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Is the taxpayer, who has ceased to carry on a business of primary production, able to make a farm management deposit under section 393-35 of the Income Tax Assessment Act 1936 (ITAA 1936)?

No. The taxpayer, who has ceased carrying on a business of primary production, is prevented from making a farm management deposit under subsection 393-35(2) of the ITAA 1936.

The taxpayer has ceased carrying on a business of primary production. However after the business is sold the taxpayer continued to receive payments from the sale of produce grown whilst the business was operating.

Subsection 393-35(2), contained in Schedule 2G of the ITAA 1936, states that the owner of a farm management deposit must be a primary producer when the deposit is made. The taxpayer cannot make a farm management deposit if the taxpayer is no longer carrying on a business of primary production in Australia. Receiving payments from sales generated prior to the business ceasing to operate does not alter the situation.