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Edited version of private ruling
Authorisation Number: 1011793116290
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Ruling
Subject: Non-commercial losses
Question
Does the repayment of funds from a farm management deposit (FMD) cause you to fail the income requirement under subsection 35-10(2E) of the Income Tax Assessment Act 1997 (ITAA 1997)
Answer: No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts and circumstances
You conduct a primary production business.
Your primary production business made a loss in the 2009-10 year of income.
You made a deposit into a FMD account in a previous financial year sourced from profits made by your business.
All eligibility rules for FMD have been satisfied.
In the 2009-10 financial year, you made a withdrawal from the FMD account and used it in relation to your business.
Your estimated 2010 adjusted taxable income (excluding the FMD withdrawal and the farm losses) is less than $250,000.
Reasons for decision
The assessable income that arises from the operation of section 393-15, Schedule 2G of the Income Tax Assessment Act 1936 (repayment of FMD) is considered assessable income "from" the business activity when:
(a) applying the loss deferral rule in Division 35, in subsection 35-10(2) of the ITAA 1997; and/or
(b) determining whether the assessable income test in section 35-30 of the ITAA 1997 has been satisfied.
The income repaid from the FMD is considered to be income from the business activity and your income from unrelated sources is less than $250,000. Therefore, you satisfy the income requirement under subsection 35-10 (2E) of the ITAA 1997.
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