An exemption from Land Tax may be available if your land, or a part of your land, is used for Primary Production.
What is Primary Production?
For Land Tax purposes, Primary Production is one or more of the following activities:
- Cultivating crops for the purposes of selling the produce (including in a processed or converted state);
- Maintaining animals or poultry for the purposes of selling them, their offspring or bodily produce;
- Cultivating or propagating plants, seedlings, mushrooms or orchids for sale;
- Commercial fishing, including preparing for fishing or storing or preserving fish or fishing gear; and
- Keeping bees for the purposes of selling their honey.
Maintaining animals or crops for personal benefit only is not Primary Production for Land Tax Exemption purposes.
There must be a sale of the products resulting from the Primary Production activity.
Land Used Primary for Primary Production
Land is primary used for Primary Production where the Primary Production activity is the main activity conducted on the land, and the main way of drawing an income from the land.
To be eligible for the Primary Production Land Tax Exemption, the eligibility criteria depend upon where the land is located:
1. Land located wholly outside Greater Melbourne:
Land located wholly outside Greater Melbourne is eligible for a Land Tax Exemption if it is used primarily for Primarily Production. It does not need to be used in a business of Primary Production, although some income must be received from the activities conducted on the land. Land located outside Greater Melbourne is land outside the Urban Growth Boundary.
2. Land that is wholly or partially in Greater Melbourne, but not in an Urban Zone:
This land will be eligible for a Land Tax Exemption in respect of Primary Production if it is used primarily for Primary Production, (and may consist of more than one parcel of land as long as both parcels are owned by the same person). This land only needs to be used primarily for Primary Production. It does not need to be used in a business of Primary Production, although some income must be received from the activities conducted on the land.
3. Land wholly or partially inside Greater Melbourne, and in an Urban Zone:
This land will be eligible for the Land Tax Primary Production Exemption if it is used solely or primarily for the business of Primary Production.
In general terms, a business of Primary Production means you use the land to conduct one or more activities, where the activities do not constitute a recreation or a hobby, but are a viable undertaking carried on in a businesslike manner, with a reasonable expectation of returning a profit.
An Urban Zone is a zone or part of a planning scheme that has been declared an Urban Zone.
Depending on where the land is located, agisting land (that is allowing another person to graze their animals such as horses on your land for a fee) may be Primary Production for Land Tax Exemption purposes.
- If the agisted land is located wholly outside Greater Melbourne, or if the land is wholly or partially in Greater Melbourne, but not in an Urban Zone, the land may qualify for Primary Production Exemption if the owner of the animals normally sells the animals or their offspring.
- Land agisted for horses kept for recreational purposes will not qualify for this exemption.
- Where agistment takes place on land that is wholly or partially in Greater Melbourne and within an Urban Zone, that land is ineligible Primary Production Exemption. This is because the owner of the land must use the land for a business of Primary Production to qualify for the Exemption, and therefore must be engaged in the business of maintaining animals to sell, not simply maintaining animals for a fee (agistment).
- Each case needs to be considered on its own merits, and on the facts as they pertain to the land in question.
You will see from the above that the location of the land is important, as is equally the activity conducted on that particular land.
We can assist and advise landowners (whether they be individuals, companies or trusts) as to the eligibility of a Land Tax Exemption for Primary Production purposes.
With the land re-valuations occurring in 2016, it is anticipated that we will see a significant jump in land tax next year (2017).
We are pleased to assist with enquiries and objections that clients may have, and the important thing to do is to act immediately upon receipt of the assessment.
Peter Bazzani LLB BSc
Bazzani Scully Priddle