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An exemption from land tax may be available if your land or part of your land is used for primary production. An exemption may also be available for land being prepared for primary production.

To be eligible for this exemption, you must satisfy certain conditions, which vary depending on the location of the land.

Exemptions may be available for land located:

  • Wholly outside of greater Melbourne if it is used primarily for primary production.
  • Wholly or partly within greater Melbourne but not within an urban zone if it is used primarily for primary production.
  • Wholly or partly within greater Melbourne and wholly or partly within an urban zone if it is used solely or primarily for the business of primary production.

What is primary production?

For land tax purposes, primary production is one or more of these activities:

  • Cultivating crops for the purposes of selling the produce, including in a processed or converted state.
  • Maintaining animals or poultry for the purposes of selling them, their offspring or bodily produce.
  • Keeping bees for the purposes of selling their honey.
  • Commercial fishing, including preparing for such fishing or storing or preserving fish or fishing gear.
  • Cultivating or propagating plants, seedlings, mushrooms or orchids for sale.

Maintaining animals or growing crops for personal benefit only is not primary production for land tax exemption purposes. There must be an intention to sell the products resulting from the primary production activity.

Activities which are incidental to primary production, such as storing equipment and providing access to resources used in the primary production process (such as water from dams), are considered to be part of the primary production activities.

Secondary activities, such as meat and dairy processing and selling activities, do not constitute primary production.

Land used primarily for primary production

Land which is used for primary production and for no other purpose is considered to be used primarily for primary production when the primary production activity has a degree of substance and intensity. Land is not considered to be used primarily for primary production where the primary production on the land is minimal or token, or where the land is substantially unused.

Land which is used for multiple purposes is considered to be used primarily for primary production when the primary production activity is the predominant use of the land, having regard to the area of the land used for each purpose and the time, labour and resources used for each purpose. 

Example 1

Land outside greater Melbourne comprising 10 hectares is used to graze a total of 8 cattle for 6 months of the year. The primary production activity is minimal and does not have the requisite degree of substance and intensity to overcome the proposition that the land is substantially unused. The land is not regarded as used primarily for primary production and is not exempt.

Example 2

Land outside greater Melbourne is used as a vineyard (90%), and café (10%). The operators of the land invest relatively more of their time, labour and resources in the vineyard (which grows grapes for sale to local wineries) than the café (which is a relatively minor activity servicing visitors). Having regard to the areas of the land used for each purpose and the time, labour and resources used for each purpose, the land is regarded as primarily used for the vineyard activities and is wholly exempt.

Part of the land is used primarily for primary production

If land (considered as a whole) is not used primarily for primary production, a partial exemption will apply if part of the land is used primarily for primary production.
 

Example 3

Land outside greater Melbourne is used as a vineyard (50%) and restaurant and function centre (50%). The operators of the land invest relatively more of their time, labour and resources in the restaurant and function centre (which provides dining, wedding and corporate facilities) than the vineyard. Having regard to the areas of the land used for each purpose and the time, labour and resources used for each purpose, the land is regarded as primarily used for the restaurant and function centre, and is not entitled to a full exemption. However, the part of the land used for the vineyard is exempt because that part is used primarily for primary production. The land is therefore entitled to a 50% partial exemption.

Business of primary production

In general terms, a business of primary production means you use your land to conduct one or more of the primary production activities described above, where the activities do not constitute recreation or a hobby, but are viable undertakings carried on in a business-like manner and have a reasonable expectation of returning a profit.

Agistment

Depending on where the land is located, using the land for agistment (allowing another person to graze their animals, including horses, on your land for a fee) may be primary production for land tax exemption purposes.

Land used for agistment located outside greater Melbourne or inside greater Melbourne but not in an urban zone may qualify for a primary production exemption if the owner of the animals normally sells the animals or their offspring. Land agisted for horses kept for recreational purposes does not qualify for this exemption.

Land used for agistment within an urban zone in greater Melbourne is ineligible for the primary production exemption. This is because the owner of the land must use the land in a business of primary production to qualify for the exemption. Accordingly, the landowner must be engaged in a business of maintaining animals to sell, not simply maintaining animals for a fee.

Land being prepared for primary production

If land is being prepared for use primarily for primary production it may be exempt from land tax if the land becomes exempt as primary production land within 12 months of the preparation work starting. We may extend this period by a further 12 months on request.

If preparation work is not completed within 12 months (or an extended 12-month period), the exemption may be removed and the land assessed for land tax.

What is greater Melbourne?

Since 18 June 2014, greater Melbourne is the area within the urban growth boundary and is marked on this map. Before 18 June 2014, greater Melbourne had a different meaning.

The urban growth boundary is the boundary specified or to be specified as an urban growth boundary in a planning scheme. 

The change to the greater Melbourne boundary does not affect land previously outside the former greater Melbourne boundary which was eligible for a PPL exemption prior to the boundary change. The primary production land continues to be exempt even if it falls within the new boundary until it is subdivided, sold or the landowner buys adjoining land within the new boundary.

Urban zones

An urban zone is a zone or part of a planning scheme declared an urban zone, under a planning scheme in force under the Planning and Environment Act 1987, by the Governor in Council. These zones change over time.

Exemption requirements

Three separate exemptions are available for land used for primary production, with eligibility criteria depending on where the land is located:

Apply for a PPL exemption

If you believe your land qualifies for a PPL exemption, apply online via My Land Tax or call us on 13 21 61.

Apply via My Land Tax

If you are already registered for My Land Tax, log in using your email address and password. If you are using My Land Tax for the first time, you must register.

From the My Land Tax homepage, select the ‘Properties’ tab, then select ‘I farm here and want to apply for a primary production land exemption’ from the ‘Amend property’ dropdown menu.

You will be asked a series of questions about how the land is used to help us assess whether you are eligible for the exemption. The information you must provide depends on whether the land is:

Once you complete your application, you can track its progress in My Land Tax by selecting the ‘Submissions’ tab on the homepage.

Land wholly outside greater Melbourne

If your land is outside greater Melbourne and you believe you qualify for an exemption, apply via My Land Tax or call us on 13 21 61. We will contact you if we need more information.

Land wholly or partly in greater Melbourne but not in an urban zone

If your land is located in greater Melbourne and not within an urban zone and you believe you qualify for an exemption, you must apply via My Land Tax or in writing and provide:

  • The date the primary production activity commenced.
  • The type of primary production activity conducted on the property.
  • The proportion of the property used for the primary production activity.
  • Evidence of sales of any primary production activity.
  • Details of the person carrying out the business.
  • Evidence of the:
    • number of stock carried on the land if applicable, and/or
    • volume of harvested produce if applicable.
  • Copy of lease agreement with primary producer if applicable.

Land wholly or partly in greater Melbourne and in an urban zone

If your land is within greater Melbourne and in an urban zone and you believe you qualify for an exemption, you must apply via My Land Tax or in writing and provide:

  • The date the primary production activity commenced.
  • The type of primary production activity conducted on the property.
  • If part of the property is used for the primary production activity or primary production business, the proportion of the property so used.
  • Evidence of sales of any primary production activity.
  • ​Details of the person or people carrying out the business.
  • Evidence of the:
    • number of stock carried on the land if applicable, and/or
    • volume of harvested produce, if applicable.
  • Copy of lease agreement with primary producer, if applicable.
  • Details of the main business activities of the owner/s.
  • If the owner is a company, details of the company’s principal business activity.
  • If the owner is a company, full details of the shareholders. 
  • If the company has paid dividends, details of the dividends paid in the last three years.
  • If the owner is a trustee of a trust or a unit trust scheme:
    • A copy of the trust deed.
    • Written confirmation that at least one of the beneficiaries of the trust or unitholders, or a relative of at least one of the beneficiaries or unitholders, is normally engaged in a substantially full-time capacity in the business of primary production for which the land is solely or primarily used.
    • If the trust is a discretionary trust, written confirmation that either each specified beneficiary is natural person or at least one of the specified beneficiaries is a natural person and each of the other specified beneficiaries is either:
      • A charitable institution or a trustee of a charitable trust. 
      • A company, all of the shares in which are owned by one or more of the specified beneficiaries who are natural persons.
      • A trustee of a trust (except a charitable trust), all of the beneficiaries or specified beneficiaries of which are specified beneficiaries of the discretionary trust who are natural persons.
  • If the owner is a trustee of a superannuation fund as defined in section 3 of the Land Tax Act 2005, written confirmation that all the members or beneficiaries of the trust are relatives and at least one member or beneficiary of the trust is normally engaged in a substantially full-time capacity in the business of primary production for which the land is solely or primarily used. 

Land being prepared for primary production

If you want to claim an exemption for land being prepared for use primarily for primary production which will later qualify for a PPL exemption, please write to us and provide:

  • The date the property started being prepared for use as primarily for primary production.
  • The type of primary production activity which the property is being prepared for.
  • Details of the preparatory activities being conducted.
  • Information regarding the person/s carrying out the preparatory activities.

Exempt land no longer used for primary production

If the primary production activities stop, you must notify us immediately. Failure to do so may lead to penalties.

Last modified: 24 January 2020
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