This section outlines the requirements that applied to a person who disposed of a farm under RAFS. Such a person included a qualifying farmer, the former partner of a qualifying farmer or the widow or widower of a qualifying farmer.
This section contains the following topics:
The person must have been a 'qualifying farmer' at the date of transfer of the farm to the eligible descendant. A qualifying farmer was a person who had a 'qualifying interest' in the farm(s) and:
A person would have been considered to own the farm property in Australia for 15 years where he or she initially owned only a part of the currently existing farm enterprise. For example, for the purposes of RAFS the farmer could be considered to have owned the entire farm for 15 years if the farmer owned a parcel of land 15 years ago and subsequently acquired adjoining parcels of land that at the time of transfer made up the farm enterprise.
Generally, investors could not demonstrate that they had contributed a significant part of their labour to the farm enterprise or derived a significant part of their income from the farm enterprise. This is because investors often have a primary occupation and/or source of income to which they devote their time and efforts other than primary production.
Farm managers who acquired ownership of the farm before 15 September 1997 were regarded as qualifying farmers if they establish that they had been involved with farming for 20 years.
A farmer holds a qualifying interest in a farm [5] if they:
Refer to section 5P(5) of the VEA [6] for the full definition.
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 [5] and qualifying sugarcane farmer [5] 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 [5] major source of income can be obtained from the farmer's tax return or the farm [5] or sugarcane farm [5] business tax return.
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.
According to subsection 5P(1) [6] of the VEA, a farm enterprise means an enterprise carried on within any of the agricultural, horticultural, pastoral or aquacultural industries.
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 [5] and qualifying sugarcane farmer [5] 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 [5] major source of income can be obtained from the farmer's tax return or the farm [5] or sugarcane farm [5] business tax return.
For the purposes of RAFS, a farmer held a qualifying interest in a farm [5] if they:
Sharefarmers who did not own real land and did not have a qualifying interest were unable to participate in RAFS.
Farmers who occupied property on a short-term lease rather than a pastoral lease were unable to participate in RAFS because they did not have a qualifying interest in the farm.
A trustee of a trust has a legal interest in the trust's assets. Accordingly, where a farm was owned by a trust and the farmer was the trustee of that trust, he or she had a qualifying interest in the farm. This included situations where the farmer was the trustee of an estate, for example where a widow/widower was trustee of the deceased partner's will.
Shareholders in private trustee companies that owned a farm had a qualifying interest.
According to subsection 5P(1) [6] of the VEA, a farm means any land that is used:
The widow/widower or former partner of an eligible farmer may have been eligible to participate in RAFS on the basis of his or her former relationship with the farmer. In the case of a separated partner this was despite the ending of the relationship.
For the widow or former partner of a farmer to be able to participate in RAFS, the farmer had to meet the definition of a qualifying farmer [5] on the day on which the relationship between the farmer and partner ended.
More ? [9]
For the widow or former partner of a farmer to be able to participate in RAFS, he or she must not have commenced a relationship with another person at any time since the relationship with the farmer ceased and prior to the determination under RAFS.
If the former partner enters into a new relationship following determination under RAFS, the deprivation provisions continue to be disregarded.
To participate in RAFS the widow/widower or former partner of a farmer must have had a qualifying interest [5] in the farm of the qualifying farmer.
More ? [10]
A woman had worked on her husband's farm since 1950. On his death in 1995, she became the owner of the property. Although she did not own the farm for more than 15 years, she was the legal owner as at 15 September 1997 and had worked on the property for more than 20 years. She therefore satisfied the definition of a qualifying farmer.
Qualifying interests
5.5.4/Requirement for Farmer to Hold Qualifying Interest [13]
A person is considered to be a qualifying farmer if they have:
During either period the person or their partner must have derived a significant part of their income [5] and contributed a significant part of their labour [5] to the development of a farm.
Refer to subsection 5P(3) and subsection 5P(4) of the VEA [6] for the full definition.
A farmer holds a qualifying interest in a farm [5] if they:
Refer to section 5P(5) of the VEA [6] for the full definition.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16161%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=node/16199%23comment-form
[3] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[4] clikpopup://DEF/Continuous period of 15 years qualifying interest
[5] https://clik.dva.gov.au/%23
[6] http://clik.dva.gov.au/legislation-library
[7] https://clik.dva.gov.au/user/login?destination=node/16197%23comment-form
[8] https://clik.dva.gov.au/user/login?destination=node/16196%23comment-form
[9] https://clik.dva.gov.au/book/export/html/16161#tgt-cspol_part5_ftn142
[10] https://clik.dva.gov.au/book/export/html/16161#tgt-cspol_part5_ftn143
[11] https://clik.dva.gov.au/compensation-and-support-policy-library/part-5-income-support-allowances-and-benefits/55-retirement-assistance-farmers-scheme-rafs/554-requirements-applicable-farmer-or-former-partner/farmer-must-be-qualifying-farmer
[12] https://clik.dva.gov.au/book/export/html/16161#ref-cspol_part5_ftn142
[13] https://clik.dva.gov.au/compensation-and-support-policy-library/part-5-income-support-allowances-and-benefits/55-retirement-assistance-farmers-scheme-rafs/554-requirements-applicable-farmer-or-former-partner/requirement-farmer-hold-qualifying-interest
[14] https://clik.dva.gov.au/book/export/html/16161#ref-cspol_part5_ftn143