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Edited version of your written advice

Authorisation Number: 1012748591902

Ruling

Subject: Fishing lease income and share fishing agreement

Questions and Answers:

1. Is your income derived from the leasing of seafood licences treated as non-primary production income?

2. Does entering into a share fishing agreement whereby you provide the seafood licences and another party the boat and fishing services result in your percentage of the agreement income being treated as primary production income?

This ruling applies for the following period:

Year ending 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You own seafood licence zones, which you lease to local fishermen.

Prior to leasing the licences, you fished with the zones, producing primary production income.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 392-80

Reasons for decision

Subsection 392-80(2) of the Income Tax Assessment Act 1997 states your assessable primary production income for the current year is the amount of your basic assessable income for the current year that was derived from, or resulted from, your carrying on a primary production business.

Taxation Determination TD 95/62 is about the owner (or lessor) of land who allows the land to be used in a sharefarming arrangement. It states at paragraphs 5, 6 and 8:

In your case, the principles in TD 95/62 apply to your share fishing agreement. Here, your provision of mere licences under the arrangement would be passive in nature and thus result in your income derived being lease (rental) income from property rather than primary production income from the carrying on of a business of primary production.


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