Treasury Laws Amendment (2023 Measures No. 2) Act 2023 (28 of 2023)

Schedule 3   Tax accounting for primary producer registered emissions units

Income Tax Assessment Act 1997

2   Subsections 392-80(2) and (3)

Repeal the subsections, substitute:

Assessable primary production income

(2) Your assessable primary production income for the *current year is the sum of:

(a) any amount of your *basic assessable income for the current year that was *derived from, or resulted from, your carrying on a *primary production business; and

(b) any amount included in your assessable income under section 420-25 for the current year because you cease to *hold a *primary producer registered emissions unit; and

(c) any amount of your basic assessable income for the current year to the extent that:

(i) you are a beneficiary of a trust that is carrying on a primary production business; and

(ii) the amount is your share of the trust's *net income that is attributable to, or resulted from, an amount being included in the trust's assessable income under section 420-25 because the trust ceases to hold an *Australian carbon credit unit; and

(iii) the unit would have been a primary producer registered emissions unit if you had started to hold, held and ceased to hold the unit instead of the trust; and

(d) any amount of your basic assessable income for the current year to the extent that:

(i) you are a partner in a partnership that is carrying on a primary production business; and

(ii) the amount is your share of the partnership's net income that is attributable to, or resulted from, an amount being included in the partnership's assessable income under section 420-25 because a partner (the holding partner ) in the partnership ceases to hold a primary producer registered emissions unit; and

(iii) the unit would still have been a primary producer registered emissions unit if each other partner in the partnership had started to hold, held and ceased to hold the unit instead of the holding partner; and

(e) any amount of your basic assessable income for the current year that was derived from, or resulted from, an *arrangement with a *carbon service provider to the extent that:

(i) the arrangement relates to the provider starting to hold, holding or ceasing to hold an Australian carbon credit unit; and

(ii) the unit would have been a primary producer registered emissions unit if you were starting to hold, holding or ceasing to hold the unit (as applicable) instead of the provider; and

(iii) the amount does not relate to you giving the provider a *quasi-ownership right over land.

Primary production deductions

(3) Your primary production deductions for the *current year are:

(a) all amounts you can deduct that relate exclusively to the amount referred to in paragraph (2)(a); and

(b) so much of any other amounts you can deduct (other than *apportionable deductions) to the extent that they reasonably relate to the amount referred to in paragraph (2)(a); and

(c) so much of any other amounts you can deduct for the current year in relation to expenditure you incur in:

(i) starting to *hold a *primary producer registered emissions unit; or

(ii) holding such a unit; or

(iii) ceasing to hold such a unit; and

(d) so much of any other amounts you can deduct for the current year in relation to expenditure you incur under an *arrangement with a *carbon service provider to the extent that:

(i) the arrangement relates to the provider starting to hold, holding or ceasing to hold an *Australian carbon credit unit; and

(ii) the unit would have been a primary producer registered emissions unit if you were starting to hold, holding or ceasing to hold the unit (as applicable) instead of the provider; and

(iii) the expenditure does not relate to you giving the provider a *quasi-ownership right over land.

Note 1: For the expenditure covered by subparagraph (c)(i), see subsections 420-15(1) and (4) and 420-65(4).

Note 2: For the expenditure covered by subparagraph (c)(iii), see subsection 420-42(1).