PRIMARY PRODUCER INCOME TAX AVERAGING

The Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016 has been introduced in the House of Representatives. The Bill proposes to amend ITAA 1997 to allow primary producers to access income-tax averaging 10 income years after choosing to opt out, instead of that opt-out choice being permanent.

If a primary producer wants to opt out again, they may still do so, but that choice to opt out is effective for 10 income years. After the 10-year opt-out period has ended, primary producers are effectively treated as new primary producers in applying the basic conditions.

The averaging adjustment applies again to a taxpayer’s assessment where the following conditions are satisfied:

•       income-tax averaging has not applied to the taxpayer because they permanently opted out 10 or more income years ago;

•       the taxpayer has been carrying on a primary production business for two income years in a row; and

•       their basic taxable income in the first year (after the 10-year opt-out period has passed) is less than or equal to their basic taxable income in the following year.

If these basic conditions are not met, an averaging adjustment will not be made until they are met in a later income year.

This change would apply to the 2016–2017 income year and later income years.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.