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An exemption from land tax may be available if your land, or part of your land, is used for primary production. An exemption may also be available for land being prepared for primary production.

To be eligible for this exemption, certain conditions must be satisfied. These vary depending on the location of the land.

Exemptions may be available for land located:

  • Wholly outside of greater Melbourne, if it is used primarily for primary production,
  • Wholly or partly within greater Melbourne but not within an urban zone, if it is used primarily for primary production,
  • Wholly or partly within greater Melbourne and wholly or partly within an urban zone, if it is used solely or primarily for the business of primary production

What is primary production?

For land tax purposes, primary production is one or more of the following activities:

  • Cultivating crops for the purposes of selling the produce, including in a processed or converted state,
  • Maintaining animals or poultry for the purposes of selling them, their offspring or bodily produce,
  • Keeping bees for the purposes of selling their honey,
  • Commercial fishing, including preparing for such fishing or storing or preserving fish or fishing gear, and
  • Cultivating or propagating plants, seedlings, mushrooms or orchids for sale

Maintaining animals or growing crops for personal benefit only is not primary production for land tax exemption purposes. There must be a sale of the products resulting from the primary production activity.

Land used primarily for primary production

Land is primarily used for primary production when the primary production activity is the main activity conducted on the land and the main way of drawing an income from the land.

Business of primary production

In general terms, a business of primary production means you use your land to conduct one or more of the primary production activities described above, where the activities do not constitute recreation or a hobby, but are viable undertakings carried on in a business-like manner and have a reasonable expectation of returning a profit.

Agistment

Depending on where the land is located, using the land for agistment (allowing another person to graze their animals, including horses, on your land for a fee) may be primary production for land tax exemption purposes.

Land used for agistment located outside greater Melbourne, or inside greater Melbourne but not in an urban zone may qualify for a primary production exemption if the owner of the animals normally sells the animals or their offspring. Land agisted for horses kept for recreational purposes will not qualify for this exemption.

Land used for agistment within an urban zone in greater Melbourne is ineligible for the primary production exemption. This is because the owner of the land must use the land in a business of primary production to qualify for the exemption. Accordingly, the landowner must be engaged in a business of maintaining animals to sell, not simply maintaining animals for a fee.

Land being prepared for primary production

If land is being prepared for use primarily for primary production, it may be exempt from land tax if the land becomes exempt as primary production land within 12 months after the preparation work commenced. We may extend this period by a further 12 months on request.

Please note that if preparation work is not completed within the 12 months (or the extended 12-month period), the exemption may be removed and the land assessed for land tax.

What is greater Melbourne?

Since 18 June 2014, greater Melbourne is the area within the urban growth boundary (UGB) and is marked on this map. Prior to 18 June 2014, greater Melbourne had a different meaning.

The UGB is the boundary specified or to be specified as an urban growth boundary in a planning scheme. 

The change to the greater Melbourne boundary does not affect land which was previously outside the former "greater Melbourne" boundary and was eligible for a PPL exemption prior to the boundary change. The primary production land will continue to be exempt even if it falls within the new boundary until it is subdivided, sold or the landowner buys adjoining land that is in the new boundary.

Urban zones

An urban zone is a zone or part of a planning scheme that has been declared an urban zone (under a planning scheme in force under the Planning and Environment Act 1987) by the Governor in Council. These zones change over time and new zones will be declared accordingly for the relevant tax year.

Exemption requirements

Three separate exemptions are available for land used for primary production. The eligibility criteria for the exemption will depend on where the land is located. The exemptions are:

Apply for a PPL exemption

If you believe your land qualifies for a PPL exemption, you can apply via the instructions specific to your circumstances. We will then determine your eligibility and, if necessary, request further information.

Land wholly outside greater Melbourne

If your land is outside greater Melbourne and you believe you qualify for a PPL exemption, please call us on 13 21 61 or complete and lodge an amendment form. If we require further information, we will advise you.

Land wholly or partly in greater Melbourne but not in an urban zone

If your land is located in greater Melbourne and not within an urban zone, and you believe you qualify for a PPL exemption, you must apply in writing and provide:

  • The date the primary production activity commenced,
  • The type of primary production activity conducted on the property,
  • The proportion of the property used for the primary production activity,
  • Evidence of sales of any primary production activity,
  • Details of the person carrying out the business,
  • Evidence of the:
    • number of stock carried on the land (if applicable), and/or
    • volume of harvested produce (if applicable)
  • Copy of lease agreement with primary producer (if applicable)

Land wholly or partly in greater Melbourne and in an urban zone

If your land is within greater Melbourne and in an urban zone, and you believe you qualify for a PPL tax exemption, you must apply in writing and provide:

  • The date the primary production activity commenced,
  • The type of primary production activity conducted on the property,
  • If part of the property is used for the primary production activity or primary production business, the proportion of the property so used,
  • Evidence of sales of any primary production activity,

  • Details of the person or people carrying out the business,

  • Evidence of the:
    • number of stock carried on the land (if applicable), and/or
    • volume of harvested produce (if applicable)
  • Copy of lease agreement with primary producer (if applicable),
  • Details of the main business activities of the owner/s,
  • If the owner is a company, details of the company’s principal business activity,
  • If the owner is a company, full details of the shareholders, 
  • If the company has paid dividends, details of the dividends paid in the last three years, 
  • If the owner is a trustee, provide a copy of the trust deed, and
  • If the owner is a trustee of a superannuation trust, specify the type of superannuation fund and provide confirmation that all the fund members or beneficiaries of the trust are relatives and at least one member or beneficiary is substantially engaged in the primary production business 

Land being prepared for primary production

If you wish to claim an exemption for land which is being prepared for use primarily for primary production and will later qualify for a PPL exemption, please write to us and provide:

  • The date the property commenced being prepared for usage as primarily for primary production,
  • The type of primary production activity which the property is being prepared for,
  • Details of the preparatory activities being conducted, and
  • Information regarding the person/s carrying out the preparatory activities

Exempt land no longer used for primary production

If the primary production activities cease, you must notify us immediately. Failure to do so may lead to the imposition of penalties.