Private ruling: Conservation Tillage Tax Offset
Published: October 2013
Ruling period: 01 July 2012 30 June 2013

Ruling: Q1: Does the Commissioner have the discretion to allow the taxpayer to claim the conservation tillage tax offset in the relevant income year, if they had not completed a conservation tillage survey during the relevant income year and have not been issued a Research Participation Certificate for the relevant year? | A1: No

Relevant facts and circumstances: XYZ are primary producers situated in a state of Australia. During the relevant financial year XYZ purchased and installed a new tillage seeder which XYZ believes is eligible for the conservation tillage tax offset. XYZ had not applied for the Research Participation Certificate or completed the conservation tillage survey from DAFF and has only just become aware that they should have done so prior to the relevant year. Under the legislation Research Participation Certificates for the relevant income year can no longer be issued by DAFF. The conservation tillage survey (contained within the Research Participation Certificate application form) must have been completed and submitted prior to the relevant year. XYZ's previous accountants had not assisted them nor advised them in this area. The sales representative at the lime made them aware that such a tax offset existed and could be claimed in their tax return but failed to explain that they needed to apply for the Research Participation Certificate. XYZ is requesting the Commissioner exercise a discretion to allow them to claim the conservation tillage tax offset in the relevant income tax return year, although the conservation tillage survey was not completed prior to the relevant year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 385-J | Income Tax Assessment Act 1997 Section 385-175 | Income Tax Assessment Act 1997 Section 385-180 | Income Tax Assessment Act 1997 Section 385-185 | Income Tax Assessment Act 1997 Section 385-190

Reasons for decision: Summary: There is no provision in the legislation that provides the Commissioner with a discretion to disregard XYZ not having applied for and obtained the Research Participation Certificate from relevant government department and not having completed the conservation tillage survey prior to the relevant year and allow them to claim the conservation tillage tax offset in the relevant income tax year. Consequently, XYZ does not meet the Research Participation Certificate requirement in section 385-175 Income Tax Assessment Act 1997 (ITAA1997) to be eligible for the conservation tillage tax offset. | Detailed Reasoning - Detailed reasoning: The conditions for entitlement to the Conservation Tillage Tax Offset are contained in section 385-175 ITAA 1997 A taxpayer is entitled to the conservation tillage tax offset for an income year if all of the following conditions in section 385-175(1) ITAA 1997 are satisfied: 1. the offset relates to the cost of an "eligible no-till seeder": 2. the income year is the 2012-13, 2013-14 or 2014-15 income year; 3. at some time during the relevant income year, the taxpayer either started to use the seeder in a primary production business (not having previously installed it ready for use) or had the seeder installed ready for use in a primary production business; 4. at the time mentioned in (3), the taxpayer "holds" the seeder 5. the time mentioned in (3) was not before 1 July 2012 and not after 1 July 2015; 6. a Research Participation Certificate has been issued for the relevant income year: and 7. the taxpayer claims the offset in their tax return for the relevant income year. Condition (6) above states that you must have been issued with a Research Participation Certificate. Part of the process of receiving a Research Participation Certificate is to complete a conservation tillage survey. Paragraph 385-190(1)(b) of the ITAA 1997 states that in order for the Agriculture Secretary to issue a Research Participation Certificate they must be satisfied that you have completed a conservation tillage survey during the relevant income year. In your case this means the said survey had to have been completed between 01 July 20XX and 30 June 20YY. XYZ had not applied for the Research Participation Certificate or completed the conservation tillage survey from DAFF and has only just become aware that they should have completed the survey prior to the relevant year. This means that XYZ had not met the requirement in section 385-175(1) to hold a Research Participation Certificate issued by the Agriculture Secretary for the relevant income tax year and therefore will not be entitled to the conservation tillage tax offset. The legislation does not give the Commissioner discretion to allow a taxpayer to claim the conservation tillage tax offset, if the conservation tillage survey was not completed at the required time and they have not been issued with a Research Participation Certificate. Further, the legislation does not permit the Agriculture Secretary to issue a Research Participation Certificate if the conservation tillage survey was not completed at the required time.