Private ruling: Farm management deposit
Date of advice: 4 July 2023
Published: 28 August 2023
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Do you satisfy the non-primary production income requirement under section 393-5(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of claiming a deduction for your Farm Management Deposit? | A1: Yes, you satisfy the non-primary production income requirement under paragraph 393-5(1)(d) of the ITAA 1997 and can deduct the amount of a farm management deposit. The dividends received from shares acquired by the taxpayer under the co-operative are assessable primary production income as defined under subsection 392-80(2) of the ITAA 1997 and for the purposes of paragraph 393-5(1)(d) of the ITAA 1997, you must only consider non-primary production income to determine if you meet the income requirement to deduct a Farm Management Deposit. Given the amounts of non-primary production income is below the $100,000 threshold, you meet this test.

Relevant facts and circumstances: You have been carrying on a primary production business in a partnership. You were part of a co-operative. As a requirement of being a part of the co-operative, the partnership was required to hold a minimum number of shares and was required to acquire additional shares based on the quantity of products supplied to the co-operative. Prior to joining the partnership, you were carrying on a primary production business with a partnership. After the listing of shares on the stock exchange, the partnership was no longer required to hold the shares in order to supply their produce. No further shares have been acquired since the public listing. You made a Farm Management Deposit.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 392-80 | Income Tax Assessment Act 1997 section 393-5