Wind farm turbines not fixtures for land tax

The Supreme Court of Victoria has determined that wind farm infrastructure (such as wind turbines, towers and wind-monitoring buildings) were chattels, rather than fixtures.

This is important because it provides guidance on when above-ground assets are part of land to be valued for the purposes of calculating capital improved value when assessing local government rates and levies and in relation to land tax.

In short, the Court held that the parties intended the wind farm infrastructure to remain the property of the wind farm operator (AWF), and therefore it would not become part of the land (fixtures) and become the property of the landowners.

The Court noted it was significant that the wind farm infrastructure was on leased land, and in addition:

• the planning permits under which the wind farm was built required the removal of the wind farm infrastructure once the wind farm was decommissioned;

• the leases required the removal of the wind farm infrastructure at the end of the lease;

• the wind farm infrastructure was installed and owned by AWF and was used as security for the construction finance for the wind farm (with no suggestion that any of the landowners asserted ownership of the infrastructure on the land);

• the wind farm infrastructure was designed in such a way that it could be removed without damaging the land or the infrastructure itself;

• the design and working life of the infrastructure was 25 years which lined up with the term of the lease;

• the leases permitted AWF to replace and remove the wind farm infrastructure during the lease term; and

• if removed, the wind farm infrastructure could be re-deployed at another wind farm site or sold on the market for second-hand wind farm parts.

Reference: AWF Prop Co 2 Pty Ltd and Ararat Wind Farm Pty Ltd v Ararat Rural City Council and Valuer General Victoria [2020] VSC 853

For further information please contact:

Alasdair Woodford
Senior Associate
T: 03 5225 5217
E: awoodford@ha.legal

Rod Payne
Principal
T: 03 5226 8541
E: rpayne@ha.legal