The AAT has affirmed that a taxpayer was not carrying on a business of primary production during the 2004-2009 years of income on his 500 acre property in Queensland and that therefore he was not entitled to deductions in respect of improvements he made to the property and other expenses he incurred.
Essentially, the AAT agreed with the Commissioner that despite the taxpayer’s genuine intentions, his operation had not reached the point where it could be characterised as a primary production business and that he was still in the preparatory stages of the business throughout the years of income in question.
In particular, the AAT found that while some of the taxpayer’s operation met a number of relevant criteria, it was not satisfied he was engaged in a “business” during the years of income in question as none of the activities had advanced much beyond the planning stage.
Moreover, it emphasised that no income had yet been produced from any of the activities in the years in question.
Accordingly, the AAT concluded that the link between the activities the taxpayer had already undertaken and the production of income at some future point was too tenuous.
(AAT Case [2012] AATA 579, Re Nelson and FCT, AAT, Ref No 2011/3312, McCabe SM, 30 August 2012.)
[LTN 170, 3/9]