The Victorian Civil and Administrative Tribunal has found that the scale of a taxpayer’s cropping and grazing activities was not sufficient for the taxpayer to qualify for the primary production land tax exemption.

The taxpayer was the trustee of a trust which held 107 hectares of land in greater Melbourne. Part of the land was used for cropping and grazing activities and another part was used for landfill. The landfill business represented 70% of the taxpayer’s income from the land with 10% being derived from cropping and grazing. The taxpayer’s land was assessed for land tax by the Commissioner for the years 2009 to 2013.

The issue was, essentially, whether, for the purposes of the land tax exemption for primary production land under s 67 of the Land Tax Act 2005 (Vic), the land was used solely or primarily for the business of primary production for the assessment period.

The taxpayer argued that the cropping and grazing activities supplemented by the sale of produce and livestock at the farm gate and on Gumtree were conducted in a business-like manner. Further, the taxpayer contended that the landfill business was related to primary production because it improved land that was to be used for its cropping and grazing business.

Relying particularly on the paucity of the records kept by the taxpayer, the Tribunal found the cropping and grazing activities had not been conducted in a business-like manner. It also found that the landfill operation was a separate business not associated with primary production on the land. The Tribunal stated, in conclusion, that “…it has not been established that any primary production use was of such a degree as to impart to the land considered as a whole the character of being used primarily for the business of cultivating and planting and maintaining animals for the purpose of sale.”

(Colosseum Pty Ltdv Comr of State Revenue [2016] VCAT 130, Victorian Civil and Administrative Tribunal, Davis SM, 8 February 2016.)