St Pier -v- Chief Commissioner of State Revenue [2002] NSWADT 112

CITATION: St Pier -v- Chief Commissioner of State Revenue [2002] NSWADT 112 DIVISION: Revenue Division APPLICANT PARTIES: Jonathan St Pier RESPONDENT Chief Commisioner of State Revenue FILE NUMBER: 016008 HEARING DATES: 10/12/2001 SUBMISSIONS CLOSED: 12/10/2001 DATE OF DECISION: 07/01/2002

BEFORE: Hole M - Judicial Member APPLICATION: Land tax exemption - primary production MATTER FOR DECISION: Principal matter LEGISLATION CITED : Co-operation, Community Settlement, and Credit Act 1923 Land Tax Management Act 1956 CASES CITED: Southern Estates Pty Limited v Commissioner of Taxation (1967) 117 CLR 481 Greenville Pty Limited v Commissioner of Land Tax (1977) 7ATR 278 APPLICANT REPRESENTATION: T Moore, barrister RESPONDENT T Thawley, barrister ORDERS: The subject property did not fall within an exemption under Section 10(1)(p)(ii) of the Land Tax Management Act 1956 as at 31 December, 1998 and/or 31 December, 1999.

1 The Applicant is the owner of land being Lots 22 to 25 inclusive FP69143 at Fame Cove, Port Stephens. The Applicant is seeking a review of the decisions of the Commissioner to assess land tax for the land tax years 1999 and 2000 in relation to the property. 2 The Applicant was the owner of the land as at 31 December 1998 and it was zoned as Rural 1(A) under the Great Lakes Council LEP. The land adjoins Myall Lakes National Park and has significant natural values including its significance to the NSW Coastal Policy 1997. 3 On 25 February 1999 the Applicant completed a Land Tax 1999 – Initial Return which was lodged with the Commissioner on 4 March 1999. 4 After considerable correspondence between the Applicant and the Commissioner by letter dated 12 July 2001 the Commissioner determined that the objections by the Applicant to the assessments were disallowed. 5 As at 12 July 2001 the Applicant had variously requested the Commissioner to consider exemptions under several provisions in the Land Tax Management Act 1956 (the Act). 6 The Applicant lodged an application with this Tribunal requesting a review of the decision and in particular noting that the Applicant was of the view that the land was exempt under Section 10(1)(p)(i) of the Land Tax Management Act 1956. Subsequently, the Applicant provided a Statement of Issues to the Tribunal that the sole issue to be determined, with respect to each of the relevant tax dates of 31 December 1998 and/or 31 December 1999 is; "was the property, as a matter of fact and law exempt from land tax because, as at the relevant date, the property fell within the exemption provided by Section 10(p)(ii) of the Land Tax Management Act 1956." 7 Section 10(p)(ii) provides that; "10 Land exempted from tax (1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 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;" 8 The Applicant and the Respondent provided succinct submissions and references to case law and the Applicant, Mr Jonathan St Pier gave evidence in relation to the issue of whether "the land is land used for primary production". 9 Pursuant to the sub-section to be land within the provisions of the sub-section, the land needed to be used for primary production being land within a "rural"… zone under a planning instrument. 10 There is no dispute that the land is zoned Rural 1(a) pursuant to the Great Lakes Council LEP 11 The issue is therefore whether the land is used for primary production as the land is within an area zoned rural, and was so used at the relevant dates being 31 December, 1998 and 31 December, 1999. 12 The Applicant seeks to rely on various activities undertaken to enable the land, or part of the land, to be used for a purpose that would be within the exemption as being a primary production purpose. 13 Both the Applicant and the Respondent have drawn attention to various cases which have been decided in relation to "used for primary production". 14 Both the Applicant and the Respondent referred to Southern Estates Pty Limited v The Federal Commissioner of Taxation V.117 of the Commonwealth Law Reports. The issue in that case concerned assessment of income tax and appeals in relation to the assessment. The issue related to "engaged in primary production". 15 The issue then is narrowed to a consideration of the words "used for primary production" and "engaged in primary production" as in this matter the issue concerns the Applicant who has purchased property for his own purposes which included attempts to subdivide the land into 10 lots, the application to subdivide appears to be unresolved to date. 16 Concurrently with applying for subdivision approval of the land, the Applicant has engaged in various activities which have been clearly undertaken with a view to attempting to use the property for a purpose suitable to the terrain and for which approval may have been given by the council pursuant to the existing zoning if necessary. 17 The Applicant has undertaken work during the period from early November 1998 through to July 2000 which has canvassed the use of part of the property for various activities including proposed deer farming activities. 18 The Applicant clearly intended to "use" the land for an income producing purpose and as it was zoned Rural it could only be permissibly used for a purpose which complied with that zoning. 19 He incidentally had the intention to subdivide the land for the purposes of achieving a subdivision of approximately ten 100 acre lots and of those he intended to allocate one to each of his four children and one to this father. 20 There is no requirement that any person holding a parcel of land should have only one intention in respect of that land. A person who uses land for the purposes of primary production may be using that land in that sense as the best possible use for the land at that particular time, however, that person may have seen the possibility to subdivide the land for the future and commenced the necessary activities to achieve a subdivision. It is clear in this case that the Applicant identified several potential uses of the land, being a large area, and intended to pursue a variety of those intentions seeking the best use of the property for him and his family and bearing in mind the significant natural value of the land. 21 Over the period from 1998 through to December 1999 the Applicant investigated various uses of various parts of the land. The Applicant completed the initial return to the Office of State Revenue on 25 February 1999. In that return the Applicant indicated the intention to use the land for the purposes of "collection of seed, (endangered habitat)." He further indicated that the land would not be used for any other purpose. He sought an exemption and indicated that the land was intended as principal place of residence and as a koala sanctuary. 22 It is clear from the evidence given by the Applicant that he fully understood that there would be correspondence between himself and the Office of State Revenue in relation to the exemptions as claimed. 23 In the course of the correspondence between the Applicant and the Respondent, the Applicant indicated that the property would be used in 5 separate sections being: · the creation of a native nursery to propagate a very endangered flower; · the creation of a vineyard; · the creation of a house site; · the creation of two different sets of fire trails; · the creation of a vegetation management agreement allowing the permanent protection of important habitat. The correspondence also discloses that the Applicant was placed in the position that he was unable to "do anything" on the property due to action being taken in several different government departments. 24 The Applicant undertook applications to all the necessary bodies and obtained evidence from the necessary experts in relation to his attempts to use the property in a way which would provide an income from the property whilst at the same time pursuing another one of his intentions being to obtain subdivision approval into 10 lots. 25 The Applicant undertook the preparation as referred to and at all stages proceeded to seek and obtain the necessary consents to the work that he was undertaking. 26 The Applicant did not proceed to the next step in the introduction of animals to the property until a date in the year 2000 being a date when he was able to introduce the deer to the property having complied with all the necessary requirements to enable him to do so. 27 In the event that the Applicant had obtained the position where he was able to introduce the deer to the property on 31 December 1999 then the exemption from land tax would clearly have been applied by the Respondent for the 2000 Land Tax year. 28 Section 3 of the Land Tax Management Act 1956 (NSW) provides: Land used for primary production means land used primarily for: (a) the cultivation thereof for the purpose of selling the produce of such cultivation, (b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase of bodily produce, (b1) 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; (c) the keeping of bees thereon for the purpose of selling their honey; (d) a commercial plant nursery, but not including a nursery at which the principal cultivation is the maintenance of plants pending their sale to the general public; 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. 29 The action of the Applicant in making an application for subdivision did not preclude the Applicant having an intention to use the land for primary production. 30 The completion by the Applicant of the 1999 return did not estop his intentions to use the land for other purposes. In this regard, if he could have satisfied the Commissioner that one of the other tests for exemption had been satisfied within the terms of the Act, then pursuant to anticipated correspondence this would have been discovered and the appropriate exemptions obtained. 31 The Applicant did not disclose that guidance was sought prior to 31 December 1998 as to the manner in which the ownership of the land would be considered within the provisions of the Act. 32 The Applicant has at all times undertaken work on the basis that he needed to obtain the relevant approval from whichever Authority was required and it is unfortunate that in having taken this step the issue involved in this matter is now before the Tribunal. 33 The Applicant sought to establish that the test under the Land Tax Management Act is the actual use of the land, that is, a test that applies to the land, not a test that applies to the individual. The Respondent drew attention to this test as being correct in that a subjective intention is irrelevant. The Respondent cited Southern Estates Pty Limited v Commissioner of Taxation (1967) 117 CLR 481 and Greenville Pty Limited v Commissioner of Land Tax (1977) 7ATR 278. 34 The issue being defined as previously stated needs to be considered firstly as a matter of fact and then as a matter of law as to whether the land is used for primary production. It is clear from the evidence that notwithstanding the valiant attempts of the Applicant to use the land in various ways which may have ultimately resulted in the land being used for primary production that as at the relevant dates the land was not used for primary production as a matter of fact. 35 The next question to be considered is, is the land used for primary production as a matter of law. This must be considered in view of decisions cited by both parties, particularly Southern Estates Pty Limited v Commissioner of Taxation (1967) 117 CLR 481 and Greenville Pty Limited v Commissioner of Land Tax (1977) 7ATR 278. 36 The Applicant's representative submitted that the Applicant had undertaken all possible steps to commence the factual use of the land and had therefore satisfied the legal definition of the use of the land for primary production as the factual use had been frustrated by actions and circumstances beyond his control. The similarity to the issues in Southern Estates Pty Limited v Commissioner of Taxation (1967) 117 CLR 481 and Greenville Pty Limited v Commissioner of Land Tax (1977) 7ATR 278 is compelling in that the Applicant clearly intended to use the land in a manner which may have had the effect of exempting the land as land used for primary production. The Applicant's intention was frustrated. As a matter of well established law the land was not used at the relevant dates for primary production. 37 I direct that all subpoenaed documents be returned. 38 In consideration of all the material provided including the cases cited by the Applicant and the Respondent I make the following order: The subject property did not fall within an exemption under Section 10(1)(p)(ii) of the Land Tax Management Act 1956 as at 31 December, 1998 and/or 31 December, 1999.