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Active Involvement

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What was considered to be active involvement?

VEA?

A person was considered to be actively involved in a farm enterprise if they:

Eligible descendant engaged in off-farm work

During periods of industry downturn, some eligible descendant may have been forced to obtain off-farm income as a result of the farm being unable to support the younger generation.

It was possible under RAFS to accept that an eligible descendant was actively involved in the farm for the three years immediately before the date of transfer, where they were forced to work off-farm, during all or part of the three year period.

Requirement to work on farm during annual breaks and holidays

During the three years immediately prior to transfer of the farm, an eligible descendant was required to contribute a proportion of their labour to the farm during term or annual breaks or holiday periods from their job, on weekends, or before or after work, where the eligible descendant was:

  • undertaking educational studies or training, or
  • working off-farm.

These rules were specific to the three-years immediately prior to transfer of the farm when the eligible descendant was:

  • Undertaking educational studies or training relevant to the farm, or
  • Working off-farm during periods of industry downturn.


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.

 

 

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.

 

 

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.

 

 

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.