The NSW Supreme Court has refused 5 taxpayers their claim for the primary production land tax exemption for the relevant years under s 10AA of the Land Tax Management Act 1956 (NSW).
The subject lands were used for cattle grazing by the first taxpayer and the activities of which were carried out by the second taxpayer (Mr G). The taxpayers (as respective land owners) received land tax assessments covering various years between 2006 and 2010. It was not in dispute that the lands were used for primary production and the dominant use was for the maintenance of animals for the purpose of selling them or their natural increase or bodily produce. In the years in question, the herd was up to about 40 cattle. The total value of the subject lands in 2009 was around $26.6m. The issue before the Court was whether the use of the lands had a significant and substantial commercial purpose or character and was engaged in for the purpose of profit on a continuous or repetitive basis, whether or not a profit was actually made (per ss 10AA(2)(a) and (b) of the Act).
The Court concluded that the first taxpayer’s use of the subject lands with or without the other lands did not satisfy the commerciality test in s 10AA(2)(a). It found the cattle operations “did not have characteristics as importance, size, depth, bulk, weight, seriousness, quality, intensity and prominence that are indicative of a significant and substantial commercial purpose or character”.
(Maraya Holdings Pty Ltd & Ors v Chief Comr of State Revenue [2013] NSWSC 23, NSW Supreme Court, Gzell J, 30 January 2013.)
[LTN 20, 31/1/13]