Carey and Commissioner of State Revenue

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: DEVELOPMENT & RESOURCES

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION: CAREY and COMMISSIONER OF STATE REVENUE [2006] WASAT 51

MEMBER: JUSTICE M L BARKER (PRESIDENT)

HEARD: 15 FEBRUARY 2006

DELIVERED : 2 MARCH 2006

FILE NO/S: DR 581 of 2005

BETWEEN: PETER WILLIAM CAREY
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Taxation - Stamp Duty - "Instrument of conveyance" - Whether s 75F Stamp Act 1921 (WA) applies to instrument of conveyance of an interest in farming property - "Farming property" - "Farming land" - Application of s 75E(3) - Whether applicant must personally/physically farm subject land immediately after conveyance - Meaning of "use" - Whether leased land falls within meaning of s 75E(3) - Application of 75E(3a)

Legislation:

Interpretation Act 1984 (WA), s 19(1)(b)(i)
Revenue Laws Amendment and Repeal Bill 2004 (WA)
Stamp Act 1921(WA), s 16(1), s 74(1), s 75D, s 75D(1), s 75E, s 75E(1), s 75E(1)(a), s 75E(3), s 75(3a), s 75F
Taxation Administration Act 2003(WA)

Result:

The decision of the Commissioner of State Revenue is affirmed. The applicant's application is dismissed.

Category: A

Representation:

Counsel:

Applicant: Self-represented
Respondent: Ms Panetta

Solicitors:

Applicant: Self-represented
Respondent: State Solicitor's Office

Case(s) referred to in decision(s):

Craig Williamson Pty Ltd v Barrowcliff [1915] VLR 450
Dival Nominees Pty Ltd and Commissioner of State Revenue [2005] WASAT 342
Ryde Municipal Council v Macquarie University (1978) 139 CLR 633

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant and his sister became the registered proprietors of farming land, following the death of their mother in January 2002.
Prior to the mother's death, since March 1998, the farming land had been leased to a third party which, pursuant to the lease, was entitled to exclusive possession of the farming land.
Following the death of the mother and at all material times, the farming land continued to be leased to that third party.
In February 2005, the applicant's sister signed an offer and acceptance form whereby she agreed to transfer her half interest in the farming land to the applicant.
The Commissioner of State Revenue assessed the offer and acceptance as an "instrument of conveyance" and under the Stamp Act 1921 (WA) assessed it for stamp duty.
The applicant objected to this assessment and claimed that the instrument of conveyance was exempt from stamp duty pursuant to s 75E of the Stamp Act.
In short, s 75E(3) provides an exemption from stamp duty where relevantly there is a transfer of farming property to a family member of the transferor and the family member "to whom the farming property is conveyed or transferred intends to continue to use the farming property in the business of primary production."
The Tribunal found that while there was an instrument of conveyance pursuant to which the transferor transferred their interest in the farming property to a family member, it could not be said that the family member intended "to continue to use the farming property in the business of primary production" because the farming property at all material times, both immediately before the transfer and immediately after the transfer, would remain leased to a third party which was entitled to exclusive possession of the property.

Issue

On 10 February 2005 Mr Carey's sister executed an offer and acceptance form whereby she agreed to transfer her half interest in an estate in fee simple in Kojonup Locations 502, 503, 504, 624 and 657 being the whole of the land comprised on to Certificate of Title Volume 2128 Folio 865, to Mr Carey for valuable consideration.
At that material time the farming land was leased to an unrelated third party under a lease executed on 21 March 2004 for a term of 3 years, to expire on 28 February 2007.
The principal issue for determination in this review application is:
Whether the stamp duty exemption contained in s 75F of the Stamp Act 1921 (WA) (Stamp Act) applies to the instrument of conveyance by which Mr Carey's sister transferred her half interest in the farming property to him.
Sub‑issues cited by the parties are:
(a)What is the instrument of conveyance for the purposes of s 75F of the Stamp Act;
(b)Was the instrument of conveyance made by the transferor or to a "family member of the transferor" for the purposes of s 75E(1) of the Stamp Act;
(c)Is the subject land "farming property" within the meaning of that term as used in s 75D(1) of the Stamp Act;
(d)Does the phrase "intend to continue to use the farming property in the business of primary production" in s 75E(3) of the Stamp Act require the applicant personally or physically farm the land immediately after the execution of the transfer.
(e)Even if the word "use" in s 75E(3) of the Stamp Act does not require the applicant personally or physically to farm the land immediately after the execution of the transfer, does the leasing of the land to the third party in the circumstances entail the applicant "using" the farming property "in the business of primary production" within the meaning of s 75E(3) of the Stamp Act.

Facts

The farming land was personally farmed by Mr Carey until 1 March 1998.
Mr Carey's mother became ill in late 1997 and he and his mother moved to Perth in or about March 1998. Mr Carey's mother passed away on 8 January 2002.
Prior to her death, Mr Carey's mother was the sole proprietor of the farming land.
Under his mother's will, the farming land was left to Mr Carey and his sister as tenants in common in equal shares. The transfer of these interests under the will from the estate to Mr Carey and his sister was registered on 11 March 2002.
The farming land was leased to an unrelated third party, under a lease executed 21 March 2004, for a term of 3 years to expire on 28 February 2007. However, prior to the grant of that lease, the farming land had been continuously leased under various leases to the same lessee since 1 March 1998.
Mr Carey accepts that during the current lease period he cannot personally farm the farming land.
As noted earlier, on 10 February 2005 Mr Carey's sister executed an offer and acceptance form whereby she agreed to transfer her half interest in the farming land to Mr Carey for valuable consideration.
Mr Carey states that once the current lease of the farming land expires in March 2007, he will solely farm the farming land.

What is the instrument of conveyance for the purposes of s 75F of the Stamp Act

Section 75F Stamp Act provides:
"If the Commissioner is satisfied that this Part applies to an instrument of conveyance, the Commissioner may, on receiving an application under s 75H –
(a)exempt the instrument from duty; or
(b)..."
Section 75F appears in Part IIIBAA – Certain transfers of farming property which in part was inserted by No. 79 of 1999 s 4(1). Section 75E of the Stamp Act also appears in the same Part.
Section 75E relevantly provides that:
"(1) Subject to subsections (2), (3), (4), (5) and (6), this Part applies in respect of an instrument of conveyance made by a person ("the transferor"), or made by a trustee on behalf of, and at the direction of, a person ("the transferor") -
(a)of farming property to a family member of the transferor;
(b)of an interest in a farming partnership to a family member of the transferor;
[(c)deleted]
(d) of -
(i) farming property; or
(ii) an interest in a farming partnership,
to a trustee where after the transfer or conveyance
the subject of the instrument, the beneficial owner
of the trust property will be a family member of
the transferor; or
(e)of -
(i) farming property; or
(ii) an interest in a farming partnership,
[(iii) deleted]
to a discretionary trustee of a discretionary trust, where -
(iv) all the persons who have a share or interest in the trust property, whether vested or contingent, or who may benefit from the discretionary trust are family members of the transferor; and
(v) the transferor does not control the discretionary trust.
(2) This Part -
(a) applies if the transfer or conveyance the subject of the instrument of conveyance referred to in subsection (1) is made by a transferor to any combination of the persons referred to in that subsection; and
(b) does not apply to a transfer or conveyance the subject of the instrument of conveyance referred to in subsection (1) if the transferees include a person who is not one of the persons referred to in that subsection.
(3) This Part applies only where -
(a) the family member, trustee or discretionary trustee to whom the farming property is conveyed or transferred intends to continue to use the farming property in the business of primary production;
(b) the farming partnership in which an interest is conveyed or transferred to a family member, trustee or discretionary trustee intends to continue to use the farming property in the business of primary production; or
(c) section 75I applies and the farming company in which an interest is conveyed or transferred to the family member, trustee or discretionary trustee intends to continue to use the farming property in the business of primary production.
(3a) However, if -
(a) part of the farming property consists of farming land;
(b) some (but not all) of the farming land is leased to another person; and
(c) under the lease, the lessee is using the leased land solely or principally for the purposes of silviculture or reafforestation,
then this Part applies under subsection (3) as if the family member, trustee or discretionary trustee, or the farming partnership or farming company, intends to use or continue to use the leased portion of the land in the business of primary production."
The first sub‑issue that needs to be determined in the course of dealing with the primary question of exemption from stamp duty is whether there is an "instrument of conveyance" to which duty is applicable and which may be the subject of exemption under s 75F.
The Commissioner and Mr Carey are in agreement that the offer and acceptance executed by Mr Carey and his sister on 10 February 2005 satisfies the definition of an "instrument of conveyance" set out in s 75D(1) of the Stamp Act.
The definition of "instrument of conveyance" provided by s 75D(1) is:
"a conveyance or transfer of property or other instrument chargeable with duty -
(a)under item 4 of the Second Schedule; or
(b)at a rate of duty provided for in item 4 of the Second Schedule,
but does not include a Part IIIBA statement."
A "Part IIIBA statement" is defined in s 4 of the Stamp Act to mean:
"(a)a section 76AG statement;
(b)a section 76AN statement;
(c)a section 76AT statement; or
(d)a section 76ATG statement."
The parties agree the offer and acceptance executed on 10 February 2005 is not a Part IIIBA statement by virtue of this definition.
Section 74(1) of the Stamp Act provides that every contract for the sale of any estate or interest in property shall be charged with the same ad valorem duty to be paid by the purchaser as if it were an actual conveyance on sale of the estate, interest or property contracted or agreed to be sold. Section 16(1) specifies that the duty to be charged in respect of the instruments specified in the Second Schedule shall be the duties specified opposite to those instruments in that Schedule (subject to any exemptions in the Stamp Act). Accordingly, item 4 relates to conveyances on the sale of property.
As a result, the offer and acceptance document executed on 10 February 2005 is, subject to any exemption, a conveyance or transfer of property chargeable with duty under item 4 of the Second Schedule; it is therefore an "instrument of conveyance" as defined by paragraph (a) of the definition of “instrument of conveyance” in s 75D(1)of the Stamp Act.

Was the instrument of conveyance made by the transferor or to a "family member of the transferor" for the purposes of s 75E(1) of the Stamp Act

As noted in the course of dealing with the first sub‑issue, duty will be payable on the instrument of conveyance unless an exemption applies. If the terms of s 75E can be satisfied in the case of the instrument of conveyance, then an exemption may be claimed.
As may be seen from a reading of s 75E, a number of pre‑conditions must be satisfied. The first is that the instrument of conveyance made by the "transferor" (that is, in this case, Mr Carey's sister) must be in respect of one of four types of interest specified in sub‑section (1)(a), (b), (d) or (e). Of these, sub‑section (1)(a) is the only one of relevance in this case. It follows that it is necessary, if an exemption is to be applied, to demonstrate that the instrument of conveyance is in respect "of farming property to a family member of the transferor".
There are two questions tied up in this issue: (1) whether the instrument of conveyance is in respect "of farming property", and (2) whether it is to "a family member of the transferor".
Dealing with the second question first, the Commissioner and Mr Carey agree that the instrument of transfer involves the transfer of an interest "to a family member of the transferor".
The expression "family member" is defined by s 75D(1) of the Stamp Act and in paragraph (c) of the definition includes "a brother or sister of the person or remoter lineal descendant of a brother or sister of the person".
In this case, the interest is transferred to Mr Carey, who is the brother of the transferor, who is his sister.

Is the subject land "farming property" within the meaning of that term as used in s 75D(1) of the Stamp Act

The next question arising under s 75E is then whether the instrument of conveyance is in respect "of farming property".
Section 75D(1) defines "farming property" to mean:
"(a)farming land; or
(b)personal property which is used solely or principally in connection with the business of primary production."
Section 75D(1) further defines "farming land" to mean:
(a)land that is used solely or principally for the purpose of primary production; or
(b)land that is used solely or principally for the purpose of silviculture or reafforestation"
So far as the farming land here in question is concerned, there is no use for silviculture or reafforestation. The definition relating to "primary production" is however potentially relevant in this case.
"Primary production" is defined by s 75D(1) of the Stamp Act to mean:
"(a)the growing or rearing of plants (including trees, fungi or any crop) for the purpose of selling them, parts of them or their produce;
(b)the breeding, rearing or maintenance of living creatures for the purpose of -
(i)selling them (or their progeny) for food;
(ii)the production or collection of their skins, shells or bodily produce; or
(iii)selling parts of them or their skins, shells or bodily produce;
(c)the breeding or rearing of horses for the purpose of selling them or their progeny"
Paragraphs (a) and (b) are relevant in this case.
Counsel for the Commissioner of State Revenue argues that, by virtue of the inclusion of the word "used" in the definition of "farming land" when applying the definition of "farming land" to the reference of "farming property" in s 75E(1)(a), there is a requirement that immediately prior to the transfer of property, the land in question must have been "used" for the purpose of primary production.
Counsel further contends that s 75E(1)(a), by virtue of the incorporation of the definition of "farming land", makes it clear for what purpose the land must have been used prior to the transfer.
With those contentions the Tribunal agrees. In other words, to show that it is "farming land", and thus "farming property", that is the subject of an instrument of conveyance, it must necessarily be land that at the time of the transfer is, in fact, used solely or principally for the purpose of primary production (so far as the facts of this case are concerned). For example, it would not be possible to satisfy the terms of s 75E by stating a future intention to use land for the purposes of primary production, if the land is not then – at the time of the conveyance – solely or principally to be used for that purpose.
The Commissioner accepts that immediately prior to the transfer in this case, the land was being used for primary production, but only because the unrelated third party which held the land under a lease, used it for that purpose.
Counsel for the Commissioner argues that the issue thus arises in relation to the construction to be given to the word "used" for the purpose of s 75E(1), as to whether the "farming land" must have been farmed physically or personally by the family members involved, or whether the physical or personal farming by a third party under a lease giving it exclusive possession is sufficient for these purposes.
Thus, counsel for the Commissioner contends there are two possible interpretations for the word "used" in the definition of "farming land" when applied to s 75E(1). First, that the family members involved must carry out the farming work personally (that is, there must be active "use" – see Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 at 664). Alternatively, the family members may still be said to "use" the land for primary production by having a third party carry out the farming work, for example under a lease (in this context, one would have a "use" in the passive sense – Ryde Municipal Council v Macquarie University at 652 – 653).
Counsel notes that the word "use" has not been judicially considered in the context in which it is used in s 75E and s 75D. Counsel acknowledges that the word "used" is a word of wide import and that its meaning in any particular case depends to a great extent on the context in which it is employed: Ryde Municipal Council v Macquarie University at 637.
Counsel further notes that the word "use" is also used in s 75E(3).
Counsel then points to a rule of statutory interpretation to the effect that words repeated in a provision are to take the same meaning throughout the provision unless a contrary intention is evident: see Pearce & Geddes Statutory Interpretation in Australia 5th Ed. 2001 – pages 90‑91; Craig Williamson Pty Ltd v Barrowcliff [1915] VLR 450 at 452. Counsel contends there is no contrary intention evident in s 75E which would necessitate a different meaning being given to "use" in the phrase "intends to continue to use" at s 75E(3) and "used" in the definition of "farming land" which is imported into s 75E(3) through the words "farming property", which is defined to include "farming land".
This issue re-emerges, as will be seen soon, in a consideration of the fourth sub‑issue.
Counsel for the Commissioner further argues that a comparison of the surrounding provisions indicates that the term "use" or "used" in s 75E(1) and s 75E(3), when relating to farming land used for the purpose of "primary production" and relating to "silvicultural or reafforestation", is intended to have a meaning consistent with the "active" view – that is to say, there should be demonstrated a physical use by the family member. It is contended that this can also be seen from a comparison of s 75E(3a) of the Stamp Act, which specifically talks of "leases". Counsel says there is no such equivalent mention of "leases" in s 75E(3) of the Stamp Act, which deals with "primary production" as strictly defined only. Therefore, counsel says, the absence of a mention of "leases" outside the s 75E(3a) context, can be said to have been deliberate.

Further, counsel for the Commissioner contends that the concluding lines of s 75E(3a) indicate that the leasing of land for silviculture or reafforestation is to be treated as if such leased land was used for "primary production", as per s 75E(3). Section 75E(3a) does not treat the leasing of other portions of the farming land for "primary production" activities.
Counsel also contends that the meaning to be attributed to the word "used" is ambiguous in the s 75D and s 75E context and so regard can be had to extrinsic materials such as Hansard, pursuant to s 19(1)(b)(i) Interpretation Act 1984 (WA) to give it a proper interpretation.
At this point it is appropriate for the Tribunal to indicate that it does not consider that there is any ambiguity in the meaning of the expression "farming property" to the extent that it incorporates the definition of "farming land" in s 75D(1)(a). The relevant meaning, in the present context, is "land that is used solely or principally for the purpose of primary production".
This definition does not invite any assessment as to the identity of the person who uses the land solely or principally for the purpose of primary production. It is an objective test concerning the use of the land.
The Tribunal considers it inappropriate to embark upon the type of analysis contended for on behalf of the Commissioner. To do so would strain the clear and unambiguous language employed by the parliamentary draftsman in the definition of "farming land" in s 75D(1)(a).
What objectively needs to be shown in order to satisfy this pre-condition for the application of s 75E, is that land the subject of the instrument of conveyance "is used solely or principally for the purpose of primary production".
In this case, that pre‑condition is satisfied because, as a matter of fact and objectively speaking, the land is used, albeit by the unrelated third party lessee, for "primary production" as defined.

Does the phrase "intend to continue to use the farming property in the business of primary production" in s 75E(3) of the Stamp Act require that the applicant personally or physically farm the land immediately after the execution of the transfer?

The issue whether the family members themselves must have been farming the property (to put the proposition colloquially) both immediately before and after the time of the conveyance or transfer of the interest from the transferor to the family member, directly arises because of the terms of s 75E(3).
Relevantly, s 75E(3)(a) provides that Part IIIBA applies only where:
"(a)the family member... to whom the farming property is conveyed or transferred intends to continue to use the farming property in the business of primary production"
The Commissioner contends that the expression "intends to continue to use" requires the "active" use referred to earlier, so that Mr Carey must intend himself – not through a lessee – to actively farm the property immediately after the conveyance or transfer to him of the interest of the transferor.
On the other hand, Mr Carey contends that the requirement that he should intend "to continue to use" the farming property in the business of primary production is satisfied by his intention that the lessee should continue to farm the property and his intention to physically farm the property when the current lease expires.
The relevant literal wording of this provision is that "the family member... intends to continue to use the farming property in the business of primary production". It may be argued, as the Commissioner argues, that if an unrelated lessee, under a lease giving it exclusive possession, actually and actively farms the property for the relevant purpose, it is not open to the family member to claim that they intend to continue to use the farming property in that way.
As decisions such as Ryde Municipal Council v Macquarie University show, and as the Tribunal recently explained by reference to that authority and others in Dival Nominees Pty Ltd and Commissioner of State Revenue [2005] WASAT 342, the noun "use", the verb "to use" and variations of them are capable of being interpreted in different ways. Accordingly, as explained and accepted earlier, the particular statutory context in which words are used must be closely considered before particular judicial pronouncements are applied in other statutory contexts.
In this case, the Tribunal is left in something of a quandary as to what was intended by the Parliament when it inserted s 75E(3a) and what the relevant words identified mean. Why was part IIIBAA of the Stamp Act inserted in 2004? Why is it that only s 75E(3a) contains some reference to the leasing of land? Does that subsection have a bearing on the proper interpretation of s 75E(3)(a)?
Section 75E(3a) provides as follows:
"However, if -
(a)part of the farming property consists of farming land;
(b)some (but not all) of the farming land is leased to another person; and
(c)under the lease, the lessee is using the leased land solely or principally for the purposes of silviculture or reafforestation, then this Part applies under subsection (3) as if the family member, trustee or discretionary trustee, or the farming partnership or farming company, intends to use or continue to use the leased portion of the land in the business of primary production."
Interestingly, it has the effect that if part of farming land, but not all of it, is leased to another person and, under the lease, the lessee is using the leased land solely or principally for the purposes of silviculture or reafforestation, then Part IIIBAA applies under subsection (3), as if the family member "intends to use or continues to use the leased portion of the land in the business of primary production".
Subsection (3a) rather suggests that absent such a lease, a lease of land to another person makes it not possible for a family member to whom the farming property is conveyed or transferred to demonstrate that they "intend to continue to use the farming property in the business of primary production".
Nonetheless, after considering the terms of subsection (3a), the Tribunal still remains uncertain as to the proper meaning of subsection (3).
In these circumstances, because there is ambiguity in the proper interpretation, the Tribunal considers it appropriate to have regard, pursuant to s 19(1)(b)(i) of the Interpretation Act, to extrinsic materials, including Hansard and other materials in the Commissioner's possession, that may help to explain the reason why Part IIIBAA was inserted in 2004 and how s 75E is intended to operate and what the relevant meaning of subsection (3) is.
Section 75E(3a) of the Stamp Act was inserted in 2004 by the Revenue Laws Amendment and Repeal Bill 2004. Section 75E(3) is at it currently stands was inserted by the same Bill.
Prior to 2004, s 75E(3) of the Stamp Act was first inserted in 1994 by the Stamp Amendment Bill (No 2) 1994, with minor amendments following in 1996 and 2003.
Prior to its deletion in 2004, s 75E(3) provided as follows:
"(3)This Part applies only where the family member ... referred to in subsection (1), to whom the farming property is conveyed ... intends to continue to use the farming property in the business of primary production."
A comparison of the pre-2004 and post‑2004 s 75E(3) suggests that the two provisions were largely and substantively similar. The pre‑2004 definition of "farming property" and "primary production" were identical. The only post‑2004 amendment to a key definition contained in s 75D concerned "farming land". Before 2004, the definition did not include the reference to silviculture or reafforestation.
Reading the Second Reading Speeches of the Stamp Amendment Bill (No 2) 1994 suggests that the family members involved in the transfer must have been physically using the land themselves for primary production prior to the transfer, and that the family member or members to whom the land is transferred must then physically use the land for primary production thereafter.
When introducing the Bill, Mr Court, the Premier and Treasurer, stated in relation to the family farming provisions:
"The Bill seeks to amend the Act to exempt from duty transfers of farming property between family members, subject to certain conditions. A farm currently can be transferred on the death of the owner by way of a will for only a $5 nominal stamp duty charge. However, if the transfer is undertaken while the owner is living, stamp duty is charged on the transfer at ad valorem duty rates. The stamp duty on such transfers can total as much as $30,000 [sic] for many farms. Stamp duty therefore is a disincentive to the transfer of ownership. This disincentive often leads to the postponement of the transfer of a farm to a family member until the owner's death, which can reduce the incentive for family members who work the land to optimise the farm's productivity until certainty of ownership is available. By removing this disincentive the proposed exemption should enable ownership of the farm to be passed on to those family members undertaking most of the work on the farm. This should increase the commitment of those family members to the long term performance of the farm. For example, usually such transfers are from farmers to the children. With the certainty provided by ownership of the property, those children will be more likely to improve the property and to introduce new and more efficient farming techniques."
Mr Court went on to explain:
"The proposed exemption will apply to transfers by way of either sale or gift. However, in all cases, the family members to whom the farming property is transferred must themselves or through their acquired interest in the partnership or company continue to undertake the business of primary production."
The committee debates of the Revenue Laws Amendment and Repeal Bill 2004 also suggest that the inclusion of s 75E(3a) Stamp Act was intended to be a specific and discrete exception, rather than an additional example of traditional farming uses. The following exchange occurred in relation to the family farming provisions:
"Mr C J BARNETT: Clauses 27 and 28 relate to extending the family farm conveyance duty exemption in a number of circumstances to include land leased to a third party for purposes such as tree farming, reafforestation or whatever. Why did this issue arise? Did particular circumstances arise, or is it a more general issue that has arisen with the tax office?
Mr E S RIPPER: A particular circumstance arose in which a transfer of farming property between family members was proposed. Such a transfer would have been exempt from stamp duty but for the fact that part of the land was leased to a third party for reafforestation for a plantation. It seems a perverse outcome of the law that the transfer of farming land between family members should in effect be penalised if someone is engaged in leasing out the land for a plantation. We obviously want more trees to be planted on farming land to help deal with the question of salinity. The Government does not want the tax system to be some sort of disincentive to a farmer leasing land for plantation purposes. If the legislation is not amended, a circumstance could arise in which a farmer may decide to not lease land because such a lease might later get in the way of a contemplated transfer of the farming property to another family member. A specific circumstance was drawn to the attention of the Office of State Revenue. The Office of State Revenue, the Department of Treasury and Finance and the Government examined the matter and decided that a policy change was warranted."
At the hearing in these proceedings, the President drew to the attention of counsel for the Commissioner, Mr Ripper's statement that, in the absence of a provision such as subsection (3a), the law produces a "perverse outcome". It appeared that the Government had received specific advice from the Office of State Revenue and the Department of Treasury and Finance that a policy change was warranted. As a result, the President requested additional information from the Commissioner as to what the circumstances were that warranted that policy change.
In the Commissioner's Supplementary Submissions, the Tribunal was supplied with the Explanatory Memorandum to the Revenue Laws Amendment and Repeal Bill 2004. As to the amendments proposed to s 75E, cl 28 of the Explanatory Memorandum states:
"This clause repeals section 75E(3) and inserts new subsections (3) and (3a).
Section 75E(3) provides that where farming property is conveyed or transferred to a family member, the exemption from conveyance duty will apply only where it is intended that the property will continue to be used in the business of primary production. The replacement of the previous subsection (3) is necessary to ensure that the exemption for the conveyance or transfer of an interest in a farming partnership, or an interest in a farming company operates as intended.
Section 75E(3a) is inserted to prevent the exemption being used where the only farming land being conveyed is the leased land. Farming land that is leased to a third party for the purposes of silviculture or reafforestation must be conveyed in conjunction with other farming land that is not leased. The portion of the farming land that is not leased must also continue to be used for the business of primary production."
As can be seen, it is explicitly stated here that s 75E(3a) is inserted to prevent the exemption being used where the only farming land being conveyed is the leased land. Farming land that is leased to a third party for the purpose of silviculture or reafforestation must be conveyed in conjunction with other farming land that is leased. In other words, it was not intended that farming land that was wholly leased could be the subject of a conveyance that gained a benefit of the s 75E exemption.
The Tribunal was further advised by the Commissioner in the Supplementary Submissions that the factual situation that gave rise to the insertion of s 75E(3a) was as follows:
"•Mr WDP applied to the Office of State Revenue on 14 December 2000 for an exemption under section 75E(3) Stamp Act as it then stood.
•Mr WDP was transferring a half interest in land to Mr MDP.
•Mr WDP was the father of Mr MDP.
•In a letter written by Mr WDP dated 27 June 2001, he explained the following:
•A small portion of land to be transferred was "under lease for trees".
•The land upon which the trees were planted was very poor land and had become salt affected due to the rising water table.
•Of the land upon which trees were planted, several Government Departments including the Department of Conservation and Land Management, Waters and Rivers Commission and the Public Works Department had put pressure on Mr WDP to plant the trees to reclaim the land and lower the water table. The pressure had been applied for 10 years.
•Mr MDP had come home to work on the farm at the age of 15 years and had farmed with Mr WDP continuously for the past 21 years.
•The trees had very little affect on their farming income.
•The trees are solely there to reduce the water and salt and in the long term, to reclaim the land.
•The OSR Revenue Officer who received the application wrote on the bottom of the application "as portion of farm rented out application for exemption on stamp duty on Part IIIBAA disallowed..."
Having regard to these extrinsic materials, it now is reasonably clear that s 75E(3a), and when read with the whole of s 75E, means that immediately before the instrument of conveyance taking effect and upon that instrument taking effect, the family members involved must themselves be engaged in the business of primary production. In this case, where the land at that time was leased, and remained leased following the execution of the instrument of conveyance, to an independent third party, it cannot be said that either the transferor or the transferee were in a position to satisfy the requirements of s 75E.
While in some ways this interpretation seems a little unfortunate for the parties to the instrument of conveyance concerned, it is now relatively clear that s 75E is not intended to apply to land which has been leased and remains leased at the time of the conveyance; it seems to be designed to facilitate the very particular circumstances where a family "on the land" wants physically to stay "on the land". Once a farmer leases the land and moves to town, they no longer relevantly remain "on the land" for the purposes of s 75E(3).

Conclusion and order

For the reasons set out above, the application of Mr Carey to review the Commissioner of State Revenue's decision to dismiss his objection to the assessment of stamp duty, must be refused.
The Tribunal orders:
1.The decision of the Commissioner of State Revenue dismissing the objection to the assessment of stamp duty of the applicant is hereby affirmed.
2.That the applicant's application is dismissed.
I certify that this and the preceding [87] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established