Private ruling: Carrying on a business
Published: November 2014
Ruling period: Income year ended 30 June 2015
Date scheme commenced: 2 May 2014

Ruling: Q1: Are you carrying on a business as a primary producer under section 995-1 of the Income Tax Assessment Act 1997 ? | A1: Yes

Relevant facts and circumstances: You are an individual that carries on a primary production activity. Your activity involves the cultivation of animals on a xx hectare property at X. You have purchased and are maintaining X head of livestock. You are planning to increase that number in the near future. Your activity involves the buying, breeding and raising of livestock for sale, to make a profit or at the very least with the prospect of making a profit. You plan to carry on the activity in an organised and business-like manner. This activity occupies your time, you attention and your labour on a full time basis.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: Paragraph 995-1(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a 'primary production business' will include any business of maintaining animals for the purpose of selling them or their bodily produce. Section 995-1 of the ITAA 1997 also defines 'business' as 'including any profession, trade, employment, vocation or calling, but not occupation as an employee'. Taxation Ruling TR 97/11 provides the Commissioner's view of the factors that are considered important in determining if you are in business for tax purposes. The factors are: • whether the activity has a significant commercial purpose or character • whether the taxpayer has more than just an intention to engage in business • whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity • whether there is regularity and repetition of the activity • whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business • whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit • the size, scale and permanency of the activity • whether the activity is better described as a hobby, a form of recreation or sporting activity. No one indicator is decisive. The indicators must be considered in combination and as a whole. Whether a 'business' is carried on depends on the large or general impression gained. Based on the information you have provided we consider that the activity has the necessary characteristics of a business for taxation purposes and will satisfy the relevant definitions in section 995-1 of the ITAA 1997.