2015 Budget and Tax Changes for Primary Producers

With just 1 week left in the current financial year, there’s still time to take advantage of the Budget changes for primary producers.

Andy Freeman, Senior Accountant at O’Regan & Partners (specialising in rural and regional accounting) has crunched the numbers for us, to give you a better idea as to what these changes mean.

“The changes affecting primary producers have been brought forward and now apply to purchases from 12 May 2015 instead of 1 July 2016 as previously announced”, said Freeman.

“This means expenditure on Fencing and Water Facilities, such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills,  is now immediately deductible. Previously these costs were depreciated over a period of three and thirty years respectively.”

“Expenditure on Fodder Storage is now deductible over three years. Previously these costs were depreciated over a period of up to fifty years.”

To put the above into context Freeman prepared this summary of the deductions available for some example purchases made pre and post budget, and some further notes below :

Asset

Cost

Purchased on
11 May 2015 –
pre-budget

Purchased on 13 May 2015 – post budget

Dam

40,000

13,333

           40,000

Fencing

30,000

137

           30,000

Concrete Silo

25,000

68

             8,333

Total deduction

13,538

78,333

The above changes apply to all primary producers regardless of size and do not substitute the immediate deduction available to small businesses for purchases of up to $20,000.

If you are both a small business and a primary producer then you can choose which method of accelerated depreciation to apply. For example, a small primary producer could spend $10,000 on fodder storage and choose to get an immediate deduction or depreciate the cost over three years.

 

The information above is general in nature, and does not constitute financial advice. You should assess your own personal circumstances before taking action, and consult an accountant if required.