The Victorian Supreme Court has dismissed a taxpayer’s appeal against land tax assessments in respect of Crown lands within the alpine resorts at Falls Creek and Mount Hotham which were used and occupied by wholly-owned subsidiaries of the taxpayer.

The Commissioner had issued land tax assessments for the 2010 to 2015 years in respect of Crown lands within the alpine resorts at Falls Creek and Mount Hotham which were used and occupied by wholly-owned subsidiaries of the taxpayer pursuant to 2 separate Agreements expressed as leases and purportedly granted under s 28 of the Alpine Resorts Act 1983 (Vic).

The taxpayer was assessed, despite its subsidiaries being the grantees, because the Commissioner had ‘grouped’ them under s50 of the Land Tax Act 2005 (Vic).

The Commissioner assessed the taxpayer on the basis that, as at the relevant date in each tax year, the Crown lands in question were leased to a related company of the taxpayer. The Court said the outcome of the appeal was wholly dependent on the characterisation of the taxpayer’s interest in the subject land: if that interest was a leasehold interest, then land tax would accordingly be payable.

The taxpayer appealed against the Commissioner’s disallowance of its objections.

The taxpayer argued that aspects of the Agreements entail that a right of exclusive possession was not granted. The taxpayer also emphasised that neither of the Agreements contained a covenant for quiet enjoyment and that this should militate in favour of a finding that the Agreements gave rise to licences only. However, the Court said that while the absence of a covenant for quiet enjoyment does tend to support a construction as a licence, “it cannot be given determinative weight”.

After lengthy review, the Court concluded that, as the regulation and reservations applicable to each of the Lands in question were “not so extensive as to negate the manifest intention to grant leases”, having regard to the purpose of the reservations, the Grantees (companies related to the taxpayer) enjoyed exclusive possession of the Mount Hotham Lands and the Falls Creek Lands. The taxpayer was, in the Court’s view, accordingly entitled to land under a lease of Crown land and obliged to pay land tax in respect of the 2010 to 2015 tax years for which it had been assessed. It dismissed the taxpayer’s appeal.

(Living and Leisure Australia Ltd v Comr of State Revenue [2017] VSC 675, Victorian Supreme Court, Croft J, 1 December 2017.)

[LTN 233, 5/12/17; Tax Month Dec 2017]

Catchwords from decision

TAXATION AND REVENUE – Land tax – Whether agreements pertaining to ski fields including significant reservations gave rise to leases or licences – Land Tax Act 2005, ss 10(1)(b), 79(2)(a).

LANDLORD AND TENANT – Lease or licence – Test – Right to exclusive possession – Relationship between reservations and exclusive possession – Lightwood’s Treatise on Possession of Land Lewis v Bell (1985) 1 NSWLR 731 – Swan v Uecker (2016) 50 VR 74 – Radaich v Smith (1959) 101 CLR 209 – Wik Peoples v State of Queensland (1996) 187 CLR 1 – Western Australia v Ward (2002) 213 CLR 1 – Western Australia v Brown (2014) 253 CLR 507 – Tonks v Mayor of Wellington (1908) 10 GLR 579.

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