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Tuesday, 26 November 1985
Page: 2304

(Question No. 470)

Senator Reynolds asked the Minister representing the Minister for Primary Industry, upon notice, on 21 August 1985:

(1) How many farmers are now growing aloe vera as an alternative to sugar cane.

(2) On what basis was capital expenditure on this farming considered for taxation deduction and why did the Commissioner for Taxation reverse this eligibility.

(3) Will urgent reconsideration be given to re-instating eligibility for this alternative crop, in view of the extreme hardship being faced by so many cane farmers.

Senator Walsh —The Minister for Primary Industry has provided the following answer to the honourable senator's question:

(1) It is estimated that 171 canegrowers are growing aloe vera.

(2) and (3) The Commissioner of Taxation has stated that, generally speaking, capital expenditure is not allowable as an income tax deduction. Exceptions for this general rule occur in some industries, for example the mining industry. The Commissioner understands that in Queensland conditions aloe vera plants have an expected life cycle of 5-10 years during which time the plants will produce annual crops for harvesting. Expenditure incurred in their initial planting is considered to be of a capital nature in much the same way as expenditure on the initial purchase and planting of pineapple plants, banana trees and other fruit trees is considered to be of a capital nature.

This contrasts with the planting of annual crops, for example wheat, sugar cane, etc which are harvested annually. The cost of planting annual crops is fully deductible for income tax purposes.

The disallowance of claims for income tax deductions for capital expenditure incurred on the initial purchase of aloe vera plants is not the result of a reversal of previous practice. An amendment of the income tax law would be required to give effect to the honourable Senator's suggestion.