primary producer qualification

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pumba's picture
Last seen: 5 months 2 weeks ago
Joined: 22/07/2016 - 10:59pm
primary producer qualification

Good morning all, I have read an older post on page 12 asking about the $20,000 assessable income test. One of the replies had a link to the ATO website for Non- commercial (losses?) which explains that to claim the losses from a business you must earn under $250,000 from other sources. On the left side is a bunch of headings one of which is EXCEPTIONS & it says to claim losses from primary production you need to earn less than $40,000 from other sources? I will be asking an accountant in the near future regarding this but in the meantime can anyone clarify this somewhat for me. I have pre approval to borrow $400,000 but will not be going ahead with this if I cant get the tax benefits from primary production nor would have I got a loan earning less than $40,000.  Im a bit confused with this but if I do qualify is there other questions I should be asking the accountant. Thanks Darren

barb's picture
Last seen: 6 days 20 hours ago
Joined: 23/11/2011 - 9:38am

Hi Darren,

Yes, it can get very confusing. This is the reason why I have an accountant. If you are only running a small property you may not need to use an accountant all the time. However, just having one consultation with one will not be too expensive and he or she will be able to clarify it for you and in simpler language than the very technical legal speak used by the ATO



highlandfarmer's picture
Last seen: 1 year 7 months ago
Joined: 03/01/2017 - 5:41pm
to claim tax benefits your income that you are claiming against cannot be in excess of $250k, if you pass the income test then you need to meet one of the 4 conditions:1) the farm business you are claiming a loss on made at least $20k in revenue,2) farm has made a profit for taxation purposes in 3 out of 5 years, 3)the property you are using in your business is valued at more than $500k or lastly 4)  the asset test where the other assets such as equipment, machinery etc is valued at at least $100k and used primarily for the purpose of conducting the farm business.
however if your income from other sources is less than $40k you do not need to pass any of the 4 test above and can claim deductions against the tax paid on other income. ( this is done because the actual tax paid on $40k is quite minimal, if your deductions are way greater than the tax paid on other income and you dont meet one of the 4 conditions above you may wish to consider defering your losses when you have something substantial to claim against or perhaps claim some losses and defer others. speak to your accountant if this is possible for your personal situation.
easy peasy, but I do work in investments/super/finance so I understand tax rules pretty well. I also have put them into practice myself.
pumba's picture
Last seen: 5 months 2 weeks ago
Joined: 22/07/2016 - 10:59pm

 Thanks for the reply, I do use an accountant every year for my tax but unfortunatly his office burnt down some months back & he has been very busy getting it all back together so I wont be chasing him up too soon, gotta give him time to get back on his feet. Anyhow I was hoping maybe someone could comfirm that they earn over $40,000 from other sources other than farming & if they do or dont receive primary producers tax benefits. Thanks.

CAS's picture
Last seen: 1 year 8 months ago
Joined: 10/12/2016 - 2:36pm

When you are stating $40,000 or 40k from other sources it usually refers to wages, Interest, Rental Income, other than business.

If for example you earned $35,000 from McDonalds, and made a primary production loss of $15,000 then you would be eligable to claim that loss against the $35k. other wise if your over the $40k then you must carry forward the loss against future primary production income.

Urchy87's picture
Last seen: 5 months 2 weeks ago
Joined: 03/09/2016 - 8:20pm

Yes you can claim tax benefits if you earn over $40000. I believe the less than $40000 rule comes into play when claiming your deductions. E.g if you haven't met any of the other criteria to be classified as a primary producer for that financial year and you had a low income year (less than $40000 from your main source of income) you can claim some deductions until the deductions applicable to $40000 in taxable income have been claimed.

If your current accountant doesn't deal with primary production they will have a bit of home work to do. Hopefully they won't pass that cost on to you.

This is my understanding of that rule. I'm no accountant though.

Hope it clears something up for you. Primary Production classification can get messy.


Gros31's picture
Last seen: 1 year 6 months ago
Joined: 11/02/2017 - 1:18am

So as I have a good job and it's going to take me a while to get 20k in revenue is impossible for me to claim

Or I need to have 100k in assets, do existing fences count, what about a large shed, bore for cattle, motor vechicle?

Then can u also claim against stuff such as interest payments on property ect

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