Primary Sector

Question 1

which of the following statement about 2018 tax year changes to deduction rules for farmers is false?. The rules for farmhouse expenditure changed from farmers being allowed 25% of
costs such as repairs and insurance to several options that aim to be more in line
with deductions for other businesses run from home.
B. The new rules for farmhouse deductions prescribe methods for Type 1 and Type 2
farms.
C. The rule for fertiliser and lime changed so that the deduction may only be spread
over the following two years, rather than four years.
D. The rule re deductibility for home telephone rental changed from 100% to 50%
E. None of the above.

Answer 1

The rule for fertiliser and lime changed so that the deduction may only be spread
over the following two years, rather than four years.

Question 2

Which of the following statements about deductions for farmers are true?

i. Farmers cannot apply the under $10,000 rule for legal expenses.
ii. Farmers may not deduct the cost of newspapers, levies and subscriptions related to the farming business.
iii. Farmers may deduct the cost of wages to their children if they have been paid regularly, for genuine work, at market rate.

Answer 2

Farmers may deduct the cost of wages to their children if they have been paid regularly, for genuine work, at market rate.

Question 3

Which of the following statements about deductions for farmers are false?
i. Farm sundries e.g. feed, twine, drench are not trading stock as they are
not purchased for resale. They are deductible, but prepayment rules
apply.
ii. The costs of regrassing paddocks is never deductible.
iii. A deduction for fertiliser and lime may be spread over all or any of the following four years, in proportions farmer chooses.

Answer 3

The costs of regrassing paddocks is never deductible.

Question 4

Farmers may claim deductions for:

Answer 4

motor vehicles in accordance with the rules that apply to all businesses.

Question 5

The two main methods for valuing specified livestock are?

Answer 5

Herd scheme and national standard cost scheme.

Question 6

Which of the following statements about the national standard cost (NSC) scheme is false?
A. The scheme is based on national average costs of production.
B. The national standard cost is applied to homebred stock.
C. Purchased stock is valued at purchase cost.
D. The average (of NSC and Purchase Cost) is applied to stock on hand at end of
year.
E. The difference between opening and closing stock is not taken into account to
determine net income.

Answer 6

The difference between opening and closing stock is not taken into account to
determine net income.

Question 7

The herd scheme treats the herd like a ______________ by exempting all movements (increases/ decreases) in herd _____________ from ______________tax.

Answer 7

capital asset, values, income.

Question 8

Which of the following statements about the herd scheme are true?

i. Farmers elect whether to value stock under the herd scheme rules.
ii. The Inland Revenue publishes national average market values (NAMVs) annually.
iii. Only changes in stock numbers have tax consequences when using the herd scheme.

Answer 8

all of them