On 10 May 2023, the Australian Government announced it will allow eligible primary producers to treat certain carbon abatement income as primary production income for the purposes of the Farm Management Deposit Scheme and accessing the income tax averaging rules. This measure is now law.
It includes income such as:
- proceeds from the sale of eligible Australian carbon credit units (ACCUs), and
- income derived from farm abatement activities supporting such units (this includes income received directly from a carbon service provider in relation to an ACCU generated from that primary producer’s land, but does not include income from rental or lease arrangements).
In addition, holders of primary producer registered emissions units (PPREUs) (that is, ACCUs held by eligible primary producers) will be taxed based on the net proceeds (or net income derived from farm abatement activities supporting such units) in the year they are sold, rather than based on changes in the value of their ACCUs each year.
This law applies to eligible ACCUs first held by eligible primary producers from 1 July 2022 and onwards.
This Bill partially implements the Primary Producers – increasing concessional tax treatment for carbon abatement measure announced by the former government in the March 2022–23 Budget. The biodiversity stewardship income aspect of the announced measure has been deferred to 1 July 2024.
For more information, see:
- Treasury Laws Amendment (2023 Measures No. 2) Bill 2023External Link
- Taxation of Australian carbon credit units for primary producers