Federal Commissioner of Taxation v Royal Sydney Golf Club

The Federal Commissioner of Taxation appealed to the High Court of Australia against a decision of the Supreme Court of New South Wales, which had allowed an appeal by the Royal Sydney Golf Club concerning a land tax assessment. The dispute centred on whether certain parts of the club's approximately 150-acre property were exempt from land tax. The club claimed exemptions for land used as the site of its clubhouse and for land used for tennis courts, bowling greens, and squash racquet courts, arguing these were not used for pecuniary profit.

The High Court was required to determine two primary legal issues. Firstly, whether the land used as the site for the clubhouse was exempt from taxation under section 13(g)(3) of the Land Tax Assessment Act 1910-1937, which exempts land used solely as a site for a building owned and occupied by a non-profit society, club, or association. Secondly, the Court had to decide if the land used for tennis courts, bowling greens, and squash racquet courts was exempt under section 13(h) of the Act, which exempts land used primarily and principally for athletic sports or exercises (other than golf) and not for pecuniary profit. A further issue concerned the operation of section 20(3) of the Act regarding the valuation of land during a triennial assessment period.

The Court was equally divided on the exemption for the clubhouse site. Latham C.J. found that the land occupied by the clubhouse was not exempt, applying the precedent of *Stephen v. Federal Commissioner of Land Tax*, which held that land occupied by a building that does not cover the entire area cannot be considered used "solely as a site" unless the building is owned and occupied entirely separately from the rest of the land. Rich and McTiernan JJ., however, found this part of the land to be exempt, disagreeing with the interpretation of "solely as a site" in *Stephen's Case* and finding the clubhouse's purpose irrelevant to the exemption. The majority of the Court, comprising Latham C.J., Rich, and McTiernan JJ., held that the land used for tennis courts, bowling greens, and squash racquet courts was exempt under section 13(h), as it was used primarily and principally for athletic sports and not for pecuniary profit, and this exemption was not precluded by *Stephen's Case*.

As the High Court was equally divided on the exemption for the clubhouse site, the decision of the Supreme Court of New South Wales was affirmed. This meant that the land used for tennis courts, bowling greens, and squash racquet courts was exempt, and the land used as the site for the clubhouse was also deemed exempt, consistent with the Supreme Court's original ruling. The appeal was therefore dismissed.