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Primary Production Aggregation Assessment for Sole Traders & Partnerships


Last updated 5 January 2007

When the aggregation rules apply



When the main business activity undertaken by a company is primary production activities, the aggregation rules of section 52CA of the VEA apply. These rules over-ride the general provision of section 52C, concerning deduction of liabilities secured against assets.

Sole traders

If a sole trader runs a farm, the aggregation assessment involves:

  • adding all the sole trader's primary production assets (this excludes the person's principal home)'
  • adding all the sole trader's primary production liabilities (this excludes liabilities relating to non-primary production assets such as the principal home and curtilage), and
  • deducting the value of the total primary production liabilities from the value of the total primary production assets to give the sole trader's net primary production assets.
Example of calculation of the aggregation assessment

The table below provides an example of the calculation of the aggregation assessment when a sole trader runs a farm.



Whole property ('mixed asset')


Home & curtilage


Primary production asset


($450,000 - $150,000)

Liability related to the whole farm property


The proportion of the liability that is a primary production liability is:

[the liability on the whole property x (the value of the mixed asset - value of home & curtilage )] divided by the value of the mixed asset,

ie [240,000 x (450,000 - 150,000)] divided by 450,000 = $160,000.

Note : If there are no other primary production assets or liabilities related to them, the net primary production asset is $300,000 minus $160,000, ie $140,000, which would be maintained as the net primary production asset.

Calculation of liabilities in partnerships

A partner's share of the partnership assets or liabilities is determined by the balance of their capital accounts, as described in the following table.

If the person's capital account has a...

Then that value is an assessable primary production...

positive value,


negative value, or deficit,


Partnership liability

If a partnership liability is secured against mixed assets privately owned by the person, and which are encumbered, the value of the liability which relates to the non-primary production part of that asset is not included in the aggregation assessment. For example an encumbered mixed asset may be mortgaged. The partnership balance sheet is adjusted to arrive at a capital account figure for aggregation assessment.

Company has the same meaning as in the Income Tax Assessment Act 1997.



For the purposes of income and assets assessment, a sole trader is a business owned by one person.

The business:

  • is not a separate legal entity from the owner,
  • is not a separate accounting entity, which means that sole traders need ONLY lodge a personal tax return,
  • may be run in the owner's name OR under a registered business name, and
  • may or may not have employees.

The owner is:

  • liable for all the debts of the business, and
  • entitled to all the profits of the business.

The principal home has the meaning given by subsection 5LA(1) of the VEA and subsection 5LA(2) of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.

  • the residence itself (e.g. house, flat, caravan),
  • permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
  • [glossary:curtilage:DEF/Curtilage] (i.e. two hectares or less of private land around the home where the private land use test has been satisfied, or all land held on the same title as the person's principal home where the extended land use test has been satisfied), or
  •       any garage, shed, tennis court or swimming pool used primarily for private purposes provided it is on the same title as the principal home.



Curtilage is the land adjacent to the exempt principal home.  A certain amount of curtilage is disregarded for the assets test.. The amount of curtilage that is exempt depends on whether the private land use test described in section 5LA(3) of the VEA, or the extended land use test described in section 5LA(4) of the VEA, is satisfied. Under the private land use test, up to two hectares on the same title as the principal home may be exempt. Under the extended land use test, all land on the same title as the principal home may be exempt.



The capital accounts of a business partnership record the capital contribution of each partner to the net assets of the partnership. The accounts may either:

  • fluctuate to record changes in the net assets, or
  • remain fixed in accordance with the partnership agreement.

If the capital accounts are fixed, a separate current account is kept for each partner. The partnership's current account then records the changes in the equity of each partner.