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.