You can claim a deduction for capital expenditure you incur on a landcare operation for land in Australia in the year it is incurred if you are a:
- primary producer
- business using rural land for a taxable purpose, except when mining or quarrying
- rural land irrigation water provider if your expenditure incurred on or after 1 July 2004.
A rural land irrigation water provider primarily and principally supplies water (other than by using a motor vehicle) to primary producers or to businesses using rural land, except for a mining or quarrying business.
The deduction is reduced to reflect any use of the land for a non-taxable purpose.
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If you claim a deduction for landcare expenses and receive any recoupment, that recoupment is assessable income.
Expenditure on plant
No deduction is available if the capital expenditure is on plant, unless it is on certain fences, dams or other structural improvements. The decline in value of plant not deductible under the landcare provisions is calculated using the general rules for working out decline in value.
Where landcare expenditure is incurred by a partnership, the deductions are claimed by the partners rather than the partnership. Costs incurred by a partnership are allocated to each partner, who can then claim the relevant deduction for their share of the costs.
A landcare operation is one of the following operations:
- when primarily and principally
- eradicating or exterminating animal pests from the land
- eradicating, exterminating or destroying plant growth detrimental to the land
- preventing or combating land degradation other than by the use of fences
- erecting fences to keep out animals from areas affected by land degradation to prevent or limit further damage and assist in reclaiming the areas
- constructing drainage works to control salinity or assist in drainage control
- erecting fences to separate different land classes in accordance with an approved land management plan
- constructing a levee or similar improvement
- for expenditure incurred on or after 1 July 2004, a structural improvement or an alteration, addition, extension or repair to a structural improvement that is reasonably incidental to the construction of a levee or drainage works.
Approved land management plan
An approved land management plan:
- shows the different classes within the land and the location of any fencing needed to separate any of the land classes to prevent land degradation
- describes the kind of fencing and how it will prevent land degradation, and
- has been prepared by, or approved in writing as a suitable plan for the land by:
- an officer of an Australian government agency responsible for land conservation who has authority to do so, or
- an individual who was at the time approved as a farm consultant.
A register of authorised consultants who can prepare land management plans for the purposes of landcare deductions is held by the Commonwealth Department of Agriculture and Water Resources.
You may be able to claim a deduction for capital expenditure you incur on a landcare operation for land in Australia in the year it is incurred if you are a primary producer, a business using rural land for certain taxable purposes, or a rural land irrigation water provider.