Question:
Agricultural land tax exemption refused by NSW Court
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
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- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
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June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
The NSW Supreme Court refused an exemption from NSW land tax for the owners of land in NSW that was used for cattle grazing with a herd of up to 40 cattle because the Court concluded that the farming operations did not have sufficient commercial purpose or character.
The NSW Land Tax Act provides an exemption from land tax where the land is used for primary production and it is:
• Zoned “rural”, “rural residential” or “non-urban”;
• The Chief Commissioner is satisfied it is rural land; or
• The primary production has “significant and substantial commercial purpose or character” and is for “the purpose of profit on a continuous or repetitive basis”.
The land did not meet the zoning criteria and was valued at $26.6m in 2009.
A beef industry expert testified that 42.6 kg of beef per hectare was “a very low output of beef”, the operation was not commercially viable and that the farmer would have been better off ceasing the operation, apart from the land tax savings.
The Queensland legislation is worded differently and provides the primary production exemption for land “that is used solely for the business of agriculture, pasturage or dairy farming" and is subject to a certain ownership restrictions. However, the relevant Queensland Guidelines set out the factors to determine the existence of a business and that includes “whether the activity has a significant commercial purpose or character” and “whether there is an intention to make a profit as well as the [actual] profitability of the activity”.
Care should be taken when claiming the land tax exemption to ensure that your primary production activities are indeed business like and with an adequate planned or actual profit.
