Zappia v Chief Commissioner of State Revenue [2025] NSWCATAD 210;

(3) For the purposes of this section, land used for primary production means land the dominant use of which is for -

...

(b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, ...

...

(4) For the purposes of this section, land is rural land if -

(a) the land is zoned rural, rural residential, non-urban or large lot residential under a planning instrument ...

1. Land may qualify for the primary production exemption if the owner permits another person to conduct primary production activities under a lease; it is the use of land and not the identity of the user which is significant: Thomason v Chief Executive, Department of Lands (1995) 15 QCLR 286; see also Revenue Ruling LT 097v3 "Land Used for primary production" at [35].
2. The following matters are not in dispute:

(1) The land was zoned Primary Production Small Lots RU4, and was therefore "rural land" as defined in s 10AA(4)(a). Accordingly, s 10AA(2) does not apply;

(2) The land size was 20,487.95 square metres;

(3) There was a 3 bedroom house on the land with an area of approx. 370.87 square metres (1.81% of the total land area);

(4) The whole of the property, including the house, was leased to tenants (Mr Marie and Ms Hristodoulou) for weekly rent of $550.

1. The Applicant's case is that the land should be exempt from land tax because it satisfied the test in s 10AA(3)(b) of the LTMA; i.e. that the dominant purpose (and use) of the Land was for the maintenance of greyhounds for the purpose of selling them or their natural increase.
2. The Respondent says that the land was not exempt from land tax in any of the Relevant Years because the Applicants have not discharged their onus of proof and therefore not satisfied the legislative requirements for the exemption in s 10AA in any Relevant Year.
3. For the reasons set out below, I agree with the Respondent and the assessments to land tax are confirmed.

1. The Tribunal has jurisdiction because the Assessments were objected to on 16 November 2023, the objection was disallowed on 5 April 2024, and the application to the Tribunal was filed within time.
2. The Applicants have the onus of proof under s 100(3) of the Taxation Administration Act 1996 (NSW) ("TA Act"). This means the Applicants must prove on the balance of probabilities that the dominant use of the land meets the "use for a purpose" test in s 10AA(3) and (3)(b) of the LTMA: see Cornish Investments Pty Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25 at [39].

1. The Applicants relied on their application to the Tribunal filed on 4 June 2024, including annexures (A1); an affidavit of John Zappia dated 20 November 2024 and filed on 1 April 2025, including annexures (A2); and written submissions (A3). The Applicants also provided, at the hearing, further bundles of photographs in respect of the relevant years in two manila files (marked A4(a) and (b)).
2. The Respondent relied on documents filed on 10 July 2024 pursuant to s 58 of the Administrative Decisions Review Act 1997 (NSW) ("ADR Act") (R1); A three volume Tender Bundle filed on 11 February 2025 (R2); Written submissions filed on 11 February 2025 (R3); and a table titled "Respondent's Objections to Affidavit of John Zappia Affirmed 20 November 2024" filed on 20 May 2025 (R4).

1. Mr Zappia was sworn in and confirmed his affidavit and annexures. Objections to his affidavit from the Respondent are dealt with below.
2. His Affidavit described:

(1) the presence on the land of "approximately 35 dog kennels (both wooden and brick), 10 waste relief yards, 9 puppy runs (for exercise) and 2 puppy yards and exercise areas": at [7]; and

(2) improvements made by the tenants at their own cost for additional kennels, whelping enclosures/facilities and food preparation spaces for the greyhounds: at [9].

1. Mr Zappia said he visited the land quite regularly. He said that he observed "more than 40 dogs" on the land when he visited it in 2019, saying there was "never any kennel empty" when he visited. He confirmed that he had taken the photographs which were before the Tribunal (date stamped between 2019 and 2023). He also said there were approximately 40 greyhounds (both adults and pups) on the land as at August 2023.
2. The Affidavit at [21], [22] and Annexures B and C sought to compile information located online from Greyhound Racing Victoria ("GRV") and the NSW Greyhound Welfare & Integrity Commission ("GWIC"). This information set out various changes of "ownership" of dogs to and from Mr Marie. It also disclosed total prize winnings by dogs which had at some time been registered as owned by Mr Marie, but showed a different "current owner". Mr Maria explained that the named "sire" of the dogs on the list was never owned by him; rather, he owned females which were artificially inseminated.
3. There was quite a lot of discussion regarding the information in the annexures, which appeared to have been prepared with considerable assistance from the Applicants' daughter. The information did not reveal "sales" of any dogs or puppies, nor any prices relating to any sales, in respect of any particular year of income.
4. Mr Zappia recalled various conversations with the tenants, some during COVID (around September to December 2020) where he said he had put to them "Are you still selling and breeding" to which they had answered yes; another regarding them expressing a sale price for dogs of "$500 to $2000, sometimes more" . These conversations were, he said, with Ms Hristodoulou (Elizabeth). He explained to the Tribunal that Mr Marie "never got involved in much discussion".

1. Mr Pullbrook was issued a summons to appear and give evidence at the hearing.
2. He said he has known Mr Marie for around 8-10 years.
3. Mr Pullbook has been a professional greyhound trainer since around February 2022. Before that, he trained his own greyhounds as a hobby, and also helped out Mr Marie from time to time (who, he said, did not have much experience training dogs himself).
4. In short, Mr Pullbrook provided no evidence that established that any relevant sales of greyhounds (or their puppies) were proposed or had occurred.
5. He confirmed that ownership of dogs had been "transferred" between himself and Mr Marie; those circumstances, however, related to the requirement that whelping greyhounds were required to be owned by a "registered breeder" with GWIC. He was asked several times, and replied consistently, that no amount of money changed hands in respect of any sales of greyhound puppies to him, and he was not aware of any sales having occurred.
6. His evidence was that he owned several female greyhounds, and he said that Mr Marie "bred two or three litters" for him, with ownership being transferred to Mr Marie and back again afterwards.
7. He explained that he and Mr Marie shared a common interest in greyhounds, and Mr Marie "did him a favour" by letting him use his breeder registration when his female dog whelped her litter of puppies.
8. He told the Tribunal that the dog (Jenneke) whelped its litter of puppies on the land, and that Mr Marie paid for everything for a period of 12 weeks or so until ownership of the puppies (and his dog) were transferred from Mr Marie to him.

1. Mr Marie was issued a summons to appear and give evidence at the hearing. He was also issued a summons to produce documents in response to five questions. He provided documents that he said were responsive to those questions.
2. The Applicants' solicitor put to Mr Marie that he did not produce all of the responsive documents to the summons. No invoices or receipts for the sale of dogs were provided and no financial evidence of income received from any sales of dogs was produced. Mr Marie maintained that everything responsive had been produced. Wording of some of the questions in the summonses assumed that Mr Marie was conducting a business in respect of the greyhounds, a matter he did not accept.
3. Mr Marie was asked about emails which he had sent to GWIC regarding the transfer of ownership and the birth of various dogs. Mr Marie did not say he no longer had access to that email account. He did not see that the emails were relevant or responsive to the questions.
4. Mr Marie confirmed that he was licensed with GWIC to breed and to own "raceable" dogs. He said that he bred his own greyhounds "as a hobby". He confirmed there were lots of kennels on the property, and he used them to kennel his dogs. He was asked several times how many dogs he owned or kept on the land, and was unable to recall particular numbers at any particular times. When pressed to answer how many dogs he had on the property in each year he variously responded "No idea", "Can't recall, too long ago", or words to similar effect.
5. Regarding sales, he said he had never sold any greyhounds. He said that when greyhounds got to racing age, they were "usually" sent to a trainer, who then took care of them (at the trainer's cost) and would split the proceeds of any race wins with him 50/50. In some cases, he would give dogs away to trainers. In other cases, if a dog was injured, it would often be returned from the trainer, retired from racing, and sent to a greyhound adoption service. When they got evicted from the property by the Applicants, he said he had to give some of the dogs away as well. He was taken through a listing of the various dogs. Surprisingly, he remembered some details with precision; for example, he recalled that the pups born 4 April 2023 were "8 pups, 4 boys, 4 girls, still owned 6, the other 2 were given away when we got evicted."
6. He confirmed that a female dog on the list called Jenneke was owned by Mr Pullbrook. Surprisingly, however, he directly contradicted Mr Pullbrook's evidence, saying (and reconfirming) that Jenneke did not whelp the pups on his property (ie the land that he leased from the Applicants). He said that had occurred at Mr Pullman's place, and not at his place. He said he only saw the puppies when Mr Pullman brought them to his property after their second vaccination date (around 12 weeks of age), when their ear tags had to be attached. He confirmed that ownership of Jenneke was transferred to him, and that Jenneke and the pups' ownership was transferred into the name of Mr Pullbrook after they were born.
7. When asked if he was paid for being the registered breeder, he said no. He asserted that he did it as a favour for friends, and he never got paid. That included Mr Pullbrook, Mr Boyd and other people on the Applicants' list.
8. On the key issue before the Tribunal, Mr Marie reconfirmed that he had never sold any greyhounds to another person. He confirmed that he bred greyhounds. He confirmed that he allowed other people to use his registration as a breeder so that their dogs' progeny could be registered with GWIC.
9. His evidence was clearly inconsistent with the evidence of Mr Pullman. He acknowledged that his registration as a breeder required that the breeding (whelping) take place on his registered property, and that did not occur.
10. The Applicants' counsel repeatedly asked Mr Marie how much it would cost to feed a dog per week. Mr Marie said he didn't do "the money side of things". He said it was $50 a week per dog. He said later that wasn't right. He said it didn't cost much. He was shown screenshots of purchases of food, but those were screenshots advised to the Tribunal to have been from his wife's phone and not from his phone. He said that the dogs ate kibble, chicken and beef, but he had no idea of the cost per week; he said they sometimes paid cash, and it was a hobby so he didn't keep receipts. He later said "all dogs cost me $150 a week". In any event, there was no precise answer to the question in respect of any particular period of time.
11. He was taken to his taxable income disclosed in his income tax returns. It was suggested to him that his disclosed earnings, after tax and other usual expenses, could not support the payments for maintaining the dogs unless he had other sources of income, and that it was "implausible" that he gave dogs away.
12. Mr Marie responded "I'm allowed to give away my dog", reiterated it was a hobby, and queried why he couldn't do nice things for his friends.
13. There was no evidence arising from the questions in respect of any other source of funds available to Mr Marie.

Respondent's table - transfer of ownership and whelping of dogs

1. There was a table at par [10] of the Respondent's submissions which listed events in the period from 27 June 2019 to 2 May 2023, containing references to the supporting documents before the Tribunal in R1. There was no dispute that those records related to Mr Marie, the tenant of the land at all relevant times.
2. I accept that those documents showed transfers of ownership of greyhound dogs to and from Mr Marie, and the whelping of dogs owned by Mr Marie, as set out in the table. Questions arise from the evidence of Mr Marie above, however, as to whether the activities of "whelping" described in the table all took place on the land.

1. Ms Hristodoulou was also summonsed to give evidence, and was sworn in under oath.
2. She directly refuted the Applicants' claims that she had been asked by Mr Zappia if she was selling the dogs or the pups. She said the first time it was raised with her was around 2024, when Mr Zappia asked her to give a statutory declaration; she said she declined to sign a document purporting that she was doing something she wasn't doing. She said it was never any agreed term of the lease that they had to conduct a business of breeding and selling dogs. She said that they had the dogs for enjoyment; they loved dogs, they enjoyed breeding them, they enjoyed going as a family to the greyhound races, and they never received any money for whelping other people's dogs.
3. She did, however, directly contradict Mr Marie's evidence that no dogs or pups were ever sold. She said that some dogs were sold to recoup costs, because it was "an expensive hobby" to feed them. She said they were sold for a couple of hundred dollars, but no particular sales could be recalled with any specificity, or in respect of any particular year.

1. It was clear from the materials before the Tribunal that a land tax exemption had been processed for the property in previous years, on advice from an Assistant Commissioner of the (then) Office of State Revenue, that use of the property for "breeding purposes" was sufficient. Mr Zappia provided correspondence from the OSR officer to this effect (R1, 80), saying in his Objection inter alia (R1, 77):

"Despite following the specified instructions, I am now informed that I am required to pay land tax for the past five years. This is perplexing and distressing, as it contradicts the exemption granted to me in writing by Assistant Director [Name].

Additionally, I have obtained and submitted records of the breeding activity from the tenant for the past five years. (see GWIC Report attached). Throughout my detailed correspondence with Assistant Director [Name], he never indicated that obtaining sales records was a requirement to support the breeding activities."

1. In the Objection Decision, the previous advice received by Mr Zappia appears to have been conceded by the Respondent, who noted (R1, 87):

"You have also placed reliance on the conversations and correspondence with [OSR Officer] to support the eligibility of the Catherin Field Property for the exemption. We do note that [OSR Officer] does mention in his email of 12 February 2013 that routine investigations are conducted and in granting the exemption he had believed that the property was used entirely for breeding purposes.

In the event, it can be demonstrated that the information provided by the Chief Commissioner is incorrect, it is settled law that no estoppel can arise to prevent the Chief Commissioner from pursuing his statutory duty to assess tax in accordance with the relevant legislation. This position is consistent with precedent cases which have confirmed that the Chief Commissioner cannot be estopped from issuing land tax assessments including reassessments. In particular, in Brataniec v Chief Commissioner of State Revenue [2013] NSWADT 65, the Tribunal found that notwithstanding an error by the Chief Commissioner which resulted in an assessment being issued for multiple years, the legislation does not confer on the Chief Commissioner, or any other authority, any general power to waive the payment of land tax..."

1. The requirements of the statutory provision regarding the primary production exemption in s 10AA(3) are clear. The High Court in Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2024] HCA 20 has confirmed that s 10AA(3) of the LTMA requires a "use-for-a-purpose" approach, described as follows by the plurality of Gordon, Edelman and Steward JJ at [28] ff:

28. ...when the text of s 10AA(3) is read in its immediate statutory context and in light of broader statutory and extrinsic context, the word ["dominant"] qualifies one composite phrase, namely (and relevantly) "use of which is for ... the maintenance of animals ... for the purpose of selling them ...". The "use-for-a-purpose" construction is thus correct.

29. The "use-for-a-purpose" construction is supported by the presence of the word "for", which is the last word in the chapeau. As Kirk JA correctly observed, the provision requires that the dominant use be for something. That something is, relevantly here, all of para (b) of s 10AA(3). That paragraph uses a composite phrase that combines an identified use of the land as well as a specified purpose for that use.

30. Further, the structure of a number of exemptions for primary production in s 10AA(3) follows the same pattern: each paragraph sets out first the genus for the exemption followed by a particular species, delineated by reference to a purpose, which must also be satisfied. ...

31. The same observation can be made about s 10AA(3)(b). The genus is land being used for the maintenance of animals; the species of that genus is that the maintenance is "for" the purpose of selling those animals or their natural increase or bodily produce. Once again, the word "dominant" qualifies both. That a "significant" use of the land was for breeding horses falls short of demonstrating that the "dominant" use of the land was the maintenance of horses for the purpose of selling them or their natural increase or bodily produce. In that respect, the word "dominant" should be given its natural meaning; it refers to that which is "ruling, prevailing, or most influential".

32. The broader statutory context also supports the Commissioner's construction. Section 10A(1) operates where land is used for multiple purposes each of which is exempt; without having to show which use is "dominant" the whole of the land is exempt from taxation. The premise of this provision assumes, relevantly in the case of s 10AA, that a "dominant" purpose would otherwise need to be demonstrated.

1. Despite the murkiness and inconsistencies in some of the evidence set out above, several matters were relatively apparent or uncontested, and I find:

(1) that Mr Marie was registered as both an owner of greyhounds and a breeder of greyhounds at all relevant times;

(2) that Mr Marie was the "registered owner" of many greyhounds and greyhound puppies at all relevant times;

(3) that the majority of the land area comprised open space and cages, "runs", exercise areas, outbuildings and kennels for the keeping of dogs;

(4) by land area, that the dominant use of the land in respect of all Relevant Years was for the maintenance of greyhounds. Many greyhounds were housed and kept on the land, as evidenced by photographs before the Tribunal. The animals all appeared to be in a healthy state and condition;

(5) that Mr Marie entered greyhounds that he owned into races; and

(6) that the amount of prize money from races was split evenly between the registered "owner" and the nominated "trainer" of the dog at the time of the race.

1. I accept that the compilation of data which was annexed to Mr Zappia's Affidavit shows evidence of registration of litters, and transfers of ownership of dogs. However, in the circumstances described by Mr Pullman and Mr Marie, I do not accept that the transfer of ownership establishes any actual sales, nor purpose of sale, of greyhounds or greyhound puppies. As submitted by the Respondent, a sale is a transfer of property from one person to another for money or money's worth: see Victoria Gardens Developments Pty Ltd v Commissioner of State Revenue [1999] VSC 10, Spedding Estates Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 117.
2. To the extent that Mr Zappia's Affidavit was objected to by the Respondent, I agree that no reliance should be placed on the parts of pars 22, 24 and the whole of par 26 for the reasons set out in the Respondent's filed document R4, with the exception of the first par, second sentence of paragraph 24. This includes the objection to Annexure C.
3. I agree with the Respondent that the evidence from Mr Marie and Ms Hristodoulou was that they maintained and bred greyhounds for fun and enjoyment, and not for the purpose of sale (see also R3 at 239, 278).
4. The evidence in respect of sales, or proposed sales, was that of Ms Hristodoulou, who said there were some sales of an indeterminate number, to offset some of the costs associated with the greyhounds. On the evidence as a whole, however, I find:

(1) there is no evidence of dogs being advertised for sale;

(2) there were likely some sales of dogs and/or puppies by Mr Marie during one or more of the Relevant Years in order to recoup some expenses of the greyhound activities;

(3) Ms Hristodoulou and Mr Marie adopted the position that the activities relating to greyhounds were conducted as a hobby and were therefore not required to be disclosed in their income tax returns;

(4) there is no evidence of any financial accounts, business plan or bank account in respect of the greyhound operations; and

(5) the evidence does not establish what sales of greyhound dogs or puppies were proposed, the number of sales, the prices obtained, or the year in which sales occurred (or were proposed to occur) in respect of any Relevant Year.

1. I agree with the Respondent that it is not sufficient for the Applicants to establish, as they submit, that Mr Marie and Ms Hristodoulou were being "reimbursed" for the direct costs of raising the greyhounds or the whelping of greyhounds (Applicant's submissions at [13]). The evidence casts some doubt on whether whelping for others occurred on the land at all. I also do not agree with the submissions of the Applicants that this would constitute "selling" for the purposes of s 10AA(3)(b) of greyhounds or their natural increase: see Godolphin at [29]-[31]. Nor is there evidence that establishes amounts, timing, or actuality of any such reimbursements.
2. I also note that:

(1) Mr Pullman said that he didn't buy any greyhounds from Mr Marie, in conformity with the evidence on this point from Mr Marie. Given the circumstances of the "ownership" change in respect of the whelping of Mr Pullman's dog, I find this as a fact on the balance of probabilities;

(2) Mr Marie said that for the most part, they kept the dogs; they raced dogs and he may have received some prize money. When the dog ceased racing or was injured, they were given up to adoption services or transferred for no money. The transfer of dogs for no payment or consideration is also not a "sale" for the purpose of s 10AA(3)(b).

1. I accept that there were concerns regarding the evidence of the witnesses. I cannot accept, however, that the "implausibility" of evidence would lead me to infer that the land was used for the dominant purpose of the maintenance of greyhounds for the purpose of sale of the greyhounds or their natural increase. Nor am I satisfied that there were activities of such a "size and scale" that the cost of conducting those activities necessitated an inference being drawn by the Tribunal that a significant number of dogs must have been sold (absent further evidence regarding finances/assets).
2. I accept there was sufficient evidence to establish that dogs were bred on the land. It also appears that this may have been accepted by the Respondent's officers as sufficient in prior years. But as noted in the Objection Decision (extracted above), this does not give rise to any estoppel against the Respondent, and it does not answer the statutory question regarding the purpose of sale.
3. I accept that it was necessary to spend money to feed the dogs and that some greyhounds may have been sold for several hundred dollars in order to recover some of the costs. But I agree with the Respondent's submissions that the amount of food purchased, and the number of dogs being maintained at any one time, also does not answer the statutory question. Greyhounds listed in Mr Marie's name as an "owner" may not have been on the land because they were with a trainer; alternatively, they were only on the land for a short time (around 12 weeks) or not at all when the ownership was transferred to Mr Marie or puppies were registered to him as the owner for a limited period around whelping.
4. In these circumstances, the drawing of any inference by the Tribunal that the dogs were maintained for the purpose of sale cannot be based on a solid foundation; let alone in respect of each or any particular land tax year. Rather, I conclude on the balance of probabilities that the dogs were maintained for the purpose of breeding and/or for racing for personal enjoyment.
5. I therefore find that the Applicants have not satisfied the onus of proof. They have not established on the balance of probabilities that, in respect of each relevant land tax year, the dominant use of the land was for the maintenance of animals (greyhounds), for the purpose of selling them or their natural increase. Accordingly, the requirements of s 10AA(3)(b) of the LTMA were not satisfied and the land was not exempt from land tax.
6. The correct and preferable decision is that each of the assessments to land tax are confirmed.

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.