Are receipts from trading in water entitlements income from primary production?
In many cases it is likely that there would be insufficient nexus between the income derived from a temporary transfer of water entitlements and the produce of the primary production business. Income that qualifies for the primary production averaging benefit is income that a person derives or results from the carrying on of a business of primary production. Where a farmer assigns the whole of their water entitlement that would normally be required to carry out their business operations, it would be difficult to demonstrate that the person continued to carry on a primary production business during the period of the assignment.
