Qualification Provisions for the Primary Production Concession

Background of primary production concession

The provisions for the Primary Production Concession relate specifically to controlled primary production trusts. Primary producers who meet certain income and asset requirements will be allowed to retain a limited appointorship role in the primary production trust, and not have the primary production assets or income attributed to them only if:

• the appointor (and their spouse) do not have any other position in the trust, including income or capital beneficiary, and

• they have very limited powers as appointor.

This concession allows a primary producer, such as a farmer, to retire and hand control of the primary production assets and income to their successor while retaining a right of veto in case of the proposed sale or break-up of those assets.

Qualification provisions criteria for primary production concession

All of the following sets out the criteria that must be satisfied if an attributable stakeholder of a controlled primary production trust wishes to qualify for this concession:

• the trust must be carrying on a primary production enterprise,

• more than 70% of the trust's assets (excluding the net value of the principal residence of the individual and their spouse) are used wholly or principally for carrying on the primary production enterprise,
• the total adjusted net value of assets that are:

• owned or controlled by the individual and their spouse,
• used wholly or principally for the purposes of carrying on a primary production enterprise,

is less than the primary production attribution threshold,

• the average adjusted net primary production income of the individual and their spouse in the 3 tax years preceding the claim for the concession is less than the current income threshold of the Family Tax Benefit Part A,     
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• if the individual and their spouse did not have adjusted net primary production income for all of the 3 tax years preceding the claim for the concession, then the delegate may determine the applicable period to be used,
• at the time the concession is claimed the individual and their spouse are not [glossary:actively involved in the:] primary production enterprise,
• at the time the concession is claimed an [glossary:eligible descend:] — [glossary:a:] — [glossary:nt:] is operating the primary production enterprise,
• at the time the concession is claimed a provision has been inserted into the trust deed to the effect that the individual and their spouse can only appoint a trustee[glossary:(:]s) if:

• the trustee concerned dies, resigns or becomes subject to a legal disability, or
• in accordance with a statutory law relating to the appointment of trustees, and

• at the time the concession is claimed a provision is inserted into the trust deed to the effect that the individual and their spouse are able to veto or direct the decision of a trustee only:

• in relation to the sale of land used for the purposes of carrying on the primary production enterprise, or
• in relation to the sale of fishing rights or timber rights used for the purposes of carrying on the primary production enterprise, or
• in accordance with a statutory law relating to the appointment of trustees, and

• at the time the concession is claimed neither the individual nor their spouse, is or is capable of becoming a trustee of the trust,
• at the time the concession is claimed, a group in relation to the individual and their spouse is not able to vary the trust deed of the trust, and
• at the time the concession is claimed neither the individual nor their spouse benefits, or is capable of benefiting under the trust, either directly or through interposed companies, business partnerships or other trusts.