Private ruling: Non-commercial losses
Date of advice: 3 February 2016
Published: March 2016
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 01 July 20XX

Ruling: Q1: Does the repayment of funds from a farm management deposits (FMD) cause you to fail the income requirement under section 35-10(2E) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.


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 of the ITAA 1997 (repayment of FMD) 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 your primary production business activity and your income from unrelated sources is less than $250,000. Therefore, you satisfy the income requirement under section 35-10 (2E).

Relevant facts: You are a partner in a partnership which conducts a primary production business. | In the relevant financial year, you withdrew more than $250,000 from your FMD. | All eligibility rules for FMDs have been satisfied. | In the relevant financial year, your income from other sources was $0 and your net investment losses were less than $100. You had no reportable fringe benefits or reportable superannuation contributions in the same period. | As a result of the FMD withdrawal, your taxable income was over $250,000 in the relevant financial year. | The primary production activity passes the real property test.