Categorising land for rating purposes used for both permanent residential and temporary tourist accommodation
On 12 February 2021, the Queensland Court of Appeal in Island Resorts (Apartments) Pty Ltd v Gold Coast City Council  QCA 19 dismissed an appeal involving a challenge to the primary judge’s findings concerning Gold Coast City Council’s (Council) decisions to:
- adopt the relevant differential rating categories of Category 2T and Category 3T and levy a minimum general rate within Category 2T and Category 3T; and
- issue rates notices to the applicant accordingly under section 94 of the Local Government Act 2009 (QLD).
In summary, the Applicant argued that Council’s decisions were an improper exercise of their powers to categorise land for differential general rates under section 81 of the Local Government Regulation 2012 (Qld) and then levy rates on this basis because the decisions were influenced by Council’s consideration of whether the occupier of rateable land was a “permanent resident” or “itinerant” (i.e. a visitor or tourist). This was in circumstances where the land in question owned by the applicant was used partly as a tourism related business for visitors but some lots were used to provide rental accommodation for “permanent residents”. The Council had confirmed that one of the factors it had taken into account in setting differential rates was:
‘… the extent to which tourism and tourism-related business and industry uses continue to contribute to the demand for the provision of Council services across the City. Council considers that land used for those businesses (including premises used to provide rental accommodation to itinerants) and industries should generate a greater contribution to general rate revenue than land that is not used for a commercial purpose …’
The Applicant contended that this was not lawful because the “personal characteristics” of the occupier did not constitute an “attribute or characteristic” of the land, being a matter that Council is able to take into account.
The primary judge had held at  that:
“…[i]f the use of land may be a relevant characteristic because of the increased burden which that use may place upon the Council’s budget, it is impossible to sustain the proposition that the choice of the owner to use the land in that particular way is an irrelevant personal characteristic.”
On the appeal, the Court ultimately held that Council’s determination of the different rates was ‘quasi-legislative’ and as such, fell within the Council’s power, with no express statutory constraints undermining the lawfulness of the decisions Council made.
It follows that, a relevant consideration for councils in Queensland in the determination of rates, is to consider the attributes and characteristics of the land as well as the nature of the use and occupation of the land for income earning activities.
Are there distinguishing rates in New South Wales?
In New South Wales (NSW), local councils may choose how they calculate and distribute rates, charges, fees and pricing policies among categories of properties in the council area based on land value. This enables a level of flexibility for councils to take into account how occupiers actually use the land in the determination of rates and may include consideration of permitted use. Although there is yet to be a tourism case similar to that which arose in Queensland, there are several guiding provisions indicating that councils in NSW may have the power to distinguish rates in NSW based on the tourism based use of residential properties.
Local Government Act 1933 No 30 (NSW)
Under NSW legislation there are several guiding provisions which may give the council powers to distinguish rates. These are covered in the Local Government Act 1933 No 30 (NSW) (the Act) s 491 – s 495.
The categories for rating purposes include:
- farmland; and
Distinguishing between the residential and business categories for tourism based land uses
Under s 516(1) of the Act, land is to be categorised as residential where its dominant use is for residential accommodation (other than as a hotel, motel, guest-house, backpacker hostel or nursing home or any other form of residential accommodation prescribed by the regulations).
Land will fall within the “business” category in circumstances where it cannot be categorised as farmland, residential or mining (e.g. commercial and industrial land uses).
Clauses 121 and 122 of the Local Government (General) Regulation 2021 clarify that:
- If the dominant use of land is for a caravan park or a manufactured home estate, the land is not to be categorised as residential for rating purposes; and
- If the dominant use of land is for a retirement village, serviced apartments or a time-share scheme, the land is to be categorised as residential for rating purposes.
Although land used for a retirement village, serviced apartments or time-shares to be categorised as residential, a rate may be the same or different within a category (s 528) or same or different for different categories (s 529). Local councils may make different ordinary rates for residential sub-categories taking into account:
- whether the land is rural residential land, or
- whether the land is in a centre of population, or
- whether the land is in a residential area or in part of a residential area.
What about land used for both permanent residential and temporary tourist accommodation related purposes?
This question was considered by the Court in McKenzie v Randwick City Council (“McKenzie”)  NSWLEC 41, which dealt with an appeal against a declaration by the Council that certain mixed-use land be categorised as “business”. In summary, this decision turned on whether land partly used as a doctor’s surgery and partly also used as the doctor’s permanent residence fell within the ‘residential’ or ‘business’ category.
The Court held that when determining which was the dominant use of the land, a comparison of the uses to identify the “main” or “principal” use, “in terms of the space occupied, time spent in occupation and layout” is required. Ultimately, in this matter the Court held that the dominant use of the premises, as in “the main or principal use … in terms of space occupied, time spent in occupation and layout”, was residential.
It follows that, at this point in time in NSW, the categories and subcategories that may be established mean that residential land used for a mixture of tourist related purposes, will either fall within the ‘residential’ or ‘business’ categories for rating purposes, depending on the dominant use of the land. The exception to this is land used for caravan parks, hotels, motels, guest-houses, backpacker hostels or nursing homes – all of which fall within the business category as provided in the Act and Regulation.
Barrak Corp Pty Ltd v Parramatta City Council  NSWLEC 1077; BC201403361
 Meriton Apartments Pty Ltd v Parramatta City Council (“Meriton”)  NSWLEC 309 (Pain J); see also Jakd Pty Ltd v Randwick City Council (“Jakd”) NSWLEC 97
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.