Tax Strategies for Farmers and Farm Businesses

Like all small business owners across Australia, Australian Farmers are facing financial hardship as a result of drought, bushfires and recently the coronavirus.

Some of the problems are being short of cashflow, losing money, having bad debts, holding on to trading stock that they haven’t planned for. So having a good tax strategy for this year will help you.

If you run a farm business, here are 10 tips and concessions for you to be aware of to get yourself planning for the year end tax return:


1) Instant asset write off

Threshold amount for each asset is $150,000 (up from $30,000) eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).


2) Instant write-off on fencing and water facilities, such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills.


3) Immediate deductions for land care operations, such as drainage works to prevent salinity, erosion control activities or erecting fences.


4) Ten-year write-off for electricity connections and telephone lines.


5) Deferral of profit on the forced disposal or death of livestock, for example sale due to drought, fire or flood.

6) Accelerated deduction for horticultural plants, including immediate deductibility for plants with an effective life of less than three years (including some grapevines).


7) Spread tax on assessable insurance recoveries in equal instalments over five years.


8) Income tax averaging.

Primary producers can even out income across years, so their tax liability is more aligned with taxpayers on a stable income. Under this system, you can even out your income over a maximum of five years.


9) Farm Management Deposits (FMD).

Another incentive to help farmers deal with a good year of income is the Farm Management Deposits. You can deposit in to an FMD account and claim a tax deduction. Then, when you draw from your account, the ATO treats the withdrawal amount as assessable income in the withdrawal year.


10) Disaster relief payments.

If you’re in a disaster-affected area and have received disaster relief payments this year, you should be aware that, while some of these payments are tax free, some grants and benefits related to disasters are actually subject to tax.


If you are a primary producer and unsure of your tax deductions and concessions available to you, contact our office for a 30 min free consultation to find out more.

1300 731 826