Estimating business income

We use your estimate of your farm business income and other business income to work out if you’re eligible for Farm Household Allowance (FHA).

We’ll ask you to estimate your business income:

  • when you apply for FHA
  • each financial year while you’re getting FHA
  • when your income changes.

Your estimate should list all business income and allowable deductions for the full financial year. If you have a non-farm business and you expect your income to be different from your latest tax return, you should give us a separate estimate.

What farm business income is

Farm business income includes the income from both:

  • your farm enterprise
  • all directly related businesses.

Directly related businesses could include businesses such as any of the following:

  • agistment
  • contracting work using farm vehicles or machinery
  • processing or adding value to farm products
  • a café on the farm selling farm products.

To confirm if a business directly relates to your farm, call us on the Farmer Assistance Hotline.

What deductions we may allow

Your business income is your gross income, less any deductions we allow. You can’t claim as many deductions as you can in your tax return. Social security law and tax law are different.

Working out if you can deduct an expense can be complex. It may also depend on your business structure.

For more help and information, you can do any of the following:

Deductions we do allow

Some of the deductions we allow are:

  • costs needed to earn business income
  • depreciation of certain business assets.

Read about the forced disposal of livestock.

You can claim depreciation of business assets listed under Division 40 of the Income Tax Assessment Act 1997 (ITAA 1997). To claim depreciation of these assets, you’ll need a depreciation schedule.

Deductions we don’t allow

Some of the deductions we don’t allow include:

  • prior year losses
  • offset losses from other businesses that aren’t directly related to the farm enterprise
  • superannuation for sole traders or business partnerships
  • donations
  • borrowing costs
  • some types of capital expenses
  • entertainment
  • amortisation of intangible assets.

We also don’t allow these deductions:

  • private health insurance premiums
  • personal life insurance premiums
  • depreciation claimed under the small business entity concessions
  • instant asset write-offs claimed under the small business entity concessions.

When there’s a change to your income

Check your income estimate regularly. You need to update it whenever there’s a change to your income.

A wide range of things can affect your profit or loss. Some examples are:

  • winning or losing a contract
  • selling more or less livestock
  • expecting a bigger or smaller harvest
  • changing your business structure.

You may need to update your estimate if you get new information. Some examples are information about:

  • crop health
  • livestock numbers
  • sale prices.

Once you get the new information, you have 14 days to update your estimate.

How to submit your business income estimate

Applying for FHA

If you apply for FHA online, we’ll ask you to answer profit and loss questions and submit supporting documents.

If you use the paper claim form, you’ll need to supply an estimate of income and expenses in profit and loss format. This is an estimate only. It doesn’t have to be a formal statement from your accountant. You can use our Profit and Loss Statement form. If you have more than one business, you should complete a form for each business.

Doing or updating your annual estimate

We’ll write to you at the end of each financial year to request your income estimate. Your estimate should list all income and expenditure for the next full financial year. You should include a reason for any major change. You can use our Profit and Loss Statement form. If you have more than one business, you should complete a form for each business.

If you need help completing your estimate, call our Farmer Assistance Hotline.

When you do your annual estimate or update it, you can submit your estimate and any documents:

  • online
  • at a service centre
  • by post to:
    Services Australia
    Rural and Climate Change Services
    Reply Paid 7816

Using your online account, you can upload documents in PDF or JPG formats up to 5 MB per file.

Page last updated: 11 August 2022.
QC 52830