Tax situation with buying entitlements

cloudroost

I'm thinking of buying some entitlements, but am not sure of what the tax situation is with this - I know it isn't treated as an expsnse. Could somebody clarify how it is treated.

Thanks.

Delber

Its basically classed as an asset and held at cost value until its sold at which time the initial cost is then deducted from the sale price and the difference is taxed at the prevalent rate(currently 33%).
There is also a personal allowance of 1270 to further reduce the taxable profit.

The simplest way to look at this is the same as buying shares that pay a dividend the entitlement being the share and the payment being the dividend.

The payment gained form the entitlement is classed as income and would be taxable at the rate applicable to the individual.

Hope this helps

cloudroost

Thanks Delber - That clarifys it for me.

just do it

Peter Young in the journal 2 weeks ago recorded it as an expense in year of purchase. Can't say which is correct.

6600

Not allowed as a deduction from your farm income. The cost is used to offset any sale proceeds if the entitlements are ever sold. This determines the profit on which CGT would be levied.