By Jim Main and Amanda Tully -
Snapshot
- When advising clients on whether their rural land qualifies for the Primary Production Land tax exemption, practitioners should bear in mind the relevant provisions of the Land Tax Management Act 1956.
- In assessing whether a land tax exemption applies, one must consider whether the land is used for ‘primary production’.
- Practitioners should also be aware of ruling LT097v3 which sets out the requirements for PPL exemption in relation to the maintenance of animals for sale.
As you drive to work after an unusually stress-free morning getting the kids out the door, your phone starts to ring. You see it is your client, Fabio, but you can’t answer the phone with your rowdy kids in the car so you decide to ignore it. But it rings again and again. You figure it must be urgent so you pull over and take the call.
Fabio had been a client since you started your career 17 years ago. He fancied himself as quite the wheeler and dealer but nothing he dabbled in ever paid off. A couple of years ago, he had an unexpected windfall after his wealthy best mate, Bob, died leaving him a generous sum of money.
At the time of Bob’s death, while his family made it clear they didn’t like the idea of Fabio receiving anything, they begrudgingly accepted Bob’s wishes and Fabio ended up with enough money to pursue his life-long dream of breeding, selling and racing horses.
Despite the generous gift, Fabio was still on a tight budget with little room for any unexpected or additional expenses.
With the knowledge that things were tight, and given Fabio’s past business failures, you and Fabio’s accountant discouraged him from proceeding and suggested he put his money into something more certain. However, Fabio’s desire to follow his dream was so strong that he went ahead with it anyway.
