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Application of Assets Limit
Net assets limit of $500,000 applies
Under RAFS, farm assets worth up to $500,000 could be transferred without being assessed under the deprivation provisions.
Assets limit could comprise of one or more farms
Prior to 1 July 2001, The $500,000 limit applied to the combined value of all farms and farm assets divested. That is, it was not on a farm by farm basis.
Additional time was allowed in certain circumstances to allow farmers to finalise the farm property transfer if they lodged a written pre-assessment request (or lodged a claim) prior to 31 July 2001.
Transfer of farms valued over $500,000
Farm assets valued over $500,000 could be transferred under RAFS provided the eligible descendant already had an interest in the farm.
In these cases, the total value of the farm or farms being divested, less the value of the descendant's estate or interest in the farm or farms, could not exceed $500,000.
Example of transfer where descendant held an interest
A retiring farmer was involved in a farm enterprise valued at $600,000. His son was a partner, holding a one-third share in the property. The value of the farm assets being divested was $600,000 less the son's share of $200,000 = $400,000. Therefore the retiring farmer was able to access RAFS.
Total value of farm could not be reduced after 15 September 1997
If a farmer wishing to participate in RAFS did anything to the property after the announcement of RAFS in order to reduce its value below $500,000, they were disqualified from participating in RAFS.
A transaction that reduced the value of property between the date of announcement of the RAFS scheme (15 September 1997) and the date on which a farm property was transferred, did not reduce the value of the property for RAFS eligibility purposes. That is, the value associated with the transaction was disregarded when assessing the value of the property for RAFS eligibility purposes.
Example of reduction disregarded for RAFS purposes
A farmer who owned a property worth $600,000 subdivided it in December 1997, after the announcement of RAFS. The farmer gave a parcel worth $100,000 to his children. If the farmer decided to give the remaining $500,000 worth of land to his children, the value of the farm would have been taken to be $600,000 for RAFS eligibility purposes. In other words, the farmer's assets remained in excess of the $500,000 limit.
Forgone wages provisions did not apply
It was not possible to use the forgone wages provisions in addition to RAFS.
According to subsection 5P(1) of the VEA, a farm means any land that is used:
- For the purposes of a farm enterprise; or
- In connection with a farm enterprise.
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.