Landcare operations
You can claim a deduction for capital expenses on a landcare operation for land in Australia if you are:
- a primary producer
- a business using rural land for a taxable purpose (except when mining or quarrying)
- an irrigation water provider (if your expenditure incurred on or after 1 July 2004).
Your deduction will be reduced if you use the land for a non-taxable purpose, such as your home.
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Definitions
Landcare operations
A landcare operation is one of the following:
- 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 using fences)
- erecting fences to keep animals out of areas affected by land degradation to prevent or limit the extension or worsening of land degradation in the area and to help reclaim the area
- 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
- a structural improvement or altering, adding, extending or repairing a structural improvement that is reasonably incidental to the construction of a levee or drainage works (only for expenditure incurred on or after 1 July 2004).
Irrigation water provider
An irrigation water provider primarily and principally supplies water to primary producers or to businesses using rural land (except for a mining or quarrying business). Water suppliers who use motor vehicles (for example, water tankers) are not considered irrigation water providers.
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
- has been prepared, or approved in writing, as a suitable plan by an i
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Claiming deductions
When you claim a deduction, you need to consider:
Recouped expenditure
If you recoup any of the money that you have claimed a landcare operations deduction for, it must be included in your assessable income.
Expenditure on plant
You can only claim a deduction under the landcare provisions for capital expenditure on plant if it is on certain fences, dams or other structural improvements as defined in landcare operations.
If you can't claim a deduction under the landcare provisions, you work out the decline in value using the general rules for depreciating assets.
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Partnership expenditure
If the costs were incurred by a partnership, a partner can only claim the deduction for their share of the expenditure.
Primary producers and other selected rural businesses may be able to claim a deduction for capital expenditure on landcare operations.