Private ruling: Recommencement of Primary Production Income Averaging
Date of advice: 22 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to choose to recommence your primary production averaging with 2015 being the first year for averaging purposes? | A1: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a primary producer who has been averaging your primary production income for more than five years. In the 2014 income tax year you retired from your fulltime occupation. Due to the retirement from your occupation your 2015 basic taxable income has been permanently reduced to less than two thirds of your average income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 392-95

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. You are treated as if you had not carried on business before. Division 392 ITAA97 allows people who are primary producers for two or more years in a row to even out your income tax liability from year to year by reducing the effect that fluctuations in your taxable income have on the marginal rates of tax that apply to you from year to year. Section 392-95 ITAA97 allows you to choose that this Division not affect your income tax liability for an income year if you can show that because of retirement or from any other cause your basic taxable income for the reduction year is permanently reduced during that year to less than two thirds of your average taxable income for that year. As required you have made your choice in writing to the Commissioner and the Commissioner has allowed your choice to reinstate 2015 as the first year for primary production averaging. As you have made this choice under s392-95 ITAA97 it applies to assessments for later income years as though you had never carried on a primary production business prior to 2015.

Reasons for decision: These reasons for decision accompany the Notice of private ruling.