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Do I need an ABN for a hobby farm?

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I'm new

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I am in the process of buying a small hobby farm in NSW want to know if I should get an ABN for farm purchases etc? I currently work in Canberra and will most likely keep working but would like to earn a bit of extra money from the farm. Hoping to save some money by finding the answer here, rather than asking an accountant.

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ATO Certified

Anonymous

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The issue of hobby farms vs carrying on a business of primary production (which is inter-related to you question of ABN) is a very subjective topic, and there have been many Administrative Appeals Tribunal and Court cases that demonstrate this.

 

It comes down to a number of factors when considering whether you are carry on an enterprise of primary production or just a hobby farmer.

 

For guidance on this please refer to ATO ruling 97/11 

https://www.ato.gov.au/law/view/document?docid=TXR/TR9711/NAT/ATO/00001

 

If in the future the ATO reviews your activites and determines that you are carrying on a business of primary production then you will be liable to pay tax on any profits and you could also be eligble to claim a deduction for any loss (claim it against other assessable income). 

 

If you are unsure as to whether your activities are just a hobby or a business then your better off applying for a ATO private ruling so you can have some certainty.

 

The last thing anyone needs is the ATO coming along some time in the future and determining that they have understated their taxable income because they have not disclosed some assessable income from a profit making venture, and then receiving amended assessments with a tax liability that includes penalties.    In the case of fraud or evasion the ATO can go back as far as they want to amend a taxpayers taxable income.

 

2 REPLIES 2
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Devotee Registered Tax Practitioner

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@Sheridan

 

Some questions to ask -

 

   Are you in business thus eligible for a ABN?

 

   Do you wish to register for GST?

   GST registration is compulsory once projected sales are greater than $75,000.

   To claim back GST on purchases, GST registration is required.

 

I do suggest you google your topics and also talk to a Tax Accountant with exposure to hobby farms.

 

Duncan Smith

Business Advice + Tax  

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Best answer

ATO Certified

Anonymous

Replies 0

The issue of hobby farms vs carrying on a business of primary production (which is inter-related to you question of ABN) is a very subjective topic, and there have been many Administrative Appeals Tribunal and Court cases that demonstrate this.

 

It comes down to a number of factors when considering whether you are carry on an enterprise of primary production or just a hobby farmer.

 

For guidance on this please refer to ATO ruling 97/11 

https://www.ato.gov.au/law/view/document?docid=TXR/TR9711/NAT/ATO/00001

 

If in the future the ATO reviews your activites and determines that you are carrying on a business of primary production then you will be liable to pay tax on any profits and you could also be eligble to claim a deduction for any loss (claim it against other assessable income). 

 

If you are unsure as to whether your activities are just a hobby or a business then your better off applying for a ATO private ruling so you can have some certainty.

 

The last thing anyone needs is the ATO coming along some time in the future and determining that they have understated their taxable income because they have not disclosed some assessable income from a profit making venture, and then receiving amended assessments with a tax liability that includes penalties.    In the case of fraud or evasion the ATO can go back as far as they want to amend a taxpayers taxable income.