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  • Abnormal primary production income

    Special rules apply to some unusual income you may receive, called abnormal income, such as:

    Conditions apply, and if certain events occur in the year, you may be ineligible to claim these concessions.

    Disaster relief payments

    Following a disaster, you may receive assistance from government authorities, charitable institutions, employers, a trade union or other sources. Most one-off assistance payments are tax-free, but regular Centrelink payments are taxable.

    Common types of government disaster relief are:

    • Australian Government disaster recovery payments (AGDRP)
    • Disaster Recovery Allowance (DRA)
    • payments under the Natural Disaster Relief and Recovery Arrangements (NDRRA)
    • other ex-gratia relief payments.

    See also:

    Grants and subsidies

    Generally, amounts received by way of grants or subsidies will be assessable income, although some grants or other payments may be exempt from tax.

    The payer of the grant, subsidy or other payment usually issues advice with the payment.

    See also:

    Profit from forced disposal or death of livestock

    You can elect to spread profit earned from the forced disposal or death of livestock over a period of five years.

    Alternatively, you can elect to defer the profit and use it to reduce the cost of replacement livestock in the disposal year or any of the next five income years. Any unused part of the profit is included in assessable income in the fifth income year.

    You can elect to spread or defer profits if you dispose of stock or stock dies because:

    • land is compulsorily acquired or resumed under an Act
    • a state or territory leases land for a cattle tick eradication campaign
    • pasture or fodder is destroyed by fire, drought or flood and you will use the proceeds of the disposal or death mainly to buy replacement stock or maintain breeding stock for the purpose of replacing the livestock
    • they are compulsorily destroyed under an Australian law for the control of a disease (including bovine tuberculosis) or they die of such a disease
    • you receive official notification under an Australian law dealing with contamination of property.

    Insurance payments

    Generally, if you have claimed the cost of the insurance premium as a tax deduction, payments you receive from a claim under the policy will be treated as assessable income.

    If the payout is for loss of trees (due to fire) or livestock that were assets of a primary production business, you can elect to spread the payout over five years.

    You account for the payout by including five equal instalments in your assessable income for five years.

    If you do not elect to do this, the whole amount is taxed in the year of receipt. You can make the election on or before the date you lodge the first return after receiving the insurance payment.

    Double wool clips

    Tax relief is available in relation to the proceeds of the sale of two wool clips arising in an income year because of an early shearing caused by drought, fire or flood.

    A wool grower can elect to defer the profit on the sale of the clip from the advanced shearing to the next year.

    Ineligibility to make an election

    A taxpayer who would otherwise be eligible to elect to spread abnormal income over a period of years may become ineligible if a 'disentitling event' occurs.

    Disentitling events include:

    • death
    • bankruptcy or insolvency
    • permanent departure from Australia
    • ceasing to carry on the primary production business to which the election relates.

    A disentitling event may occur to a:

    • sole trader
    • partner in a primary production partnership
    • trustee or beneficiary of a primary production trust.
    • In the case of a trust, we may make a determination upon application that a disentitling event has not occurred if it is fair and reasonable to do so.

    See also:

    Last modified: 24 Aug 2016QC 42303