Exemption for Land Used for
Primary Production Business
Land Tax Assessment Act 2002, Section 30C & 30D
As at 22 May 2016
The information contained in this fact sheet should be read in conjunction with Commissioner’s
Practice LT 17 ‘Primary Production Business Exemptions’ and the Frequently Asked Questions
available on the State Revenue website.
Commencing from the 2014/15 assessment year, an exemption for land used for a primary production
business has been introduced to replace the rural business exemption, rural business 50% concession
and the Commissioner of State Revenue’s (‘Commissioner’) discretionary exemption provisions.
See Appendix A for explanations of the terms used in this fact sheet.
Primary Production Exemption on Rural Land
Rural land is exempt for an assessment year if, at midnight on 30 June in the previous financial year, it
is used solely for a primary production business.
The exemption for rural land is based on use by any person. There are no requirements for use by the
owner or a family member to qualify for exemption. Where a portion of land is being used solely for a
primary production business, a partial exemption will be allowed on that portion of the land.
Example
If two-thirds of a parcel is being used solely for a primary production business and one-third of the
land is being used for a trucking business, then two-thirds of the land will be exempt.
Primary Production Exemption on Non-rural Land
Non-rural land is exempt for an assessment year if, at midnight on 30 June in the previous financial
year, it is used for a primary production business only by an owner of the land, a person related to an
owner of the land (if the owner of the land is a family owner), or a combination of both.
Where land is jointly owned by unrelated persons or a non-family owner, an exemption will only apply if
all of the owners are using the land for a business of primary production. In these circumstances the
land will not qualify for the exemption if the land is used by a person who is not an owner.
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Applying Primary Production Factors
Example 1
Norm is a gardener who enjoys growing and exhibiting pumpkins and broccoli from his garden.
Norm keeps up with advances in growing techniques, talks with other growers, subscribes to
relevant publications and maintains government contacts to keep up with the latest information on
vegetable growing.
Usually the broccoli and pumpkin are given to friends and family. However, in recent times, people
have offered to purchase the prize winning vegetables, which Norm has been happy to sell.
Because of the interest, Norm calculated he would be able to run a profitable business if he had
more land. He bought a block of land to specifically grow broccoli and pumpkins, kept detailed
records of activities and established markets through the approaches made to him at shows.
In this instance it is a primary production business as the activity has a profit-making purpose, the
size and scale of the activity was expanded, there are detailed records, and Norm has established
a market for his broccoli and pumpkin.
Example 2
Richard is a musician who has a passion for dressage for which he owned land to breed and train
horses and maintain better mounts for competition.
Richard belongs to the local dressage club and sells unwanted and untrained horses through the
local newspaper. The sale prices are well below the expenses associated with maintaining horses.
Richard researches breeding and training and keeps up to date with the latest information.
Richard has kept detailed records of breeding and associated expenses. When the horses are too
old for competition, he puts them out to pasture as Richard cannot bear to part with old
companions.
In this instance there is no primary production business. Despite keeping records, organisation,
repetition and regularity of activity and research conducted, the activity is motivated by a desire to
compete and returns were incidental to this purpose. In addition, there is no profit, intention to
carry on a business or to make a profit and there is no significant commercial purpose or character.
Applying the Owner-user Rule
Examples







John is the owner of the land. The land is used for a primary production business by John. The
land is exempt as the owner uses the land.
John is the owner of the land. The land is leased to an unrelated neighbour David, who uses
the land for a primary production business. The land is not exempt as the user is not related to
the owner.
John is the owner of the land. The land is used for a primary production business by John and
his unrelated neighbour David under a partnership. The land is not exempt as the partnership
includes a person not related to the owner.
John is the owner of the land. The land is used in a primary production business by John’s
brother Mark. The land is exempt as Mark is a related person to the owner.
John is the owner of the land. The land is used in a primary production business by John and
John’s brother Mark in a partnership. The land is exempt as both partnership members are
related.
Unrelated persons John, David and Joan own the land and only Joan uses the land for a
primary production business. This land is not exempt as it is not used by all the owners.
Unrelated persons John, David, Joan and Sue own the land, and all four owners use the land
for a primary production business. The land is exempt as all owners use the land.
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Applying the Family Owner Test
Example
The only shareholders of J & J Pty Ltd are John, his wife Jane, and their two children. John is the
nominated shareholder. This is a family corporation because all of the shareholders are either the
nominated shareholder or family members of the nominated shareholder.
If John’s brother was a shareholder, it remains a family corporation as that relationship fits within
the definition of family member. However, if Jane’s sister was also a shareholder, it would cease to
be a family corporation as Jane’s sister is not a family member of the nominated shareholder John.
Applying the Related Person Test
Example 1: J & J Pty Ltd own land being used for a primary production business. If John is the
nominated shareholder of J & J Pty Ltd, John’s children are related to J & J Pty Ltd.
Similarly, if John was the nominated shareholder and the land was being used in a primary
production business by the trustee of the John Unit Trust, of which the only unit holder was John’s
wife, the unit trust would be related to the family corporation.
However, if there was a unit holder in the unit trust that was not a family member of the nominated
shareholder John, there is not a family relationship and no exemption would apply.
Example 2: John Family Trust owns land being used for a primary production business. If John is
the nominated beneficiary and the land is being used by John’s children, the related person
requirement would be satisfied and the land would be exempt.
If someone who is not a family member of John was also farming the property with John’s children,
this would not satisfy the related person requirement and the land would not be exempt.
Example 3: John Family Unit Trust owns land being used for a primary production business. If
John is the nominated unit holder and that land is being used by John’s brother and sister, the
related person requirement would be satisfied and the land would be exempt.
Secondary Processing of Primary Produce
The primary production exemption can apply when the primary produce is sold in a processed or
converted state. An exemption for land tax would apply to the portion of the land used to grow the
produce but would not apply to the portion of the land used to process the produce. Where land is
being used for both primary production and secondary processing as part of an integrated business, a
partial exemption would apply.
Example: Land used to grow oranges may be eligible for the primary production exemption, but not
the land or part of the land used to process the oranges into juice.
Multiple Use of Land
Any portion of the land used for a non primary production business activity (e.g. winery, restaurant,
commercial business activities, rental house) must be disclosed as it will not be entitled to a primary
production exemption.
In this situation you should provide a sketch of the whole lot(s) with your application. Please show the
position of all buildings on the lot(s) (including your private residence) and identify the use of every
building or area not used for the primary production business (e.g. vacant land, parking lot, restaurant).
Mark the position of fences, driveways etc. Please estimate the approximate metric area used for a non
primary production business.
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Changes to Exempt Land
Where land is receiving a primary production exemption, the owner must notify the Commissioner if
there are any changes to the land. Such changes include –

where the land is no longer used for a primary production business;

where unrelated owners jointly own land, but not all the owners are using the land in a primary
production business; or

in the case of jointly owned land used by a related person, where the ownership changes so an
owner no longer qualifies as a family owner or the family owners are no longer related to each
other.
The Commissioner must be notified in writing that the land is no longer used for primary production by
no later than the beginning of the assessment year following the change, or 3 months after the day of
the change, whichever is later.
Failure to notify the Commissioner may result in a penalty of up to $5,000.
How to Apply for Exemption
Form FLT30 ‘Exemption Application: Land Used for Primary Production Business’ must be completed
and lodged, together with the relevant supporting documentation. The application form is available on
the Office of State Revenue’s website.
Contact Information
Web Enquiry
www.osr.wa.gov.au/landtaxenquiry
Website
www.osr.wa.gov.au/landtax
Office
Office of State Revenue
200 St Georges Terrace
PERTH WA 6000
Office Hours
8:00 am – 5:00 pm Monday to Friday
Postal Address
Office of State Revenue, GPO Box T1600 PERTH WA 6845
Telephone
(08) 9262 1200
1300 368 364 (WA Country Callers general enquiries)
Note: The information contained in this Fact Sheet is issued for guidance purposes only. It is not an exhaustive explanation of the
provisions of the Land Tax Assessment Act 2002 and reference should be made to the Act for complete details.
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APPENDIX A – TERMS USED
Primary production means any of the following:
(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 selling them or their progeny for food;
the production or collection of their skins, shells or bodily produce; or selling parts of them or their
skins, shells or bodily produce;
(c)
the breeding, rearing or maintenance of produce animals for the purpose of selling them or their
progeny for stud purposes; selling them, or their progeny for food; the production or collection of
their skins, shells or bodily produce; or selling parts of their skins shells or bodily produce; or
(d)
the breeding or rearing of horses for the purpose of selling them or their progeny.
Note: It is not relevant that the produce is sold in a natural, processed or converted state. However, the
exemption does not extend to any portion of the land that is used for secondary production.
Primary production business means land used for primary production and that use of the land:
(a)
has significant and substantial commercial purpose or character; and
(b)
is directed at making a profit and has a prospect of making profit (whether or not a profit is
actually being made); and
(c)
is planned, organised and carried on in a businesslike manner, rather than being carried on for
recreation, hobby, sporting or similar activities; and
(d)
has the same or similar characteristics as, and is carried out in the same or a similar manner to,
the ordinary trade in that line of business taking into account scale, size, permanency, repetition
and regularity; and
(e)
is in accordance with any other prescribed factor.
Non-rural land means all land in the State:
(a)
that is in the metropolitan region; or
(b)
that is outside the metropolitan region and is zoned other than for rural purposes under a local
planning scheme or an improvement scheme.
Rural land means all land in the State other than non-rural land.
Family Owner
To determine family relationships, an individual (where land is owned jointly by two or more individuals),
or an individual that is a shareholder, unit holder or beneficiary (as the case may be) must be
nominated in writing by the family owner. Such a nomination will determine which family the
relationships are to be tested against.
If a nomination is not made within a reasonable time after a request, the Commissioner may nominate
an individual, shareholder, beneficiary or unit holder for this purpose.
Sections 30I, 30J, 30K and 30 of the Land Tax Assessment Act 2002 (‘LTA Act’) define who is related to
a family owner.
Section 29 of the LTA Act provides that family owner, in relation to land, has the meaning given in
section 30H.
A family owner of land is an owner of the land that:
(a)
is an individual; or
(b)
is a corporation in which every shareholder is either the nominated shareholder or a family
member of the nominated shareholder (‘a family corporation’); or
(c)
holds the land in the capacity of trustee of a discretionary or other trust (other than a unit trust
scheme) under which every beneficiary is either the nominated beneficiary or a family member of
the nominated beneficiary (‘a family trust’); or
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(d)
holds the land in the capacity of trustee of a unit trust scheme under which every unit is held by
either the nominated unit holder or a family member of the nominated unit holder (‘a family unit
trust scheme’).
Related Parties
Section 29 of the LTA Act provides that related, in relation to a family owner of land, has the meaning
given in sections 30I to 30 of that Act.
Section 30I of the LTA Act provides that a person is related to a family owner of land who is an
individual (‘the individual’) if the person is:
(a)
a family member of the individual; or
(b)
a partner in a partnership in which every partner is either the individual or a family member of the
individual; or
(c)
a corporation in which every shareholder is either the individual or a family member of the
individual; or
(d)
a trustee of a discretionary or other trust (other than a unit trust scheme) under which every
beneficiary is either the individual or a family member of the individual; or
(e)
a trustee of a unit trust scheme under which every unit is held by either the individual or a family
member of the individual.
Section 30J of the LTA Act provides that a person is related to a family owner of land that is a family
corporation if the person is the nominated shareholder for the corporation (‘the shareholder’) or is:
(a)
a family member of the shareholder; or
(b)
a partner in a partnership in which every partner is either the shareholder or a family member of
the shareholder; or
(c)
another corporation in which every shareholder is either the shareholder or a family member of
the shareholder; or
(d)
a trustee of a discretionary or other trust (other than a unit trust scheme) under which every
beneficiary is either the shareholder or a family member of the shareholder; or
(e)
a trustee of a unit trust scheme under which every unit is held by either the shareholder or a
family member of the shareholder.
Section 30K of the LTA Act provides that a person is related to a family owner of land that is a trustee of
a family trust if the person is an individual who is the nominated beneficiary for the trust (‘the
beneficiary’) or is:
(a)
a family member of the beneficiary; or
(b)
a partner in a partnership in which every partner is either the beneficiary or a family member of
the beneficiary; or
(c)
a corporation in which every shareholder is either the beneficiary or a family member of the
beneficiary; or
(d)
a trustee of another discretionary or other trust (other than a unit trust scheme) under which every
beneficiary is either the beneficiary or a family member of the beneficiary; or
(e)
a trustee of a unit trust scheme under which every unit is held by either the beneficiary or a family
member of the beneficiary.
Section 30 of the LTA Act provides that a person is related to a family owner of land that is a trustee of
a family unit trust scheme if the person is the nominated unit holder for the scheme (‘the unit holder’) or
is:
(a)
a family member of the unit holder; or
(b)
partner in a partnership in which every partner is either the unit holder or a family member of the
unit holder; or
(c)
corporation in which every shareholder is either the unit holder or a family member of the unit
holder; or
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(d)
a trustee of a discretionary or other trust (other than a unit trust scheme) under which every
beneficiary is either the unit holder or a family member of the unit holder; or
(e)
a trustee of another unit trust scheme under which every unit holder is either the unit holder or a
family member of the unit holder.
Section 29 of the LTA Act provides that family member has the meaning given in section 100 of the
Duties Act 2008 in which a reference to a family member includes:
(a)
a child or remoter lineal descendant of the person; or
(b)
a parent or remoter lineal ancestor of the person; or
(c)
a brother or sister of the person or remoter lineal descendant of a brother or sister of the person;
or
(d)
an aunt or uncle of the person; or
(e)
the spouse, former spouse, de facto partner of two years or former de facto partner of two years
of the person; or
(f)
the spouse or de facto partner of two years of a person mentioned in paragraph (a), (b), (c) or (d),
or more than one of them.
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