Farm Table says:
This tax determination is in relation to the following:
Will the owner (or lessor) of land who allows the land to be used in a sharefarming arrangement be considered to be engaged in a business of primary production as defined by the Income Tax Assessment Act 1936 (‘the Act’)?
Two examples are given:
- Example 1: Sharefarmer Y agrees to pay to landowner X a designated share of crop proceeds in consideration for use of the land owned by X. X does not participate in the cultivation of the land. Only Y involves himself in the farming activities.Y would be considered to be engaged in a business of primary production.The share of crop proceeds received by X is not considered to be income from primary production. It is not personal exertion income and would in essence be income from property.
- Example 2 : Sharefarmer Y pays an agreed consideration to X, the owner of items of machinery or other plant for their use in primary production. Only Y is involved in the day to day activities of farming. For the same reasons as above, Y is considered to be a primary producer, but X is not.