| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012539432085
Ruling
Subject: Non-commercial losses - farm management deposits
Question 1
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(s)
Year ended 30 June 2013
The scheme commences on
1 July 2012
Relevant facts and circumstances
You and your spouse conduct a primary production business under a partnership structure.
During the 20XX financial year, you and your spouse deposited over $250,000 each into an eligible farm management deposit (FMD) account using funds from your primary production business.
In the 20YY financial year, the partnership made a loss and you and your spouse each withdrew over $250,000 from your respective FMDs which was used in the primary production business as working capital.
All eligibility rules for FMDs have been satisfied.
As a result of the FMD withdrawal, your taxable income was over $250,000 in the 20YY 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:
(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 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).