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Edited version of private advice
Authorisation Number: 1051794608319
Date of advice: 7 January 2021
Ruling
Subject: Farm management deposit
Question
Is the repayment of funds from Farm Management Deposit (FMD) relating to your business loss activity excluded from the income requirement calculation under subsection 35-10(2E) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
The assessable farm management deposit income that arises from the operation of Division 393 of the Income Tax Assessment Act 1997 (ITAA 1997) is considered assessable income "from" the business activity when applying the loss deferral rule in Division 35 of the ITAA 1997, and is therefore excluded from the income requirement calculation. For more information on non-commercial losses, please visit our website at ato.gov.au and search for quick code QC 33774.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
Year Ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are a partner in a partnership which conducts a primary production business activity (the activity).
All eligibility rules for FMD have been satisfied.
In the 20XX-XX financial year you withdrew an amount from your FMD account for use in your primary production business.
After excluding the farm management deposit income, your adjusted taxable income for the purpose of the income requirement calculation at section 35-10(2E) of the ITAA 1997 is less than $250,000.
Your FMD deposits are less than $XXX, you may require further withdrawals in sequential financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 35-10(2E)
Income Tax Assessment Act 1997 Section 35-30
Income Tax Assessment Act 1997 Division 393