Income tax: is a primary producer who receives compensation payments for having destroyed sheep under the Victorian Ovine Johne's Disease (OJD) control program eligible to make elections under Subdivision 385-E of the Income Tax Assessment Act 1997?

Yes. If you are a primary producer who receives compensation payments for the destruction of your sheep, from an agreement made under the Victorian OJD control program stipulating that the sheep will be slaughtered, you are entitled to make an election (under either section 385-105 or section 385-110) to use the tax concessions available under Subdivision 385-E.

Section 385-100 provides for circumstances in which a primary producer can elect either to: • spread the 'tax profit on the disposal or death' of live stock over a five year period (section 385-105); or • defer the inclusion of the 'unused tax profit on the disposal or death' of live stock in assessable income, if the proceeds of the disposal are to be used mainly to buy replacement live stock or to maintain breeding stock for the purpose of replacement of the live stock that were disposed of or died (section 385-110).

Paragraph 385-100(1)(a)(iv) provides that a primary producer can make an election under Subdivision 385-E if live stock are disposed of or die because 'they are compulsorily destroyed under an Australian law for the control of a disease or they die of such a disease'.

A primary producer whose flock is subject to the OJD control program must either quarantine or destroy the flock. If you choose to destroy the live stock an agreement to do so is entered into under the Livestock Disease Control Act 1994 (Vic) and compensation is paid under that Act. The agreement stipulates, among other things, that the sheep will be slaughtered.

If you enter into such an agreement for the slaughter of your sheep under the Victorian OJD control program you are accepted as having disposed of live stock by compulsory destruction under an Australian law within the terms of paragraph 385-100(1)(a)(iv).