Key points to remember:
- A Trust or Partnership that runs a PP business does NOT receive Tax Averaging. It's only the individuals that receive a Trust Distribution or a Partnership Distribution which includes Primary Production (PP) income that may receive PP Averaging "Complimentary Tax" (additional tax) or a PP Averaging "Rebate" (reduced tax) as an averaging adjustment for the year.
- For PP income distributed by a Trust or a Partnership to an individual, the Individual must have:
- "Tax Averaging" set to YES, AND
- an amount entered in at least one prior year for "Basic Taxable Income", AND
- an amount entered in "Distributed Primary Production Income" (the cell that appears just above "Estimated Taxable Income AFTER Tax Planning" that only appears once you click YES to the question at the top of the column "Tax Averaging".
- If an individual earns PP income in their own name, they simply have to record it in "Primary Production Income", say YES to "Tax Averaging, and enter an amount in at least one prior year for "Basic Taxable Income".