Income averaging allows farmers to pay tax based on the average of the five years farming profits and losses. This means one-fifth of the profits for the five years is charged to tax for the year.
If you opt-in to averaging, you must remain on averaging for a minimum of five years. If you revert to the normal basis of assessment a review will be done. We will carry out a review of your previous years of assessment and an adjustment may be necessary.
You may also elect to temporarily step-out of averaging for a single year. This means that you may pay tax based on your actual profits that year. You defer payment of the tax due on the average profits as well.
More information is available in Averaging of Farm Profits.
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