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Bisvic Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 192

Date of judgement 19 June 2017 Proceeding No. 1510563
Judge(s) Senior Member AR Boxall
Court or Tribunal New South Wales Civil and Administrative Tribunal
Legislation cited Interpretation Act 1987

Land Tax Management Act 1956

Local Government Act 1993

Taxation Administration Act 1996
Catchwords Land tax – rural land – grazing – carry on business of grazing – mainly used
Cases cited B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481

Bisvic Pty Limited v Chief Commissioner of State Revenue [2011] NSWADT 293

Bisvic Pty Limited v Chief Commissioner State Revenue (No 2) [2014] NSWCATAD 166

Chief Commissioner of State Revenue v Metricon Qld Pty Limited [2017] NSWCA 11

Hope v Bathurst City Council (1980) 144 CLR 1

Hope v Bathurst City Council (No 2) (1983) 52 LGRA 79

Hope v Bathurst City Council (1986) 7 NSWLR 669

Background

The Taxpayer applied to the Chief Commissioner under 62K(1) of the LTMA for an unutilised land value allowance to be ascertained for the Land on the basis that it satisfied the description in the paragraphs of s62J(1)(c) of the LTMA. That is, the Taxpayer claimed the land was zoned or otherwise designated under an environmental planning instrument so as to permit its use otherwise than as rural land, or its subdivision into two or more lots or portions, one or more of which has an area of less than 40 hectares.

The Chief Commissioner did not consider the Land was “rural land” as defined in the dictionary to the Local Government Act 1993, and did not forward the application to the Valuer-General for determination of an unutilised value allowance.

Issue

Paragraph (a) of the definition of “Rural land” in the dictionary of the Local Government Act provides that rural land includes:

“a parcel of rateable land which is valued as one assessment and exceeds 8,000 square metres in area and which is wholly or mainly used for the time being by the occupier for carrying on one or more of the businesses or industries of grazing, animal feedlots, dairying, pig-farming, poultry farming, viticulture, orcharding, bee-keeping, horticulture, vegetable growing, the growing of crops of any kind or forestry,”

The Taxpayer and the Chief Commissioner both accepted that the land was rateable, and that the only rural activity conducted on the Land during the relevant period was horse grazing. However, they disagreed on whether the land was, at the relevant times, “wholly or mainly used for the time being by the occupier for carrying on… the business… of grazing”.

Decision

The Tribunal considering three separate issues in respect of each financial year in order to determine whether the land should be considered as “rural land”.

Who Was the Occupier?

With reference to the lease agreements and usage of the land, the Tribunal found that in accordance with s8(c) of the Interpretation Act 1987, there were multiple occupiers of the land:

  • As at 30 June 2011, the occupiers of the land were Mr Meharg, R&H Hancock Pty Limited, the Taxpayer and, arguably, Mr Pastrovic; and

  • As at 30 June 2012 and 2013, the occupiers of the land were R&H Hancock Pty Limited, the Taxpayer and, to a less certain extent, Mr Meharg and Mr Pastrovic.

Did the occupier carry on the business of grazing?

The Tribunal determined what constituted the business of grazing by reference to the decision in Hope v Bathurst City Council (1980) 144 CLR 1 as to the meaning of “rural land”, and the meaning of “carrying on the business of grazing". In that case the Court determined that where an occupier keeps, waters and tends their own stock on the land, whether themself or through an agent, they are conducting the business of grazing.

The Tribunal noted that previous failures of the Taxpayer to qualify for the primary production exemption under the Land Tax Management Act (LTMA) did not affect its consideration of the current application for an unutilised land value allowance. The reason is that the legislative provisions with respect to the primary production provisions in s.10AA of the LTMA differ significantly to the unutilised land value allowance provisions.

The specific circumstances of the 2012 land tax year through the evidence of the Taxpayer, the Chief Commissioner and the previous consideration of grazing activities in a previous case, Bisvic Pty Limited v Chief Commissioner of State Revenue [2011] NSWADT 29, were considered. The Tribunal accepted the finding in that case that as at 30 June 2011, which is the relevant date for purposes of the 2012 tax year, the Land was used as follows:

  1. as to 96.5%, by Mr Meharg for purposes of his equine activities;
  2. as to 0.26%, for residential purposes;
  3. as to 0.20%, for R&H Hancock’s business;
  4. as to the small parking area, for truck parking; and
  5. as to the balance, as the site of the unused abattoir buildings.

Did grazing constitute the whole or main use of the Land?

The Tribunal concluded that the Taxpayer had been carrying on the business of grazing on the Land for the 2012 land tax year. This decision was supported by the percentage of the Land used for grazing at the time (96.5%) and the lesser importance of economic value or intensity of usage under this exemption compared to the exemption under s.10AA of the LTMA. The relevant s.10AA exemption is for “…the maintenance of animals …for the purposes of selling them or their natural increase or bodily produce”, which therefore excludes grazing activities conducted by way of agistment.

The Tribunal noted that in Hope v Bathurst City Council (No 2) (1983) 52 LGRA 79 the Court accepted that an arrangement under which the occupier of land accepted other people’s stock on the land for a fee, where the occupier grazed, watered and tended the stock amounted to a grazing activity for the purposes of the definition of “rural land” in the Local Government Act. The decision was approved by the Court of Appeal in Hope v Bathurst City Council (1986) 7 NSWLR 669.

However, the Tribunal noted that there were significant changes to the operation and occupation of the Land during the 2013 and 2014 land tax years, including the cessation of the grazing lease and the equine activities. Consequently, The Tribunal was not satisfied that the business of grazing had been conducted on the Land during the 2013 and 2014 land tax years.

Orders

The Chief Commissioner’s decision that the Land is not eligible under section 62J(1) of the LTMA for an unutilised land value allowance in respect of tax year 2012 was set aside.

The Chief Commissioner’s decision that the Land is not eligible under section 62J(1) of the LTMA for an unutilised land value allowance in respect of tax years 2013 and 2014 was affirmed.

Link to decision

Bisvic Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 192

Last updated: 10 July 2017