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Triston Pty Ltd atf The Ghantous Family Trust v Chief Commissioner of State Revenue [2018] NSWCATAP 37

Date of judgement 5 February 2018 Proceeding No. AP 17/19854
Judge(s) M D Schyvens, Deputy President
J S Currie, Senior Member
Court or Tribunal New South Wales Civil and Administrative Tribunal, Administrative and Equal Opportunity
Legislation cited Civil and Administrative Tribunal Act 2013, ss 41, 80(2)(b)

Interpretation Act 1987, ss 33

Land Tax Management Act 1956, ss 10AA, 10AA(1)-(4), 10AA(4)(a)-(f), 10A(1)
Catchwords REVENUE LAW – Land Tax – Land Tax Management Act 1956 (NSW), s 10AA – exemption for land used for primary production – meaning of “rural land” in s 10AA(4). STATUTORY INTERPRETATION – Interpretation Act 1987 (NSW) – application of s 33 – construction that would promote the purpose or object underlying the Act. Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 41, 80(2)(b)
Cases cited Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27

Bell v Commissioner of Taxation [2012] FCA 1042

Carr v Western Australia [2007] HCA 47; (2007) 232 CLR 138

CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

Collins v Urban [2014] NSWCATAP 17

Ferella v Chief Commissioner for State Revenue [2014] NSWCA 378

Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366

Leda Manorstead v Chief Commissioner [2010] NSWSC 867

Background

By Notice of Appeal received by the Tribunal on 2 May 2017, Triston Pty Ltd atf The Ghantous Family Trust (“Triston” or “the Appellant”) appealed against the decision and orders of Senior Member Frost of the Tribunal made on 31 March 2017.

The Senior Member’s orders confirmed the Chief Commissioner’s assessments of land tax for three contiguous lots of land in Windsor (“the land”) for the 2011 to 2015 land tax years (“the assessments”). Triston had objected to the assessments on the ground that the land was used for primary production and should have been exempted under s10AA of the Land Tax Management Act 1956 (NSW) (“the LTM Act”).

The land has dual zoning being ‘rural landscape’ (“RU2”) and ‘low density residential’ (“R2”) with around 95% of the land being within the RU2 zone.

The grounds and arguments

Ground 1

Triston argued that the Tribunal committed an error of law in concluding that s10AA of the LTM Act requires that land is to be zoned exclusively rural in order to be “rural land”.

Triston submitted that s10AA(4)(a) of the LTM Act applies to land which is zoned “rural” even if that land has a dual zoning. The definition in s10AA(4)() does not require land to have a single zoning.

The Chief Commissioner submitted that there was no error of law by the Tribunal in its interpretation of “rural land” as defined in s10AA(4) of the LTM Act.

Further, it was open to Senior Member Frost to conclude that only when there is a single rural zoning covering the entire parcel of land will it be “rural land” and where each parcel of land has dual zoning with one of those zones not being rural, the entire parcel of land is not “rural land”.

Ground 2

Triston argued that the Tribunal committed an error of law in mistakenly concluding that the use of the land for primary production was not the dominant use of the land.

Triston submitted that for the 2011 to 2015 land tax years, Senior Member Frost should have found that cultivation of plants was being conducted on the land and at least for the 2012 to 2015 land tax years the land was not used for any other purpose and that the cultivation of plants was the dominant purpose.

The Chief Commissioner submitted that this ground raised a question of fact, not law; the Tribunal correctly identified the only use of the land for the 2012 to 2015 land tax years was the nursery activity; and on the basis of the evidence from Mr Ghantous, the Tribunal found that there was no actual propagation of plants conducted. Further, the Tribunal correctly determined that the nursery use of the land did not satisfy s10AA(3)(e) as it was not a ‘commercial plant nursery’ or s10AA(3)(f) due to the lack of propagation. In any event, the nursery use was de minimis.

Ground 3

Triston argued that the Tribunal committed an error of law in mistakenly concluding that the Applicant did not propagate horticultural stock on the land.

Mr Ghantous asserted that the higher ground was used to conduct “a propagating nursery to grow specific plants for sale”. He estimated there were 700 to 800 at any given time, which were very mature plants and not newly cultivated or newly propagated.

The Chief Commissioner submitted that this ground raised an issue of fact, not an issue of law and accordingly, Triston must seek leave to appeal and that leave should not be granted. This was because it was open to Senior Member Frost based on what he described as the “somewhat sketchy” evidence of the Appellant at the hearing, to conclude that the evidence had failed to establish that the dominant use of the land had been for a purpose under s10AA(3) and that any actual propagation had been conducted on the land.

The Chief Commissioner also submitted that if the decision of Senior Member Frost in relation to ground 2, namely that the land was not “land used for primary production”, there was no utility in reviewing Ground 3, because the effect is that the land is not “land used for primary production” within s10AA(3), whether or not any actual propagation took place.

Decisions

Ground 1: “Rural Land” for the purposes of s10AA(4)(a) of the LTM Act

The Appeal Panel noted that each of the three parcels of land are dually-zoned as “rural landscape” (RU2) and “low density residential” (R2).

The Appeal Panel considered that the purpose or object underlying the LTM Act is the imposition of land tax, subject to conditions, limitations and exemptions. The purpose or object of the provisions of s10AA is consistent with:

  1. “allowing exemption from land tax for areas of land which are (in the generic sense) rural in nature; the test of that being that they are used for primary production as defined and are zoned rural; and

  2. withholding the availability of exemption from areas of land which are not zoned rural, even though they are used for primary production, unless it can be established that the primary production:

    1. has a significant and substantial commercial purpose or character; and

    2. is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made).”

The Appeal Panel found that Senior Member Frost was not in error and that Ground 1 in the Notice of Appeal fails.

Ground 2: “Dominant use” of the land

The Appeal Panel was satisfied that the appeal on this issue raised questions of fact and not law.

The Appeal Panel then had to consider whether to grant leave to appeal. It decided not to grant leave on the basis that the “dominant use” issue in this case was not of itself an issue of principle or a question of public importance (see Collins v Urban [2014] NSWCATAP 17 AT [80] TO [84].

Ground 3: “Propagation of horticultural stock”

As the Appeal Panel dismissed the appeal on Ground 2 so that the land was not “land used for primary production” within s10AA(3) of the LTM Act, it did not see any purpose in further considering the appeal on Ground 3. The effect of the Tribunal’s decision was that the land could not attract an exemption whether or not there was propagation of horticultural stock on the land at any time during the relevant period.

Orders

  1. The Appellant is granted an extension of time to lodge its Notice of Appeal (The lodgement of the Notice of Appeal was one day out of time. The Chief Commissioner did not press the issue)

  2. The Appeal is dismissed

  3. Each party is to pay its own costs of the Appeal.

Link to decision

Triston Pty Ltd atf The Ghantous Family Trust v Chief Commissioner of State Revenue [2018]NSWCATAP 37

Last updated: 28 February 2018