Business income estimates for Farm Household Allowance (FHA) 002-02050030

• Understand and explain the importance of the business income estimates being accurate and up to date
• Provide information about income sources to be included in each business income estimate but not determine the amount for the customer

Having a reasonable and accurate estimate of the customer’s business income supports accurate assessments for entitlements and reduces the risk of overpayments. Customers must not provide a false estimate of their farm or non-farm business income for any reason

The business income estimates must:

• reflect the farm business and any directly related farm businesses financial circumstances for the whole financial year
• reflect the non-farm business circumstances for the whole financial year
• be determined by the customer. Any discrepancies or unreasonable estimates must be discussed with the customer to see if the amount must be changed

Customers may provide an estimate of their business income for the current financial year where the previous tax returns do not reflect the net income of the business.

The estimate:

• can be used to assess FHA eligibility
• should be based on a projected profit and loss statement for the full financial year
• must be recorded accurately even if the amount is nil or a loss

If the customer advises their new financial year estimate will be the same as currently assessed, the estimate must be updated from 1 July of the new financial year.

A customer may update their business income estimates at any time, particularly when there has been a change in circumstances such as:

• change in income (livestock sale or harvest of crop)
• downturn in business or change in stock value

For estimates provided before 1 July 2020, a customer's actual business income was reconciled to their estimate after the end of that financial year during the Business Income Reconciliation process. Business income reconciliation processing ended on 30 June 2024. FHA customers may now be subject to an FHA intervention.

Customers can update their business income estimate by:

• Calling the Farmer Assistance Line. Transfer the customer's call if they want to update their estimate
• Lodging a document online. The document should list all sources of income and expenditure for the farm business enterprise for the full financial year, and contain an explanation for any significant change
• Lodging a document in person:
• Scan the document and upload to Document Tools on the customer record
• Select Yes to hand-off for further action and include 'FHA business income estimate, send to FHH' in the Notes section to transfer the activity to the Rural Processing team
• Lodging a document by post:
• Scanned documents will be added to the national queue for classification as an unstructured document
• Processing staff must be aware that unstructured documents on an FHA record could be related to farm business income estimates

Note: customers cannot update their farm business income estimate online via myGov or their Centrelink online account.

The FHA Business Financials (FBF) screen shows if FHA is being paid based on actual or estimated income. Go to the FBF screen to see if FHA is based on an estimate.

To view the current FHA business income estimate:

• On or after 14 November 2020, farm business income estimates may be recorded on:
• REBS/BUS, and/or
• Farm Business Income (FBI) FHA Trust and Company task in Process Direct
• Before 14 November 2020, see Farm Business Income (FBI) FHA Estimate task in Process Direct

See Table 2.

Estimates must include business income for the financial year to date, plus expected business income and expenditure for the rest of the financial year.

If a farmer has more than one farm business, or a single farm business with entities, which are:

• not necessarily related (such as a farm and a petrol station), profits from one cannot be offset by losses from the other
• necessarily or directly related (for example, the related farm business cannot operate without the farm enterprise), profits from the related farm income can be offset by losses from the other

To assess their total farm or non-farm business income they need to add all sources of income and then subtract allowable business deductions.

The online claim and Claim for Farm Household Allowance (SU694) asks customers to list sources of income, non-variable expenses, and variable expenses separately.

Business income estimates must include:

• All income derived from the activities of the farm enterprise and any directly related business. This includes money from the sale of livestock but may exclude money (or a portion of the amount) received from the forced disposal of livestock (see Step 7 for more information). If income is not derived from the activities of the farm enterprise or any directly related business, it is non-farm income and should not be included in the farm business income estimate
• Expenses incurred because of carrying on the farm enterprise, so far as they are related to the farm or any directly related business
• The value of trading stock on hand, noting that if the value at the end of the tax year is:
• greater than at the start of that tax year, the customer's profit from business must include the difference in these values
• less than at the start of that tax year, the customer's profit from business must be reduced by the difference in these values

Non–farm business

• All income derived from the activities of the non-farm business can only be offset by expenses directly related to that non-farm business
• Treat unrelated fields of activity as separate sources of income
• Assess each non-farm business operation in its own right

For more details about:

• income to be excluded, see Assessing income for Farm Household Allowance (FHA)
• allowable deductions, see Business deductions

The following are not allowable for FHA farm business income estimates:

• Losses from non-farm business
  Note: if a farmer advises of such losses, they are to be recorded and will be automatically assessed
• Investments in Farm Management Deposits
• Income averaging
• Provisions to defer tax
• Capital expenditure deductions
• Superannuation contributions for the sole trader/partner
• Obsolescence
• Borrowing costs
• Donations to charities
• Small business entity depreciation expense. See Business deductions
• Prior year losses

When updating the farm business income estimate after a customer advises they have received income from the forced disposal of livestock:

• include the net income received from the forced disposal of livestock that will not be deposited into a Farm Management Deposit (FMD), and
• exclude the amount of the exemption applied to the amount intended or deposited into an FMD

See Assessing income for Farm Household Allowance (FHA).

Is the estimate being provided for the customer's FHA claim?

• Yes:
• If there is a Progress of Claim DOC on the record, annotate this with the new estimate supplied
• If a Progress of Claim DOC is not on the record, record a standalone Fast Note - Select Auto Text, use > Rural > Update > FHA business income estimate update detail the new estimate supplied. Procedure ends here
• Go to Step 2
• No, the estimate is being updated, go to Step 2

Does the customer operate their business in a Complex partnership, Trust, or Company (T&C) structure?

• Yes:
• Tell the customer they will need to provide an estimated profit and loss statement for the relevant:
  financial year, or
  if they advise the estimate will be the same as the previous financial year tax return, Income Tax Return (ITR) and financial statement
• Send a request for the estimated profit and loss statement or a request for ITR and financial statement if they have not been provided, see Requesting information (CLK). Do not send out a profit and loss statement (SU580)
• Tell the customer if they have not responded by the due date, their payment may be suspended. Make sure all options to reply are discussed including online and Express Plus
• Once the activity comes off hold, if the customer has:
  failed to return the requested documents, suspend FHA payments, reason FSD
  returned all requested documents, make sure documents scanned and refer to CAO
• If all requested documents have been returned at time of customer contact, the telephony Service Officer is to create CAO referral. See Identifying and making suitable referrals to the Complex Assessment Officer (CAO).
  Once the CAO assessment has been completed, code the trust and company income. See Assessing income for Farm Household Allowance (FHA)
• No, go to Step 3

Does the customer have a related farm business?

• Yes:
• The income or loss from the farm business and any related businesses needs to be offset against each other to determine the net income. See the Resources page in Assessing for Farm Household Allowance (FHA) for calculation examples
• Go to Step 4
• No, go to Step 4

Generally, if a customer provides a total estimate and the calculations are correct, the estimate is considered reasonable. However, the customer must agree to alter the estimate if errors or omissions are identified.

When the estimate differs substantially from the income shown on the latest financial statements provided, for the estimate to be considered reasonable the customer must explain the variation, for example:

• reduced livestock numbers due to drought
• reduced fruit volumes due to storm
• disease or pest outbreak
• change in commodity price
• change in climatic conditions
• restructure of the business
• increase in estimate regardless of amount

If an explanation is not provided and the assessor considers the estimate is not reasonable, request a profit and loss statement, see Requesting information (CLK).

Is the estimate reasonable?

• Yes, go to Step 7
• No, go to Step 5

Ask the customer to correct any errors or omissions.

If the provided estimate is verbal, seek the customer's agreement to revise their estimate immediately.

If a document has been lodged, contact the customer to discuss the estimate and seek their agreement to revise the estimate verbally.

If reasonable estimate cannot be obtained, issue a request for a reasonable estimate, see Requesting information (CLK), and record details on a DOC.

Has the customer provided a reasonable estimate as requested?

• Yes, go to Step 7
• No, go to Step 6

If a reasonable estimate is not provided within the notified timeframe:

• For FHA claims, reject the claim reason FSD
• If FHA is current and the customer's current estimate is not considered reasonable and the timeframe for providing the estimate has expired:
• suspend FHA payments reason FRC
• record details using Fast Note - select Auto text, use Rural > SUS/CAN/RES > FHA SUS including details of the estimate provided and any contact with the customer

Procedure ends here.

Has it been identified the new estimate may cancel FHA due to income?

• Yes, if the customer is:
• on the phone, advise them of the cancellation and give them the opportunity to give a new estimate. If customer confirms the estimate is:
  Correct, code the estimate. See Table 3, Step 1
  Incorrect, the customer can revise the estimate verbally or if related to a trust and company they will need to provide new documentation, as another CAO assessment is needed. See Table 2, Step 2
• not on the phone, make genuine attempts to contact to advise them of cancellation and give them the opportunity to give a new estimate. If contact is successful and the customer confirms the estimate is:
  Correct, code the estimate. See Table 3, Step 1
  Incorrect, the customer can revise the estimate verbally or if related to a trust and company they will need to provide new documentation, as another CAO assessment is needed. See Table 2, Step 2
• unable to be contacted: Record the details using Fast Note - select Auto text, use Rural > Update > FHA Phone Contact Attempted Code the estimate. See Table 3, Step 1
• No, see Table 3, Step 1

Does the customer have a related farm business?

• Yes:
• Update the REBS and FBF screens in the one activity using the FHA workflow. Select the Income and Asset and FHA Business Financial tasks from the FHA Workflow Task Selector
• The income or loss from the farm business and any related businesses needs to be offset against each other to determine the net income
• Key the net value of Farm Business Income or Losses under the appropriate FPT/FST business on the REBS screen with the start date
• The DOV recorded on the REBS screen will be for:
  new claims, the start date of FHA payments
  current customers providing a revised estimate, the date of notification
  customers providing an estimate for the new financial year during the current financial year, the DOV is 1 July. Note: this cannot be coded more than 30 days in the future
• Income: Total net farm income
• %Income (C/P): code as per business structure
• Frequency: ANN
• Zero the existing farm related income coded as non-farming income, if applicable. For example, NST, NPT the same date as the Farm Business Income/Losses
• Go to Step 2
• No:
• The income estimate must be recorded on the REBS screen under the relevant sole trader or partnership farm business
• The DOV recorded on the REBS screen will be for:
  new claims, the start date of FHA payments
  current customers providing a revised estimate, the date of notification
  customers providing an estimate for the new financial year during the current financial year, the DOV is 1 July. Note: this cannot be coded more than 30 days in the future
• Income: Total net farm income
• %Income (C/P): code as per business structure
• Frequency: ANN

For help coding, see Code the Business Details (BUS) screen.

Record the details in Fast Note - Select Auto Text, use > Rural > Update.

Go to Step 2

Does the customer have a non-farm business?

• Yes:
• Update the REBS screen using the FHA Workflow
  Select the Income and Asset tasks from the FHA Workflow Task Selector
• Key the net value of non-farm Business Income or Losses under the appropriate NPT/NST business on the REBS screen with the start date
• The DOV recorded on the REBS screen will be for:
  new claims, the start date of FHA payments
  current customers providing a revised estimate, the date of notification
  customers providing an estimate for the new financial year during the current financial year, the DOV is 1 July. Note: this cannot be coded more than 30 days in the future
• Income: Total net non-farm income
• %Income (C/P): code as per business structure
• Go to Step 3
• No, go to Step 3

If tax returns have been provided, FBF should always show the customer is being assessed on their actual income unless there has been a change of circumstances.

To record an actual or estimated income on FHA Business Financials (FBF), Service Officers must select FHA Business Financial from the FHA Workflow Task Selector and complete the following sections:

• Expected lodgement month: Confirm when the customer is expected to lodge their tax returns for the requesting financial year. This information may be available in the SU694, Private Trust details (MOD PT) or Private Company Details (MOD PC)
• If this information is not available and the customer cannot verbally confirm the date, use May of the next financial year, and
• Record a DOC on the customers record for the FHCO to follow up to confirm the expected lodgement date
• Requesting Financial Year: the year the customer is providing an estimate for (24/25 will display as 2025)
• Business name: business on the Real Estate and Business (REBS) screen appear in the drop-down box. For trust and company income use (Other)
• Update the end date of the previous coding to the day before the new estimate was coded. If there was no previous FBF coding skip this step
• Start Date: The start date will be the day the estimate was coded on the REBS screen
• End Date: Key 31/12/9999. If there is previous coding for the same financial year, update the end date of the previous coding to the day before the new estimate was provided
• Estimate/Actual: source of the current farm business income

If the customer has more than one business, only one business needs to be updated.

For partnered customers where the partner is claiming as the partner of a farmer:

• Select OTH for the business name, and
• Key May as the expected lodgement month if an expected lodgement month has not already been provided

Farm business losses will automatically assess from 14 November 2020, if the farm business income is less than zero.

If the customer and partner request to change the way their loss is apportioned, see Assessing income for Farm Household Allowance (FHA).

Go to Step 5

If the updated estimate results in a rate or entitlement change, a new Social Service Plan (SSP) will be created for the customer (and their partner). This SSP will be approved once the activity is finalised in Process Direct.

Note: to view the partners SSP, select the Relations tile before finalising the activity.

If the estimate is for:

• the current financial year, the estimate will be used to assess the rate of FHA payments from the date the estimate was provided
• the next financial year, the estimate will be used to assess the rate of FHA payments from 1 July of the new financial year

If the business income estimate results in a nil rate of payment, the customer's FHA payments will automatically cancel reason INC. Record details on the cancellation Fast Note , select Auto Text, use Rural > SUS/CAN/RES > FHA Cancelled.

An automatic letter is sent to the customer to advise any change in their FHA payments.