Recent changes have come into place giving irrigators and irrigation groups more options for their tax treatments.

Recent changes to income tax law now mean that taxpayers have a choice in how water infrastructure improvements are treated for income tax purposes. Word from the ATO says changes apply to taxpayers who are eligible participants in a sustainable rural water use and infrastructure program.

Under the new system irrigators and related companies can choose to have their eligible payments treated as ordinary income, in which case they can include the payments and any related capital gains and losses in their tax return. Alternatively, they can elect for non assessable non-exempt income (NANE), which does not include the payments in their income tax return. Any related capital gains and losses, or any deductions that are connected to these payments, are also excluded from their income tax return.

The NANE option only applies to payments received on or after 1 April 2010. The tax treatment also applies to eligible payments received from the Commonwealth directly or indirectly through a regional water supplier or irrigation organisation.

For more information visit www.ato.gov.au/water