The Commissioner assessed land owned by the taxpayer for the 2019 land tax year. The taxpayer had leased the land for two years to a share farmer at a rental of only $100 per year. The taxpayer objected to the assessment on the basis that it was used primarily for the purposes of primary production and therefore should be exempt under section 66 of the Land Tax Act or that it was being prepared for primary production and therefore should be exempt under section 68 of the Land Tax Act.
The taxpayer contended that the primary production on the land was cropping for barley or alternatively that weed spraying in September 2018 was preparing the land for primary production. It was a condition of the lease that the lessee conduct primary production on the land so that the taxpayer could obtain a land tax exemption.
On 24 May 2021, the Tribunal delivered its decision in favour of the Commissioner and confirmed the assessment, holding the land was not exempt under section 66 of the Land Tax Act because the weed spraying was not a primary production activity. It was not undertaken as part of any cultivation, or for the purposes of selling the produce of cultivation, but rather for the lessee to decide if the land was in a fit state for cropping. The weed spraying was undertaken prior to entering into the lease at which point the lessee was uncertain about the viability of sowing a crop and had not made any commitment to cultivating the land.
The land was also not held to be exempt under section 68 of the Land Tax Act because when the weed spraying occurred, there was no certainty cultivation would take place on the land as it depended on it succeeding in controlling the weeds. In addition, the Tribunal found the invoice rendered by the lessee for the weed spraying objectively pointed to some other purpose and it could not be satisfied that it was undertaken in preparing the land for use primarily for primary production by way of cultivation.