ATO ID 2002/97: Share farming expenses
Date of decision: 17 December 2001
Year of income: Year ended 30 June 2001
Business line: Private Groups and High Wealth Individuals

Issue
Is a deduction available to a taxpayer who is not the property owner under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for a half share of share farming expenses?

Decision
No. A deduction is not available under section 8-1 of the ITAA 1997 for a half share of share farming expenses as the taxpayer never incurs the expenses.

Facts
The taxpayer is a share farmer. All share farming income is placed in a separate bank account in the property owners' name. All share farming expenses are incurred in the property owners' name and are paid for by the property owner from this bank account each month. The share farmer has no access to this bank account. Under the share farming agreement, the share farmer receives a payment equal to 50% of the share farming income after the deduction of farm expenses.

Reasons for decision
Summary: Section 8-1 of the ITAA 1997 states that a deduction is allowable for all losses or outgoings to the extent that they are incurred in gaining assessable income. In this case, the taxpayer never incurs the farm expenses. These expenses are incurred solely by the property owner, who pays for them from a separate bank account. As the taxpayer does not incur the share farming expenses a deduction for these expenses is not available under section 8-1 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 8-1
Subject references: Deductions & expenses Primary production