WILL the Australian Taxation Office (ATO) allow farmers to claim an instant asset write-off on farm machinery ordered in good faith and in good time, but not delivered on-farm by June 30 due to unforeseen port delays?
That is the question Western Australian farmers, who have taken advantage of successive record harvests and good commodity prices to invest in new, more efficient machines only to be told by harassed dealers their machines have not cleared port due to quarantine inspection hold-ups, want answered.
It was also a question National Farmers' Federation (NFF) members put to Federal Agriculture Minister Murray Watt, assistant Minister for both Trade and Manufacturing Tim Ayres and independent senator David Pocock when they attended the NFF Members' Council in Canberra last week.
Before the meeting, NFF president Fiona Simson said farmers continued to hold out hope the instant asset write-off arrangements - "full expensing" in ATO speak - for agriculture would be extended in the Federal Budget due to be delivered by Treasurer Jim Chalmers on Tuesday, May 9.
"The measure is an exceptional incentive for farmers to invest in the plant they need to improve productivity, to be more resilient and sustainable and to make their workspaces safer and less labour-intensive," Ms Simson said.
But the more pressing aspect members wanted clarified urgently, the senators were told, was whether the current instant asset tax write-off arrangements, due to end on June 30, would be extended to cover agricultural machinery and equipment ordered and invoiced in good time, but still not delivered by June 30 because of port and other delays.
The current tax arrangements require machinery to be delivered on-farm or equipment to be installed on-farm and be "ready to use" by the June 30 deadline, before the full asset value can be claimed for the current financial year.
"It makes no sense that farmers who, in good faith, bought equipment before the deadline should miss out through no fault of their own," Ms Simpson said.
Being able to write off against farm income the full asset value of new machinery or equipment purchased this financial year - instead of depreciating it over several years - is particularly important to WA grain farmers who enjoyed a second consecutive record harvest in 2022-23.
At about this time last year, after the first of the consecutive record harvests, agricultural machinery dealers warned farmers that with delivery times of 12 months or more on most machinery, they would have to place firm orders quickly to take advantage of the instant asset write-off before it disappeared this year.
Many farmers heeded their warning.
They ordered big tractors that were - and remain - hard to get if an American rather than European brand name is desired, combine harvesters which were mostly difficult to get last year but are available this year and self-propelled sprayers and seeding rigs - both with some availability this year.
The instant asset write-off arrangements were amended in October 2020 to remove a $150,000 purchase price ceiling, which had limited practical write-off benefits to smaller assets like solar-powered pumps or controlled traffic guidance technology.
Last financial year, farmers could invest in "big ticket" items and - provided they took delivery by June 30 - could potentially claim millions of dollars in asset write-offs because there was no limit on cost or number of eligible assets claimed in any one year.
But some farmers attempting to do the same this year are now wondering whether they will get the instant write-off benefit because their machines are held up awaiting inspection at port and may not be delivered by June 30.
"Quarantine inspections are the biggest problem, particularly through Melbourne (port), they're holding up deliveries," said Farm Machinery & Industry Association of Western Australia (FM&IA WA) executive officer John Henchy on Monday.
"The quarantine inspections at ports have been holding up new car deliveries for some time and now agricultural equipment is competing with the cars for inspections and, when needed, cleaning to remove whatever biosecurity risks there are, before anything leaves the port," Mr Henchy said.
Because Eastern States' ports are serviced by more ships than Fremantle Port, it was sometimes quicker to have imported agricultural machinery delivered to the east then trucked west, he confirmed - which meant some WA-bound machines were caught up in Eastern States' port backlogs.
Fremantle Port was also not immune to delays, he pointed out, with tractor deliveries stalled there for up to 12 weeks in the past.
Specific component shortages, such as computer chips, and other manufacturing and supply chain delays have meant almost-complete and finished production units are often stockpiled for long periods by manufacturers before they are shipped.
With big items like tractors, combine harvesters and self-propelled sprayers, storage is often outside where the machines are exposed to insects and wind-borne seeds and plant material that could pose a biosecurity risk to Australia.
Onboard roll-on, roll-off ships an insect pests can also spread from one cargo consignment to adjacent consignments.
As a consequence, all cargoes discharged at Australian ports are subject to quarantine inspections for potential risks, with cleaning or other preventative measures by an approved contractor required if a potential risk is discovered during inspection, before goods can leave the port area.
Last year, for example, Chinese car manufacturer MG had to reload 1000 cars on a ship at Port Kembla, New South Wales, to send them back to China to be cleaned after a snail infestation was discovered.
"We support the quarantine inspections because we don't want the biosecurity risks coming here," Mr Henchy said.
"But the process needs to be speeded up, with more inspectors and more cleaning facilities made available.
"What needs to be understood by politicians and the government department responsible for quarantine inspections is that our industry is seasonal.
"While you can sell a car or truck that is delayed on arrival by a quarantine inspection, at any time later pretty much without any flow-on impacts, a tractor or seeding equipment has to be inspected and released in time for seeding, a harvester has to be available for harvest."
Mr Henchy said the FM&IA WA would support any move to extend the current instant asset write-off arrangements to cover delayed delivery of agricultural machinery and equipment purchased in good faith and originally due to arrive before June 30 before delivery was delayed unexpectedly.
Comment was sought from the ATO to clarify whether farmers who have ordered machinery and equipment will be eligible to claim an instant asset write-off if delivery is delayed beyond June 30.
