A primary producer is an individual, partnership, trust or company carrying on a primary production business.

A primary producer is carrying on a business of:

  • Maintaining animals for the purpose of selling them or their bodily produce, including natural increase.
  • Manufacturing dairy produce from raw materials they have produced.
  • Cultivating or propagating plants, fungi or their products in any physical environment.
  • Conducting operations relating directly to taking or catching fish, pearls, crustaceans, etc.
  • Planting or tending trees in a planation or forest that are intended to be felled.

Primary producers receive certain tax concessions that are not available to other business owners including:

  • Special capital expenses write-offs (See Tax Strategy 107).
  • Access to the Farm Management Deposit Scheme (See Tax Strategy 106).
  • Tax averaging.
  • Special valuation rules for plants and animals including natural increases.

Taxpayers need to review their activities and the various indicators to determine whether they are actually carrying on a business, or operating a hobby or form of recreation. The tax consequences are completely different.


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