2 produced 81% of total income from the subject land, and of that sprouts accounted for 83% and seeds accounted for 17%. This means over 67% of the income from the subject land is attributable to sprouts.

The Tribunal determined that the intensity of the sprout cultivation on lot 2, and the full time work commitment of the Applicant and his wife made clear that the dominant use for Lot 2 is for primary production. Lot 1 provided access to, and storage for, Lot 2. Considering the subject land as a whole, and weighing up the relative factors affecting the two lots, the Tribunal concluded that the dominant use of the land is for primary production activities.


Pursuant to s. 101(1) of the Taxation Administration Act 1996, the assessment is revoked.

Link to decision

Moore v Chief Commissioner of State Revenue [2018] NSWCATAD 88

Last updated: 22 May 2018