Land tax – get out of aviation before you lose everything

[Dick Smith]

Due to a recent legal finding in relation to land tax and Essendon Airport, it appears that lessees at places like Bankstown will now have to pay land tax.

One lessee claims that the land tax will be $17,000 per year.

With the one-way grind of extra regulations and extra costs, I simply can’t see a future for the smaller GA businesses.

Yes, the major airlines might be OK, but no one on the political side looks at the marketplace issues for general aviation.

[tipsy.skipsy]

Boom, lets build a new massive housing estate around Cheltenham, Victoria and call it Foxbat Estate. Homes with a yellow roof get an additional discount on land purchase maybe even a second hand yellow foxbat.

[LexAir]

Dick, are you able to provide more particulars of the recent decision regarding the land tax issue at Essendon Airport?

[Clare Prop]

Land tax is a State tax. Are you now saying the States can levy taxes on Commonwealth land?

Link please Dick!

[Lead Balloon]

Dick’s confusion could be caused by the likes of this confusing SMH article: https://www.smh.com.au/business/companies/349m-or-7m-essendon-airports-loses-valuation-case-20190902-p52n47.html

[John Eacott]

Dick’s confusion could be caused by the likes of this confusing SMH article: https://www.smh.com.au/business/companies/349m-or-7m-essendon-airports-loses-valuation-case-20190902-p52n47.html

That makes far more sense, and is quite an understandable position from the Commonwealth. Nowt to do with State Land Tax payable to the Victorian SRO.

FWIW, when Mt Hotham Ski Resort built the Hotham Airport down past Dinner Plain, the PR made much of the investment of (IIRC) about $7 million to build the runway and infrastructure.

Came Rates time and the Alpine Shire hit them for a massive charge, for which the Shire gave absolutely zero in the way of services. Not even a rubbish collection, no power, no roads (GAR is VicRoads), etc. At the subsequent appeal the council valuer was asked his history in assessing airfields (none, your honour) and how he then based his Valuation? Simple, they spent $7m so I valued it at $7m.

And to this day the owners still pay 6 figure annual rates to a council that does nothing for them.

Dick Smith if the Essendon Airport/Essendon Fields owners have played silly buggers with their own valuation they will spend a lot of money on legal arguments against the Commonwealth, but it isn't a State Land Tax. I'd be surprised if all Lessees from the Commonwealth (Bankstown, Archerfield, etc) have undervalued their holdings to this degree.

[Lead Balloon]

The bit I can’t understand is how someone can be obliged to make an ‘ex gratia’ payment...

[Clare Prop]

We already do make ex-gratia payments, when the federal airports were built the local council whose land was taken to build the airport got an annual ex-gratia payment in lieu of the rates they wouldn't get from that land. Of course since privatisation that annual payment, instead of coming from the commonwealth or the head lease holders who should be paying it, gets gouged out of the tenants, billed as "rates".It is not rates at all, in fact the only thing the local council do is empty the bins and that is not included in the "rates" but invoiced separately (about $500 a year).
Perth Airport leaseholders fought this and lost. It was just one of the many issues that came from privatisation and a nice little earner for the local council.

[Lead Balloon]

I’ve never made an ‘ex gratia’ payment to anyone.

[thorn bird]

quote:

"Land tax is a State tax. Are you now saying the States can levy taxes on Commonwealth land?"

the answer is yes, because the land is not Commonwealth land, it is state land that is owned by the commonwealth.

[Lead Balloon]

Whatha??

Are you saying that the Commonwealth is obliged to pay Victorian land tax to the Victorian government, for the land the Commonwealth has leased to the Fox / Beck business? The article at the link says:Land tax does not apply to government-owned property such as leased airports. But Essendon Airport must make annual "ex gratia" payments to the federal government instead, applied to the land it uses for non-aviation activity and based on Victorian land tax rates.As I said, I find the article confusing. But no matter how hard I squint I don’t read it as saying the Commonwealth government is obliged to pay land tax to the Victorian government.

[Clare Prop]

Commonwealth of Australia v Essendon Airport Pty Ltd [2019] FCA 1411 (2 September 2019) (http://classic.austlii.edu.au/au/cases/cth/FCA/2019/1411.html)

[Lead Balloon]

FFS. Can nobody read? You only need to get to para 4:4. Because the land in issue is owned by the Commonwealth, land tax in respect of it was not payable when the Land Tax Act 1958 (http://www.austlii.edu.au/au/legis/vic/hist_act/lta195890/) (Vic) (“1958 Land Tax Act (http://www.austlii.edu.au/au/legis/vic/hist_act/lta195890/)”) was in force, and is still not payable under the present Land Tax Act 2005 (http://www.austlii.edu.au/au/legis/vic/consol_act/lta200590/) (Vic) (“2005 Land Tax Act (http://www.austlii.edu.au/au/legis/vic/consol_act/lta200590/)”).It was a commercial dispute about the interpretation of a lease clause that imposed a payment obligation on the lessee to pay the Commonwealth an amount calculated as if - pretendees - land tax was payable on certain parts of the leased land, when in law land tax was not and is not payable.

[Clare Prop]

https://cimg3.ibsrv.net/gimg/pprune.org-vbulletin/800x780/essendon_e2bb9220557b2949bac8ad2fe54fea0d09ca3471.jpg

[Lead Balloon]

That breakdown would be ballpark accurate for most of the ‘privatised’ airports.

I laugh like a drain at the furore over $30M being paid by the Commonwealth for a block of land near Badgerys Creek worth $3M. Meanwhile, a private citizen has been turned into a billionaire off the back of the Canberra airport, him having paid $65million for the 99 year lease. Not a bad return.

And how many millionaires have been made off the back of KSA?

The $30M for $3M blocks of land stories are just chook feed to keep the chooks distracted.

[thorn bird]

$250 million for three airports in the Sydney basin which was recovered with the closure and development of one, so two for free. Bankstown airport alone was valued by state government at between 1 to 1.2 billion as freehold land in 2002. The whole process has been a gigantic fraud from the beginning, the Australian people got shafted, the aviation industry got shafted, the nsw government got shafted, the local ratepayers got shafted and will now have to live with the massive increase in large trucks on their already congested streets, plus the health risks from heavy contamination and possibly the increased risk of flooding on the Georges river. It can all be traced back to one or two bureaucrats who sold the people down in favour of billionaire development sharks.

[gerry111]

The $30M for $3M blocks of land stories are just chook feed to keep the chooks distracted.

I reckon you're right. Along with the furore over $20,000 worth of Cartier watches.

[Deceiver]

https://www.afr.com/companies/infrastructure/airport-operators-win-in-3-4m-council-rates-claim-20190925-p52ur0

The above reminds me of this stoush that was going on for yonks. In the end, sanity prevailed.