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Edited version of private advice
Authorisation Number: 1012669210288
Ruling
Subject: Conservation tillage tax offset
Question
Does the Commissioner have the discretion to allow the taxpayer to claim the conservation tillage tax offset in the 2013-14 financial year, if they were issued a Research Participation Certificate for the relevant financial year?
Answer
No
This ruling applies for the following period(s)
Year ended 30 June 2013
Year ended 30 June 2014
Relevant facts and circumstances
During the subsequent financial year you purchased a new air-seeder to attach to tillage equipment that was already owned by you.
The tillage equipment was not used before the above purchased air-seeder was attached.
You did consider attaching an old air-seeder at first, however this was never installed or used on the existing tillage equipment, nor was any offset claimed for this equipment.
You wish to claim the offset for the 2013-14 financial year for the newly purchased air-seeder.
You applied for the Research Participation Certificate and completed the conservation tillage survey from Department of Agriculture, Fisheries and Forestry (DAFF) for the relevant financial year.
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 (3) and (6) confirm that in order to be eligible for the offset you must have been issued a Research Participation Certificate and start to use the seeder, or have the seeder installed ready for use in the same relevant financial year.
In your case, you have been issued a Research Participation Certificate for the relevant financial year and purchased a new air seeder in the subsequent financial year to attach to existing tillage equipment that had never previously been installed and/or ready for use in primary production.
The financial year in which your Research Participation Certificate was issued is not the same financial year that the equipment was used or installed ready for use.
This means that you have not met the requirement in section 385-175(1) and therefore are not entitled to the conservation tillage tax offset.
Furthermore, the legislation does not give the Commissioner discretion to alter the eligibility criteria for the conservation tillage tax offset. Nor does it permit the Agriculture Secretary to issue a Research Participation Certificate if the conservation tillage survey was not completed at the required time.