Private ruling: Non-commercial losses
Published: March 2014
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: A1: No.

Relevant facts and circumstances: You conduct a primary production business of sheep raising and cropping. All eligibility rules for FMD have been satisfied. In the 2012-13 financial year you withdrew an amount from your FMD account for use your primary production business.

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

Reasons for decision: Summary: The assessable income that arises from the operation of Division 393 ITAA is considered assessable income 'from' the business activity when: (a) applying the loss deferral rule in Division 35, in subsection 35-10(2) of the ITAA 1997; and/or (b) determining whether the assessable income test in section 35-30 of the ITAA 1997 has been satisfied. The income repaid from the FMD is considered to be income from the business activity and your income from unrelated sources is less than $250,000. Therefore, you satisfy the income requirement under subsection 35-10(2E) of the ITAA 1997.

Subject: Non-commercial losses: Does the repayment of funds from a farm management deposit (FMD) cause you to fail the income requirement of subsection 35-102(E) of the IITAA 1997?