If farmers plan their spending needs carefully, almost anything they buy new for the farm in the next two years looks set to qualify for an instant full depreciation write-off.
This week's federal budget asset write-off offer to more than 99 per cent of Australian businesses has been widely applauded in the bush as a great opportunity for capital intensive farm businesses to strategically plan for big ticket investments in plant and machinery.
Even modest spending on a new office computer or quad bike will attract a handy potential tax write-off opportunity.
The government's efforts to turbocharge investment activity also cover spending on new farm buildings and related infrastructure.
Depending on the circumstances, depreciation allowances may apply to building extensions, too, or refurbishments to shearing sheds or machinery workshops.
The two-year buying opportunity for new gear coincides with an existing popular instant asset investment write-off for second hand equipment worth up to $150,000, which runs until the end of the year.
Even that investment opportunity, for small to medium-sized businesses with $10 million to $590m annual turnover, was given extra headroom by Treasurer Josh Frydenberg on Tuesday.
Farmers will not be required to have a purchase actually "installed" or working on their property until the end of June next year, although the sale must be before December 31.
Sheds and silos
Other assets including hay sheds, silos, fencing, stock yards and water investments continue to qualify for instant depreciation write-offs under the federal government's drought preparedness incentives.
"The government has been very generous," said southern NSW-based director with accounting group RSM Australia, Gerard O'Brien.
"We've found the tax deductible investment incentives available in recent years have been well received by farmers, but if you are spending on big gear like a new harvester, you need plenty of time to plan ahead," he said.
"You can't always make that buying decision before tax time, especially if the season doesn't go to plan."
NSW Farmers president James Jackson said the "no-cap" instant asset write off tax break over the next two years would give farmers "the certainty they need to invest back into their businesses".
"It will also be a big help in stimulating local economies," he said.
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Albury-based Mr O'Brien, also a mixed livestock and grain producer at Burrumbuttock, said many farming enterprises would also be big winners from the government's decision to allow companies to offset tax losses, or equipment purchases, against previous profits.
Farming company business losses incurred last financial year, this year or in 2021-22 will also be able to be claimed back against profits made in 2018-19 or following years.
The offer has been designed to help companies which were profitable and paying tax in recent years, by now facing a loss position because of the COVID-19 pandemic.
Conveniently, however, Mr O'Brien said it could also apply usefully to farms where earnings were hit hard by drought last financial year.
Refunds will be available when business lodge their 2020-21 or 2021-22 tax returns, but the amount "carried back" will be limited to not exceed earlier taxed profits.
The measure is expected to deliver almost $5 billion in tax relief to business in general around Australia.
Unfortunately, however, the offer does not extend to business partnerships or farming trust companies, ruling out a big number of agricultural operators.
"Corporate agricultural businesses, or smaller operators who run farms alongside trucking or grain storage or other agribusiness ventures will certainly benefit," Mr O'Brien said.
"For those who are eligible, it's a big bonus we weren't expecting."
Other positive key support measures for agribusiness included the introduction of JobMaker credits of up to $200 a week for farmers employing staff aged up to 30 for a full year for more than 20 hours a week, or $100/week for employees aged between 30 and 35.
"A lot of farms and businesses hit by drought in the past few years would have let employee numbers decline and I think they'll look seriously at taking advantage of this opportunity to hire," Mr O'brien said.
"In general there's a thumping great shortage of workers in many parts of the bush, particularly as the harvest season starts rolling."
Victorian Farmers Federation president David Jochinke also applauded the $17.4m allocated to provide $6000 grants to help workers to immediately relocate to regional areas to fill an estimated 26,000 job vacancies.
"It's good news for farmers and the industry to see the investment in getting Australians to pursue careers in agriculture, as is the wage subsidy for employers to help employ young unemployed workers on farms."
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