Submission on use of primary production averaging and farm management deposit provisions by trust beneficiaries

On 5 May 2011, the Institute lodged a submission on the Exposure Draft legislation and Explanatory Material to allow beneficiaries of trusts which carry on a primary production business to continue to use the primary production averaging and farm management deposit provisions in a loss year. This material was released by Treasury for public consultation on 13 April 2011.

Broadly speaking, the Exposure Draft legislation is designed to restore the position which existed prior to the High Court decision in the Bamford case which triggered the withdrawal by the ATO of TR 95/29 with effect from the 2011 income year. In its submission the Institute:

• focuses on the proposal to limit to four the number of natural person beneficiaries who may be “chosen” to be treated as carrying on the primary production business actually carried on by the trustee in a year in which the trust has a loss for trust law purposes. Consistent with how the law has been administered under TR 95/29 our submission calls for no limit or, if a limit is to be retained, that it be set at a number greater than four
• highlights the fact that, if a limit is to be imposed, beneficiaries currently using the averaging and/or farm management deposit provisions and who are not chosen in a loss year should not be adversely affected by being unexpectedly unable to utilise those provisions.
  

Article last updated 6 February 2012