In the case of Moore v Chief Commissioner of State Revenue  NSWCATAD 88 the primary question for the Tribunal was whether the dominant use of the land by Mr Moore (Taxpayer) was for the purpose primary production. The land was being used to cultivate mung beans, alfalfa and snow peas for sale. The Taxpayer also used the land to package sprouts, which was a requirement of the relevant packaging licence held by the Taxpayer.
The Chief Commissioner of State Revenue took issue with the extent of primary production use of the land, based on other uses of the land, including general warehousing. The Chief Commissioner also submitted that the packaging of sprouts by the Taxpayer constituted secondary production (and therefore not primary production).
It was held by the Tribunal that on a broad holistic test, the cultivation activities were the dominant use of the land. Further, the Tribunal rejected the contention that the packaging of sprouts was secondary production on the basis that there was no change to the sprout product by packaging.
This decision shows that when it comes to determining the question of dominant use of land, a common sense approach should be applied, taking into account the connected and ancillary uses which form part of the leading use.
Senior Member R Hamilton SC referred to all the relevant factors pertaining to the use of the land and whether the dominant use was primary production. However, he commented that it is not a useful approach to question the use of land by breaking down the various uses into smaller and smaller parts.
The Senior Member considered evidence led by the taxpayers indicating that the husband and wife worked full-time in the business together with the particular uses of the land as follows:
- Lot 1, being approximately 500sqm, provided access from the public road to Lot 2. It contained a storage shed which was rented to an arms’ length tenant who used the balance of the land for parking and deliveries. Lot 1 contained a shipping container for disposing of rubbish.
- Lot 2, being approximately 620sqm, housed a larger warehouse/shed which contained two levels used to prepare, sprout and store seeds in low light conditions. The shed contained a packing area, cool room, office space and amenities. Lot 2 also provided forklift storage, dumpster rubbish, pallet storage and space for parking a delivery vehicle and car. The land contained two greenhouses for growing sprouts. However, one of these greenhouses was damaged in a storm and facilities were moved to operate in one greenhouse during the relevant year. Separately, a small area of the land was used for seed roasting.