The High Court of Australia has unanimously dismissed an appeal brought by Godolphin Australia Pty Ltd against the NSW Chief Commissioner of State Revenue in respect of an application for a primary production land tax exemption.
Godolphin Australia Pty Ltd v NSW Chief Commissioner of State Revenue [2024] HCA 20 concerned the proper construction of S10AA of the Land Tax Act, which exempts from land tax land used for primary production. Under the Act, “Land used for primary production” involves a “dominant use” test of the relevant land.
This decision will have implications for primary producers who run other, non-primary production, businesses on their land.
Godolphin operates a thoroughbred breeding and racing operation on its land in NSW, as well as breeding thoroughbreds. Godolphin had relied upon its breeding of thoroughbreds to claim an exemption from land tax. Although breeding thoroughbreds is a primary production business, thoroughbred racing is not.
The High Court held that “where land has more than one use, for a given use to be dominant it must exhibit such predominance as to impart to the whole of the land the necessary exempting character.” Although Godolphin successfully demonstrated that a significant use of the land was for primary production, it did not demonstrate that this was “so predominant a use as to impart an exempting character”, and therefore did not qualify for the primary production exemption from land tax.
