The NSW Supreme Court has held that a taxpayer which acquired a group which operated a wind farm on leased land was liable to pay landholder duty. The case involved a consideration of ‘tenants fixtures’ and ‘net present value’ as a means of deterring the taxable value.
See below for further details.
The facts were these.
- SPIC acquired the Taralga group which indirectly held certain freehold land and leasehold interests in land in NSW.
- The leased land was used by the Taralga group to operate the Taralga wind farm.
- The Chief Commissioner assessed SPIC for landholder duty on the basis that the relevant member of the Taralga group (Holdco Land Trust) was a “landholder” for the purposes of s146(1) of the Duties Act 1997 (NSW).
The Court agreed that the Holdco Trust was a ‘landholder’ and there was ‘landholder duty’ on the transfer of units in that Trust, based on the leased land, but it shaved about 10% off the Commissioner’s taxable value of the land. There were two elements in this.
- TENANT’S FIXTURES – The Court concluded that the wind turbine generators and meteorological or monitoring masts (met masts) on the wind farm, together with infrastructure affixed to the land necessary to send generated electricity to the National Electricity Market, were tenant’s fixtures at the time of the acquisition of the Taralga group. Since, in the Court’s view, Holdco Land Trust’s interest in those fixtures was a purely legal interest in land, the unencumbered value of Holdco Land Trust’s leasehold interests was well in excess of the $2m landholder duty threshold. Accordingly, Holdco Land Trust was a “landholder” for the purposes of the Duties Act.
- NET PRESENT VALUE – For the purposes of assessing SPIC’s liability to landholder duty, the Court valued SPIC’s interests in the land at just over $201.62m (and not $223.6m as determined by the Chief Commissioner). The Court accepted SPIC’s methodology of valuing its leasehold interests, namely establishing the present value of the beneficial rental ($21.5m per annum) for the unexpired term certain (25.78 years) at an appropriate discount rate, less any deferred liability at lease end. However, the Court disagreed with the discount rate (20%) used by SPIC and instead adopted a discount rate of 9.5%.
Finally, as the items characterised by SPIC as “goods” were fixtures, the unencumbered value of all of SPIC’s goods in NSW was not 90% or more of the total unencumbered value of all SPIC’s land holdings and goods in NSW, and therefore s 163G of the Duties Act did not apply.
Catchwords
- LAND LAW – fixtures – whether plant and equipment installed at a wind farm are fixtures – intention of parties – degree of annexation – where wind turbines very strongly affixed to land – purpose of annexation – whether wind turbines annexed for better enjoyment of land
- LAND LAW – fixtures – whether plant and equipment installed on leased land for the purposes of a wind farm are tenant’s fixtures
- TAXES AND DUTIES – land tax – liability – tax threshold – whether taxpayer a “landholder” for the purposes of Ch 4 of the Duties Act 1997(NSW) – whether the value of the land holding is less than $2,000,000T
- AXES AND DUTIES – land tax – liability – valuation – how interest in land is properly to be valued TAXES AND DUTIES – land tax – liability – whether entity owns goods which could be disregarded under s 163G of the Duties Act 1997 (NSW) – whether items characterised as “goods” are fixtures – items not “goods” – s 163G not applied
(SPIC Pacific Hydro Pty Ltd v Chief Comr of State Revenue [2021] NSWSC 395, NSW Supreme Court, Payne JA, 20 April 2021.)
[10/5/21; LTN 85, 5/5/21]