NSW NSW Land Tax - Primary Production Exemption

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vishi

Member
23 October 2020
2
0
1
I recently purchased 15 acres land which is flood prone and at very low level. It is zone Rual RU4 small lots. Out of the 15 acres, about 10 acres are completely unusable (that is useless even for grazing!!!) due to running creeks, swamp, protected steep hill bush land. About 1000 sqm land is at a level that council will permit to build a house with some restrictions. Out of remaining approx 5 acres of flat land, 2 acres have mature fruit orchard ready for fruit production, 3 acres were vegetable growing area which was abandoned due to floods (and the land becomes very soggy with any rain due to very low level). Nothing is allowed to be built on the whole land due to very low levels by the council, there is no competing or alternative uses for this land other than agriculture. I hired a town planner who concluded that except for 1000 sqm land and the existing orchard, none of the land is usable for any form of agriculture activity due to floods. One can use about 3 acres for grazing, but that is not economically viable.

When I applied for land tax exemption based on Orchard primary production activity, land tax people rejected it with a determination "unused land is the dominant use". I tried to convince them that 100% of the usuable land is used for Orchard, that there is no land that is usable is "unused". My argument is land has to be usable for it to be used. But they say "while the land is "useless" and one can not do much with it, but still it is classified as "unused" for the land tax purposes and as our property has 2 acres of orchard and remaining 13 acres is useless, the useless land being classified as unused land is the dominant use and hence tax is payable. I can not understand how anybody considers "useless" land as "unused" land and forces to pay land tax. The land tax lawyers (from state revenue) said they will send me some case reference where previously courts considered "unsuitable/useless" land as "unused" land for tax purposes. I have not yet received, the cases they sent me all related to potential future subdivision lands (that is usable lands that are not used now), but my case the land is not usable at all.

I have do not have legal knowledge. Common sense should prevail. If almost 100% of the usable land is used for primary production, rejecting my exemption application based me not using "unusable" land does not make sense. Can any of you people help??. My summary question "can "useless land" be considred dominant use of the land and taxable. The disputed land tax amount is $14K, I was quoted $50K to take up may case and hence I am representing my self with no legal knowledge with only common sense and honesty (against 3 lawers from NSW state revenue).
 

Docupedia

Well-Known Member
7 October 2020
35
1
124
Land tax isn't imposed on the 'usable land' only. It is levied on the land as a whole, 'usable' and 'unusable', noting that 'unusable' appears to just be from your point of view. The Land Tax Management Act states at the outset that land tax is to levied and paid on "all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act)". The word 'usable' does not appear anywhere in the Act.

From a land tax point of view, which is looking at all of the land, the dominant part is being unused - because as you say it is unusable (for your purposes).

Sorry to say it, but I think it is your approach which appears not to be common sense. If the criteria was levying land tax on 'usable land' then it would probably be a different matter; but that is not the case.
 

vishi

Member
23 October 2020
2
0
1
Thank you for your advice. May be repeating myself, in this situation, part of this land is "not usable" for any purpose, meaning it is in a flood path, it floods even in moderate rain, council prohibits any sort of use alternative use, construction due to very low level. The area that is considered reasonably high we are using 100% of it for productive Orchard which is primary production, but it is 2 out of 15 acres. Because 13 acres can never be used for any purpose, I have to continue to pay tax, even though there is no house on it or other activity carried on the land except Orchard production??
 

Docupedia

Well-Known Member
7 October 2020
35
1
124
As I said, whether or not the land is usable or not doesn’t factor into whether or not you pay land tax. If anything, it should factor into the valuation of the land, which in turn affects how much land tax you pay.