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Edited version of private advice
Authorisation Number: 1012644122956
Ruling
Subject: Primary production income
Question
Are you carrying on a primary production business?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a sole trader who is contracted by farmers to harvest, silage, hay, and seeding work on their farm. You use your own equipment to do this work but you do not take ownership of the end product. You do not get the hay or crop you just harvest it or plant the seeds for the crop to grow.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 995-1
Reasons for decision
A primary production business is defined by section 995-1 of the ITAA 1997 to be a business of, amongst other things, cultivating or propagating plants, fungi or their products or parts (including seeds, spores, bulbs and similar things), in any physical environment.
Taxation Determination TD 95/62 explains that where a sharefarmer pays the owner of machinery or other plant for use in their primary production the owner of that machinery would not be a primary producer.
In your circumstances you use your machinery on a paid contract basis to facilitate the farmers in their primary production businesses.
Therefore the income received by you for harvesting, silage and seeding work would be in the nature of income from your use of the machinery rather than from the carrying on of a business of primary production.