Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue (NSW)  NSWSC 430 – Land tax
The New South Wales Supreme Court has upheld a horse breeding and racing business’ challenge to the assessment of land tax upon some of the properties used in its operation.
The taxpayer ran a thoroughbred horse stud in NSW that bred, raced and sold horses. The Chief Commissioner charged the properties used in the business with land tax for the 2014 to 2019 land tax years. The taxpayer challenged the assessment, contending two of its four properties were exempt as ‘land used for primary production’ under section 10AA(3)(b) of the Land Tax Management Act 1956 (NSW) on the basis that its dominant use of the land was to maintain animals for the purpose of selling them or their natural increase or bodily produce.
The Court held that the taxpayer’s dominant use of the relevant land was to maintain animals for the purpose of selling their bodily produce or natural increase and revoked the land tax assessments in issue, despite acknowledging that a substantial part of the land was used for training racehorses. The Court concluded that when viewed as a whole the taxpayer was running an integrated operation in which the race training was undertaken to maximise revenue from its horses’ nomination fees and progeny. The court also held that the phrase ‘purpose of selling’ in section 10AA(3)(b) does not require land to be used with a ‘dominant purpose’ of sale to qualify for exemption. Rather, section 10AA(3)(b) must be considered as a whole.
The taxpayer has applied to the High Court for special leave to appeal the Full Federal Court’s decision in FCT v Burswood Nominees Ltd as trustee for Burswood Property Trust  FCAFC 151 (covered in the Birchstone Brief for the week ended 27 August 2021).