Tax deduction for landcare operations

Tax deduction for landcare operations


You may be able to claim a tax deduction for capital expenditure on a landcare operation in Australia in the year it is incurred. Providing you are a primary producer, a rural land irrigation water provider who incurred the expenditure on or after 1 July 2004, or a business using rural land for taxable uses (excluding mining and quarrying businesses) you are eligible to claim a deduction.

Many operations fall under the category of a landcare operation.

For instance, when you primarily and principally:
– eradicate, exterminate or destroy plant growth detrimental to the land.
– put in fences to keep animals from areas affected by land degradation to prevent or limit further damage and assist in reclaiming the areas.
– eradicate or exterminate animal pests from the land.
– construct drainage works to control salinity or assist in drainage control.
– prevent or combat land degradation by means other than fences.

Other operations the ATO defines as a landcare operation include:
– constructing a levee or similar improvement
– erecting fences to separate different land classes as set out in an approved land management plan
– for expenditure incurred on or after 1 July 2004, a structural improvement or alteration, addition, extension or repair to a structural improvement that is reasonably incidental to the construction of a levee or drainage works.

Recouped expenditure
When you claim a deduction and receive recoupment, the recoupment is assessable income. However, you cannot claim a deduction if the capital expenditure is on plant unless you incurred the costs on certain fences, dams or other structural improvements.

If landcare expenditure is incurred by a partnership, each partner is entitled to claim the relevant deduction for their share of the costs.

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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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