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Edited version of your written advice
Authorisation Number: 1012737450729
Ruling
Subject: Carrying on a business
Question 1
Are you carrying on a business as a primary producer under section 995-1 of the Income Tax Assessment Act 1997?
Answer
Yes
This ruling applies for the following period:
Income year ended 30 June 2015
The scheme commences on:
2 May 2014
Relevant facts and circumstances
You are an individual that carries on a primary production activity.
Your activity involves the cultivation of animals on a xx hectare property at X.
You have purchased and are maintaining X head of livestock. You are planning to increase that number in the near future.
Your activity involves the buying, breeding and raising of livestock for sale, to make a profit or at the very least with the prospect of making a profit.
You plan to carry on the activity in an organised and business-like manner.
This activity occupies your time, you attention and your labour on a full time basis.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 995-1
Reasons for decision
Paragraph 995-1(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a 'primary production business' will include any business of maintaining animals for the purpose of selling them or their bodily produce.
Section 995-1 of the ITAA 1997 also defines 'business' as 'including any profession, trade, employment, vocation or calling, but not occupation as an employee'.
Taxation Ruling TR 97/11 provides the Commissioner's view of the factors that are considered important in determining if you are in business for tax purposes. The factors are:
• whether the activity has a significant commercial purpose or character
• whether the taxpayer has more than just an intention to engage in business
• whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity
• whether there is regularity and repetition of the activity
• whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business
• whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit
• the size, scale and permanency of the activity
• whether the activity is better described as a hobby, a form of recreation or sporting activity.
No one indicator is decisive. The indicators must be considered in combination and as a whole. Whether a 'business' is carried on depends on the large or general impression gained.
Based on the information you have provided we consider that the activity has the necessary characteristics of a business for taxation purposes and will satisfy the relevant definitions in section 995-1 of the ITAA 1997.