Private ruling: Business activities
Published: April 2015
Ruling period: Year ended 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Is your business regarded as a primary production business for income tax purposes? | A1: No.


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

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 defines what a primary production business is and states that you carry on a primary production business if you carry on a business of: (a) cultivating or propagating plants, fungi or their products or parts (including seeds, spores, bulbs and similar things), in any physical environment; or (b) maintaining animals for the purpose of selling them or their bodily produce (including natural increase); or (c) manufacturing dairy produce from raw material that you produced; or (d) conducting operations relating directly to taking or catching fish, turtles, dugong, beche-de-mer, crustaceans or aquatic molluscs; or (e) conducting operations relating directly to taking or culturing pearls or pearl shell; or (f) planting or tending trees in a plantation or forest that are intended to be felled; or (g) felling trees in a plantation or forest; or (h) transporting trees, or parts of trees, that you felled in a plantation or forest to the place: (i) where they are first to be milled or processed; or (ii) from which they are to be transported to the place where they are first to be milled or processed. Paragraphs (f) to (h) relate to trees, however to qualify as a primary production activity for income tax purposes, the business must relate to trees in a plantation or forest. In your case, your business is based on tree removal from private properties and other properties. Your business does not involve planting, growing, producing or felling trees in a plantation or forest and cannot accurately be described as a primary production business for income tax purposes. Although you fell trees and process and mill timber, the trees are not from a plantation or forest. The definition of a primary production business does not include cutting down trees from private and other properties. Consequently, your business is not regarded as a primary production business for income tax purposes.

Relevant facts: The business is a tree removal business. The business cuts down trees from private and other properties and has done this for several years. The trees are not felled from a plantation or forest. | The trees are brought back to your property to process into a saleable product such as leaf mulch and firewood. The business also mills timber from the trees into fence posts and other timber products.