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No Reduction in Value of Assets
Forgone wages are not considered to represent an interest and cannot reduce the value of the transferred assets. However, a transfer completed prior to 29 April 2004 in recognition of forgone wages will be allowed as an interest in the assets. For example, a retiring sugarcane farmer has sugarcane assets worth $700,000. His son has worked on the farm many years and has accrued forgone wages worth $250,000. A share of the farm is transferred on 15 April 2004 representing that amount. For RASF purposes, the farmer's interests are now worth $450,000.
Forgone wages in transfer completed on or after 30 April 2004
If the transfer was completed on 30 April 2004, the transfer would not be recognised for RASF purposes and the asset value would be taken to be $700,000. The farmer would therefore not qualify for RASF.
Total value of sugarcane farm cannot be reduced after 29 April 2004
A transaction that reduces the value of property between the date of announcement of the RASF scheme (29 April 2004) and the date on which a sugarcane farm property is transferred does not reduce the value of the property for RASF eligibility purposes. That is, the value associated with the transaction is disregarded when assessing the value of the property for RASF eligibility purposes.
Reduction in value of property after 29 April 2004
If a sugarcane farmer wishing to participate in RASF takes any action relating to the property after the announcement of RASF in order to reduce its value to $500,000 or less, they are disqualified from participating in RASF. The value prior to the reduction (i.e. a value in excess of $500,000) will be applied.
Example of reduction disregarded for RASF purposes
A sugarcane farmer who owned a property worth $600,000 subdivided it in May 2004, after the announcement of RASF. The sugarcane farmer gave a parcel worth $100,000 to his children. If the sugarcane farmer decided to give the remaining $500,000 worth of land to his children, the value of the sugarcane farm would be taken to be $600,000 for RASF eligibility purposes. In other words, the sugarcane farmer's assets remain in excess of the $500,000 limit.
Forgone wages provisions do not apply
It is not possible to use the forgone wages provisions in addition to RASF.More ?