Vic Land Tax – Lotus Projects Pty Ltd v Commissioner of State Revenue (Vic) Part of development used as golf course not exempt from land tax – reasons bear examination
On 20 March 2017, the Victorian Supreme Court held that the part of a residential development, used as a golf course, was not eligible for an exemption from Victorian land tax as land leased to a public golf course under s71(1) of the Land Tax Act 2005.
The plaintiff was a property developer. It was the registered proprietor of a residential development known as Silverwoods Estate. Part of the Estate was leased to another company for use as a golf course and club-house. At all relevant times, the land was the subject of a single certificate of title.
The plaintiff was assessed to land tax on the Estate for the 2014, 2015 and 2016 land tax years. The plaintiff, however, claimed that it was entitled to an exemption under s71(1) of the Land Tax Act 2005 (Vic) in respect of that part of the Estate comprising the golf course and the club-house.
Section 71(1) provides a land tax exemption for “land vested in a person or body” that is leased for certain outdoor activities, including sporting or recreational activities, and is available for use by members of the public, provided the rent is applied exclusively for charitable purposes (the rent received by the plaintiff was paid to a charity).
The Victorian Supreme Court concluded that s71(1) referred to the land that was vested in the plaintiff and not, as contended by the plaintiff, the land that was leased. Since all the land vested in the plaintiff was not leased for outdoor sporting or recreational activities, and s71(1) did not expressly allow for a partial exemption, the section did not apply. In this regard, the Court also rejected an argument that the land within the relevant certificate of title was effectively leased for the required purpose, having regard to the essential and overall use made of the land. The Court indicated that the golf course was incidental to the residential development rather than the other way around.
(Lotus Projects Pty Ltd v Commissioner of State Revenue [2017] VSC 63, Victorian Supreme Court, Croft J, 17 March 2017.)
[LTN 55, 23/3/17]
FJM comment
The view taken by the Court appears, with respect, ‘wrong-headed’ in that a subdivision, to separate the residential lots from the Golf Course, would deprive the Commissioner of the key substantive reason for denying land tax exemption.
There is another troubling aspect, of this decision, that will only be evident to those possessed of the submissions of the winning Commissioner. His Honour’s reasons are, in large part, an unattributed copy of the relevant parts of Commissioner’s submissions. A member of the Federal AAT also used unattributed copies of the Commissioner of Taxation’s submissions, to dismiss the Taxpayer’s application for review. The Full Federal Court ordered the AAT decision be set aside and the Commissioner of Taxation (who’s submissions had been copied without attribution) pay the taxpayer’s costs in that appeal (see LVR (WA) Pty Ltd v Administrative Appeals Tribunal and Commissioner of Taxation [2012] FCAFC 90). It remains to be seen whether this taxpayer takes similar action.