Net income of primary production enterprise
7 Net income of primary production enterprise
This section applies in relation to the individual if, at any time during the period of 3 years that ended before the test time, the first primary production enterprise was being carried on by an entity, other than:
the individual or the individual’s spouse; or
a company that was a controlled private company in relation to the individual or the individual’s spouse; or
a trust that was a controlled private trust in relation to the individual or the individual’s spouse; or
a business partnership of which the individual, or the individual’s spouse, was a partner.
The Secretary must consider:
the amount that is the average of the following amounts in relation to the first primary production enterprise:
the net income (if any) of the enterprise for the last tax year that ended before the test time;
the net income (if any) of the enterprise for the tax year that preceded the tax year mentioned in subparagraph (i);
the net income (if any) of the enterprise for the tax year that preceded the tax year mentioned in subparagraph (ii); and
any reductions or adjustments that might have been made to the amounts mentioned in subparagraphs (a) (i), (ii) and (iii) if the entity that had carried on the first primary production enterprise in the tax years mentioned in those subparagraphs had been:
the individual or the individual’s spouse; or
a company that was a controlled private company in relation to the individual or the individual’s spouse; or
a trust that was a controlled private trust in relation to the individual or the individual’s spouse; or
a business partnership of which the individual, or the individual’s spouse, was a partner.
In this section:
first primary production enterprise means the first primary production enterprise mentioned in paragraph 1208U (1) (b) of the Act.
tax year, in relation to a primary production enterprise, means a tax year of the entity that carried on the enterprise.
test time means the test time in relation to the individual mentioned in subsection 1208U (1).
Part 3 Determination of reduction of value of specified asset
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