In the recent decision of Chandrala v Chief Commissioner of State Revenue [2021] NSWCATAD 50, the NSW Civil and Administrative Tribunal (NCAT) has determined that rural land, that was leased to a tenant, was not exempt from land tax under the primary production exemption. This case demonstrates the importance of ensuring the requisite primary production activities are occurring at the relevant date (ie 31 December), being able to provide evidence of those activities and that, where the land is leased, that the tenant actually carries on those activities by that date. It also reaffirms that rural land is not automatically exempt from land tax, even where there is an intention to undertake farming activities.
The land in question was purchased in August 2019 and leased from October 2019 for the purpose of growing vegetables. However, no farming work was undertaken, and the first lease was abandoned in February 2020. A second lease was entered in March 2020, under which some cultivation activities, such as repairs, were commenced. Between October and December 2019, the applicant gave evidence that he also had undertaken some cultivation activities, such as preparing reports on bushfire assessment and on-site waste management. Based on these activities, the applicant argued that his land was used for primary production.
NCAT found that there was no evidence of physical use of the land for primary production activities and the intention to grow vegetables under the first lease was insufficient as evidence of primary production. Additionally, the evidence given by the applicant of his own cultivation activities was deemed unreliable. NCAT determined that it was inadequate that primary production activities were carried out under only the second lease, as this was after the relevant date of 31 December 2019. As such, the land was subject to land tax for the 2020 year.
To discuss or for further information please contact:
Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au
