NSW land tax: Moore v Chief Commissioner of State Revenue – Lot 2 was exempt from Land Tax, its dominant use was primary production by servicing commercial cultivation on the more dominant Lot 1

The NSW Civil and Administrative Tribunal has held that, for land tax purposes, the dominant use of land used to grow sprouts was for primary production.

The land in question effectively consisted of Lot 1 (about 500m²) and Lot 2 (about 620m²).

• Lot 2 contained a warehouse/shed used to store seeds, prepare seeds by washing them and sprout the seeds on stacked vertical racks. There was also a packing area, cool room, office and amenities area.
• Lot 1 contained a shipping container and dumpster bin for use by the taxpayer and a packing/storage shed that was rented to an arm’s length tenant. The taxpayer also used Lot 1 to access Lot 2 from the public road.
• For a number of years, there were 2 “greenhouses” on Lot 2 each covering about 114m². In early 2015 Greenhouse A was badly damaged by a storm. Instead of repairing Greenhouse A, the taxpayer installed a vertical racking system in Greenhouse B thereby enabling the same quantity of sprouts to be produced in half the previous space.
• The area that was covered by Greenhouse A has not been used, other than for storing pallets and parking.

The issue in this case was whether the dominant use of the subject land is for the purpose of primary production (here cultivation, for the purpose of selling the produce of the cultivation), sec.10AA(3)(a) Land Tax Management Act 1956(LTMA). The ‘commerciality’ test (sec.10AA(2) LTMA) is not in issue. The year in question was the 2016 land tax year.

The Tribunal said that a common sense approach “takes account of the connected ancillary uses as forming part of the leading use.”

1. On this basis, the sprout production area included areas used for parking, rubbish, loading and unloading goods, storage, administration and amenities.
2. Packing and storing sprouts ready for sale was also ancillary use.
3. On the evidence, the Tribunal was satisfied that the dominant use of Lot 2 was for primary production.
4. And, as Lot 2 was the larger part, and the more important economically, the dominant use of the subject land, as a whole was for primary production.

(Moore v Chief Commissioner of State Revenue (NSW) [2018] NSWCATAD 88, NSW Civil and Administrative Tribunal, Administrative Division; Senior Member: R Hamilton SC; 19 April 2018)

[LTN 76, 23/4/18; FJM; Tax Month – April 2018]

Study questions (answers available)

1. Was there cultivation on Lot 1 (in the year in question)?
2. Was there cultivation on Lot 2 in that year?
3. Was the use of Lot 2 ancillary to the the cultivation on Lot 1?
4. Is the ‘dominant use’ of land for primary production, the only test for land tax exemption in NSW?