Automatic reinstatement of primary production income tax averaging
The Government released the Agricultural Competitiveness White Paper on 4 July 2015 which announced changes to the primary production income tax averaging rules to allow primary producers to opt back in to averaging 10 years after they have elected to opt out.
Under the current rules, an election to opt out of averaging is permanent.
The measure will be implemented by automatically reinstating income tax averaging after 10 income years for all primary producers who have elected to opt out. This will be beneficial because the first averaging adjustment always results in a tax offset.
Primary producers can then choose to again opt out of income tax averaging, but if they do so the choice will be binding for a further 10 income years.
The proposed start date for this measure is 1 July 2016. Primary producers who elected out for the 2007 or earlier income years will automatically be eligible for averaging as of the 2017 income year.
Legislation and supporting material
The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016External Link and associated Explanatory Memorandum were tabled in Parliament on 14 September 2016. This measure is not yet law.
The Government has announced that it will allow primary producers who have opted out of income tax averaging to be eligible again after 10 income years.