Private ruling: Farm management deposits and the income requirement calculation
Date of advice: 13 December 2018
Published: April 2019
Ruling period: Financial year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are farm management deposits relating to your business loss activity, excluded from the income requirement calculation under section 35-10(2E) of the Income Tax Assessment Act 1997 ? | A1: Yes . The assessable farm management deposit income that arises from the operation of Division 393 of the Income Tax Assessment Act 1997 (ITAA 1997) is considered assessable income "from" the business activity when applying the loss deferral rule in Division 35 of the ITAA 1997, and is therefore excluded from the income requirement calculation. For more information on non-commercial losses, please visit our website at ato.gov.au and search for quick code QC 33774

Relevant facts and circumstances: You are a partner in a partnership which conducts a primary production business activity (the activity). In the 2017-18 financial year you withdrew $X from the farm management deposits relating to the activity. After excluding the farm management deposit income, your adjusted taxable income for the purpose of the income requirement calculation at section 35-10(2E) of the ITAA 1997 is less than $250,000. The activity earned more than $20,000 in assessable income during the 2017-18 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 35-10(2E) | Income Tax Assessment Act 1997 Section 35-30 | Income Tax Assessment Act 1997 Division 393