Private ruling: Non-commercial losses - farm management deposits
Published: September 2012
Ruling period: Year ended 30 June 2010
Date scheme commenced: 01 July 2009

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 (repayment of FMD) is considered assessable income "from" the business activity when: · applying the loss deferral rule in Division 35, in subsection 35-10(2) of the ITAA 1997; and/or · 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).

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are a partner in a partnership which conducts a primary production business. | Surplus funds were placed into a farm management deposit (FMD) in the 2007-08 financial year. | In the 2009-10 financial year, you withdrew over $200,000 from the FMD to be used for business purposes. | All eligibility rules for FMDs have been satisfied. | As a result of the FMD withdrawal, your taxable income was over $250,000 in the 2009-10 financial year.