Tax Alert - Vic Land Tax exemption for leasing land in primary production business

Lowe Lippmann Chartered Accountants

Vic Land Tax exemption for leasing land in primary production business


The Victorian Supreme Court has allowed a taxpayer’s successful appeal from a decision of the VCAT and found that it was entitled to an exemption from land tax under section 67 of the Land Tax Act 2005 (Vic) on the basis that the land was used by the taxpayer primarily production land.

 

Section 67 provides an exemption for land located wholly or partly in greater Melbourne, that is wholly or partly in an urban zone, where the Commissioner determines that land held by the trustee of a discretionary trust is used solely or primarily for a business of primary production.

 

The taxpayer, the corporate trustee of a discretionary family trust, was assessed in the 2018 and 2019 land tax years for land tax on the land, which it leased to a Partnership made up of some of the family members.

 

In determining the principal business of the taxpayer, at the Tribunal level (leading to the Supreme Court decision) there was a comparison of the gross income, labour employed, and capital employed in each respective business.

 

The Tribunal found that Mr. M (the key individual involved in the activities on the land, a director of the corporate trustee and one of the partners in the Partnership) undertook the majority of the taxpayer’s cattle farming activity himself and was ordinarily engaged in the business of breeding cattle for sale in a substantially full-time capacity.

 

The Supreme Court considered that the rental payments made to the taxpayer were simply the mechanism for allocating revenue from the sale of cattle to the taxpayer (including that the taxpayer was also engaged in the relevant activities).

 

As such, this resulted in the Supreme Court finding that the taxpayer was “carrying on one integrated primary production business” and the rent received by the taxpayer from the Partnership arose from the taxpayer’s primary production business.  The fact that the taxpayer and the Partnership held separate identities did not take away from this conclusion.

 

The Supreme Court also noted that the lease arrangement “was merely instrument designed to allocate revenue from primary production cattle business on land to the taxpayer”.



Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

Liability limited by a scheme approved under Professional Standards Legislation


July 1, 2025
Large proprietary limited – are you one? Tips and traps for your assessment. In Australia, being classified as a large proprietary limited company means that you have to prepare, and lodge audited financial statements with ASIC under the Corporations Act 2001 (the Act), however many companies are not necessarily applying the thresholds appropriately. A proprietary company is large if it meets at least 2 of the following thresholds: Consolidated revenue ≥ $50 million Consolidated gross assets ≥ $25 million 100 or more employees. These thresholds seem simple, however some points to note: The calculations must be performed applying ALL accounting standards so even if you are preparing special purpose financial statements, then you will need to assess these thresholds as if you were applying all standards, including: AASB 16 Leases – this standard would add a right of use asset to your balance sheet potentially significantly increasing your gross assets. AASB 10 Consolidated Financial Statements – if you have controlled entities then the inclusion of their income statement and balance sheet may significantly increase each of the thresholds. AASB 128 Investments in Associates and Joint Ventures / AASB 11 Joint Arrangements – if you have entities over which you have significant influence or joint control then applying equity accounting or including your share of assets and revenue would affect the thresholds. In determining the number of employees, the Act is clear that it is all full-time and part-time employees (on a pro-rata basis), however casual employees need to be considered. For example, are they genuinely casual with varying hours / shifts each week or are they in substance a permanent member of your team but just employed on a casual basis.  The thresholds need to be met at the end of the financial year and therefore entities should track their performance during the year so they are aware if they will meet the definition of a large proprietary company at year end.
June 17, 2025
In a previous blog, we discussed the changes to the accounting standards relating to classification of current / non-current liabilities on the balance sheet. We have been receiving a number of questions on this topic and have provided some practical scenarios below as well as some actions for you as we approach 30 June reporting dates.
June 13, 2025
High Court special leave application granted to appeal Bendel Case decision The Australian Taxation Office has been granted special leave to appeal to the High Court from the Full Federal Court decision in FCT v Bendel [2025] FCAFC 15. During March 2025 we released a Tax Alert ( see here ) explaining the current view of the ATO following the Full Federal Court decision that an unpaid present entitlement (or UPE) owed by a discretionary trust to a corporate beneficiary is not a “loan” for Division 7A purposes. The ATO also issued an Interim Decision Impact Statement ( see here ) in response to the Full Federal Court decision, providing information for taxpayers and advisers in relation to the details of the case and issues decided by the court.
More Posts