Darley Off to High Court for Land Tax Exemption

Media Release - Monday Nov 13

Since April 2022 I have been constantly updating the industry on the status of Godolphin’s land tax exemption dispute with Revenue NSW.

A Darley loss on assessment, a win at the NSW Supreme Court, a loss at the Court of Appeal – a drama that we hope would end with victory at the highest court in the land, the High Court.

It was never a fait accompli that Darley would ever get their day in the High Court, special leave had to be applied for. Under this process the parties apply to have their cases heard by the court. During this process the court decides whether or not the appeal a party is attempting to raise merits the attention of the High Court.

In great news, on 16 October the High Court announced it will hear an appeal on land tax exemption for rural land in NSW used for a business that combined the breeding and racing of thoroughbred horses.

The taxpayer in Chief Commissioner of State Revenue (NSW) v Godolphin Australia Pty Ltd secured special leave to appeal to the High Court against the decision of the NSW Court of Appeal denying the exemption. The Court of Appeal had held that the land was not entitled to the exemption for land used for primary production within the Land Tax Management Act 1956 (NSW). That section exempted primary production land from land tax if the dominant use of the land was for the maintenance of animals for the purpose of selling them or their natural increase or bodily produce.

At the latest court hearing, the Court of Appeal had held that rural land used for a business that combined the breeding and racing of thoroughbred horses was not entitled to the exemption for land used for primary production. In other words, they successfully argued that the dominant use of the land was not for the maintenance of animals for the purpose of selling them or their natural increase or bodily produce.

The appeal court argued that the text and structure of the exemption rules as a whole, and the relevant authorities, indicated that the concepts of “use” and “purpose” are connected and should not be considered separately. In their words “use of land cannot be mixed into a conglomerate “animal maintenance” to which a purpose of sale then adheres.”

My sources advise the High Court appeal will be held around April 2024. Fingers crossed my next update has a final chapter that brings a victory to Darley, a victory that will have widespread and positive implications to many similar operations in the breeding and racing industry.

Please do not hesitate to contact the writer if you wish for me to clarify or expand on any of the matters raised in this article.

PAUL CARRAZZO CA

CARRAZZO CONSULTING PTY LTD