Civil and Administrative Tribunal New South Wales Medium Neutral Citation: McCabe v Chief Commissioner of State Revenue [2019] NSWCATOD 33 Hearing dates: 6 February 2019 Date of orders: 25 February 2019 Decision date: 25 February 2019 Jurisdiction: Occupational Division Before: Emeritus Prof G D Walker, Senior Member Decision: Decision under review affirmed. Catchwords: REVENUE – land tax – primary production exemption – dominant use of land – whether unfenced rural land could be used for the dominant purpose of grazing. Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Land tax Management Act 1956 (NSW) Taxation Administration Act 1996 (NSW). Cases Cited: Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11; Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184; Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366, (2011) 85 ATR 775; Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 23; Saville v Commissioner of Land Tax (1980) 12 ATR 7; Southern Estates Pty Ltd v FCT (1967) 117 CLR 481; Teebee Holdings Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 338; Thomason v Chief Executive, Department of Lands (1994 – 1995) 15 QLCR 286. Category: Principal judgment Parties: Leo E D McCabe (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: S T Richardson (Respondent) Solicitors: L E D McCabe (Self Represented)(Applicant) Crown Solicitor's Office (Respondent) File Number(s): 2018/00208447 Publication restriction: Nil reasons for decision 1. The applicant Mr Leo E D McCabe applied to this tribunal on 3 July 2018 for review of the respondent's land tax assessments for land tax years 2017 and 2018 in relation to two parcels of land identified by the property identification numbers PID 3158080 and PID 3910634 located at Kurrajong, New South Wales. The assessment notices were dated 27 February 2018 (exhibit R1, pp 60-68, pp 82-88). The applicant and his wife Mrs M M McCabe (as well as a company) own several adjacent lots and the applicant holds a principal place of residence exemption in respect of certain lots. The proceedings relate to Lot 10 and Lot 11 in DP 270280. 2. There is no dispute about the ownership of the land and the identity of the taxpayer, assuming that land tax is in fact payable. The ownership of lots 10 and 11 has, however, undergone a number of changes which should be briefly noted. Lot 10 is owned as follows: * The part formerly in 13/613296 is owned by a company, Tennisport Pty Ltd; * The part formerly in 1/255340 is owned by Mr McCabe; * The part formerly in 2/255340 is owned by Mr McCabe and Mrs McCabe as joint tenants. 1. Lot 11 is owned as follows: * The part formerly in 1/255340 is owned by Mr McCabe; * The part formerly in 2/255340 is owned by Mr McCabe and Mrs McCabe as joint tenants. 1. The Valuer-General's register describes the land in PID 3158080 as comprising part of Lot 10 and part of Lot 11. The same description applies to PID 3910634. The land in PID 3158080 is owned 100 percent by Mr McCabe, while that in PID 3910634 is owned 100 percent by Mr McCabe and Mrs McCabe. There is a small part of Lot 10, which was formerly in 13/613296, which is owned by Tennisport Pty Ltd. It amounts to only .014 hectares in area and is irrelevant to these proceedings. 2. After the land tax assessment notices were issued on 27 February 2018, Mr McCabe lodged an objection on 24 April 2018, in which he stated that "The dominant use of this land is in fact Grazing/Livestock, this is the dominant use of this land today and has been the only use of this land" (exhibit R1, p 91). On 8 May 2018, the respondent disallowed the objection. Referring to aerial imagery of the relevant land, the decision-maker, having considered PIDs 3158080 and 3910634, determined that, "Based on the aerial imagery above it is determined that the dominant use of the land as [sic] vacant or unused land". He pointed out that when lot 7 DP 270280 was sold, lots 10 and 11 no longer had a connexion with Lot 5 and Lot 6 DP 270280, which had been granted a primary production land exemption. "For the objected years the lands are not considered to be exempt as primary production land. The objection is disallowed accordingly" (exhibit R1, p 101). Applicable legislation 1. Under ss 7, 8 and 9 of the Land Tax Management Act 1956 (LTM Act), land tax is chargeable on the taxable value of property, in this case for the 2017 and 2018 land tax years, on the basis of the ownership of the property in question at midnight on 31 December 2016 in respect of the land tax year (in effect calendar year) 2017, and 31 December 2017 in respect of land tax year 2018, pursuant to s 8 of the LTM Act. It is not disputed that on each of the assessment dates, the ownership of the property was as stated above. 2. The primary production exemption from land tax is contained in s 10AA of the LTM Act: 10AA Exemption for land used for primary production (1) Land that is rural land is exempt from taxation if it is land used for primary production. (2) Land that is not rural land is exempt from taxation if it is land used for primary production and that use of the land: (a) has a significant and substantial commercial purpose or character, and (b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made). (3) For the purposes of this section, land used for primary production means land the dominant use of which is for: (a) cultivation, for the purpose of selling the produce of the cultivation, or (b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, or (c) commercial fishing (including preparation for that fishing and the storage or preparation of fish or fishing gear) or the commercial farming of fish, molluscs, crustaceans or other aquatic animals, or (d) the keeping of bees, for the purpose of selling their honey, or (e) a commercial plant nursery, but not a nursery at which the principal cultivation is the maintenance of plants pending their sale to the general public, or (f) the propagation for sale of mushrooms, orchids or flowers. (4) For the purposes of this section, land is rural land if: (a) the land is zoned rural, rural residential, non-urban or large lot residential under a planning instrument, or (b) the land has another zoning under a planning instrument, and the zone is a type of rural zone under the standard instrument prescribed under section 33A (1) of the Environmental Planning and Assessment Act 1979, or (c) the land is not within a zone under a planning instrument but the Chief Commissioner is satisfied the land is rural land. 1. It is also not disputed that the land is rural land within the meaning of s 10AA(4)(b) of the LTM Act. The lands each have a zoning as Rural Small Holdings, and that zone is a type of rural zone under the standard instrument prescribed under s 33A(1) of the Environmental Planning and Assessment Act 1979 read together with cl 1.2(1) of the Standard Instrument – Principal Local Environmental Plan, which was made pursuant to s 33A, and cll 2 and 9(2) of the Standard Instrument (Local Environmental Plans) Order 2006. 2. The issue in the present proceedings is whether, in respect of the land tax years 2017 and 2018, the land in PID 3158080 and PID 3910634, consisting partly of lots 10 and 11, is exempt from land tax by operation of the exemption for land used for primary production under s 10AA of the LTM Act. Respondent's evidence 1. As the applicant was not legally represented at the hearing, the parties agreed that it would be more convenient for the respondent to present his case first. 2. The respondent called Mr Simon Winter, an agricultural consultant, who had prepared an expert's report dated 7 December 2018 (exhibit R6) dealing with the suitability of the land for cattle grazing, considering the quality and type of grass, any fencing or lack of it and the topography of the land, as well as whether or not cattle could be moved from lots 5 and 6 along the common property road to enter the subject land in order to graze, considering the distance cattle would be required to cover and the topography of the land to be travelled by the cattle. If he were of the view that cattle could be so moved, he was to comment on how that might be done. 3. The report concluded that while the land itself would be amenable to cattle grazing, it was clear that cattle would not able to be grazed on the subject land during the relevant tax years, as there was insufficient infrastructure on the land to retain the cattle, because of a lack of fencing. The lack of fencing could be seen on the Nearmap images in appendix 3 to the report and was confirmed by the applicant. As the land is bordered on the western side by a public road and the south side by a common property road that is also used by the public, good quality fencing would be needed to prevent cattle from accessing those roads. 4. If no fencing was in place on the western and southern sides during the relevant tax years, the report said, the land could not be used for grazing, even though the land itself would be suitable. That was because the cattle would pose a real threat to the public, such as of people being injured by cattle wandering into the path of a car, causing accidents, and the public would also pose a real threat to the cattle, such as by cattle being injured or killed from being hit by a vehicle. 5. The unsuitability of the land for grazing at the relevant time was reinforced by the fact that the land had regularly been slashed. That indicated that the grasses continued to be productive, but unchecked growth would create problems such as overgrown land and weed infestation. Regular slashing would, however, be considered wasteful from a grazing perspective, as it would be effectively cutting down a resource rather than using it for grazing. 6. In relation to moving cattle to or from the disputed land, Mr Winter's report noted that there were currently no yards or loading ramps on the land, so cattle could not be loaded or unloaded using trucks. Cattle could be quite readily moved from lots 5 and 6 to the subject land by walking them along the common property road, which is a very short distance. Nevertheless, walking the cattle along the common property road would require some preparation and sufficient resources to obtain the permission of all tenants of the common road for that purpose, ensure that existing fences along the road were intact before moving the cattle, make sure all gates were shut before moving the cattle, block existing roads and lanes so that the cattle did not go in the wrong direction and direct the cattle on to the subject land and prevent them from entering the public road. 7. In his oral evidence at the hearing, Mr Winter adopted his affidavit of 9 December 2018 (which annexes the report). Asked about his statement that the applicant had "confirmed" the lack of fencing, he explained that he had visited the property on 22 November 2018 and met the applicant there. They looked at the land and discussed the lack of fences on the western and southern sides. Mr McCabe said that there had been no fences on the main thoroughfare (C**** Road) for many years. He gained the clear impression that the period during which there had been no fences was greater than the period in issue, as he and Mrs McCabe had owned the land for many years. 8. In cross-examination, the applicant put it to the witness that the south side of the property borders an access route to a subdivision, which is a private road, not a public one. The witness agreed that it was not a public road but said the public could access it. Asked if the land was suitable for primary production, the witness replied that it was not suitable in its current state because of the lack of fencing. Other nearby lots that were not in dispute had wire fencing, some of it electric. The sale of Lot 7 had removed the previous ready access from lots 10 and 11 to lots 5 and 6. The land itself was suitable and well maintained, but without fences it was not suitable for grazing. In addition, there was a concern about the difficulty of moving cattle between the two areas, as suitable fences would be needed and all gates would have to be kept shut. The applicant put it to the witness that the cattle would only need to move 200 m, and the other properties in the area were well fenced. The witness replied that some of the lot 9 fencing was rotting and could therefore fall over, and there were two lanes running off C**** Road that would need to be blocked off, otherwise cattle could run onto the road. 9. In re-examination Mr Winter said that regular slashing would be wasteful, but it did minimize overgrowth and the spread of weeds. In that respect the land was well maintained, but slashing was wasteful. 10. The respondent also relied on the s 58 documents (exhibit R1) and other documentary material. Applicant's evidence 1. The applicant adopted his written statement dated 1 October 2018 in which inter alia he disputed the respondent's classification of the property as vacant or unused land. He stated that he is a primary producer and the dominant, and indeed only, use of the land and all the rural holdings was primary production. He and his wife had carried on a primary production business at the property on C**** Road, Kurrajong, since 1989. 2. On 4 September 1980 they purchased 46 acres, which was part of an original dairy farm of 80 acres. That was now known as lots 5 and 6 DP 270280, and Lot 15 DP 1014091. On 13 January 1989 they purchased an additional adjoining rural property of 34 acres, which was the balance of the original dairy farm. That was now known as lots 3, 12 and 13 DP 270280. On 26 November 1992 they purchased 2/255340, an adjoining rural property of 14.5 acres. Part of that land was now known as Lot 10 DP 270280, which is part of the land in question. On 17 June 1994 they purchased 1/255340, which was also adjoining rural land amounting to 12 acres, which on two sides are joined the land already owned. Part of that land is now known as Lot 11 DP 270280, and is also part of the land in question. On 4 March 1998 they purchased 13/613296, also an adjoining rural property of 13.5 acres. That land also adjoined on two sides land already owned and is now known as lots 2, 7 and PT 10 DP 270280. 3. In summary, from March 1998 they had a rural landholding of 120 acres for their primary production operation. By June 1994 they held 106.5 acres, which includes the land in question. Further, as far back as January 1989, they had rural landholdings of 80 acres, using the original dairy farm land for their primary production operation. 4. The applicant said that the photographs provided by the respondent showed that the land in question was anything but "vacant and unused". It is cleared, managed and cultivated pastureland of mainly Kikuyu grass, specifically for cattle grazing. The land is well-managed rural land used in their primary production operation. It is constantly maintained, cleared, cultivated and slashed on a regular basis for that purpose. 5. The perimeter fencing is in the process of being replaced but the work has been delayed because of financial and medical factors. The respondent was of the view that Lot 7 had been subdivided in 2016 and had been sold in that year. That was incorrect. 6. In oral evidence in chief at the hearing the applicant added that in addition to his primary production, he was the managing director of two other family businesses. His grazing activities were a simple primary production operation that he had been conducting for 30 years. Lots 10 and 11 were bigger when they were purchased in 1992 and 1994 respectively. For 22 and 24 years respectively, lots 10 and 11 were land tax exempt on the ground of primary production. 7. He had learned of the change in their classification only when he received a land tax notice. He thought there must be an error, as he would have expected to receive prior notice. The certificate under s 47 of the LTM Act dated 30 June 2016 (exhibit A2), issued when Lot 7 had been sold, showed that part of the property to be land tax exempt. Having been sold, it was now nothing to do with the applicant, nor were lots 8 or 9 owned by the family. 8. In cross-examination he noted that the house on lot 5 had been his residence for 40 years. He agreed that the sale of Lot 7 in 2016 had severed the link between Lot 6 and lots 10 and 11 and that there was no fence between those two lots and the road. That could be seen from exhibit R6, appendix 3. The far south-western corner of Lot 6 had fencing all along the western and southern boundaries, which was heavier in the corners. 9. The ground-level photographs (exhibit R7) had been taken in the course of a site visit in October 2018 and showed that there was no fencing between lot 11 and the main road and the common property. The applicant said the situation was still unchanged, but the land had been marked out for fencing, and it will be done. The situation shown in the exhibit R7 photographs was the same as it had been in 2016 and before. But ever since they had purchased the land, grazing had been the dominant, indeed the only, use to which it was put. 10. The applicant agreed that although the land in question was only used for grazing, it could not be used for that purpose while there was no fencing. He had not installed temporary fencing such as 4-strand electric fencing, because he did not want to create a risk that cattle would stray. In hindsight he thought it would have been better to do so, as he would not be here (in the tribunal) if he had done so. The two lots were suitable for grazing when they were fenced, however, and the land was still the same. 11. Mr McCabe acknowledged that there had been no cattle on the property since 2015 or 2016, but stressed that the land had been maintained. Asked about the profit and loss statements for the business for the years ended 30 June 2016, 2017 and 2018 (exhibit A4), the applicant agreed that there were no expenses listed specifically in relation to lots 10 or 11, but said he would not expect that, as the statements related to the whole trading entity, and included repairs and maintenance in relation to all lots. The figures were not specific and could relate to the tractor, the slasher or anything. They were only small figures. The expenditure for moving cattle would be nil. The accounts were never intended to be segmented in relation to separate blocks but related to the properties overall. He could not break down the figures. 12. Mr Richardson then put it to the witness that there was no evidence in relation to the frequency of moving cattle. Mr McCabe agreed, pointing out that there could not be frequent moving when there were no fences. He could not safely move cattle in those circumstances and had not done so. 13. By way of re-examination the applicant said that he had been at the property for 40 years, almost, since September 1980. Nothing had changed in relation to lots 10 and 11, except that their size was changed relatively to the subdivision. As those lots had been exempt from 1992 and 1994 respectively he believed that the change had come about because of a misunderstanding about a supposed subdivision in 2016 14. The applicant agreed that the lots were unfenced, but that was because the fences needed replacing and he was in the process of replacing them. But the work had not proceeded for financial reasons and because his helper had an injured shoulder. It is not possible to do fencing with a bad shoulder. He would like to know what are the guidelines for grazing, such as whether animals were needed, and if so how many. Many properties did not have cattle. He had kept the land fit for grazing. Applicant's submissions 1. Mr McCabe said he had no doubt that the property was properly categorized as rural land. He had kept the business activity on the land continuing on a limited scale while repairs were carried out, namely the replacement of the fencing. Meanwhile he had been keeping the land in prime grazing condition. It was not clear to him how many cattle were required in order to qualify as primary production. He had not been comfortable with installing electric fencing because he was not sure that it would keep the cattle in and prevent them from straying. It was not fair that he had lost his exemption when he had been keeping the land fit for its dominant purpose. He did not see why he should be disadvantaged. He had been operating the property for 30 years, but the fences had deteriorated and needed renewing. At present there were no cattle on the land, but when the fences were replaced, there would be. Consideration 1. This tribunal has jurisdiction to hear the present application for review by reason of s 96(1) of the Taxation Administration Act 1996 (TA Act), which provides as follows: 96 Review by Civil and Administrative Tribunal (1) A taxpayer may apply to the Civil and Administrative Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision of the Chief Commissioner that has been the subject of an objection under Division 1 if: (a) the taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection, or (b) 90 days (not including any period of suspension under section 92) have passed since the taxpayer's objection was served on the Chief Commissioner and the Chief Commissioner has not determined the objection. 1. Under s 63 of the Administrative Decisions Review Act 1997(ADR Act), the tribunal's role is to determine whether, having regard to the underlying facts in the matter and the applicable law, the Commissioner's decision is the correct and preferable one. The tribunal is to review the merits of the original decision and is required to consider the evidence available at that time, together with any other or later material, so as to affirm the original decision, vary it or set it aside: Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, 77. 2. As the Court of Appeal explained in Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184, [12] – [14], the statutory scheme creating the liability of a landowner to land tax is structured as a two-part statutory scheme. The relevant taxing act is the LTM Act, while procedures applicable to a variety of State taxing acts are provided in the TA Act. 3. Mr McCabe evidently seeks to qualify for the exemption under s 10AA(3)(b), which deals with land the dominant use of which is for "the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce". 4. As regards what might constitute a "use", the Court of Appeal in Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11, (2017) 105 ATR 11 had this to say: In summary, I am of the opinion that the concept of "use" relevant to s 10AA as a whole (and s 10AA(3) in particular) – a concept in which the preposition "for" plays a central role – is one of physical deployment of Isaacs J's "concrete physical mass" [22] in pursuance of a particular purpose of obtaining present benefit or advantage from it, with deployment understood as including not only activity but also inactivity deliberately adopted as a means of obtaining such actual and present advantage from the land; and with purpose understood as objectively ascertained purpose. There is no requirement that immediate productive return be achieved, as long as some benefit or advantage accrues. In a s 10AA(3) case, each "use" considered in the search for "dominant use" must be of the character I have described. Otherwise, the necessary process of comparison cannot sensibly be undertaken. The contentions of Metricon in that respect should be accepted. 1. As it is common ground that the property in question was at all relevant times categorized as rural land pursuant to s 10AA(4) of the LTM Act, the applicant would be entitled to the primary production exemption for the 2017 and 2018 tax years if the dominant use of the property as at 31 December 2016 and 2017 was primary production: Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 23, [68]. But inquiry is not limited to the use to which the land is put on the relevant date. It extends to a consideration of its use during a reasonable period before and after the relevant date. In Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867, Gzell J took the view that a period of six months before and after the relevant date was a reasonable period for inquiry: at [4]. 2. His Honour went on to explain that "dominant" in its ordinary meaning connotes ruling, prevailing or most influential. The provision presupposes that land may be used for more than one purpose and requires a determination of which use of the land is the main, chief or paramount use. It is a question of fact and degree that may, in the end, be determined as an objective matter of impression having regard to the facts: at [69] – [70]. 3. His Honour quoted, with approval, the reasons of the Queensland Land Appeal Court in Thomasson v Chief Executive, Department of Lands (1994 – 1995) 15 QLCR 286, 303: In our view the proper approach to be taken when ascertaining the dominant use of land is to consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses of the land, the extent to which the land is used for activities which are incidental to a common business or industry…, the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise one cannot ignore the conclusion that an objective observer might reach from viewing the land as a whole. 1. In Thomason, the court stressed that the land must be "used", that is, it must be applied to, or employed for some purpose, put into service, or turned to account. For land to be "used", it must be actually used, not contemplated or intended to be used, nor be merely suitable for use. Work carried out to prepare land for primary production does not of itself constitute use of the land for primary production: Southern Estates Pty Ltd v FCT (1967) 117 CLR 481, 488. 2. At the same time, it is not necessary that there must be activity on all of the land. As the court also pointed out in Thomason (at [3]), an owner can use land by keeping it in its unimproved state, where retaining it in that state is relevant to a particular purpose. 3. Further clarification was added in Teebee Holdings Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 338, where Hamilton SM explained that: [26] However it is well established that a 'token' use will not suffice. In Greenville Pty Ltd v Commissioner of Land Tax (1977) 7 ATR 278 it was held that the planting of one and a half acres of pumpkins on a parcel of 160 acres (which was formerly a golf course) did not mean that the land was primarily used for cultivation for the purpose of selling the produce of such cultivation. Helsham J said (At 280): "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 the land does not necessarily characterise the use of the land as a whole, so that one can say the land is primarily used for that activity….For in no real sense at all was the land in question here being used at the relevant time primarily for cultivation…If it was a real use, rather than a token or colourable one, as I must assume it was, the degree of use does not in all the circumstances and at the relevant time endow the land comprised in the golf course with the character of being used primarily for growing pumpkins, nor enable me to say that in substance and looked at as a whole the land was being used for this activity." [27] In this case it is question of weighing the facts regarding the relative quantum of uses of the land against any non-use in determining whether the primary production use (cultivation of trees for purpose of sale) is the dominant use. 1. Under s 100(3) of the TA Act, the applicant bears the onus of proving the assertions he or she makes. 2. The applicant pointed out that the two lots in question had been covered by primary production exemptions for over 20 years, and he was clearly of the view that as the land was still the same, the exemption should be treated as still applying in the subject years. One can understand that, as a practical and experienced grazier, the applicant might feel some resentment about the change in classification, but there are no prescriptive rights in this field. Liability to land tax is adjudged on the basis of conditions existing in the individual year being assessed. The applicant also contended that the respondent was mistaken in its references to a subdivision of Lot 7 in 2016. Even if that were so, however, it would not be relevant to the present review. 3. In his statement (exhibit A1), which he adopted in the witness box, the applicant stated that the land in question "is used for primary production" and rejected the respondent's classification of it, declaring that "this land in question is anything but 'Vacant and Unused land' as described. You will note that the land is cleared managed cultivated pastureland of mainly Kikuyu grass specifically for cattle grazing. This land is well-managed rural land used in our primary production operation" and is "constantly maintained, cleared, cultivated and slashed on a regular basis for this purpose. The perimeter fencing is in the process of being replaced. This has been delayed due to financial and medical reasons". 4. There is no doubt that the property is well-managed rural land that is constantly maintained, cleared, cultivated and slashed on a regular basis as the applicant avers. The expert evidence of Mr Winter, however, while accepting that the land itself is suitable for cattle grazing, concludes that it could not be used for that purpose during the relevant tax years: However, in considering any limitations to the disputed land being able to be grazed by cattle… Even though the land itself is suitable land, it is clear that cattle were not able to be grazed on the land in dispute during the Relevant Tax Years as there was insufficient infrastructure on the land to retain the cattle, i.e. due to lack of fencing. This lack of fencing can be seen in the Nearmap images (Appendix 3) and was confirmed by the owner, Mr McCabe. As the disputed land is bordered on the western side by a public road and the southern side by common property road that is also a public road, good quality fencing would be required to prevent cattle from accessing those roads. If no fencing was in place on the western and southern sides of the disputed land during the Relevant Tax Years, the land could not be used for grazing, even though the land itself would be suitable for grazing. This is because the cattle would pose a real threat to the public (e.g. people being injured from cattle wandering into the path of a car causing accidents) and the public would also pose a real threat to the cattle (cattle injured or killed from being hit by a car) [exhibit R6, para 11]. 1. In relation to moving cattle to or from the disputed land, Mr Winter noted the absence of yards or loading ramps to enable cattle to be loaded or unloaded using trucks. He considered that cattle could be quite readily moved from lots 5 and 6 to the disputed land by walking them along the common property road, but that would require resources and preparation, including ensuring that the existing fences along the road were intact. He pointed out that some of the fencing for lot 9 (which is no longer owned by the McCabe family) was rotting and could fall down. 2. In oral evidence Mr Winter said that in conversation with the applicant during his visit to the property on 22 November 2018, Mr McCabe had told him that there had been no fences on the subject land for many years, which he took to mean for a longer period than was in issue in relation to the 2017 and 2018 assessments. 3. Mr McCabe proved to be a frank and honest witness. He stressed that he was running a simple primary production operation and had done so for 30 years. Cattle grazing was the only activity he had ever carried out on the land. Primary production exemptions had been granted in respect of lots 10 and 11 for over 20 years. 4. In cross-examination he acknowledged that the ground-level photographs (exhibit R7) accurately showed that there was no fencing between the subject land and the main road and the common property road. The situation was still unchanged, but the land had been marked out to be fenced and the work would be done. The perimeters referred to had been unfenced since before 2016. 5. When it was put to him that in reality the two lots were unsuitable for grazing because they lacked fences, he replied that they were quite suitable when they were fenced and the land was still the same. He could have put up temporary fencing, but chose not to do so because he thought it would not be effective for keeping the cattle in. He said that there had been no cattle on the property since 2015 or 2016, but the land had been maintained all that time. 6. As regards the feasibility of moving cattle between lots 5 and 6 on the one hand, and lots 10 and 11 on the other, the applicant agreed that there was no evidence to show with what frequency cattle had been moved in that way. He said it could not be frequent when there were no fences. The solution of moving stock along the common property roadway would only work when there was fencing in position. Without fencing, he could not safely move cattle and he had not done so. 7. The factual position is thus quite clear. As at the relevant taxing dates of 31 December 2016 and 31 December 2017, there were no cattle on the subject land. Although the land itself was quite suitable for cattle grazing and had been well maintained for that purpose, it could not be used for that purpose because of the lack of fencing on the western and southern boundaries. The fences that had previously stood on those boundaries had deteriorated and had to be removed. 8. Nor was it possible to move stock from lots 5 and 6 to the subject land through the common property access, again because of the need for fencing, as well as other needed infrastructure and preparations. The applicant had, and has, every intention of replacing them with new fencing, but had been unable to do so because of financial and medical factors. Once that was done, the land could once again be used for primary production. That had been the position before 2016 and it is still the case. 9. The applicant stressed his long-term pastoral activities on the land, his intention to return the land to pastoral production and the preparations he had made such as by marking the boundaries for fence construction. He believes he has been treated unfairly by the loss of his exemption for the two years in question. But as the court in Thomason pointed out, it is not enough that the land is merely suitable for use as livestock pasture. And the Court of Appeal explained in Metricon (at [36]) that "Whether land is being used for primary production within the meaning of the definition must be decided by an objective test – the inquiry is an inquiry into actual land use; it is not to be tested by the intentions of the owner". In other words, "There must be a present use for which the land is being used" (at [32]). Some benefit or advantage had to accrue from its being kept unused (at [22])( see also Thomason at [3]). But there was no advantage in Mr McCabe's keeping the land unused. As Mr Winter said, it was wasteful to be slashing the land and therefore not making use of a resource. 10. Further, that use must be substantial: " [i]t 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": (Saville v Commissioner of Land Tax (1980) 12 ATR 7, 10). 11. There is no doubt about the genuineness of Mr McCabe's intention to fence the subject land and bring it back into production, and he has the expertise to do so. But his case for the exemption is to a considerable extent a subjective one, while the statutory test has been held to be objective. And the objective fact is that there were no cattle on the subject land at the relevant times and the applicant's work in slashing and maintaining the land in good condition did not constitute an actual use of the land for grazing purposes, much less a substantial one. 12. In my view the applicant has not discharged the onus of proving his entitlement to the primary production exemption for the relevant period, and I so find. The decision under review must be affirmed. Order 1. Decision under review affirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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. Decision last updated: 25 February 2019