GST-Free land sales - The meaning of 'improvements on the land'
7 October 2005
There have been numerous cases, several at the High Court of Australia, addressing the meaning of 'improvements thereon or appertaining to' or similar expressions in the context of land tax and rating statutes.2 Each has taken a broad view of the meaning of the expression, that is, not limiting it to visible structural improvements but taking it to embrace clearing, draining and any other operation on the land that has the effect of enhancing its value.
Applying this principle when interpreting the words 'improvements on the land' means that the term 'improvements' refers to any improvements through human intervention 'on' the land which have the effect of enhancing its value.
The following examples are 'improvements on the land' for the purposes of the Subdivision 38-N and Division 75 if they enhance the value of the land:
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houses, town-houses, stratum units, separate garages, sheds and other out-buildings;
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commercial and industrial premises;
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farm houses, farm outbuildings, internal fencing, stockyards, wells and bores, excavated tanks, dams, surface drains, culverts, bridges, sown pasture, formed internal roads, and irrigation layouts;
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formed driveways, swimming pools, tennis courts, and walls;
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any other similar buildings or structures;
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fencing - internal or boundary fencing;
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clearing of timber, scrub or other vegetation;
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excavation, grading or levelling of land;
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drainage of land;
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building up of soil fertility;
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removal of animal pests, rabbit burrows etc.;
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removal of rocks, stones or soil; and
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filling of land.
The fact that a particular human intervention results in a decrease in the value of land does not necessarily mean that there are no other improvements on the land.3 In limited circumstances, a building may be a detriment. For example, a building that is uninhabitable because it is derelict, is not capable of being repaired and does not enhance the value of the land is a detriment rather than an improvement. However, usually there will be other improvements on the land, in particular, clearing. In those circumstances, there are improvements on the land notwithstanding the presence of the derelict building.
In some circumstances, human intervention on land results in neither an improvement nor a detriment, as it neither enhances nor decreases the value of land. Examples of this are as follows:
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fire breaks, where their purpose is solely to allow access to fire equipment and reduce the spread of a fire and which do not enhance the value of the particular land; and
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a fence that is in such disrepair that it does not enhance the value of the land, but is capable of being easily removed.