Farmers will reap some handy taxation advantages from this year’s federal Budget push to make life easier for small business.
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Depreciation on new equipment is likely to make new purchases a lot more attractive for rural businesses after July 1, including mid- to large-scale farm enterprises.
Accelerated depreciation allowances introduced last year for farms with up to $2 million in annual sales have now been extended to businesses whose receipts total up to $10m.
Gear worth up to $20,000 can now qualify for an instant asset write off in the financial year it was purchased, rather than the traditional staggered depreciation period over five to 10 years.
The new conditions will apply to new and second hand plant and equipment - anything from office equipment to a second hand ute.
There is also no limit to the number of different purchases which can be included in the asset write off.
“This will be a big deal for a lot of mainstream rural producers and many businesses in regional centres, too,” said Albury based agribusiness accountant with RMS Bird Cameron, Jason Croker.
“If you buy a $10,000 quad bike or a new grain auger it will qualify.”
For larger purchases worth more than $20,000, farmers will also qualify for new accelerated depreciation rates at 15pc in the first year and then 30pc each following year.
Early repayments on farm borrowings will qualify for a new immediate tax rebate, too, rather than over the next 12 months.
“If you’re paying $50,000 off a 2016-17 interest bill in advance in June 2016 a typical farm business paying a 20pc tax rate will get a saving of $10,000 in their back pocket.
Small business entities will also qualify for new capital gains tax concessions on the transfer of assets to family members.
Mr Croker said this change would be a significant practical motivator for farmers looking at farm succession strategies.
“Surprisingly, however, the Budget provided no real signs of major taxation reform on the Treasurer’s agenda,” he said.
“Given all the talk we’ve heard about the need tax reform it was interesting to note the phrase didn’t get a mention on Tuesday night.”
Meanwhile the government’s recommitment to the $13.8 million Farm Co-operatives and Collaboration Pilot Program is being praised as a chance to help farmers take advantage of the new trade opportunities provided by the export trade agreements in Asia.
"The big question for an economy in transition is how to capture more value from the export opportunities and new markets for Australian producers,” said Business Council of Co-operatives and Mutuals chief executive officer, Melina Morrison.
"A seamless trade and investment environment should be matched with investment in collaborative export platforms that support domestic business ownership and value capture to the Australian economy."
"Agriculture is a vital part of our economy, exporting $40 billion in goods annually, and co-operatives are a key part, with co-ops exporting 40pc of the country’s wheat, processing 30pc of Australia’s milk and exporting all our rock lobster”.
“The government’s modest investment in expanding awareness and take up of the co-operative model is sound."