Reysson Pty Ltd v Chief Commissioner of State Revenue [2008] NSWADT 196

Set aside by Appeal :

CITATION: Reysson Pty Ltd v Chief Commissioner of State Revenue [2008] NSWADT 196

DIVISION: Revenue Division

APPLICANT Reysson Pty Ltd PARTIES: RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 076054

HEARING DATES: 7 December 2007, 10 March 2007 and 11 April 2008

SUBMISSIONS CLOSED: 11 April 2008

DATE OF DECISION: 18 July 2008

BEFORE: Verick A - Judicial Member

MATTER FOR DECISION: Land Tax exemption - primary production

Land Tax Management Act 1956 Land Tax Act 1956 LEGISLATION CITED : Environmental Planning and Assessment Act 1979 Apiaries Act 1985 Taxation Administration Act 1996

Commissioner of Land Tax v Christie & Ors [1973] 2 NSWLR 526 Sonter v Commissioner of Land Tax (1976) 7 ATR 30 Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278 CASES CITED: Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 Longford Investments Pty Limited v Commissioner of Land Tax (NSW) (1978) 78 ATC 4264 Saville & Ors v Commissioner of Land Tax (NSW) 81 ATC 4373 Shananhan & Anor v Chief Commissioner of Land Tax 96 ATC 4320

M Fraser, counsel REPRESENTATION: AH Rider, counsel

ORDERS: The objection decision under review is affirmed

REASONS FOR DECISION Introduction 1 The Applicant seeks a review of the Respondent's decision to disallow the Applicant's objection against the Land Tax Notice of Assessment for the 2005 Land Tax Year in respect of land situated at Tweed Heads, New South Wales (the "Land"). 2 The Land in question comprises of the following lots: Lot 1 in Deposited Plan 781510 (Lot 1); Lot 2 in Deposited Plan 1060215 (Lot 2). Lot 4 in Deposited Plan 228424 (Lot 4); and Lot 110 in Deposited Plan 1019833 (Lot 110). 3 The issue in these proceedings is whether the Land was exempt from land tax for the 2005 land tax year pursuant to s 10(1)(p) of the Land Tax Management Act 1956 (NSW) (the "LTM Act") as land used primarily for primary production in the course of carrying on of a business of primary production. In particular, the issue is whether the land was used primarily for the keeping of bees thereon for the purpose of selling their honey in terms of s 3(1) of the LTM Act. 4 Alternatively, if the exemption for primary production is not available to the Applicant, the Applicant claims that it was entitled to the concession under s 6 of the Land Tax Act 1956 (NSW) (the "LT Act") for "flood liable land". Background 5 In a letter produced by the Applicant and sent to the Respondent dated 17 September 1985, some historical background in relation to the Land was provided by Mr Keith A Beveridge, a director of the Applicant as follows: "The above land was purchased at auction in July 1979 for the purpose of building a caravan park on Lot 9 and if successful a village and recreational type accommodation on the remainder of the land when and if the opportunity became available to us. However, due to economic changes and continued delays and obstacles put forward by the Tweed Shire Council, we were forced to abandon our dreams. Continued high interest rates and holding charges forced us to try and sell the land. The land is low lying and would require in excess of two million dollars to fill and because the Tweed Shire Council were to claim seven acres to construct a thirty meter wide drain and floodgates through the middle of the land, it has been unsaleable and buyers have been hard to find." 6 In 1983 an attempt was made to clear the land for cattle grazing and part of the land was fenced for the cattle grazing operation. The cattle grazing operation was abandoned due to removal of part of the fence line by the Council for building a road, which allowed the cattle to stray to the neighbouring golf course and to the Pacific Highway. 7 The Applicant in 1994 made an application for development of the Land to create an artificial waterway with residential subdivision and a tourist hotel which was unfortunately refused by the Minister pursuant to section 101(8)(b) of the Environmental Planning and Assessment Act 1979. The grounds for refusal were that the "proposed treatment procedure for exposed acid sulphate soil has not been demonstrated not to adversely affect the water quality in the Tweed River". 8 The events leading to these proceedings have been usefully summarised in the Respondent's written submissions as follows (without the reference to footnotes for the source of the information): "14. On 24 November 2003, the OSR's Compliance Division conducted a Field Investigation on part of the Land and described its conditions as "Dense scrub, not fenced, no evidence of crops, sign saying keep out private ppty". 15. On 22 March 2004, in the course of investigating the potential land tax liability of unregistered land owners, the Respondent wrote to the Applicant and requested the Applicant to complete the enclosed land tax questionnaire (Questionnaire) by 5 April 2004 to assist the Respondent with its investigations. 16. The Applicant completed the Questionnaire and returned it to the Respondent on 23 July 2004. In the completed Questionnaire, the Applicant claimed the primary production exemption applied to the Land on the basis that it was used for beekeeping and the agistment of racehorses. 17. On 21 October 2004, the OSR conducted an investigation of the Land. The investigating officer reported, "All that could be evidenced was dense bushland … There was also no evidence of horse agistment activity." The investigating officer concluded that based on the evidence, no Primary Production activities were being carried out and that a Primary Production Land (PPL) should not apply. 18. On 20 December 2004, the Applicant's Accountant wrote to the Respondent setting out the basis for the Applicant's claim for treating the land as "Primary Production". 19. On 7 January 2005, the Respondent wrote to the Respondent (sic) in response to the Respondent's request for further and better particulars regarding the Land. 20. On 13 January 2005, the Respondent issued the Assessment to the Applicant. 21. On 10 March 2005, the Applicant objected to the Assessment by completing the OSR's pro-forma 'Objection to an Assessment or Decision' and attaching the Grounds for Objection (Objection) and copies of various documents. In summary, the Objection set out the following grounds for the Applicant's objection to the Assessment: 1. 100% of the land available is utilised for primary production. 2. The land is 100% unoccupied flood liable land. 3. The land has had development approval refused by the Minister on the grounds of Acid Sulphate Soil. 4. The land is burdened by planning instruments and zoning constraints that prevent the Applicant from utilising large portions of the land. 5. The land is subject to a Council stop work order and Tree Preservation Order prohibiting the Applicant from expanding its primary production operation. 6. The operation of primary production has been frustrated by the Council removing a large portion of fenceline used to contain cattle. 7. Over (approximately) 4 hectares of the Land cannot be utilised by the Applicant due to the size and location of a 32 metre wide open drain (which traverses over all lots) that was constructed for the benefit of the Council to drain Banora Point. 8. An area of (approximately) 2-2.5 hectares is taken by an open drainage easement of Lots 2 and 4. 9. The land is burdened by an (approximately 8-9 hectare) borrow pit that is inundated by water and is currently being utilised as an illegal drainage outlet by an adjoining development. 10. The assessment valuation of $7.5 million for the Land is excessive and unjustified. 11. The Land is subject to numerous compulsory acquisition matters for the benefit of the Council. 22. On 8 August 2005, two compliance officers from OSR inspected the Land. The officers reported some clearing of Lot 2, which was generally composed of scrub, waste and bushland. On Lot 4, the officers observed a drain that was about 30 metres wide, which allowed a borrow pit to form with the original dam on the property. The officers also observed piles of rubbish dumped on Lot 1, which they described as being 'like a council tip'. The officers also noted that Mr. Beveridge (a director of the Applicant) showed no care or worry in that the public were using his land as a dumping ground. On re-entering Lot 4, the officers observed 60 beehives kept by Mr Nikola occupying approximately 600 square metres. 23. In January 2005, the officers had a telephone conversation with Mr. Nikola during which Mr. Nikola stated: · he had no formal commercial agreements with the Applicant and had not been advised of a confirmed rental amount for the use of the Land, although he stated that he paid Mr. Beveridge '$20-40 here or there' any time he saw him; · from September 2002 – January 2005, there were only five (5) beehives located on the Land; and · the largest area occupied by the hives was approximately 1,200 square metres. 24. Based on the evidence gathered, as well as their sightings (sic) of the Land, the officers recommended that the Primary Production land exemption claim for the Applicant be rejected and that the Applicant be liable for land tax on the Land. The officers also recommended that the Assessment be reissued for the Tax Year, as the land value for the Land had been amended. 25. On 25 January 2007, the Respondent wrote a letter informing the Applicant that its Objection had been disallowed (Decision) on the grounds that: · the Land is zoned residential and is not considered to be used for primary production in the course of carrying on a business of primary production for the Tax Year; · the Land does not comply with the Respondent's definition of flood-liable land because correspondence from the Council confirms that the whole of the Land is able to be used for the erection of a building on; · no conservation agreement or trust agreement within the meaning of s.10(1)(p1) (sic) of the LTMA has been supplied by the Applicant; and · there are no exemption or concession provisions under the LTMA applicable to the circumstances stated in the Objection. The Respondent's letter also attached the Reassessment to reflect the new (lower) land value for the Land and therefore the reduced land tax payable on the Land for the Tax Year. 26. On 29 March 2007, the Applicant's Accountant filed an application for review of the Respondent's Decision to disallow the Applicant's Objection ( Application for Review ) in the Administrative Decisions Tribunal ( Tribunal )." Evidence 9 The Applicant produced a folder that was admitted as "A1". It contained various documents and statements including witness statements made by Dr Somerville, a Technical Specialist Bees, employed with the NSW Department of Primary Industries, Mr Anderson, a Certified Practising Town Planner and Mr Beveridge, a director of the Applicant. A supplementary statement of Dr Somerville was admitted as "A2". A letter to the Applicant's solicitors with attachments from Mr Paul Morgan, Planning & Infrastructure Engineer, employed by the Tweed Shire Council was admitted as "A3". A document entitled "Tweed Shire Development Control Plan: Section A3 - Development of Flood" was admitted as "A4". A statement by Mr Nikola, the beekeeper who gave evidence at the hearing was admitted as "A5". 10 The Tribunal also had before it the documents lodged by the Respondent pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 and admitted as "R1". Two photographs of the Land produced by the Respondent were admitted as "R2" and "R3" respectively. In addition, a document entitled "Beekeeping Code of Practice for NSW" produced by the NSW Department of Primary Industries was admitted as "R4". 11 Written submissions in some detail were also received from both parties. 12 Dr Somerville in his first statement essentially dealt with general factors that make land, suitable for beekeeping and after referring to what he was told by others about the nature of the Land, concluded that the "vegetation of the region and the Land makes it suitable and desirable for beekeeping" and that the "bee survival rates should be high". 13 Dr Somerville also provided a further statement in which he referred to the "floral species" on the Land and acknowledged that there "is no simple mathematical formula for determining the amount of land required for a certain number of hives". In relation to the beekeeping activity on the Land he concluded as follows: "14. The position of the apiary on the property is in my view the most appropriate given the proximity of residential housing. 15. The flight range of honey bees will vary seasonally and is dependent on the nutritional requirements of the colony. One kilometre in winter would be considered reasonable and three to four kilometres in the warmer months, thus the entire identified property would be considered a resource for Mr Nikola's bees. NB please note the attached maps. 16. The mix of floral species and the descriptions provided to me by Mr Nikola suggest that the property as identified is an excellent site for the placement of the bee hives for commercial purposes. 17. The residential address of both Mr Jason Nikola and Mr Michael Nikola to the property suggests to me that this bee site is of significant consequence to their commercial beekeeping enterprise. 18. The identified property, given the evidence from Mr Nikola has been utilised for commercial beekeeping purposes on an ongoing basis since 1996 to present, notwithstanding any temporary relocation of hives that might have taken place having regard to prevailing pollen and nectar provision. 19. The lack of other commercial apiaries within 3km to 5km, plus the fact that the Nikola's (sic) have not experienced any outbreak of the disease, American foulbrood, add considerable value to the property as a site for commercial beekeeping. 20. In my opinion the loss of this property as a site to place commercial quantities of honey bee colonies would negatively impact on Mr Nikola's beekeeping business." 14 Mr Anderson, a Certified Practicing Town Planner in his evidence by way of a written statement said that he was "familiar with the subject site" and had "inspected the site on numerous occasions from prior to 1 July to most recently 10 August 2007". In relation to the nature of the land and its current use, he expressed the following opinion: "12. In my opinion the Land is appropriately characterised as rural land because it does not contain any infrastructure (such as streets, powerlines, water supply or sewer reticulation) or dwelling houses and is largely in a natural state comprising of grasslands and forested areas. 13. If the Tribunal was to find that the Land is not rural land, it is my opinion based on my inspections of the Land that: · the 100 or so bee hives that I have witnessed on the Land give the Land a substantial agricultural commercial nature; · the dominant use of the property at 1 July 2004 and continuing to the present date is beekeeping and honey production. 14. From my discussions with the beekeeper, Mr Michael Nikola, I understand that the beekeeping is run with aim of making profit. This accords to my assumptions from inspecting the Land and observing the number of hives used. 15. Having regard to the current urban zoning of much of the Land and the surrounding principally residential land uses, in my opinion beekeeping is an appropriate interim land use pending possible future urban development of the Land, for the following reasons: · the low capital costs to establish such an operation; · the negligible impacts on the biophysical and geophysical environment by such an operation; and · the ecologically sustainable use of the existing remaining forest resources on the site and adjacent land." 15 He went on to express his opinion that Lot 2, Lot 110 and Lot 4 were "flood prone" and that "lack of any integrated infrastructure (particularly water, sewer and access) would be a significant constraint on the erection of a building" on these lots particularly residential buildings in their "present state". 16 In a short statement Mr Beveridge, a director of the Applicant, in relation to the use of the Land, stated as follows: "3. There are no buildings on the Land. 4. The only activity taking place on the Land relates to beekeeping. 5. Bee keeping was commenced on the Land by Mr Michael Nikola in or around 1997. The beekeeping operation has continued uninterrupted since that time. 6. Beekeeping is the only, and therefore, dominant use of the Land." 17 The beekeeper, Mr Michael Nikola's statement was that - "4. Since 1996, I have continually used and still use the Land for my commercial beekeeping business. Recent work has been conducted in conjunction with my son, Jason Nikola, who is taking on an owner/ manager role of my beekeeping business. 5. The Land is a suitable site for my beekeeping business because it is large enough to provide a buffer between the bees and surrounding residential and other public areas, thus minimising the spread and inconvenience that bees may cause to others. 6. The value of the site for commercial beekeeping is enhanced by the existence of heath and a reliable supply of pollen and nectar. This is particularly the case during the cooler months where floral resources are relatively sparse elsewhere. It is the combination of the size of the site and the availability of water, nectar and pollen that makes it suitable for commercial bee keeping. The Land is vital to the success of my overall beekeeping business. If the Land was cleared or if it was smaller in area, I would not view the Land as appropriate for beekeeping. The Land also is particularly suitable for the rearing of queen bees. Queen bees need to be replaced each year for optimal honey production. Young queens produce more eggs (and hence more worker bees) than the older queens. This in turn enables greater nectar and pollen collection and consequently honey production. 7. The intensity of the land is determined by the season and this is the same in all commercial bee keeping business. In winter, I generally place between 100 to 120 hives on the Land and during spring and summer the number of hives placed on the Land is suitably less, usually around 20 hives. At times, I will have up to 200 hives and nucleus hives on the site. Depending upon the availability of floral and nectar resources, these usual numbers might change from year to year. 8. I do not have precise records for how many hives were on the land on or around 1 July 2004 or 31 December 2004. Even if hive numbers were low at that time, this does not reflect the site not being used for bee keeping. Rather, it simply reflects the fact that like many farming techniques, stock rates will vary according to climatic conditions, water supply, grass coverage or, in the case of bees, nectar and pollen supply. At no time have I ceased using the Land for a commercial beekeeping operation or intended to cease using the Land. 9. I live approximately 1 minute drive away from the premises and my son Jason lives approximately 5 minutes drive away. This is of great assistance to us during the summer months when we rear queen bees for our entire beekeeping enterprise. 10. On average, my business produces approximately 35,000 kilograms of honey annually which equates to an income of approximately $80,000. Of this amount, the majority would derive queens reared on the Land in addition to hives on the Land. 11. I am not aware of any other suitable premises available for beekeeping close to where I and my son live. If we are not able to use the Land for beekeeping and in particular queen rearing, it will have a major impact on the viability of the business." 18 Mr Nikola was cross examined and when referred to the record made by the Respondent's officers in relation to telephone calls to him in 2005, he was not able to recall the exact nature of the conversations. He also confirmed that the major part of his honey production took place on the "Tablelands". Relevant Legislative Provisions 19 By the combined effect of sections 7, 8 and 9 of the LTM Act, land tax is levied each year on land value of all land in New South Wales owned at midnight on the thirty-first day of December immediately preceding the year other than land which is exempt from taxation under the LTM Act. 20 Section 10 of the LTM Act sets out various categories of land that enjoy exemption from land tax under the LTM Act. In relation to these proceedings, the exemption relied upon by the Applicant under s 10(1)(p) was, in the year under review in the following terms: " 10 Land exempted from tax (1) Except where otherwise expressly provided in the 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 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, …" 21 The expression "land used for primary production" is defined in s 3(1) of the LTM Act as follows: "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 or 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, …" Submissions 22 Mr M Fraser, counsel for the Applicant, submitted that the Applicant's case was as follows: "It is the combination of two factors in particular which leads to the conclusion that the exemption under s 10(1)(p) must apply to the land the subject of these proceedings: · The land upon which the beekeeping is undertaken is otherwise underdeveloped in any way and unused in any other productive way. · The keeping of bees is a particular agricultural activity o which may superficially appear to use little land in terms of where the beehives are located, o and yet command a large area of land with access to appropriate flowering trees and fresh water to be commercially viable. The land in question has those qualities which fit it directly and comfortably into the exemption." 23 Reliance was placed by the applicant on the evidence given by Dr Somerville and in particular to the following propositions and opinions expressed by Dr Somerville: o "There is no simple mathematical formula for determining the amount of land required for a certain number of hives." o "It is not … appropriate to examine that area used by the site for beekeeping merely in terms of the area where hives are physically located." o "The location of the apiary on the site is ideal, providing the maximum possible buffer between the bee hives and residential properties." o "… the entire identified property would be considered a resource for Mr Nikola's bees." 24 Some reliance was also placed on Mr Anderson's statement that there "is the great difficulty in developing the land for any other use whatsoever. Such inability to use supports and reinforces the conclusion that beekeeping is the dominant (only) use, and therefore primary". 25 Alternatively, it was submitted that if the Tribunal found against the Applicant in respect of the above submission, then the "land tax ought be made payable on the lands on the basis of a s.6 recalculation of land as appropriate and applicable having regard to the flood liable nature of the land as a whole". 26 Mr Rider who appeared for the Respondent first dealt with the actual uses of the Land and submitted that in the relevant year only 0.4% of the Land was used for Beekeeping Use and that rest of the Land was used as follows: 6.7% - 8.3% for the drainage easement use by the Tweed Shire Council for an open drainage easement over Lots 2 and 4 occupying an area of (approximately) 2 – 2.5 hectares of the Land; 6.7% - 10% for the osprey protection use by the NSW National Parks and Wildlife to maintain an endangered bird (an osprey) within an environmental protection zone habitat of approximately 2 – 3 hectares; 13.3% for the open drain use by the Tweed Shire Council for a 32 metre wide open drain occupying over (approximately) 4 hectares of the Land; 26.7% - 30% for the borrow pit use by an adjoining development for an illegal drainage outlet into an (approximately) 8 – 9 hectare borrow pit on the Land which was also used to supply water to the surrounding neighbourhood; and 38% - 46.2% for no actual physical use". 27 It was submitted by Mr Rider that on the decided cases, in particular Commissioner of Land Tax v Christie & Ors (1973) 2 NSWLR 526, Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30 and Ryde Municipal Council v Macquarie University (1978) 139 CLR 633, it was "relevant in this case to consider both the physical and economic uses of the Land for the Tax Year" and that as the Land was treated as a single parcel of land it was "relevant to consider the various uses of the Land in the context of the Land as a whole". On that basis it was submitted that in the relevant Tax Year, the Land was used in an economic sense to derive income of approximately $20 to $40 from Mr Nikola and to hold the Land as an investment with a land value of $5 million. 28 It was further submitted that it was necessary "to determine the primary use of the Land for the Tax Year" and "that the evidence shows that for the Tax year, the Land was primarily used: · in an overall physical sense, for no use at all; · in terms of actual use, the Borrow Pit Use; and · in an economic sense, by the Applicant for the Investment Use". 29 On the above basis, the Respondent submitted: "… that the Beekeeping Use (which only occupied approximately 0.4% of the total area of the Land for the Tax Year) was so insubstantial that even if the other actual physical uses of the Land were disregarded, the Beekeeping Use would still be insufficient to prevail over the proposition that the Land was primarily to be regraded as unused land for the Tax Year." 30 In determining the meaning of the phrase "the keeping of bees thereon for the purpose of selling their honey", it was submitted by Mr Rider that definition of terms used in the Apiaries Act 1985 (NSW) ("the Apiaries Act"), which regulates the keeping of bees in New South Wales are "instructive" and support that the phrase "refers to land used primarily for keeping of beehives thereon for the purpose of selling the honey which the bees store in the beehives situated on the land". 31 In relation to the submission that if the Tribunal finds against the Applicant on the principal ground, that of beekeeping exemption, the Respondent submitted that the Applicant was also not entitled to the concession under s 6 of the LTM Act because the relevant Council had "determined that it was suitable for building". Findings and Reasons for Decision 32 The principal issue in this matter was whether the Land was exempt from land tax in respect of the 2005 land tax year pursuant to s 10(1)(p) of the LTM Act as land used for primary production in the course of the carrying on of a business of primary production. 33 The expression "land used for primary production" is defined in s 3(1) of the LTM Act to mean, so far as it is relevant, land used primarily for: "… (c) the keeping of bees thereon for the purpose of selling their honey," 34 The claim in this matter was, accordingly, that the Land was used for "the keeping of bees thereon for the purpose of selling their honey" in the relevant tax year under review and the Applicant was therefore entitled to the exemption. 35 Essentially, the issue was whether the whole parcel of the relevant Land made up of various lots was used primarily for keeping of bees or just the Land where the beehives were physically located. The Respondent's case was that the only land used for keeping of bees was the location of the actual beehives, which Mr Rider submitted was approximately about 0.4% of the total area of the Land. The Applicant on the other hand had submitted that on the evidence, in particular of Dr Somerville, the whole land was used for beekeeping in the year under review. 36 The factual background is quite unusual. The Land was purchased by the Applicant in 1979 for the purpose of building a caravan park on one of the lots and "if successful" to build a village and recreational type of accommodation on the rest of the land. It seems that the Applicant failed to get the necessary approval for development for the initial plan and a number of subsequent proposals, including one made in 1995 to create an artificial waterway with residential subdivision and a tourist hotel. Land has remained unoccupied and no development has occurred on the Land. 37 Some effort was made to use part of the land for cattle grazing but with little success. The only activity that has occurred on the land is the current claim that the land has been used for beekeeping since 1996. In a telephone conversation in January 2005 with the Respondent's officers, the beekeeper indicated that between September 2002 and January 2005 there were 5 beehives located on the property. But the evidence in respect of subsequent years indicate that an average of 100 to 150 beehives are placed on the property from March to September of each year. The beekeeper has no commercial written agreement with the Applicant and pays Mr Beveridge a director of the Applicant $20 to $40 "here and there any time he sees him" and also occasionally gives him some jars of honey. The property was, in the 2005 land tax year, valued at $5m. 38 The LTM Act sets out the relevant exemption in rather general terms and, to determine if the exemption applies in this matter, it is necessary to understand the scope of the expression "land used primarily for" in relation to the claimed activity of keeping of bees thereon. It is necessary to examine the various decisions that have considered the exemption to determine the principles that need to be applied to establish that the Land was used primarily for keeping of bees thereon. 39 In Christie it was held that the question is one of fact and degree and that "use" has regard to the purpose to which the whole land is put. Similarly, in Sonter in considering whether the land was used for primary production, Rath J held that - "There is no particular touchstone that can be used; all circumstances bearing on the degree, extent and intensity of the uses as land are to be considered. The question is one of fact and degree, and one to be approached on a broad commonsense basis." 40 Further in Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7 ATR 278 at p 280, in rejecting a claim for exemption as land used for primary production, Helsham CJ observed that - "To claim an exemption under the Act the owner must be able to point to an activity being conducted on the land that will give the land the character of being mainly used for that activity, or that will enable a person having to decide the matter to say that the land is, in substance and looked at as a whole, being used for an activity that gives rise to an exemption." 41 His Honour went on in Greenville to say - "I do not think the question: what is the main use of the land, is to be answered by pointing to the only activity on the land. An activity going on on the land does not necessarily characterize the use of the land taken as a whole, so that one can say the land is used primarily for that activity. That is evidently a correct proposition if there is more than one activity going on on the land; it does not cease to be correct where portion of the land is not being put to any use. It may follow that one activity being conducted on land means that the land is used primarily for that activity; but it does not necessarily follow. And for the plaintiff to succeed here it must necessarily follow." 42 In considering whether land awaiting development that had previously been used for primary production and in the years in dispute used on a small scale for agistment, Roden J in Saville & Ors v Commissioner of Land Tax (NSW) 81 ATC 4373 at p 4377 examined the meaning of the expression "land used primarily for" and expressed the following opinion: "Consideration was given in argument to the question whether it is appropriate only to uses to which the land is put and to determine primacy among those uses, or whether non-use is a relevant consideration so that land use for one purpose only may still properly be regarded as not being land use primarily for that purpose. Strictly and grammatically, it would appear that the first of those interpretations is available. It would, however, lead to some absurd conclusions. It does not accord with interpretation that have been placed upon the Act in the past, and , as I understand it, ultimately at least, neither counsel contended for that interpretation. I am of the view that, for any use of the land to justify the statement that the land is used primarily for that purpose, it is necessary not only that that use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land." 43 His Honour also considered the relevance of intention with regard to use of land and said: "Basically, what is to be determined is the actual use of the land, and this of course may be quite different from any intention that the owners may have as to its later or ultimate use, or indeed any wish that the owners might have as to its use at that particular time." 44 In Longford Investments Pty. Ltd v Chief Commissioner of Land Tax (NSW) 78 ATC 4264 some 69 acres had been acquired by the taxpayer, and in the tax year in dispute 12 acres comprised rain forest, about 2 acres were under cultivation for the purposes of growing passionfruit and citrus, a further ½ acre was occupied by a cottage and packing sheds, 20 acres of cleared land and with about 27 acres awaiting to be cleared for cultivation. Sheppard J first sought to explain that the enquiry as to the use of the land should not be confined to just what occurred on the 31 December of the relevant land tax year but to some months prior to that date and to some months after that date into the new land tax year. In rejecting the claim for exemption, Sheppard J said: "Notwithstanding the fact that about one-third of the property could not be put to direct use because it comprised the rain forest to which I have referred, the use to which the property was being put during what I may describe as the relevant period was, so far as primary production was concerned, minimal, two acres or thereabouts being devoted to the cultivation of land for the production of citrus and passionfruit and further half acre for the ancillary purposes of a cottage and packing shed. It is right to say that the land was used for the cultivation thereof for the purpose of selling the produce of such cultivation; but was that its primary use? The fact that there was no use of the remaining land does not, in my opinion, mean that I must answer that question favourably to the plaintiff. That was the view of Helsham C.J. in Eq. in Greenville . … Having weighed the various factors that I believe to be relevant I have reached the conclusion that whilst the use ought not to be described as merely colourable or insignificant, I cannot be satisfied that at the relevant time the land was being used primarily for any of the purposes referred to in the definition. In the result I have reached the conclusion that the plaintiff's appeal must fail." 45 Some reliance was placed by the Applicant on the decision in Shanahan & Anor. v Chief Commissioner of Land Tax 96 ATC 4320. In that case a dentist who had an interest with others in properties which were used to graze beef cattle for sale had used his own property in Baulkham Hills for a number of years for the purpose of staging prior to the sale of the cattle. But in the year in question the taxpayer had ceased to have any interest in the other properties and only a few cattle belonging to him were on the Baulkham Hills property and suffered a net loss on his grazing activities. In rejecting the Commissioner's submission that as the land was not on the relevant 31 December being used profitably for primary production, the land was outside the exemption provision, Newman J at p 4323 said: "The fact that the activities being carried on did not result in a profit did not take the land out of the exemption created by s10(1)(p) of the Act. If the purpose of the land use is for the gleaning of profit, then the fact that no profit is forthcoming does not appear to me to remove the land from the exemption. What is important is that the purpose of land use is for profit. On the contrary if animals were being grazed not for any profitable purpose, but merely to create a situation where a claim could be made that the land fell under the exemption created by s 10(1)(p)(i) of the Act, then such a claim should fail. However, it is not suggested that such a situation was present here." 46 His Honour also rejected a further argument by the Commissioner that the activity on the land was merely agistment and did not satisfy the primary production exemption but importantly observed that - " In this regard it was submitted that agistment involves merely the grazing of animals brought from without a subject property for the purposes of allowing such animals to graze. For instance if a property owner used his land solely for the purpose of allowing other person's animals to come into the land to graze ultimately being removed by their owners for the purposes of sale by them such land would not fall within the exemption created by s 10(1)(p)." 47 By way of summary, the above cases provide the following guidance when conducting the necessary enquiry to determine the question whether a particular land was used primarily for primary production: · The question is one of fact and degree and it is necessary to consider the land as a whole and the question must be approached on a broad commonsense basis. (Christie, Sonter and Greenville) · An activity going on on the land does not necessarily characterize the use of the land taken as whole, so that one can say the land is used primarily for that activity. (Greenville) · The inquiry is an objective inquiry as to the actual land use and not as to the intention of the owner. (Greenville) · For any use of the land to justify the statement that the land is used primarily for that purpose, it is necessary not only that the use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land. (Saville) · The enquiry must involve looking at events not just on the relevant 31 December but also for a short period prior to that date and a similar period subsequent to that date. (Longford Investments Pty Ltd) · In determining primary use, any substantial part of the property that cannot be put to direct use is to be taken into account against the part of the land used for primary production. (Longford Investments Pty Ltd) · Where an activity is being carried on the land not for a profitable purpose, but merely to make a claim that the land fell under the exemption created by s 10(1)(p)(i) of the LTM Act, then such a claim should fail. (Shanahan) 48 The basic evidence in this matter was that in the 2005 land tax year there were some beehives on the Land. It is not clear what the exact number of beehives were on the Land on 31 December 2004 or some months before and after that date. The Respondent's audit inspection found 60 beehives on 8 August 2005. In a telephone conversation made by the Respondent's officers with the beekeeper, the beekeeper indicated that between September 2002 and January 2005 there were only 5 beehives located on the Land. 49 The beekeeper's evidence on the actual number in the relevant year was quite "hazy" and his memory quite selective. He agreed in cross examination that there might have been the number of beehives as recorded by the Respondent's officers in their audit report after a conversation with him as he usually kept most of his beehives on the Tablelands at that time of the year. 50 The onus was under s 100(3) of the Taxation Administration Act 1996 (NSW) on the Applicant to prove its case in these proceedings. 51 In his statement that was tendered as evidence, the beekeeper said that: "The intensity of the use of the land is determined by the season and this is the same in all commercial bee keeping business. In winter, I generally place between 100 to 120 hives on the Land and during spring and summer the number of hives placed on the Land is substantially less, usually around 20 hives. At times, I will have up to 200 hives and nucleus hives on the site. Depending upon the availability of floral and nectar resources, these usual numbers might change from year to year." 52 That was a fairly general statement and it did not established to the satisfaction of the Tribunal the number of beehives on the Land in the land tax year under review. However, there was no challenge by the Applicant, to the Respondent's estimate of land occupied by the beekeeper to keep his beehives. That was no more than 0.4% of the total acreage of the Land. There was also no dispute that almost half of the Land was not being used, that almost 30% of the Land was being used as a borrow pit and about 13% as an open drain. 53 The Land was purchased for development and several applications have been made to get approval for development. The land is clearly awaiting development approval. The Applicant's Land was estimated by the Respondent, to be worth almost $5m in the year in dispute. 54 The beekeeper is on the property almost gratis, paying a very small amount of money, "$20 - $40 here and there" with the occasional jar or jars of honey in respect of the Land that is worth $5m. Economic return is not critical in the case of an owner carrying on a bona fide business of primary production for profit. But it is an important factor that should be taken into account as was suggested by Newman J in Shanahan where the activity is created for the dominant reason to get the benefit of the exemption. 55 Although it was not suggested by the Respondent that the beekeeping activity was "merely colourable", it is difficult to avoid asking the question why the Applicant for no economic return from the beekeeper should allow the activity. The only commonsense reason for allowing the activity was the prospect of getting the exemption under the LTM Act. 56 His Honour, also in Shanahan, made an important observation, that allowing other person's animals on the land of an owner merely for agistment would not satisfy the test that the land was being used for primary production business. Here, the beehives were placed on the Land for short periods, in particular the cold months whilst the honey was actually made on the Tablelands. It was argued by Mr Rider for the Respondent that the activity was very much like the agistment his Honour referred to in Shanahan. I agree with that submission. 57 On the guidance provided by the cases, it is not difficult on the facts of this matter to conclude that the Land was not used primarily for primary production, in the relevant land tax year. 58 That conclusion is enough to dispose of the application; but there was however a "twist" in this matter. The Applicant's case was that the Tribunal should not determine the use of the land by just focusing on the 0.4% land on which the beehives were physically placed. The Tribunal should, it was submitted by Mr Fraser for the Applicant that on the evidence of Dr Somerville, rule that the whole land was used by the beekeeper. 59 Unlike cultivation of produce or maintenance of animals, bees travel to uncharted areas for the necessary nectar and/or pollen beyond the control of the beekeeper. It was submitted by the Applicant that because the bees have that potential and as there was the floral species for the nectar and pollen within flying distance of the property, the whole property should be treated as land used primarily for the keeping of bees thereon for the purpose of selling their honey. 60 The principal evidence given on behalf of the Applicant was given by Dr Somerville, a honey bees technical specialist employed by the New South Wales Department of Primary Industries. He said that there were "floral species of significant value within flying distance of the property" but conceded that there "is no simple mathematical formula for determining the amount of land required for a certain number of hives". He went to say that the "location of the apiary on the site is ideal, providing the maximum possible buffer between the beehives and residential properties" and that in his opinion, it was not "appropriate to examine that area used by the site for bee keeping merely in terms of the area where hives are physically located". He concluded that the whole of the Land was suitable for bee keeping. 61 Dr Somerville's expert evidence provided useful guidance at to the ideal conditions necessary to locate beehives but unfortunately it was of little assistance in determining the issue before the Tribunal in terms of the exemption sought by the Applicant for the tax year in question. 62 The LTM Act exemption is confined to the land used primarily for keeping the bees thereon for the purpose of selling their honey. In determining the scope of this exemption, it is necessary to note that the other exemptions set out in s 3(1) of the LTM Act relate to human activity involving control by the owners of the land in respect of cultivation of produce or maintenance of animals or commercial fishing or commercial plant nurseries or the propagation of mushrooms, orchids or flowers. 63 In relation to "keeping of bees", it was suggested that the exemption extends to the whole land that bees may travel to seek nectar or pollen or water to drink. However, the total area of land "covered" by the bees cannot be determined with any precision as indicated by Dr Somerville. His evidence was that the whole of the subject Land is not too large an area for beekeeping purposes. But no evidence was produced to show that the bees from the beehives on the property in the year under review travelled to the various other areas of the Land from the beehives. The Tribunal was asked literally to use its imagination on the basis of Dr Somerville's expert evidence and take the view that the bees were everywhere on the Land in the 2005 land tax year. 64 The exemption deals with "keeping of bees thereon". I think the word "keeping" restricts the scope of the exemption. It is not defined in the LTM Act. But as submitted by Mr Rider, some assistance is available from the definition of the term "keep" in the Apiaries Act. It is defined in that Act to include "have possession of and control of". Bees are kept in beehives with the beekeeper having the possession and control of the bees. The enquiry should in those circumstances be directed to the land physically used for keeping of the beehives. That interpretation would be consistent with the requirement of human control in relation to the other exemptions. 65 The exemption also speaks of the keeping of the bees, "thereon". It is difficult to regard bees in the territory outside the hives as keeping of bees "thereon". The suggested interpretation by the Applicant would create difficulties for the Respondent to determine the actual area to extend the exemption. 66 The Tribunal also notes that, as submitted by Mr Rider, only the "forager" bees leave the beehives to collect pollen or nectar or to drink water. The "forager" bees collect and deliver nectar to the indoor bees, which are the only bees that make the honey. This adds further support to the view that the exemption only extends to the land on which the beehives are physically located, being the land where the production of honey takes place. 67 There is also further support that only 0.4% of the Land is actually used for keeping of bees thereon when the activity of the "forager" bees is fully examined. The movement of the bees occurs to collect pollen or nectar or to drink water. The pollen and nectar is collected from various floral species found on the Land. The floral species are growing naturally and have not been cultivated by the beekeeper on the land for the precise purpose of pollen or nectar for his bees. In that context, it is difficult to say that the land on which the floral species is found is used for the keeping of bees. The nature of the unused land would not change simply because some bees have collected nectar or pollen from floral species growing on the unused land. There was also an indication that the bees could use the floral on the adjoining golf course and native reserve. 68 For all the above reasons I am not satisfied that the whole of the Land, that is the whole of the Land of 30 hectares comprised in Lot 1, Lot 2, Lot 4 and Lot 110, was used primarily for the keeping the bees thereon for the purpose of selling their honey. The Tribunal accordingly rejects the Applicant's submissions on the principal issue. 69 However, I also need to consider the alternative submission made by the Applicant that, on the facts of this case, the Land "falls within the intended ambit of land unsuitable for the erection of a building because it is liable to flooding" and that the Tribunal ought to "allow the s.6 concession" found in the LT Act. 70 In the land tax year, s 6 of the LT Act was in the following terms: "6 Land tax liability in respect of flood liable land (1) In this section council , in relation to any land, means the council of the area, within the meaning of the Local Government Act 1993 , in which the land is situated. Flood liable land means which is unoccupied and which has been determined, by the council, to be (or which is, in the opinion of the Chief Commissioner) unsuitable for the erection of a building because it is liable to flooding. (2) Notwithstanding any other provisions of this Act or the provisions of any other Act, where a person is the owner of 2 or more parcels of land, one or more of which is flood liable land, the amount of land tax payable by the person shall, in respect only of such land as is flood liable land, be: (a) calculated separately in respect of each parcel of that land that is not exempt from taxation, and (b) so calculated in the case of each parcel as if it were the only land owned by that person." 71 It should be noted that s 6 of the LT Act does not provide an "exemption" from land tax. It allows land tax to be calculated separately in respect of each parcel of a taxpayer's flood liable land. If s 6 applies, it would only reduce the land tax payable and does not operate as an exemption. 72 Section 6 only operates in respect of any unoccupied land that has been determined, by the relevant council "to be (or which is, in the opinion of the Chief Commissioner) unsuitable for the erection of a building because it is liable to flooding". 73 Reliance was place by the Applicant on the evidence given by Mr Anderson, a former senior development control planner with the Tweed Shire Council. It was submitted that because of his employment with the Council "his opinion on what determination the Council would make is significant". His analysis it was submitted was "that such a proportion of each lot is flood liable that each lot could not be occupied by a building or dwelling" and that the Respondent should "come to the same opinion" under s 6 of the LT Act. 74 Mr Anderson's evidence was that parts of Lots 2, 110 and 4 were "flood prone" and that these parts were "not suitable for the erection of a building, particularly a residential building" in their "present state". In respect of Lot 1, he identified various constraints making the Lot "unsuitable for the erection of a building". These included the physical shape of the Lot, being "landlocked", 50% of the Lot is subject to an environmental protection order, is bush fire prone and "fill would be required to achieve a flood free building site" on the Lot. 75 In addition to Mr Anderson's evidence, reliance was also placed on additional evidence "filed consisting of the following: · Letter from Council 17 January 2008: identifying that Lot 1 DP781520 and Lot 2 DP1060215 are entirely "flood liable" as the Council defines those terms meaning an area of land which is subject to inundation by floods. In respect of Lot 4 DP228424 and Lot 110 DP1019833 the Council has advised that the majority of those are flood liable. · Further s. 149 Certificates: Each of the parcels is identified as flood liable in each of the s.149 Certificates now available for all parcels." 76 It was submitted by Mr Rider that Mr Anderson's evidence only suggested "that none of the Lots are suitable for the erection of a building, particularly a residential building, in their present state" and his evidence "recognises that buildings can be erected on Lot 1 without consent and that parts of Lots 2, 4 and 110 are suitable for the erection of a building". I agree with that submission. 77 Some capital work to fill parts of the various Lots that are subject to some flooding may be necessary for the erection of buildings on those parts. The fact that the Land was purchased for development and various proposals for development have been made by the Applicant would suggest that the land is suitable for the erection of buildings. Mr Anderson's evidence also confirms that the Land is suitable for the erection of buildings. 78 In relation to the additional evidence from the Council, the Respondent submitted it does not establish that the Council has made any determination that the Land is unsuitable for the erection of a building because it is liable to flooding and that the Council in its letter of 17 January 2008 has merely drawn the attention of the Applicant that "development of all subject allotments is permissible with consent of Council" and that "flooding is a constraint to development, but does not necessarily preclude the erection of a building." I agree that no determination has been made by the Council as required by s 6(1) of the LT Act in respect of any part of the Land 79 On the evidence the Applicant has also failed to establish that the Land was "flood liable land" in terms of s 6 (1). The Applicant is accordingly also not eligible for the concessional calculation of land tax under s 6(2) of the LT Act. Order The objection decision made by the Respondent is affirmed.