ATO Interpretative Decision

ATO ID 2002/825 (Withdrawn)

Income Tax

Deductions and Expenses: Farm Management Deposits and Superannuation Contributions
FOI status: may be released

This ATO ID is withdrawn because it is no longer necessary. Guidance on this issue has been transferred to web content.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Does a deduction for a superannuation contribution reduce the taxpayer's 'taxable non-primary production income' calculated under subsection 392-85(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes, the deduction for a superannuation contribution reduces the taxpayer's 'taxable non-primary production income' calculated under subsection 392-85(1) of the ITAA 1997.

Facts

The taxpayer is carrying on a business of primary production but is also deriving more than $100,000 non-primary production income. The taxpayer is making contributions to a superannuation fund.

The taxpayer wishes to make a farm management deposit.

Reasons for Decision

Section 393-5 of the ITAA 1997 allows a deduction for a farm management deposit if certain conditions are satisfied. One of the conditions, at paragraph 393-5(1)(d) of the ITAA 1997, provides that a taxpayer's 'taxable non-primary production income' cannot exceed $100,000.

Where the 'assessable non-primary production income' exceeds the 'non-primary production deductions', the 'taxable non-primary production income' equals the difference (subsection 392-85(1) of the ITAA 1997) between them.

'Non-primary production deductions' are defined in subsection 392-85(3) of the ITAA 1997. The 'non-primary production deductions' are the difference between any deductions and any 'primary production deductions'.

'Primary production deductions' are defined in subsection 392-80(3) of the ITAA 1997 and include all amounts that you can deduct that relate exclusively to the 'assessable primary production income', and other amounts that you can deduct that reasonably relate to the 'assessable primary production income'.

The Commissioner considers that 'primary production deductions' do not include deductions for superannuation contributions because they do not reasonably relate to the 'assessable primary production income'.

Consequently, the deduction for the superannuation contributions will increase the 'non-primary production deductions' and therefore reduce the 'taxable non-primary production income' calculated under subsection 392-85(1) of the ITAA 1997.

Amendment History

Date of amendment	Part	Comment
1 July 2014	Issue, Decision, Reasons for Decision, Legislative References	Updated legislative references to replace sections and subsections in former Divisions 363 and 393 in Schedule 2G of the ITAA 1936 with sections and subsections in Divisions 392 and 393 of the ITAA 1997.
	Facts	Change in taxpayer's non-primary production income to $100,000.
	Reasons for Decision	Updated non-primary production threshold to increase from $50,000 (and later $65,000) to $100,000 per section 393-5 of the ITAA 1997 effective 1 July 2014.
	Keywords	Add 'Farm management deposits'.

Date of decision: 23 July 2002

Year of income: Year ending 30 June 2003 Year ending 30 June 2004 Year ending 30 June 2005

Legislative References:
Income Tax Assessment Act 1997
   subsection 392-80(3)
   subsection 392-85(1)
   subsection 392-85(3)
   section 393-5
   paragraph 393-5(1)(d)

Keywords
Farm management bonds
Farm management deposits
Primary production income
Primary production expenses

Business Line: Small Business/Individual Taxpayers

Date of publication: 21 August 2002

ISSN: 1445-2782

history

	Date:	Version:
	23 July 2002	Original statement
	1 July 2014	Updated statement
You are here	10 June 2016	Archived

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