Establishing shelterbelts on land used in a primary production business

Our commitment to you

Exclamation This publication provides you with the following level of protection:

If you follow our information in this publication and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty. Also, if you acted reasonably and in good faith we will not charge you interest.

If you make an honest mistake in trying to follow our information in this publication and you owe us money as a result, we will not charge you a penalty. However, we will ask you to pay the money, and we may also charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to.

If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us.

This publication was current as at November 2016.

Establishing shelterbelts on land used in a primary production business

Payments you receive - what you need to know

This fact sheet explains your entitlement to claim an income tax deduction for the cost of establishing shelterbelts on land you use to carry on a primary production business.

A shelterbelt is a line of trees or shrubs planted to protect an area from fierce weather. They are often created on a farm to protect crops and livestock, reduce soil erosion, control salinity and improve biodiversity.

Whether you can claim a deduction will depend on the type of expense and the purpose of the shelterbelt.

You cannot claim a deduction for a shelterbelt created for a private purpose, such as to protect a home.

What kind of expenses can I claim?

If you create a shelterbelt for a primary production purpose, you can claim an immediate deduction for any new fencing and reticulation costs related to the shelterbelt.

You can only claim for expenses such as site preparation, chemicals and trees if the shelterbelt is established primarily and principally for the purpose of preventing or fighting land degradation.

If you recoup any of the expenditure that you can claim as a deduction (for example, under a government assistance program), that amount is included in your assessable income.

What is land degradation?

Land degradation is the process by which land deteriorates through the action of natural agents (such as water, wind and temperature), or as a result of land use or management practices.

Soil erosion and salination are examples of land degradation, as are harmful changes in soil structure such as acidity and compaction. Degradation of vegetation is also a component of land degradation.

What if I can't claim a deduction?

If the shelterbelt is not established primarily and principally for the purposes of preventing or fighting land degradation, you cannot claim a deduction for capital costs associated with site preparation or the planting of trees. Also, you cannot treat the trees as depreciating assets.

These expenses will form part of the cost base of the land for capital gains tax purposes.

More information

This fact sheet draws on material from a range of ATO view documents.

For more information call the ATO on 13 28 66.


You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Siebel/TDMS Reference Number:  1-9GQFXI0

Date of publication:  4 October 2017