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Edited version of private advice
Authorisation Number: 1012611220569
Ruling
Subject: tillage offset
Question
Does the Commissioner have the discretion to allow the taxpayer to claim the conservation tillage tax offset in the 2013 financial year, if they had not completed a conservation tillage survey during the 20XX financial year and have not been issued a Research Participation Certificate for the 20XX year?
Answer
No
This ruling applies for the following period(s)
Year ended 30 June 2013
Relevant facts and circumstances
During the 20XX financial year you purchased and installed a new tillage seeder which you believe is eligible for the conservation tillage tax offset.
You did not apply for the Research Participation Certificate or completed the conservation tillage survey from Department of Agriculture, Fisheries and Forestry (DAFF) by 30 June 20XX as you were not aware this was a condition.
Under the legislation Research Participation Certificates for the 20XX financial year can no longer be issued by DAFF. The conservation tillage survey (contained within the Research Participation Certificate application form) must have been completed and submitted prior to 1 July 20XX.
You are requesting the Commissioner exercise a discretion to allow them to claim the conservation tillage tax offset in the 20XX income tax return year, although the conservation tillage survey was not completed prior to 30 June 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 385-J
Income Tax Assessment Act 1997 Section 385-175
Income Tax Assessment Act 1997 Section 385-180
Income Tax Assessment Act 1997 Section 385-185
Income Tax Assessment Act 1997 Section 385-190
Reasons for decision
The conditions for entitlement to the conservation tillage tax offset are contained in section 385-175 Income Tax Assessment Act 1997 (ITAA 1997)
A taxpayer is entitled to the conservation tillage tax offset for an income year if all of the following conditions in section 385-175(1) ITAA 1997 are satisfied:
(1) the offset relates to the cost of an 'eligible no-till seeder':
(2) the income year is the 2012-13, 2013-14 or 2014-15 financial year
(3) at some time during the relevant income year, the taxpayer either started to use the seeder in a primary production business (not having previously installed it ready for use) or had the seeder installed ready for use in a primary production business
(4) at the time mentioned in (3), the taxpayer 'holds' the seeder
(5) the time mentioned in (3) was not before 1 July 2012 and not after 1 July 2015
(6) a Research Participation Certificate has been issued for the relevant income year
(7) the taxpayer claims the offset in their tax return for the relevant income year.
Condition (6) above states that you must have been issued with a Research Participation Certificate. Part of the process of receiving a Research Participation Certificate is to complete a conservation tillage survey.
Paragraph 385-190(1)(b) of the ITAA 1997 states that in order for the Agriculture Secretary to issue a Research Participation Certificate they must be satisfied that you have completed a conservation tillage survey during the relevant income year. In your case this means the said survey had to have been completed between 01 July 2012 and 30 June 2013.
In your case, you did not apply for the Research Participation Certificate or complete the conservation tillage survey from DAFF prior to 30 June 2013 as you were unaware this was a condition.
This means that you have not met the requirement in section 385-175(1) to hold a Research Participation Certificate issued by the Agriculture Secretary for the 2013 financial year and therefore are not entitled to the conservation tillage tax offset.
The legislation does not give the Commissioner discretion to allow a taxpayer to claim the conservation tillage tax offset, if the conservation tillage survey was not completed at the required time and they have not been issued with a Research Participation Certificate.
Further, the legislation does not permit the Agriculture Secretary to issue a Research Participation Certificate if the conservation tillage survey was not completed at the required time.