In brief - Land tax exemption for land used for primary production in New South Wales can apply where land is used independently by different persons, finds the New South Wales Court of Appeal in Chief Commissioner of State Revenue v McIntosh Bros Pty Ltd (in liq) [2021] NSWCA 221 

The decision is relevant where land is used for primary production activities by different persons as may be the case for farming operations that are conducted by different family members, agistment arrangements or share farming arrangements. 

The case concerned land owned by McIntosh Bros Pty Ltd that was assessed for land tax.

The Civil and Administrative Tribunal set the assessments aside because it found that the land was exempt from land tax as it was used for primary production.

An appeal by the Chief Commissioner to the Appeal Tribunal was unsuccessful. The Chief Commissioner appealed to the New South Wales Court of Appeal.

For some time, the land had been informally divided into two parts called Denbigh and Bangor. Denbigh was controlled by Jim McIntosh and his family, including his son Ian. Bangor was controlled by Ron McIntosh and his family, including his son Richard.

Denbigh was used by Ian to graze his own cattle and to agist cattle of others including Brett Hayter, who was a farmer nearby.

Ron and Richard conducted a beef cattle operation on Bangor that was part of a farming business that included sheep farming at other land. Richard's nephew Jim Head also conducted a cattle grazing business at Bangor.

There was no formal lease or licence between the owner of the land and the persons who used the land.

The land was not zoned rural land.

Land tax exemptions

The exemption for land used for primary production is in section 10AA of the Land Tax Management Act 1956 (NSW). Land that is not zoned rural land is exempt if:

  • the dominant use of the land is for certain primary production activities, including the maintenance of animals for the purpose of sale of those animals, their natural increase or their produce

  • that use has a significant and substantial commercial purpose or character and is engaged in for the purpose of profit on a continuous or repetitive basis.

Findings of the Court of Appeal in Chief Commissioner of State Revenue v McIntosh Bros Pty Ltd (in liq)

The Court of Appeal found that: 

  • you can combine uses of the land that were conducted independently by different persons to determine whether the dominant use of the land was for primary production

  • it was not necessary for the uses to be undertaken by a single user or a single cohesive group of users as was argued by the Chief Commissioner

  • the identity of the person maintaining animals on the land was not relevant in considering whether the animals were maintained for the purposes of sale, so it may be possible for the exemption to apply where animals are maintained by one person and a different person has the purpose of sale for those animals, their natural increase or their produce.

The decision of the Tribunal also involved certain findings of fact which could not be overturned by the Court of Appeal because they did not involve any questions of law.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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