When it comes to land tax exemptions in New South Wales (NSW), there are specific provisions that cater to the needs of approved childcare and education services. These exemptions play a crucial role in encouraging and supporting the provision of quality education and care for children. In a recent case, Mourched v Chief Commissioner of State Revenue (NSW) 2023 ATC ¶20-873;  NSWSC 668, the Supreme Court shed light on the exemptions applicable to land used for childcare services, including ancillary services. Let's delve deeper into the details of this case and its implications.
Under section 10(1)(u) of the Land Tax Management Act 1956 (NSW), land used solely for the purpose of providing childcare services may be eligible for exemption from land tax. To qualify, the land must serve as the place where children are educated or cared for by the service. The case in question revolved around the interpretation and application of this exemption.
In the case of Mourched v Chief Commissioner of State Revenue, the taxpayer owned a registered lot consisting of two parcels of land. Parcel A was specifically used to operate a childcare center, while a portion of Parcel B housed a wastewater treatment and septic system necessary for the operation of the center. The Chief Commissioner issued a land tax assessment that granted an exemption for Parcel A but taxed Parcel B.
The taxpayer contested the assessment, arguing that the entire registered lot should qualify for the exemption under section 10(1)(u). Their claim was based on the fact that Parcel B was solely used to provide the treatment system without which the childcare center could not function.
The Supreme Court considered the evidence presented and agreed with the earlier decisions made by the Tribunal and the NCAT Appeal Panel. It emphasized that for the exemption to apply, the land must be "the place" where children are educated or cared for. The presence of a treatment system and a fence erected to keep children out of Parcel B did not meet the criteria for exemption. Additionally, the existence of a development application for a commercial car park on Parcel B meant that the land was not solely used for the exempt purpose.
The Court also addressed the question of whether land used in support of land used for the exempt purpose could be eligible for exemption. While the Tribunals had taken a narrower interpretation, the Supreme Court adopted a broader view. It noted that exemptions meant to encourage, reward, or protect specific activities should not be narrowly construed. Previous cases under section 10 had found that land used to provide ancillary services to exempt land could itself be exempt. By drawing parallels with C of LT v Joyce (1974) 132 CLR 22, where vacant land used for parking by attendees of a gospel hall was exempt, the Court affirmed that ancillary services to exempt land could be eligible for exemption.
In the case of Mourched v Chief Commissioner of State Revenue, the Supreme Court clarified the provisions of the land tax exemption applicable to childcare and education services in NSW. While the land tax exemption applies to land solely used for providing childcare services, ancillary services supporting the exempt land may also be eligible for exemption. However, it is essential to meet the criteria outlined in the legislation and ensure that the land is not used for purposes inconsistent with the exempted activity.
This ruling highlights the importance of understanding the intricacies of land tax exemptions, particularly for childcare and education services. It encourages the continued provision of high-quality childcare facilities and ancillary services in support of education and care.
Source: Mourched v Chief Commissioner of State Revenue (NSW) 2023 ATC ¶20-873;  NSWSC 668, 7 July 2023.
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