| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012296681075
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Non-commercial losses - farm management deposits
Question:
Does the repayment of funds from a farm management deposits (FMD) cause you to fail the income requirement under section 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
01 July 2009
Relevant facts
You are a partner in a partnership which conducts a primary production business.
Surplus funds were placed into a farm management deposit (FMD) in the 2007-08 financial year.
In the 2009-10 financial year, you withdrew over $200,000 from the FMD to be used for business purposes.
All eligibility rules for FMDs have been satisfied.
As a result of the FMD withdrawal, your taxable income was over $250,000 in the 2009-10 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Division 393
Income Tax Assessment Act 1997 - Subsection 35-10(2E)
Reasons for decision
The assessable income that arises from the operation of Division 393 of the ITAA (repayment of FMD) is considered assessable income "from" the business activity when:
· applying the loss deferral rule in Division 35, in subsection 35-10(2) of the ITAA 1997; and/or
· 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 your primary production business activity and your income from unrelated sources is less than $250,000. Therefore, you satisfy the income requirement under section 35-10 (2E).