Kiddle v Deputy Federal Commissioner of Land Tax

The case of Kiddle and Another v Deputy Federal Commissioner of Land Tax concerned appeals by Lewis Kiddle and R. G. Kiddle against assessments of the unimproved value of their pastoral property, Carabost Station, for land tax purposes between 1914 and 1918. The Deputy Federal Commissioner of Land Tax had assessed the unimproved value at £24,068. The taxpayers appealed to the High Court of Australia.

The primary legal issues before the court were how to ascertain the unimproved value of a pastoral property that comprised both significantly improved land and a portion of land that had reverted to a near-useless state due to incomplete timber treatment. Specifically, the court had to determine whether the Commissioner could attribute the unimproved value per acre of the improved section to the reverted section, and if not, what method should be employed to calculate the unimproved value of the property as a whole.

Knox C.J. held that the Commissioner's method of attributing the unimproved value per acre of the improved portion to the reverted portion was incorrect. He reasoned that the unimproved value of the entire parcel of land must be ascertained as a whole. In the absence of comparable sales of unimproved land, the court determined that the proper method was to first ascertain the improved value of the property, and then deduct the value of the improvements. The improved value was to be based on the carrying capacity of the property, with a value of £3 15s. per sheep. The value of improvements was to be calculated by considering the cost of making those improvements at the relevant date, including allowances for depreciation and loss of interest on outlay, and not exceeding the amount reasonably involved in bringing the unimproved land to its improved state.

The court allowed the appeals, ordering that the assessments be amended to reflect an unimproved value of £16,682. The respondent was ordered to pay the costs of the appeals.