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Sugarcane Farmer must be a Qualifying Sugarcane Farmer

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Definition of a qualifying sugarcane farmer

    

The person must be a qualifying sugarcane farmer at the date of transfer of the sugarcane farm to the eligible descendant. A person is a qualifying sugarcane farmer if:

  • acquired an eligible interest in a sugarcane farm before 29 April 2004 and the person, or their partner, has had a [glossary:20-year involvement in farming:DEF/20 year involvement in farming] for any period in Australia:
Example of requirement to contribute significant labour and derive significant income

A sugarcane farmer purchased his farm in 1989 and planted sugarcane. From 2000 to 2002, the farmer worked full-time in off-farm employment, but continued to work on the farm after hours, and continued to receive a small income from his sugarcane farm. For the period 2002 till 2005, all of his labour was contributed to the sugarcane farm. The farmer retired in 2005 and gifted the farm to his daughter. The farmer is a qualifying sugarcane farmer because:

  • he has continuously owned a farm for at least 15 years, and
  • during the period of ownership, the significant part of his income, labour and capital was related to the farm, and
  • contribution of his labour and capital and the income he derived was from a sugarcane farm for at least the last two years.
Significant part of income

A significant part of income is determined in relation to the individual, or both members of a couple individually. A significant part is considered to be 50% or more. The income used in determining a significant part of farm income is the gross income (i.e. income before expenses). The Department of Agriculture, Fisheries & Forestry have also advised that a temporary (less than a year) reduction in the proportion of income derived from sugarcane farming to below 50% is acceptable.

Partner's income irrelevant

For members of a couple, if one member of a couple is otherwise eligible and can establish that a significant part of his/her income is from sugarcane farming, it is irrelevant what proportion of the partner's income comes from sugarcane farming.

Significant part of labour

A significant part of labour is determined in relation to the individual, or both members of a couple individually. Each case must be determined on its unique circumstances. Factors that may be taken into account include but are not limited to:

  • whether the person is working the farm full time
  • if the person is undertaking full time study on a course related to farming (including various business management related courses)
  • if the person has other jobs apart from working the farm
  • time put into administration and business matters regarding the farm.
Significant part of capital

A significant part of capital is also determined in relation to the individual, or both members of a couple individually. Each case must be determined on its unique circumstances. Factors that may be taken into account include:

  • personal borrowings taken out to finance farm operations
  • guarantees given by the person on business borrowings
  • contribution of income from other sources to support farm operations
  • contribution of personal capital (eg inheritances) to farm operations
  • any rearrangement of personal investments to make available more capital for farm operations.
Example of exception

Due to a downturn in the sugar industry, a sugarcane farmer has undertaken employment on a nearby cattle farm so that less than 50% of his time has been spent working on the sugarcane farm and less than 50% of his income has been earned on the sugarcane farm. If the farmer could demonstrate that normally he would meet the definition of a qualifying sugarcane farmer (i.e. that normally over 50% if his time was spent farming sugarcane and over 50% of his income would be earned from the sugarcane farm), then he or she would qualify. However, if the majority of his contributed labour and income derivation was from something other than farming for a period of time exceeding one year then he would not qualify.

Effect of acquiring adjoining parcels of land during the 15-year period

A person is considered to own the sugarcane farm property in Australia for 15 years where he or she initially owned only a part of the currently existing sugarcane farm enterprise. For the purposes of RASF, the sugarcane farmer can be considered to have owned the entire sugarcane farm for 15 years if the sugarcane farmer owned a parcel of land 15 years ago and subsequently acquired adjoining parcels of land that at the time of transfer make up the sugarcane farm enterprise. If there is any gap during which the person (or the person's partner) does not own a farm during the 15 years, qualification under this criterion is not met, even if the gap is just 1 day.

Investors

Generally, it is expected that investors will not be able to demonstrate that they have contributed a significant part of their labour to the sugarcane farm enterprise or derived a significant part of their income from the sugarcane farm enterprise. This is because investors often have an occupation and/or source of income to which they devote their time and efforts other than primary production.

Sugarcane farm managers

Sugarcane farm managers who acquired ownership of the sugarcane farm before 29 April 2004 are regarded as qualifying sugarcane farmers if they establish that they have been involved with farming for 20 years.


VEA 

Qualifying sugarcane farmer – 15 years continuous involvement

Subsection 5PAA(3) VEA

Qualifying sugarcane farmer – 20 years involvement

Subsection 5PAA(4) VEA

VEA  (go back)

A person is considered to be a qualifying sugarcane farmer if they have:

  • held an eligible interest in the farm for a continuous period of 15 years and the farm has for the last two years and since 29 April 2004 been a sugarcane farm, or
  • acquired an eligible interest in the sugarcane farm before 29 April 2004 and had an active involvement in the farm or the farming industry in Australia for any period or periods totalling at least 20 years.

During either period the person or their partner must have derived asignificant part of their income and contributed a significant part of their labour to the development of a sugarcane farm for at least the last two years.

Refer to subsections 5PAA(3) and 5PAA(4) for the full definition.

 

 

According to subsection 5PAA(1) of the VEA, a sugarcane farm is a farm that is used predominantly for the purposes of a sugarcane farm enterprise .

 

 

According to subsection 5P(1) of the VEA, an eligible descendant in relation to a person means:

  • a child, step child or adopted child of the person or of a partner of the person, or
  • a descendant in direct line of a child described above, or
  • any other person who, in the opinion of the [glossary:Commission:DEF/Commission/Repatriation Commission], should be treated for the purposes of this definition as a person described in the above paragraph.

 

 

The 15 year eligible interest period must have been continuous.

If a person has bought and sold a series of sugarcane farms, where there were any periods during which they did not hold an eligible interest in a sugarcane farm, they will not satisfy the test.

Documents such as title deeds for the previously owned sugarcane farms should be obtained to verify that there have been no gaps in sugarcane farm ownership. In these situations, it may be easier for the person to satisfy the 20-year involvement in farming test.

 

 

A person's 'partner' is someone who is a member of a couple with that person.

    VEA 

RASF definitions

Subsection 5PAA(1) VEA

VEA (go back)

For RAFS and RASF, under the 15 years ownership rule, a farmer or sugarcane farmer must have contributed a significant part of their labour and capital to the development of a farm or farms.

For RASF under the 15 years ownership rule, the contribution of labour and capital must relate to sugarcane farm(s) during at least the last 2 years.

See glossary terms significant part of labour and significant part of capital for details.

 

 

For RAFS and RASF, a farmer or sugarcane farmer needs to derive a significant part of their income from their relevant farming enterprise in order to fulfil the requirements for a qualifying farmer and qualifying sugarcane farmer respectively.

When determining whether a person derived a significant part of their income from farming or sugarcane farming, gross (before expenses) income figures should be used. The general rule will be that at least half of the person's income was involved. The entire period is examined as a whole.

An indication of a family member's major source of income can be obtained from the farmer's tax return or the farm or sugarcane farm business tax return.

 

 

    VEA

Eligible interest in a sugarcane farm

Subsection 5PAA(5) VEA

Eligible interest in a relevant sugarcane farm asset

Subsection 5PAA(6) VEA

VEA  (go back)

A sugarcane farmer holds an eligible interest in a sugarcane farm if they:

  • have a legal estate or interest in the sugarcane farm, or
  • have a transferable legal right or a transferable licence to occupy the farm for a particular purpose of the sugarcane farm enterprise, or
  • have an equitable estate or interest in a farm, as mortgagor of the legal estate or interest in the farm; or
  • are a shareholder in a private company that owns or holds a pastoral lease over the farm land.

Refer to subsection 5PAA(5) for the full definition.

 

 

Australia is defined in the Acts Interpretations Act 1901 and includes the following territories and Islands:

  • Christmas Island
  • Cocos (Keeling) Islands

Subsection 5Q(1) of the VEA provides specifically that the definition of Australia includes the external territories for many VEA purposes including Part III, IIIAB, some parts of Part IIIB, Parts IIID, VIIA, VIIC and sections 52ZO, 58A, and 132.  Norfolk Island] is currently the only external territory of Australia. For the above VEA sections, which cover service pension, [glossary:income support supplement:118], pension bonus, pension loans scheme, Veterans supplement, pension supplement and Commonwealth Seniors Health Card purposes it is considered to be part of Australia. The test of residing in Australia does not by itself satisfy the full definition of Australian Resident, as residency also requires Australian citizenship or the holding of a specified visa.

Papua New Guinea and Nauru have both previously been external territories of Australia.  Lord Howe Island and Macquarie Island, formerly regarded as separate islands, are now part of mainland NSW and Tasmania respectively.

 

 

In considering whether a 'significant part' of the person's labour was related to the farm, the general rule will be that at least half of the person's working hours were involved. The entire period is examined as a whole.

RAFS example: A farmer purchased his farm in 1982. From 1993 to 1995 the farmer worked full time in off-farm employment, but continued to work on the farm after work and on weekends, and continued to receive a small income from his farm. For the remainder of the period, all of his labour was contributed to the farm. The farmer retired in 1998 and gifted the farm to his daughter. The farmer is a qualifying farmer because he has continuously owned a farm for at least 15 years, and during that time the significant part of his income, labour and capital was related to his farm.

RASF example: A sugarcane farmer purchased his sugarcane farm in 1988. From 1999 to 2001 the farmer worked full time in off-farm employment, but continued to work on the sugarcane farm after work and on weekends, and continued to receive a small income from his sugarcane farm. For the remainder of the period, all of his labour was contributed to the sugarcane farm. The sugarcane farmer retired in August 2004 and gifted the sugarcane farm to his daughter. The sugarcane farmer is a qualifying sugarcane farmer because he has continuously owned a sugarcane farm for at least 15 years, and during that time the significant part of his income, labour and capital was related to his sugarcane farm.

 

 

According to subsection 5P(1) of the VEA, a farm enterprise means an enterprise carried on within any of the agricultural, horticultural, pastoral or aquacultural industries.

 

 

According to subsection 5PAA(1) of the VEA, a sugarcane farm enterprise is a farm enterprise where:

  • a majority of the enterprise is undertaken for the purposes of farming commercial quantities of cane sugar, or
  • a significant proportion of the enterprise is undertaken for the purposes of growing commercial quantities of cane sugar, and the Commission has determined that there are special reasons why the farm enterprise should be treated as a sugarcane farm enterprise.

For the full definition, refer to subsection 5PAA(1).

 

 

According to Section 5E(2) of the VEA a person is a member of a couple, if they are:

  • legally married to another person and is not living separately and apart from the other person on a permanent basis; or
  • living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
  • all of the following conditions are met:
  • living with another person, whether of the same sex or a different sex;
  • not legally married to that person;
  • in a de facto relationship with that person; and
  • not in a prohibited relationship

The term “partnered” is also commonly used.

Under the 15 years ownership rules for RAFS and RASF, a farmer or sugarcane farmer needs to contribute a significant amount of capital to their relevant farming enterprise in order to fulfil the requirements for a qualifying farmer or qualifying sugarcane farmer respectively.

Generally, outright ownership or financial interest in the farm enterprise and farm operations for a period of 15 years would indicate significant capital contribution.