Private ruling: Business of livestock raising
Date of advice: 13 November 2018
Published: February 2019
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you carrying on a business of livestock raising? | A1: Yes You meet the relevant factors contained in Taxation Ruling TR 97/11. Further information about carrying on a business can be found by searching 'QC 31733' on ato.gov.au

Relevant facts and circumstances: You maintain a property with livestock in order to produce a product for sale. You prepared a business plan prior to the commencement of the activity which is updated in June of each financial year. You only farm livestock which produce a product which is in demand in Australia and overseas. All of the products sold are first tested by another business. This business grades the product, and once certified, this further raises the demand and prices for the product. To sell the product you engaged selling agents. The product is auctioned off and has always found a buyer in either Australia or overseas. As at the end of the most recent financial year, you have made the following investments in the property: ● land ● property improvements ● plant and equipment. You incur the following expenses in order to operate the business: ● feed and fertiliser ● freight ● equipment hire ● motor vehicle costs ● rates and taxes ● veterinary expenses ● chemical expenses ● machinery repairs ● fence maintenance ● sowing and baling crops for fodder. You have set feeding times, set spraying times, drenching re worm infestations, set maintenance times, lousicide application as the season requires, and set harvest times. You engaged a specialist consultant who recommended a specific schedule to raise the quality and usability of the product and maximise financial returns. The production is the sole source of business income as there are no secondary operations. You maintain all receipts and invoices for the business which are digitised by your tax agent. The business is subscribed to an accounting program to maintain your financial records. You work six days per week to make the business a commercial success. You operate at two to three times multiple of the head count necessary to breakeven to ensure the financial success of the business. Profits have been produced in four out of the past five financial years. One financial year returned a minor loss due to a low yield with sales. The profits are anticipated to continue as per the forecasted profit and loss in the business plan.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 995-1(1)