Royal Sydney Golf Club v Federal Commissioner of Taxation

The Royal Sydney Golf Club (the appellant) appealed against a land tax assessment made by the Federal Commissioner of Taxation (the respondent) on the unimproved value of land owned by the club. The land in question was laid out as a golf course and was subject to the County of Cumberland Planning Scheme Ordinance, which reserved it for open space and prohibited development. The appellant contended that these restrictions significantly reduced the land's unimproved value, while the Commissioner's assessment did not adequately account for this.

The primary legal issues before the court were whether the land should be valued without regard to the County of Cumberland Planning Scheme Ordinance, and if not, whether the land qualified as "vacant land" under the Ordinance. The court was required to determine the correct method for valuing land subject to such planning restrictions, considering the potential for future development or relaxation of those restrictions.

The court held that the land must be valued with regard to the provisions and effect of the County of Cumberland Planning Scheme Ordinance. It was determined that the land, with the exception of certain small ancillary buildings, was to be considered "vacant land" under the Ordinance, meaning it was reserved for open space with significant restrictions on development. The court rejected a valuation method that sought to ascertain the value free from restrictions and then deduct for their effect. Instead, it reasoned that the restrictions were unlikely to be removed and that the possibility of obtaining permission for development was speculative. Therefore, the land should be valued based on its restricted use as an open space, with a small allowance for the speculative chance of future development.

Ultimately, the appeal was allowed. The assessment was remitted to the Commissioner to be amended by altering the unimproved value of the non-exempt land to £192,425. The appellant was awarded costs for the case stated to the Full Court and half of its other costs of the appeal.