Constable v Chief Commissioner of State Revenue

Background

1. The Land is 64.57 hectares in size and it is located on the South Coast of New South Wales. The Land does not have any structural improvements on it other than a high voltage transmission power line.
2. The applicant's late father purchased the Land many years ago. The applicant and his brother are the current owners of the Land. They were the owners during the relevant land tax years, together with their father until he died.
3. The Land, as I have noted, is timbered (i.e. a hardwood forest) and that the applicant has managed the Land since 1980.
4. In March 1995, the local Council, Eurobodalla Shire Council, gave approval to thin (i.e. log/harvest) the trees on the Land. In accordance with that approval trees were harvested from the Land by local saw-millers who paid a stumpage price based on metric volume for the timber that was recovered. Since that time no timber has been harvested from the Land. The applicant advised that prior to 1996, timber had been harvested from the Land in 1988 and prior to that in the mid 1970s.
5. In February 2004, at the request of the applicant, his father and brother, an Aboriginal Cultural Heritage Assessment report was prepared in relation to the Land. In the introduction of the report, it is stated that the report had been commissioned as the applicant, his father and brother proposed: "… [an] urban development over the northern two-thirds of the land, which has an Urban Expansion 10 zoning, with the eventual possibility of a rural residential development over the southern third, which at present has a Rural 1a zoning. At the time of this report, proposed subdivision plans and layout have not yet been finalised."
6. On 12 June 2009, on behalf of the applicant, his father and brother, a development application (DA) was lodged with the local Council for the construction of a storage shed and 33 storage units for rent on the Land. The estimated cost of the development proposal was $500,000. The local Council approved the DA, which had an expiry date of 17 February 2015.
7. On 22 June 2009, the applicant made an enquiry about the regulation of private native forest (PNF) activities under the Native Vegetation Amendment (Private Native Forestry) Regulation 2007, with the then Department of Environment and Climate Changes (DECC). Having received a response from DECC, on 28 September 2009, the applicant again wrote to DECC requesting the preparation of a five year PNF Property Vegetation Plan (PVP) for the trees on the Land. In October 2009, DECC sent the requested PNF PVP agreement to the applicant for signing. The agreement was withdrawn in March 2017 when no response had been received from the applicant.
8. From 1 July 2011 to 19 July 2012, 45% (i.e. 29 hectares) of the Land was zoned Rural under the Eurobodalla Rural Local Environmental Plan 1987(Eurobodalla RLEP 1987). The remaining 55% (36 hectares) was zoned Urban Expansion 10. Forestry (i.e. commercial harvesting of the trees) was permitted with development consent under both zones. However, that section of the Land that was zoned Rural also required a PNF PVP in order to harvest the trees.
9. On 20 July 2012, the zoning of the Land changed, in part, under the Eurobodalla Local Environment Plan 2012 (Eurobodalla LEP 2012). Under this LEP, 67% (43 hectares) of the Land was re-zoned R2 Low Density Residential and 3% (2 hectares) was re-zoned IN1 General Industrial. The remainder of the Land, namely 30% (19 hectares) continued to be zoned Rural under the Eurobodalla RLEP 1987. The applicant contends that notwithstanding the 2012 re-zoning of the Land which did not permit forestry, he and his brother retained their existing forestry rights use under s 106 and 107 of the Environmental Planning and Assessment Act 1979.
10. From November 2013 to April 2015, the Land was listed and advertised for sale, by tender, for $4.5 million with a Narooma Real Estate Agency, Century 1. The Land was listed for sale together with the adjoining parcel of land (Lot 2 Dalmeny Drive, Kianga). The listing sales agent described the Land in the following terms: "This would have to be an opportunity of a lifetime for a prudent investor/developer. Majority zoned R2 (Low density residential) and portion zoned RU1 Rural. This property adjoins existing established housing. R2 zoning permits subdivision to 550m2 subject to council approval." And "This site will provide up to 1000 residential lots meeting the future housing requirements for the area for the next 20 years, without the need for urban sprawl."
11. The s 149 Planning Certificate, issued by the local Council and attached to the contract for sale for the Land, expressly stated, at item 16, that "Council has received no advice that a Property Vegetation Plan under the Native Vegatation (sic) Act 2003 applies to the land."
12. In November 2014, in accordance with the conditions of the 2009 DA Approval for the construction of the industrial storage units, the applicant commissioned and obtained a management plan report for the riparian zone adjacent to the proposed construction (the "Riparian Management Plan").
13. During January 2015, sewer construction was commenced and completed on the Land in regard to the 2009 DA for the proposed industrial storage units. The local Council accepted that the sewer works represented a physical commencement of the proposed works in accordance with the relevant provisions of the Environmental Planning and Assessment Act 1979.
14. On 10 July 2015, the respondent wrote to the applicant, his father and his brother to advise them that he was reviewing their landholdings and exemption for primary production that was applied to their Land. Attached to the letter was a pro-forma questionnaire entitled: "Land Tax Questionnaire - Primary Production Questionnaire". The applicant, his father and brother were requested to complete and return the questionnaire by 10 July 2015. The applicant completed the questionnaire and returned it to the respondent, on or about 7 September 2015. In the completed questionnaire the applicant identified the applicable tax years to be "2010-2015". He also stated that the Land area was 76 hectares in size and it was being used for forestry. He stated that logging was anticipated to commence in "12-18 months" and that he was in the process of establishing a PNF PVP over that part of the Land that was zoned Rural.
15. On 9 October 2015, at the request of the respondent, the applicant advised, by email, that the Land was zoned R2 and IN1. In his email to the respondent the applicant attached a copy of the relevant extracts from the Eurobodalla LEP 2012 relating zone R2 and zone IN1. Each extract prescribed the types of development permitted within each zone, with and without local Council consent. Each extract also provided that any development not prescribed as a permitted development was prohibited. Forestry was not prescribed as a permitted development in either zone.
16. On 3 February 2016, the respondent wrote to the applicant thanking him for his response to an earlier request and informing him of the terms of the commerciality test in s 10AA(2) of the LTM Act. The respondent went on to say the following: "Dewsbury Road, Dalmeny is not zoned rural, therefore must also satisfy additional tests which determine whether primary production undertaking is carried out for genuine commercial and profit purpose. The development application for land clearing dated 24 March 1995 and management plan 95 - 041 (map only) were provided as evidence were for the period from 24/03/1995 to 24 March 2000. No evidence of up keeping timber forest for the period from 1 July 2010 to current time has been provided. PPL exemption is currently being reviewed for this period. Therefore evidence of an active program of managing the forest is required to consider the exemption claim. Evidence of sales since purchase of land, protection and improvement of the growing timber, including maintenance of fire breaks, removal of undergrowth, thinning of the trees and up keeping of the trees during the period from July 2010 is required to substantiate your claim for exemption. Please provide any supporting evidence by Tuesday, 9 February 2016. Assessments may be issued based [on] any information provided and available to this office after that date. Contact me for any enquiries regarding this matter. "
17. The applicant did not respond to the respondent's request for additional information and on 2 March 2016 the respondent made his Assessment decision and issued a Land Tax Assessment Notice for the 2012 to 2016 land tax years.
18. On 20 May 2016, the applicant lodged an objection to the respondent's Assessment Notice, which he was entitled to do: see Taxation Administration Act 1996, s 86. In support of his objection the applicant provided a "Business Plan" for the Land, dated May 2016.
19. Sometime during 2016, the applicant's father died.
20. On 17 August 2016, the respondent disallowed the applicant's objection.
21. In January 2017, the Land, on its own, was again listed and advertised for sale by tender through Webster Nolan Real Estate, in Surry Hills. Originally, the estimated selling price was stated to be between $4 - 4.5 million. Tenders closed in April 2017. In October 2017 the sale price was reduced to $2.75 million and the Land remains for sale under a Conjunction Agreement with Webster Nolan Real Estate and Whale Coast Realty, Narooma.
22. On 17 October 2016, the applicant lodged this application for review.
23. The applicant's application was heard on 2 February 2018.

Evidence

1. The applicant relied on the material he had provided to the respondent prior to this application having been lodged together with the material he filed in these proceedings. This material was contained in the respondent's bundles of documents filed in these proceedings. However, the applicant also tendered into evidence a further copy of the following material which he contended was of particular relevance to this application: 1. an undated letter from the applicant to the solicitor of the Office of the NSW Crown Solicitor having carriage of this application on behalf of the respondent. Attached to that letter was a completed and signed "Forest Operation Plan" template from the NSW Department of Environment, Climate Change and Water relating to the Land. The completed template is signed by the applicant in his capacity as "owner" and it is dated 9 February 2017; and 2. the May 2016, "Business Plan" that was lodged with the applicant's objection.
2. The applicant did not otherwise file, in these proceedings, a statement, a statutory declaration or an affidavit. The respondent contended that this alone was sufficient for the Tribunal to find that the applicant had failed to discharge his onus, as there were matters relevant to this application for which only the applicant could give evidence. I have dealt with this issue below.
3. The respondent filed the following material: 1. the s 58 bundle of documents which contained copies of the correspondence between the parties relevant to the respondent's Assessment decision that is the subject of this application, 2. an affidavit, affirmed on 7 December 2017, by Kathleen Kerr, solicitor of the office of the respondent's solicitor. That affidavit dealt with correspondence between the parties concerning the single expert Mr Cameron and the expert report he had prepared in October 2017; 3. a further affidavit of Kathleen Kerr, affirmed on 8 December 2017. That affidavit dealt with the instructions given to Mr Cameron for the purpose of preparing a single expert report. Attached to the affidavit was a copy of the documents provided to Mr Cameron for the purpose of that report; 4. a copy of Mr Cameron's expert witness report dated 11 November 2017; 5. an affidavit, sworn on 29 January 2018, by Betty Sarkissian, solicitor of the office of the respondent's solicitor. Attached to the affidavit were copies of documents produced, pursuant to a summons, by the NSW Office of Environment & Heritage, Eurobodalla Shire Council, the NSW Environment Protection Authority, Matthew Dapiran trading as Century 21 at the Wharf and Garraroo Pty Ltd trading as Webster Nolan Real Estate. Also attached to the affidavit were copies of the 2012 to 2016 income tax returns of the applicant; and 6. an updated copy of Mr Cameron's expert witness report dated 30 November 2017.
4. Both parties filed and served written submissions.
5. Mr Cameron gave oral evidence at the hearing and was cross-examined by counsel for the respondent.

Land Tax Administration Act

1. As I have already noted, land tax is levied under s 7 of the LTM Act. That section provides: "7 Land tax on taxable value of land Land tax at such rates as may be fixed by any Act is to be levied and paid on the taxable value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act)." (italics added)
2. Section 8 provides that land tax is to be charged on land owned at midnight on 31 December immediately preceding the year for which it is levied. A "year" is defined in that section to mean the period of 12 months commencing on 1 January. That is, each year land tax is levied on land owned by a person(s) as at midnight on 31 December of the previous year.
3. The word "owned" is defined in s 3(1) of the LTM Act to have the same meaning as that of an "owner", which is defined in the same section to relevantly mean: "Owner includes: (a) in relation to land, every person who jointly or severally, whether at law or in equity: (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, (b) …"
4. At the time of the hearing of this application, the owners of the Land were the applicant and his brother. During the course of the hearing the applicant said that his father had died about two years ago (i.e. during 2016). Hence, it would appear that during the relevant land tax years the applicant's father was also an owner of the Land. As no issue was raised during the course of the hearing as to whether the applicant's father was a joint owner of the Land during the relevant tax years, I have not considered this issue any further. However, it was accepted that, in these proceedings, the applicant was authorised to act on behalf of the joint owners of the Land. It was also accepted that the applicant was primarily responsible for the manner in which the Land was used.
5. Section 9(4) of the LTM Act provides that the "land value of land", in relation to a "land tax year" is the value of the land entered in the Register of Land Values as at 1 July in the previous year. The word "Register" is defined in s 3(1) of the LTM Act to mean "the Register of Land Values kept under section 14CC of the Valuation of Land Act 1916."
6. The term 'tax year" and "land tax year" is defined in s 3(1) of the LTM Act to mean a period of 12 months starting on 1 January for which land tax is leviable and payable.
7. As noted above, s 7 of the LTM Act provides that land tax is to be levied and paid on the taxable value of all land situated in New South Wales, unless the land is exempt from taxation under that Act. The applicant relies on the exemption contained in s 10AA(3)(a) of that Act, the terms of which are set out in paragraph which I have set out in paragraph 5 above.
8. The word "dominant" is not defined in the LTM Act and should be given its ordinary meaning. As pointed out by Gzell J In Leda Manorsted v Chief Commissioner of State Revenue [2010] NSWSC 867, at [69] to [70], Gzell J, considered the meaning of the word "dominant" and its application in the LTM Act as follows: "69 Dominant in its ordinary meaning connotes ruling, prevailing, or most influential. The statute's reference to a dominant use presupposes that land may be used for more than one purpose and requires a determination of which use of the land is the main, chief or paramount use. 70 That is a question of fact and degree that may, in the end, be determined as an objective matter of impression having regard to the facts. 71 In Saville v Commissioner of Land Tax (1980) 12 ATR 7, Roden J was concerned with whether land was used primarily for the maintenance of animals thereon under a former provision in the Land Tax Management Act. The primary use test was not unlike the dominant use test in the present legislation. His Honour said at 10: "I am of the view that, for any use of the land to justify the statement that the land is used primarily for that purpose, it is necessary not only that that use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land.""
9. As noted above, following the 2012 re-zoning of the Land it no longer fell within the terms of "rural land" as defined in s 10AA(4) and as a consequence, the "commerciality" test in s 10AA(2) applies: see Triston Pty Ltd atf The Ghantous Family Trust v Chief Commissioner of State Revenue [2017] NSWCATAD 100, at [44].
10. Again the onus is on the applicant to prove the "dominant" use test and the "commerciality" test in s 10AA(3)(a) and (2) of the LTM Act: see TA Act, s 100(3).
11. The Appeal Panel, in Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue [2012] NSWADTAP 25, at [45(ii) and (iii)], made the following observations in regard to the commerciality test: "45 In contrast to the position in relation to land that is used for primary production activity on land. Sub-s (2) requires the following steps: (i) A threshold determination that the land is used for primary production. … (ii) If the threshold determination is favourable, there must be a level of use that 'has a significant and substantial commercial purpose or character (factor (a)). This criterion eliminates hobby or token operations even though they may have passed the de minimis threshold to which we have referred in (1). The taxpayer then needs to show that the operation is run on a commercial basis with appropriate attention to the orthodoxies of income, expenditure and the aim of profitability; cognisant of the element of unpredictability of any business operation, especially primary production. This is a higher standard that the one that applies to rural land. … (iii) The next criterion, factor (b), takes the issues raised by factor (a) to a further level of exactitude. The activity must be engaged in for the purpose of profit 'on a continuous or repetitive basis (whether or not a profit is actually made)'. The reference to 'continuous' or 'repetitive' we see as connoting a business enterprise of a well structured, long term character, with administrative features (organisation, management, book keeping) which support the conclusion that it is set up with the aim of generating a profit year to year over a succession of years."
12. In Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 23, at [90] and [91], his Honour Gzell J said: "90 Not every business will satisfy the commerciality test. The test distinguishes activities amounting to a business that is carried on in a small way or as a sideline from those of a more serious and weighty kind. It will usually also exhibit some such characteristics as size, depth, bulk, weight, seriousness, quality, intensity and prominence. 91 To determine whether Maraya's cattle operation had a significant and substantial commercial purpose or character, the court should consider the intensity of the operation, the size and quality of the herd, the size and carrying capacity of the land and the resources (whether of time, labour or expenditure) put into the development and maintenance of the cattle operation."
13. On appeal, the Court of Appeal (Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 408) agreed with the approach taken by Gzell J.
14. In Vartuli v Chief Commissioner of State Revenue [2014] NSWSC 678, at [138], his Honour White J concluded that in that case, the use of the land lacked a significant and substantial commercial purpose or character because profits were not derived from the use of the land that made any "real, as distinct from trifling, contribution to the income of the plaintiffs', the owners of the land in issue.
15. On appeal, Vartuli argued that his Honour had misdirected himself in his approach to the application of s 10AA(2)(a) in that his Honour added a requirement that was not included in that subsection. It was contended that the true and only test for "significant and substantial" under s 10AA(2)(a) was that set out by his Honour Gzell J in Maraya (supra); namely a comparison with competitor farms with similar attributes: see Vartuli v Chief Commissioner of State Revenue [2015] NSWCA 372, at [70] and [72]. At [88], the Court of Appeal (per Gleeson JA, with Meagher JA and Ward JA concurring) rejected the contentions of Vartuli that his Honour had misdirected himself and misapplied the approach taken by his Honour Gzell J. The approach taken by his Honour White J was summarised by his Honour Gleeson JA, at [53], as follows: "53 His Honour referred to the reasons of the trial judge (Gzell J) and this Court in Maraya. At [103] he observed that this Court upheld Gzell J's approach that to determine whether the use of the land had a significant and substantial commercial purpose, or a significant and substantial commercial character, it was necessary to consider the intensity of the operation, the size and quality of the herd, the carrying capacity of the land, the resources put into the development and maintenance of the operation and the profitability of the operation."
16. Ultimately, the dominant use test and the commerciality test in s 10AA(3) and (2) respectively are questions of fact to be determined on an objective basis on the material before the Tribunal.

Environmental Planning and Assessment Act 1979

1. As I have noted, following the 2012 re-zoning of the majority of the Land, forestry was no longer a permitted activity/use of that portion of the Land. However, as pointed out by the applicant, sections 106 and 107 of the Environmental Planning and Assessment Act 1979 had the effect of preserving "existing uses" where there was a re-zoning of land. These sections, along with all the other sections within the Environmental Planning and Assessment Act were re-numbered upon the coming into effect the provisions of the Environmental Planning and Assessment Amendment Act 2017. The sections were re-numbered by decimal numbering in accordance with the number of the relevant Part and Division under which the section fell. Accordingly, sections 106 and 107 were re-numbered as ss 4.65 and 4.66 of Division 6 of Part 4 and relevantly provide: "4.65 Definition of "existing use (cf previous s 106) In this Division, existing use means: (a) the use of a building, work or land for a lawful purpose immediately before the coming into force of an environmental planning instrument which would, but for this Division, have the effect of prohibiting that use, and (b) the use of a building, work or land: (i) for which development consent was granted before the commencement of a provision of an environmental planning instrument having the effect of prohibiting the use, and (ii) that has been carried out, within one year after the date on which that provision commenced, in accordance with the terms of the consent and to such an extent as to ensure (apart from that provision) that the development consent would not lapse. 4.66 Continuance of and limitations on existing use (cf previous s 107) (1) Except where expressly provided in this Act, nothing in this Act or an environmental planning instrument prevents the continuance of an existing use. (2) Nothing in subsection (1) authorises: … (e) the continuance of the use therein mentioned where that use is abandoned. (3) Without limiting the generality of subsection (2)(e), a use is to be presumed, unless the contrary is established, to be abandoned if it ceases to be actually so used for a continuous period of 12 months."
2. I reiterate, ss 106 and 107 were in the same terms as above.

Evidence of Mr N L Cameron

1. In his report of 11 and 30 November 2017, Mr Cameron provided responses to a number of specific questions he was asked to address by the applicant and the respondent.
2. In response to the first question of the observed percentage of the Land over which the applicant's forestry operation could commercially extend, Mr Cameron said that he had estimated 89.5% of the applicant's Land may be commercially exploited. He said the applicant's Land supported native eucalypt forests that are predominantly mix-aged with a full suite of growth stages present in some areas. He noted there was a history of timber harvesting with evidence of three commercial harvesting events occurring within the last 50 years. He said that the tree species on the applicant's Land (spotted gum, coastal blackbutt and ironbark) are all preferred commercial forestry species. He said that he had not observed any areas of unproductive or non-commercial forest. This he said was consistent with the climate, soil type and tree species mix on the Land. He said "relative to other commercial south coast forests I would classify the forest on the Land as moderate to high site quality."
3. Mr Cameron also noted that he had observed a small clearing on the corner of the north-west boundary of Land adjoining the Dalmeny industrial area. He said the combined area of the clearings was estimated to be 0.5 hectares or 0.8% of the Land. He said other smaller clearings on the Land were observed and these were designated to log dumps and or apiary sites and as such fell within the extent of the applicant's proposed forestry operation.
4. In response to the question of the relative size of the applicant's forestry operation compared to other private native forests and State/commercial forest operations, Mr Cameron said the applicant's proposed forestry operation was considered comparable to other private native forests that had been approved for timber harvesting (i.e. land that had an approved Private Native Forestry Property Vegetation Plan (PNF PVP)) along the in NSW East Coast. However, when compared to commercial harvesting the operations undertaken by the Forestry Corporation of NSW the applicant's proposed operation was much smaller (being 23% of the average gross operational area and 41% of the average net harvesting area). Mr Cameron went on to say: "My assessment of the Applicant's Land is that it is a relatively small parcel of land (particularly when compared to the State forest compartments to which it adjoins) however it supports preferred forest types and has a good standing volume of sawlogs with scattered poles. Being close to the coast (where the climate is relatively uniform) the timber will also be inclined to cut well (i.e. have a low internal defect). Together these positive attributes offset the disadvantage of its relatively small size.
5. In response to the question about the actual scale and intensity of any forest activity evident in the applicant's Land and the potential intensity of that activity, Mr Cameron said that recognised forestry activities were evident on the Land. These activities he said, included timber assessment, forest protection, roading, harvesting, and silviculture. He went on to say forest protection included fire trail maintenance, hazard reduction burning and bushfire suppression, pest and weed control, and the control of an authorised activity. He said, compared to other primary production, native forestry is an extensive land-use and forestry activities are typically interspersed in time and space with intense operational activity occurring only occasionally. For example, he said, a forest may be subject to periodic hazard reduction burning but only harvested once every 30 years.
6. In regard to the applicant's activities, Mr Cameron said that the applicant had advised that in 2016, measurements had been collected as part of an inventory on the merchantable timber of the Land. He noted that no particulars of the inventory were provided (i.e. raw measurement data), however, reference to the inventory were included in the 2016 Business Plan. Mr Cameron also noted that the applicant had informed him that he routinely removed dumped rubbish and trees that fell across the roads, trails and tracks on the Land. The applicant had also advised that he had spent time spraying weeds, but he did not specifically observe any areas that had recently been controlled. However, the forest was relatively weed free.
7. Mr Cameron noted that the Land was well roaded with no new construction required to facilitate future timber removal. He noted that the stumps revealed that they were in various states of decay indicating at least three separate harvesting events that have occurred on the Land that this was consistent with those described by the applicant (i.e. mid 1970's, 1988 and 1996).
8. In regard to his observations as to whether there are any harvestable trees on the Land that could currently be profitably sold, including the estimated area and value of such trees, Mr Cameron reiterated that "commercial operations can occur on 58 hectares or 89% of the Land and that there are harvestable trees on all of this area". He also noted that the applicant had indicated to him that only 50% of the site would be harvested. Mr Cameron went on to estimate the total yield of forest products from the Land (i.e. high quality sawlogs, low quality saw logs and pulpwood). He made his estimates under three different harvesting scenarios (i.e. light intensity harvesting, medium intensity harvesting and higher intensity harvesting) based on a harvest on the whole of the harvestable Land and also based on the harvesting of only 50% of that Land.
9. In his oral evidence Mr Cameron said it was not unusual for only 50% or 25% of a native forest being harvested at any one time.
10. Mr Cameron noted that a high proportion of the trees on the Land were regrowth (spar and pole) size and that they will grow, in the next 10 to 50 years into merchantable timber. Mr Cameron went on to estimate the net timber sales revenues (after harvesting and haulage costs) based on his estimates of the total yield of the forest products. His estimate of revenue from timber sales over a 30 year period ranged between $36,250 and $156,600 depending on the intensity of the harvesting and the area subject to harvest. Such revenues only being earned every five or 10 years.
11. In estimating future costs Mr Cameron costed the time the applicant said he spent in managing the forest. In this regard the applicant had told him he spends two to three hours per week on average on forestry activities.
12. Mr Cameron also said that he was fairly satisfied that the applicant's forestry operation, as described in the applicant's Business Plan and Forrest Operation Plan exhibited traits that would reasonably be expected to be observed in a commercial operation geared towards making a profit. However, he did note that the Business Plan was lacking in detail in some areas and greater consideration could have been given to cash-flow and the maximisation of revenue/profits.

Was the dominant use of the Land cultivation, for the purpose of selling the produce of the cultivation?

1. As I have noted, it is accepted that forestry may, in appropriate circumstances, fall under s 10AA(3)(a). It is also accepted that forestry is a long-term activity and that trees need not be sold and harvested every year. However, for s 10AA(3)(a) to apply there must be evidence of the "cultivation" of the land as an on-going activity for the purpose of eventually harvesting the trees for sale: Safety Beach Estates Pty Limited v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032, at 4037.
2. As pointed out by the respondent, no trees were harvested from the Land and sold since 1996 (i.e. no evidence of a harvest for 20 years). Hence the question is whether, the applicant has established/proven, on the balance of probabilities, that "cultivation" activities did occur on the Land, during the relevant land tax years (2012 to 2016), and those activities were undertaken for the purpose of harvesting and selling the trees that were on the Land.
3. The respondent contended that the applicant had failed to establish/prove that "cultivation" activities did occur on the Land during the relevant tax years because: 1. the applicant did not put on any evidence, including evidence about any "programme of tending, in accordance with the practices of husbandry" applicable to native forests which explained what "cultivation" activities had occurred on the Land, or why "cultivation" did not occur or need to occur during the relevant tax years; 2. the applicant did not put on any evidence of having retained existing use rights in regard to that part of the Land that was rezoned in 2012 and which made up 70% of the Land area. Hence, the applicant failed to prove that it was legally possible for him to cultivate 70% of the Land; and 3. the applicant's plan to sell the Land in 2013-2014 objectively showed that his "purpose" in relation to the Land was to sell it for low density residential development and that purpose was inconsistent with the purported purpose of harvesting and selling the trees on the Land. The applicant's plan to sell evidenced an abandonment of any purported purpose of harvesting and selling the trees on the Land.
4. In his written submissions in reply, the applicant contended that the respondent's submissions in this application failed to take into account the finding of the respondent made, on 17 August 2016, in regard to the applicant's objection, namely that upon reviewing the Land, he was satisfied that the dominant use of the Land was for primary production purposes. This determination, as I have noted is not the subject of review in this application.
5. At the hearing of this application, the applicant pointed out that he was not legally represented and had not appreciated a need to put on direct evidence in the form of an affidavit, statement or statutory declaration. Instead he relied on what he had said to Mr Cameron for the purpose of preparing the 2016 Business Plan together with what he had submitted to the respondent in course of the July 2015 review and the applicant's subsequent objection to the Assessment decision.
6. It is not unusual for unrepresented applicants before the Tribunal to fully understand the usual way in which "evidence" is presented in a court in accordance with the rules/procedures of the relevant court.
7. Provisions concerning the procedure of the Tribunal generally are contained in s 38 of the Civil and Administrative Tribunal Act 2013. Subsection 38(2) provides that the Tribunal is not bound by the rules of evidence and "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice". Subsection 38(4) provides that the Tribunal is to "act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms". Hence, subject to the rules of procedural fairness, any prejudice to the opposing party and weight, the Tribunal accepts as evidence material that may not be accepted in a court.
8. Hence, in my opinion, in this application, to the extent the material relied on by the applicant contains an assertion made by him in regard to the use of the Land should be considered as his evidence. In any event, I was left with the impression that the applicant did not have any more to add than what was asserted in this material.
9. I accept the evidence of Mr Cameron that, as at September 2016, 89% of the Land is forested and suitable to be commercially exploited through the harvesting of trees and selling the tree products therefrom. I also accept Mr Cameron's evidence that, at the time of his inspection, recognised forestry activities were evident on the Land, which included some timber assessment, forest protection, roading, harvesting (i.e. mid 1970's, 1988 and 1996). I note, Mr Cameron did not identify any other use of the Land except for a very small area where there was evidence of an apiary.
10. I accept the evidence of the applicant, as stated in the May 2016 Business Plan, that the goal of the owners of the Land is and has been to manage the native forest on the Land sustainable and frugally. I also accept the evidence of the applicant that his forestry activities on the Land was minimal; namely two to three hours a week clearing and maintaining the native forest on the Land. This is consistent with the evidence of Mr Cameron who said that the applicant's private forestry operation was small compared to the much larger commercial harvesting operations. It is also consistent with Mr Cameron's evidence that, at the time of his inspection of the applicant's forest, a high proportion of the trees were regrowth in size, presumably as a result of the earlier harvesting of trees within the forest in the 1970s, 1988 and 1996. As I have noted, Mr Cameron went on to say that these regrowth trees will grow into merchantable timber within the next 10 to 50 years.
11. This evidence is consistent with Mr Cameron's evidence that generally forestry activities in a native forest are typically interspersed in time and space with intense operational activity (e.g. harvesting) occurring only occasionally, sometimes 30 years apart.
12. I accept the applicant has failed to explain why he did not action the PNF PVP agreement forwarded to him by DECC in 2009. However, on the basis of Mr Cameron's evidence, which was not disputed, that harvesting generally occurs occasionally, sometimes 30 years apart, I do not accept that the evidence of minimal forestry activity by the applicant during the relevant tax years is indicative of a change of use, or abandonment of existing use.
13. Nor, on the material before the Tribunal, am I persuaded that as a result of the 2012 rezoning of 70% of the Land and the subsequent 2013-2014 listing of the Land for sale evidenced a change in the "purpose" for which the applicant's forestry activity was engaged in during the relevant land tax years. I am also not persuaded that the applicant abandoned existing use right as a result.
14. The respondent does not dispute that there was an existing use right prior to the 2012 rezoning. Had the Land been sold during the relevant land tax years for the purpose advertised, there would have been a change in dominant use. Additionally, had the proposed storage units been built, this may also have changed the dominant use.
15. What is evident from the material before the Tribunal is that the dominant use of the Land during the relevant land tax years did not change from what it had been in the previous years. In my opinion, on the material before the Tribunal, I am satisfied that the dominant use of the Land continued to be for cultivation of the native forest on that Land for the purposes of harvesting and selling the wood products from the forest. That there was a 20 year gap from when the trees in the forest were not harvested, according to the evidence of Mr Cameron, was not unusual. However, the evidence does establish that the applicant continued to manage the forest on the Land in the same manner he had previously.
16. Notwithstanding my findings in regard to dominant use of the Land, in my opinion, the fact that the applicant has provided no explanation as to why he did not action the 2009 PNF PVP agreement and the subsequent advertising of the Land for sale in 2013-2014 are relevant to the question as to whether the applicant has satisfied the "commerciality" test.

Commerciality Test

1. As I have noted above, there are two aspects to the commerciality test and for the reasons set out below I find that the applicant has failed to establish either aspect of this test.

(a) Does the use of the Land have a significant and substantial commercial purpose or character?

1. In my view, based on the applicant's evidence alone, his primary production use of the Land did not have a significant and substantial commercial purpose or character during the relevant tax years.
2. I agree with the respondent, that Mr Cameron's evidence of future harvesting possibilities from the Land do not assist the applicant in establishing that his primary production use of the Land had a significant and substantial commercial purpose or character during the relevant tax years. Mr Cameron's evidence is of course based on hypotheticals for the future and not the past. The main difficulty for the applicant is that he has not placed any material before the Tribunal which established that during the relevant land tax years his use of the Land had a significant and substantial commercial purpose or character.
3. As I have noted above, prior to the 2012 re-zoning of the Land, the "commerciality" test did not apply to the existing use of the Land. However, upon the 2012 re-zoning, the "commerciality" test did apply and in my opinion, it was this change of zone and the subsequent listing of the Land for sale for low density residential development which evidences that the existing dominant use of the Land for forestry did not have a significant and substantial commercial purpose or character. That is, as demonstrated in the material for the sale of the Land for development, the commercial purpose or character of that sale was and continues to be of greater significance and substance than the applicant's dominant use of the Land for primary production. Had the contrary been the case, the Land would not have been offered for sale for development. In the applicant's own words, the Land was offered for sale together with the adjoining property so as to test the market for development of low-density residential buildings. The sale was not to test the market for native forests.
4. That the applicant and his co-owner(s) listed the Land for sale in 2013-2014 is understandable in the circumstances. It appears to have been a commercial decision given the 2012 changed circumstances and in my opinion, the applicant cannot now assert otherwise.
5. Accordingly, I find that the applicant has failed to establish that, during the relevant land tax years, the primary production use of the Land had a significant and substantial commercial purpose or character. My finding is sufficient to dispose of the applicant's application. However, in the event I am wrong I have also considered the second aspect to s 10AA(2) of the LTM Act.

(b) is the use of the Land engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made)?

1. As noted by the respondent, an absence of a profit does not negate an engagement in a primary production use of land for the purpose of profit: see Maraya (supra), at [107]. However, a continuous pattern of a lack of profit may lead the Tribunal to question and, in appropriate cases, reject evidence that the primary production use of the land was engaged in for the purpose of profit.
2. For the same reasons stated in (a) above, in my view, the evidence of Mr Cameron is of little, if any, assistance to the applicant in regard to this limb of the "commerciality" test. I make a similar finding in regard to the applicant's Business Plan, which was also future looking.
3. Again, I note, on the material before the Tribunal, the applicant's primary production use of the Land was no more than an ongoing existing use of the Land. However, the applicant has failed to demonstrate that this use was engaged in for the purpose of profit during the relevant tax years. As I have noted, the 2012 re-zoning of the Land resulted in the applicant and his co-owner(s) listing the Land for sale for development into low density residential housing. That listing, as pointed out by the respondent, is inconsistent with the primary production use of the Land being engaged in for the purpose of sale.
4. Again, that the applicant and his co-owner(s) listed the Land for sale is understandable in the circumstances and for the reasons I have given I am not satisfied that the applicant has established this limb of s 10AA(2) of the LTM Act.

Conclusion and orders

1. For the reasons set out above I have found that the applicant has failed to establish that his primary production use of the Land the subject of this application meets the "commerciality" test in s 10AA(2) of the LTM Act. Accordingly, the applicant has failed to establish that the Land was exempt from land tax during the 2012 to 2016 land tax years.
2. On the basis of my findings, the appropriate order is to confirm the respondent's Assessment decision that is the subject of this application: see TA Act, s 101(1)(a).

Order 1. The Assessment decision of the respondent, made on 2 March 2016, is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 May 2018