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In Australia if you are operating a primary production business individually or in a partnership or as a trust then you will be considered as a primary producer. It could be maintaining animals for the purpose of selling, manufacturing dairy produce, planting or tending trees, fishing, pearling etc. If you operate such a business in Australia, you may able to claim special tax concessions unless the business is just a part of your hobby, recreation or a sporting activity.

To be a primary producer you need to consider various indicators. This special concession also affects when you have to pay your income tax, as you may be able to make two pay as you go (PAYG) instalments each year. There are some special tax rules for this concession. These include:

  •   Profit from the forced disposal or death of livestock: You can spread your profit from a forced disposal over five years to reduce your cost of replacing the livestock;
  •  Recovery amount from insurance for losing livestock: You can elect to include the recovery amount from insurance for losing livestock, loss of trees by fire etc;
  • Double wool clips: You can elect to defer your profit from advance clip from one income year to the next year due to floor, fire or drought; 
  • Farm management deposits: You can spread your profit from farm management deposits that allow you to defer income to a later year;
  • Tax Average: You can smooth out your taxable income over five years to allow for good and bad season.

Primary producers can also be benefited from exceptions to the non-commercial losses rules that will restrict you from offsetting losses for a non-commercial business activity, which is limited to less than $40,000 (excluding net capital gains).  

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