CITATION: Colusso & Ors v Chief Commissioner of State Revenue [2003] NSWADT 211 DIVISION: Revenue Division FIRST APPLICANT Dora Colusso SECOND APPLICANT Atanasio Colusso PARTIES: THIRD APPLICANT Andrea Colusso FOURTH APPLICANT Flower Power Pty Ltd RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 016009 HEARING DATES: 18-20/02/2003 SUBMISSIONS CLOSED: 02/20/2003 DATE OF DECISION: 09/09/2003 BEFORE: Hole M - Judicial Member APPLICATION: Land tax exemption - primary production MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Horticultural Stock and Nurseries Act 1969 Land Tax Management Act 1956 Taxation Administration Act 1996 CASES CITED: Gresham Life Assurance v AG [1916] 1 Ch 228; 7 TC 36, Premier Automatic Ticket Issues Ltd v FC of T (1933) 50 CLR 268, Theosophical Foundation Pty Ltd v C of LT (1966) 67 SR (NSW) 70, Southern Estates Pty Ltd v FC of T (1967) 117 CLR, Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30, Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278, Ronell v FC of T (1978) 12 ATR 411, Longford Investments Pty Ltd v Commissioner of Land Tax (NSW) (1978) 8 ATR 656, Abbott v Commissioner of Land Tax (Vic) 9 ATR 728 (1978), Illawarra Meat Co v Commissioner of Land Tax (NSW) 9 ATR 734, Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032, Clarke v Commissioner of Land Tax (NSW) (1980) 11 ATR 794, Hope v Bathurst City Council (1980) 144 CLR 1, Jones v Commissioner of Land Tax (NSW) (1980) 80 ATC 4539 at 4541; (1980) 11 ATR 98, Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 12 ATR 161, Spic'n'Span Corporation v Fredericks 1982 50 LGRA 46, R v Inland Revenue Commissioners; ex parte National Federation of Self-Employed & Small Businesses Ltd [1982] AC 617, Oamington Pty Ltd & Anor v C of LT (NSW) & Anor (1997) 98 ATC 5051, Pickering v Deputy Commissioner of Taxation (1997) 97 ATC 4893, Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd (1999) 48 NSWLR 299, McDonald's Australia Ltd v Commissioner of Taxes (2000) 45 ATR 124; 2000 ATC 4607, Grice Holdings Pty Ltd v Commissioner of Taxes (2000) 45 ATR 530 APPLICANTS REPRESENTATION: J Robson, counsel RESPONDENT H Sorensen, counsel ORDERS: The land known as 821 Hume Highway Bankstown is entitled to an exemption pursuant to S10(p)(i) of the Land Tax Management Act 1956 for land tax years 1990 to 1999 inclusive REASONS FOR DECISION 1 This is an application by Dora Colusso, Atanasio Colusso and Andrea Colusso together with Flower Power Pty Ltd in respect of land tax assessed by The Chief Commissioner of State Revenue for land tax years 1990 – 1999 inclusive in relation to the land known as 821 Hume Highway Bankstown. A review pursuant to Division 2 of Part 10 of the Taxation Administration Act 1996 and Chapter 3 of the Administrative Decisions Tribunal Act 1997 is sought by the applicants following an assessment of the land tax liability under the Land Tax Management Act 1956. 2 Flower Power Pty Ltd is a fully owned subsidiary of Syesun Pty Limited. Nicholas Sammut is the principal of Flower Power Pty Ltd and the Flower Power Group. The land 3 821 Hume Highway Bankstown comprises lots 100 in DP711837 and 101 in DP711837. The owners 4 The land is owned by Dora Colusso, Atanasio Colusso and Andrea Colusso. The land is leased from the owners by Flower Power Pty Ltd. 5 Lot 101 has been let to various persons associated with Flower Power Pty Ltd during the period 1990 to 1999, the relevant period. For the years 1 January 1991 to 30 December 1995 the lessee was Nicholas Sammut. For the period 1 January 1996 to 30 December 2000 the lessee was Syesun Pty Limited, this company remained as the lessee for the relevant period. The payment of land tax is the responsibility of the lessee. 6 The grandmother of two of the owners of Lot 100 lived on that property. The land other than the cottage which was occupied by the grandmother was used by Nicholas Sammut and his employers as part of the nursery and for the planting and growing of flowers. A shed constructed on Lot 100 was also used as part of the nursery. Plants were grown as seedlings and in pots which were either placed on the ground or on bench tables. Plants were grown in the ground in garden beds. Plants were propagated on Lots 100 and 101 and Lots 100 and 101 were used for the cultivation of the plants in the ground, on the ground, in pots and in seedbeds. 7 The land was owned previously by the grandmother of Andrea Colusso and Atanasio Colusso, she died in December 1992. A nursery was operated on the site for some time prior to 1967, then in 1967 the running of the nursery was taken over by Nicholas Sammut. Section 10(1)(p) of the Land Tax Management Act 1956 8 Section 10(1)(p) provided in 1990 that an exemption was provided where the land was used for primary production not being land as excluded by section 10(1)(p)(a) – (d) inclusive. This section was amended in 1991, the section now is as follows: "10 Land exempted from tax (1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10AA, 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act: … (p) with respect to taxation leviable or payable in respect of the year commencing on 1 January 1991 or any succeeding year, land that: (i) is land used for primary production in the course of the carrying on of a business of primary production, or (ii) is land used for primary production (whether or not in the course of carrying on a business of primary production) if the land is within a "rural" or "non-urban" zone under a planning instrument or (in the case of land not within a zone under a planning instrument) is land that the Chief Commissioner is satisfied is rural land, ..." 9 This section has been the subject of various litigation particularly in relation to the meaning of the words "primary production". 10 The definition of primary production has generally meant the definition given to the expression "land used for primary production" as set out in section 3(1) of the Land Tax Management Act. The definition in the Act is: "land used primarily for : (a) the cultivation thereof for the purpose of selling the produce of such cultivation, (b1) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, (c) the purpose of commercial fishing (including preparation for that fishing and the storage or preparation of fish or fishing gear) and the commercial farming of fish, molluscs, crustaceans or other aquatic animals, (d) the keeping of bees thereon for the purpose of selling their honey, (d) a nursery within the meaning of the Horticultural Stock and Nurseries Act 1969, being a nursery in respect of which a person is registered under the Act as a nurseryman, or (e) the propagation for sale of mushrooms, orchids or flowers, and includes all land owned by a society registered as a rural society under the Co-operation, Community Settlement, and Credit Act 1923, as amended by subsequent Acts." 11 Following the amendment in 1991, pursuant to the provisions of section 10(1)(p)(i) of the Land Tax Management Act land that is "used for primary production in the course of the carrying on of a business of primary production is exempt from land tax, section 10(1)(p)(ii) of the Land Tax Management Act provides that certain land used for primary production is exempt or may be exempt if the Chief Commissioner is satisfied it is rural land. 12 This application relates only to an exemption claimed under section 10(1)(p)(i) of the Land Tax Management Act. Section 7 of the Horticultural Stock and Nurseries Act 1969 13 Under section 3 of this Act various phrases are defined including: 'nursery' means any place at which any horticultural stock is propagated for the purposes of sale; 'propagate', in relation to any horticultural stock, means generate or multiply, by sexual or asexual means 14 Section 7 of this Act requires that a person who is propagating any horticultural stock for the purposes of sale must be registered as a nurseryman. 15 A Certificate of Registration as a Nurseryman was issued for all of the relevant years to Flower Power Pty Ltd the actual certificates for the years 1993 and 1994 were not available to be copied, a copy of all the other years' certificates were provided. These certificates relate to the whole of the subject land. History of use 16 Lots 100 and 101 were used by the grandmother of two of the registered proprietors, prior to Flower Power Pty Ltd, for a nursery. From 1990 to 1999 the land has been used by the Flower Power Group continuously in the same form as it was used in 1990 and then with the expansion of the nursery and its activities on the land, the use of the land for the nursery was intensified. 17 Mr Colin Paul Sammut provided the Tribunal with an accurate description of the activities that took place on the land. Mr Sammut also gave clear evidence of the construction of the car park in 2000 which was built on Lot 101. 18 Mr Spiteri, the Finance Director of Flower Power Pty Ltd, provided the Tribunal with a description of the activities undertaken by the company on the land. Under cross examination Mr Spiteri provided the following definitions of the various relevant undertakings of the company on the land. These definitions included: 'nursery' means – propagated, grew, cultivated plants and sold those plants from the site and sold other products which were ancillary; 'propagated' means – "to multiply" by taking cuttings and growing the cuttings and advancing them to larger plants, divide plants; 'cultivate' means – to grow, to nurture, to look after both plants and land, to have stock plants in gardens, to grow plants in the ground, to grow plants in the gardens and propagate or take cuttings from those plants. It includes growing plants in the ground and in containers; 'stock plant' means – a mature plant from which cuttings are taken to multiply or propagate from to make more plants. Mr Spiteri impressed the Tribunal as a straightforward and reliable witness. 19 The evidence of Mr Spiteri was to the effect that Flower Power Pty Ltd had cultivated the land for the purpose of selling the produce of that cultivation, the produce of that cultivation included the propagated plants from the stock plants, some of the propagated plants were grown in the ground or in pots placed on the ground. 20 John Paul Sammut gave comprehensive evidence as to the various parts of Lots 100 and 101 that were used for the purposes specifically for cultivation and other areas that were used for the plant beds and for the growing of stock plants and propagated stock. This evidence was assisted by reference to a sketch of the land which had been highlighted in various colours disclosing inground garden beds, retail areas, glasshouse, display and growing area both covered and uncovered, pots, bagged fertiliser, driveway, car park, turning bay, bulk storage bins, propagation area and machinery storage. This sketch was helpful in terms of understanding the individual uses of parts of the land over the relevant period. The evidence was to the effect that these uses were substantially the same over the whole of the period. 21 Section 10(1)(p)(i) of the Land Tax Management Act requires the satisfaction of three elements to enable the exemption to be applied and they are: (a) the land is to be used for primary production, (b) the land is to be used primarily for primary production, and (c) the land is to be used in the course of carrying on of the business of primary production. Section 3(1) of the Land Tax Management Act 1956 is as set out in paragraph 10 above. History of interface between the Office of State Revenue and the Applicant 22 Michael Anthony Spiteri, the Finance Director of Flower Power Pty Ltd during the relevant period, was required as part of his duties, to attend to matters relating to the financial functions of the company. 23 Mr Spiteri has been responsible, during the relevant period, for ensuring that the company and its related companies comply with any statutory obligations including the liability and payment of land tax to the New South Wales Office of State Revenue. 24 After the employment of Mr Spiteri by the company he recalled reviewing a letter forwarded to "M/S D Colusso, 821 Hume Highway, Bankstown 2200" dated 17/10/89. This is a format notice to land owners forwarded by the Office of State Revenue and includes a printout notice being from "Office of State Revenue Compliance Division". The letter had been originally addressed to 43 Border Road, Horsley Park 2164, the Compliance Division notice remains addressed to that address. The letter had been re-addressed to 821 Hume Highway Bankstown 2200. The Compliance Division notice refers to the land, the notice requires completion and return of either a 1989 land tax return or return of the letter together with certain information including a response to whether a land tax return is required or had been made. 25 Mr Spiteri's evidence was to the effect that he believed that the company had received the notice referred to in the previous paragraph on 9 January 1990 after it had been re-addressed to the company. Mr Spiteri recalled that he had contacted the Office of State Revenue by phone. He spoke to an officer there and indicated that Flower Power Pty Ltd received exemptions for all other property and was advised to write a letter to the Office of State Revenue. 26 Mr Spiteri caused a letter to be forwarded to Office of State Revenue dated 9 February 1990 and in that letter he requested that: "We write to advise that Flower Power Pty Limited is the lessee of the land in question. This property is used for primary production purposes, that is the wholeslae (sic) and retail of nursery plants . Enclosed you will find a plan of the nursery indicating those areas which are used for: i) propagation of horticultural stock; ii) plant production; and iii) raw material storage We therefore seek exemption from land tax on this property on behalf of the property owners." 27 The letter referred to in the previous paragraph was accompanied by a sketch which appears to be identical to the sketch referred to by Mr Colin Paul Sammut and referred to in paragraph 20. 28 Mr Spiteri gave evidence that he contacted the Office of State Revenue or caused another employee to contact Office of State Revenue at least once a year, if not twice a year, to seek determination in relation to the letter forwarded to the Office of State Revenue on 9 February 1990. Mr Spiteri recalled that Ms Ferraro (Mr Spiteri's personal assistant who also contacted the Office of State Revenue by telephone) had advised him words to the following effect: "The OSR informed me that they have destroyed all their old files including our 1990 application for exemption" As a result of being advised of the loss or destruction of the file Mr Spiteri caused a copy of the letter dated 9 February 1990 to be forwarded to the Office of State Revenue again. 29 There was no written communication from the Office of State Revenue in respect of the issue concerning the land between 1990 and 1998. 30 On 1 July 1998 a letter was prepared by the Office of State Revenue and then forwarded to: "Colusso A & Colusso D & Colusso N c/- Schofield & Co Pty Ltd P.O Box 2380 NORTH PARRAMATTA NSW 2151" This letter advised: "I refer to your application for an exemption from land tax on land used for primary production for 821 Hume Highway, Bass Hill. Please find enclosed an application form and revenue ruling for the exemption of land used for primary production. This application form must be completed and returned to this office within 21 days otherwise we will base our assessment on the information currently held. If you have any questions or need further explanation on this matter please contact me on (02) 9689 6688 quoting reference number 103571144." A copy of Revenue Ruling LT 22 and an application form were included with the letter. 31 The application form was completed and returned to the Office of State Revenue by Flower Power Pty Ltd. 32 On 26 November 1999 the Office of State Revenue caused a letter to be forwarded to A, D & N Colusso C/o Michael Spiteri requesting further details to enable consideration to be given to the exemption. On 27 December 1999, following a telephone discussion between Ms Foo of the Office of State Revenue and Mr Spiteri, a written request was made by Mr Spiteri on behalf of Flower Power Pty Ltd to review the assessments which had issued on 22 September 1999 in respect of the years 1990 to 1999 inclusive. 33 Mr Spiteri gave evidence in relation to the assessment of land tax on each of the other properties used by Flower Power Pty Ltd including a reference to the exemption of all other properties other than one property which was not used at all. Mr Spiteri also averred to his understanding that land tax was a liability and that it needed to be addressed regularly on an annual basis and that this had been done. 34 The notices of assessment issued in 1999 in relation to the land were forwarded directly to the owner of the land, c/- of a company which does not seem to have any relationship to the owner other than as an adviser, on 22 September 1999. Case law 35 The parties drew particular reference to several cases which they believe are relevant to the existent situation. The Applicant's representative drew attention to: Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032 at 4036 – 4037, Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 12 ATR 161, Illawarra Meat Co v Commissioner of Land Tax (NSW) 9 ATR 734, Abbott v Commissioner of Land Tax (Vic) 9 ATR 728, Spic'n'Span Corporation v Fredericks 1982 50 LGRA 46, R v Inland Revenue Commissioners; ex parte National Federation of Self-Employed & Small Businesses Ltd [1982] AC 617 at 651 The Chief Commissioner's representative drew particular reference to: McDonald's Australia Ltd v Commissioner of Taxes (2000) 45 ATR 124; 2000 ATC 4607, Grice Holdings Pty Ltd v Commissioner of Taxes (2000) 45 ATR 530, Jones v Commissioner of Land Tax (NSW) (1980) 80 ATC 4539 at 4541; (1980) 11 ATR 98 at 101, Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30 at 34-35, Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278 at 280, Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032 at 4035; 9 ATR 451 at 455, Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 81 ATC 4426; 12 ATR 161. On appeal, (1982) 82 ATC 4014; 12 ATR 666, Hope v Bathurst City Council (1980) 144 CLR 1, Premier Automatic Ticket Issues Ltd v FC of T (1933) 50 CLR 268 at 298, Longford Investments Pty Ltd v Commissioner of Land Tax (NSW) (1978) 8 ATR 656 at 661, Clarke v Commissioner of Land Tax (NSW) (1980) 11 ATR 794 at 802, Theosophical Foundation Pty Ltd v C of LT (1966) 67 SR (NSW) 70 at 74.9, Southern Estates Pty Ltd v FC of T (1967) 117 CLR at 494, Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd (1999) 48 NSWLR 299 at 303-304, Oamington Pty Ltd & Anor v C of LT (NSW) & Anor (1997) 98 ATC 5051 at 5064-5066, Ronell v FC of T (1978) 12 ATR 411, Gresham Life Assurance v AG [1916] 1 Ch 228; 7 TC 36, R v Inland Revenue Commissioners; ex parte National Federation of Self-Employed & Small Businesses Ltd [1982] AC 617 at 651, Pickering v Deputy Commissioner of Taxation (1997) 97 ATC 4893 Each of the above has been considered. 36 The cases cited by the Applicant include the following and particular references have also been drawn to the attention of the Tribunal: (a) Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032 at 4036 – 4037 and Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032 at 4035; 9 ATR 451 at 455 This case was cited on behalf of the Applicant and the Respondent with particular emphasis on the comment that the expression "cultivation thereof for the purpose of selling the produce of such cultivation" indicated the idea that the meaning was the improvement of the land for the purposes of selling the produce of that improved land. (b) Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 12 ATR 161 and Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 81 ATC 4426; 12 ATR 161. On appeal, (1982) 82 ATC 4014; 12 ATR 666 In this case, which was also cited on behalf of the Respondent, there was an acceptance that the cultivation of land, to improve the land to assist the growth of "potted plants" could be considered to be part of the cultivation of land. (c) Illawarra Meat Co v Commissioner of Land Tax (NSW) 9 ATR 734 The relevant issue was considered to be the purpose of sale. It is of no consequence that the produce is sold in pots or otherwise and that it is of no consequence that the cuttings are sold and not the mother plants. (d) Abbott v Commissioner of Land Tax (Vic) 9 ATR 728 This case considered, i.e., whether the whole of the land was used "primarily" for the purpose that was exempt and whether that use imparted a character to the whole of the land. Regard was had to the decision in Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30 a case cited by the Respondent. Lush J held that: "… the word "primarily" is related to the whole of the parcel and it is from that point of view that the matter must be considered. The predominant use must be of such a degree that that use can be attributed as the character of the parcel as a whole. The subjective attitude of the owner was not relevant and the farming activities in the particular circumstances could not be classified as constituting the primary use of the property. In one sense, the land used for primary production was merely the residual part after the land used for the golf course had been set aside for that purpose." In this particular case the land is used by the Applicant for the purposes of a nursery and in excess of 90% of the produce of the improved land is sold from the land, i.e. on site, the remaining 10% being sold elsewhere. By comparison in this matter the question then becomes whether the competition between the uses i.e. is the use primary production or is the use retail nursery as in 'Abbott' it was the distinction between primary production and the golf course. The sale of the plants from the nursery could not eventuate in the absence of the propagation and growth of those plants. Therefore as the retail nursery could not operate in the absence of the propagation and growth of those plants it is clear that the primary purpose is the propagation and growth of those plants. Revenue Ruling LT 22 being "Exemption for Land Used Partly For Primary Production" issued on 23 January 1990 remains an existing ruling. This Ruling provides (i.e.) that; where land is used for more than one purpose, it will only qualify if the primary production activity gives the land the character of being mainly used for that activity to determine whether the primary production activity gives the land that character, the Commissioner will consider the degree, extent and intensity of each use, and relevant factors will include the area of land allocated to each use the capital investment in each use the income generated by each use the use before and after the taxing date. (e) Spic'n'Span Corporation v Fredericks 1982 50 LGRA 46 This case considered the use of part of the land which was not the primary use of the land. Wells J noted that it was not inconsistent with the primary use of the land. It is considered that this clearly indicates that if there is not an inconsistency with the use then the land continues to be used primarily for the exempt use. The evidence provided on behalf of the Applicant supports the view that the propagation of plants from stock grown on the land and in receptacles placed on the land was the main undertaking or primary use of the land. The sale of a large percentage of those plants from the land (sold on site) is not inconsistent with the primary use of the land. (f) Taxation Ruling 97/11 The Applicant has submitted that the issues in relation to the definition of "business of primary production" have been considered and defined in Income Tax Ruling TR 97/11. This Ruling comments that:- "from the judgments it is clear that the relevant indicators to consider when examining whether a business of primary production is being carried on by a tax payer are: · does the activity have a significant commercial purpose or character? · does the taxpayer have more than a mere intention to engage in business? · is there an intention to make a profit or a genuine belief that a profit will be made? Will the activity be profitable? · is there repetition and regularity in the activity? i.e., how often is the activity engaged in? What amount of time does the taxpayer spend on the activity? · is the activity of the same kind and carried on in a similar way to that of the ordinary trade? · is the activity organised in a businesslike manner? · what is the size or scale of the activity? · is the activity better described as a hobby, a form of recreation or a sporting activity?" It is clear that the Applicant used the land in the course of carrying on a business of primary production. This is particularly evident from the inclusion of a nursery in the definition set out section 3 of the Land Tax Management Act 1956. The Respondent made reference to various cases in submissions including the following: (a) Jones v Commissioner of Land Tax (NSW) (1980) 80 ATC 4539 at 4541; (1980) 11 ATR 98 at 101 This case, it was submitted, supports the view that the land is not being "used" if the land was being prepared for the use. In the instant matter there is no suggestion that the land was only being prepared for the particular use. The evidence supports that the land had been prepared and was being used for the particular purpose. It was further submitted that in order to satisfy the test as to whether the land is primarily used for a purpose then the predominant use must be of such a degree that the use can only be attributed as the character of the land as a whole. It is clear from the evidence that there was not any part of the land that was not used for the primary purpose or for an ancillary purpose (being the sale of the produce from the use of the land) and therefore the use could only be considered to be as the use of the whole of the land and thus epitomised the character of the land as a whole. (b) Jones v Commissioner of Land Tax (NSW) (1980) 80 ATC 4539 at 4541; (1980) 11 ATR 98 at 101 and Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30 at 34-35 and Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278 at 280 These cases clearly support the view that the uses of the land must be considered together and that those uses must then be weighed objectively. In the instant case there are two possible uses of the land and considering the evidence objectively it is clear that the predominant use is that the land is used primarily for primary production. The land is used for two activities and of those activities the evidence supports the view that the primary use is for primary production. (c) Safety Beach Estate Pty Ltd v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032 at 4035; 9 ATR 451 at 455 The reference to this case is to "Breaking it up, as by ploughing, or … by activities that may or may not be associated with breaking up of the soil. …". In this instant case the land has been broken up for the purposes of cultivating the land to improve the plants, as stock plants, and to grow seedlings and take cuttings. These activities have been taken in accordance with the use of the land to ensure that the use may be continued to ensure the continuation of the business of the nursery. It is clear that the way in which the land has been improved that it has been undertaken to practice the best husbandry applicable to the various plants that are grown and have been grown. (d) Commissioner of Taxation v Waldeck Nurseries Pty Ltd (1981) 81 ATC 4426; 12 ATR 161. On appeal, (1982) 82 ATC 4014; 12 ATR 666 As noted this has been cited on behalf of both the Applicant and the Respondent. The Respondent has suggested that the issue in the case was only as to whether the items of expenditure fell within any of the categories listed in Section 75A of the Income Tax Assessment Act 1936 . (e) Hope v Bathurst City Council (1980) 144 CLR 1 and Premier Automatic Ticket Issues Ltd v FC of T (1933) 50 CLR 268 at 298 The Respondent has submitted that the particular activity must be pursued in association with rather than independent of the "carrying on" of "the business". It is clear in the instant case that the activities engaged in were on a continuous and repetitive basis and that the activities were pursued in association with the carrying on of the business as the produce was sold on site for profit. (f) Longford Investments Pty Ltd v Commissioner of Land Tax (NSW) (1978) 8 ATR 656 at 661 and Clarke v Commissioner of Land Tax (NSW) (1980) 11 ATR 794 at 802 and Theosophical Foundation Pty Ltd v C of LT (1966) 67 SR (NSW) 70 at 74.9 These cases support the view that the Applicant bears the onus to show that the requirements of section 10(1)(p) are satisfied. The Applicant has brought evidence to satisfy the requirement that the land is used for primary production in the course of the carrying on of a business of primary production. (g) Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd (1999) 48 NSWLR 299 at 303-304 This case supports the proposition that land tax imposed by the Land Tax Act 1956 is to be read and construed with the Land Tax Management Act 1956. There is a clear duty on the taxpayer to disclose to the Chief Commissioner the ownership of land for the purposes of assessment. The Chief Commissioner is required to assess the land tax payable. Reasons 37 The issue as to when the land was used as a nursery (if it was a nursery) changed to being used as a retail outlet must be considered in relation to the activity on the land. Mr Spiteri gave evidence to the effect that the activities on the land did not change during the period of his employment from July 1989 until the completion of the car park construction on the site in 2000. The representative of the Chief Commissioner submitted that the operation of the nursery (if it was such) changed some time after December 1995 and that if an exemption had been available then there would not have been an exemption after the change of use of the land. No evidence was provided to the Tribunal that the use of the land as a nursery (if it was) changed between December 1989 and December 1998 other than the use increased with the development of the carrying on of the business of a nursery. 38 The evidence discloses that the car park was built in the year 2000 and as and from that time the Applicant and the Office of State Revenue agreed upon the status of the land in regard to exemptions or otherwise in the Land Tax Management Act. 39 The evidence discloses that both the Applicant and the Office of State Revenue consider the land as being the whole of the land being Lots 100 and 101. As and from when further land was leased from the Education Department part of the operation of the nursery was moved on to that leased land. 40 The Applicant provided evidence of the use of Lots 100 and 101 for the relevant period being December 31 1989 through to December 31 1998. The evidence was comprehensive and discloses that the land is used primarily for primary production and in the course of carrying on of the business of primary production. This use included a nursery where horticultural stock being plants, shrubs and other vegetation was propagated and grown for the purposes of sale. The propagation included taking cuttings from stock plants growing in the ground in gardens and in pots and multiplied by growing those cuttings in the ground in gardens and in pots. Horticultural stock was grown as stock plants in the gardens and in the ground for the purposes of sale. 41 The sketch of the land, being the sketch referred to in paragraph 20, disclosed that large areas of the land are used for the purposes of primary production. The Chief Commissioner of State Revenue did not provide any information disagreeing with the use of the land as shown in the sketch of the land. 42 A further question arose as to whether the plants sold on the land were other than those that were propagated on the land. The evidence of Mr John Paul Sammut disclosed that more than 90% of the plants propagated and cultivated on the land were sold through the nursery on the land and that ancillary products related to gardening were also displayed and sold through the nursery. 43 From the behaviour of the officers of the Office of State Revenue, the clear and frequent attempts by the Applicant (referred to in evidence) to obtain written confirmation and the supply of the relevant material to the Chief Commissioner by the Applicant then the Applicant must be considered to be entitled to believe that an exemption had been granted. Further in view of the Applicant's other properties which were exempt, apart from the one property which was properly disclosed and assessed for Land Tax as it was vacant land. If the Applicant had taken all stock grown on the subject land and sold that stock elsewhere, then what other use would the land have been used for? The answer as disclosed by the evidence is that a large proportion of produce (in excess of 90%) was sold on site, some ancillary material was sold on site and the Applicant conducted a business selling the produce of the cultivation on site. Therefore the business could not be considered a sham and if the sales had been moved off site there would be no question that the land was exempt under s10(1)(p)(i) as the land was used primarily for the purpose of selling the produce of such cultivation. 44 The Applicant made full disclosure to the Chief Commissioner of the use of the land. The Chief Commissioner has not disclosed, in writing, to the Applicant any decision. The Chief Commissioner must make this disclosure in a timely way. The disclosure of the Chief Commissioner by issue of notices dated 22/09/1999, apparently in ignorance of the facts, following the Applicant's receipt of verbal assurances by officers of the Chief Commissioner is considered to be unfair and certainly ignores the exhortation of Lord Scarman in R v Inland Revenue Commissioners; ex parte National Federation of Self-Employed and Small Business Limited [1982] AC 617 at 651 F where his Lordship stated:- "I am persuaded that the modern case law recognises a legal duty owed by the revenue to the general body of the taxpayers to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise; to ensure that there are no favourites and no sacrificial victims." 45 Unfairness arises in relation to the ability of the Applicant, as a party subject to the Land Tax Management Act , to consider and pay, if not exempt, a tax assessed as at a date, belatedly assessed up to 8 years. Apart from the potential loss of documentary evidence, the assistance of evidence of procedures applied by the Chief Commissioner may not be available. In this instance there is the considerable, undisputed evidence of the Applicant as to the use of the land and as to the attempts of the Applicant to comply with the Chief Commissioner's requirements. No criticism is directed to the Chief Commissioner or the Office of State Revenue as to the unavailability (having been destroyed) of the file and correspondence relating to this property and taxpayer. Nevertheless, there is no conflicting evidence presented by the Chief Commissioner as to the use of the land or disputing the compelling and clearly reliable evidence of the Applicant as to the use of the land. 46 The land is used for primary production in the course of the carrying on of a business of primary production. This is not contradictory to the land being a nursery within the meaning of the Horticultural Stock & Nurseries Act as evidenced by the registration under that Act. Decision The land known as 821 Hume Highway Bankstown is entitled to an exemption pursuant to S10(p)(i) of the Land Tax Management Act for land tax years 1990 to 1999 inclusive. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.