Deductions for Primary Producers
Did you know that there are now generous concessions available to Primary Producers?
From 7.30pm, 12 May 2015 primary producers can immediately deduct capital expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills.
In addition, if you meet the definition of a small business (currently with a turnover less than $2M and from 1 July 2016, with a turnover < $10M, subject to legislation being passed), you can choose to either depreciate the asset as per the following guidelines or if it is an item costing < $20,000 (excluding gst) you can claim an immediate write off. This will apply to assets purchased up to until 30 June 2017.
The asset must be in use or be installed ready for use in order to claim the deduction, i. e. you can’t pre-order on the 28 June and claim the deduction unless it is in use or installed ready for use by 30 June.
Both new and old/second hand assets remain eligible for these deductions
For depreciating assets costing $20,000 or more, small businesses can elect to use the pooling arrangements and depreciate the cost of such assets at 15 per cent in the first year and a diminishing value rate of 30 per cent on the opening pool value each year thereafter.
Deductions for Fencing, Fodder Storage, Water Facilities:
Fencing – 100% outright deduction if it’s not a stockyard, pen or portable fence (previously written off over a period of up to 30 years),
Fencing – if it’s a stockyard, pen or portable fence –claim at a rate of 7.5% pa,
Fodder Storage Asset – deduct cost over 3 years (previously written off over a period of up to 50 years).
Typical examples of fodder storage assets include:
- silos
- liquid feed supplement storage tanks
- bins for storing dried grain
- hay sheds
- grain storage sheds
- above-ground bunkers.
Water facilities – 100% is deductible in the year you incur the expense (previously written off over 3 years).
A water facility is plant or a structural improvement, or an alteration, addition or extension to plant or a structural improvement that is primarily and principally for (or incidental to) the purpose of conserving or conveying water.
Water facilities include:
- dams
- earth tanks
- underground tanks
- concrete or metal tanks
- tank stands
- bores
- wells
- irrigation channels or similar improvements
- pipes
- pumps
- water towers
- windmills
- extensions or improvements to any of these items.
Things that are reasonably incidental to conserving or conveying water include:
- a culvert
- a fence to prevent livestock entering an irrigation channel
- a bridge over an irrigation channel.
Other changes outlined in the 2016/17 Budget for all businesses with annual turnover of less than $10 million that may also be relevant to primary producers are:
- a simplified method of paying PAYG instalments calculated by the ATO, which removes the risk of under or over estimating PAYG instalments and the resulting penalties that may be applied;
- the option to account for GST on a cash basis and pay GST instalments as calculated by the ATO; and
- a trial of simpler business activity statements (BAS), reducing GST compliance costs, with a full roll-out from 1 July 2017.
