This blog will touch on some of the concessions currently available to primary producers that we commonly see being accessed by our clients.
Firstly… What is a Primary Producer?
A primary producer is an individual, partnership, trust or company that operates a business that undertakes:
- Plant or animal cultivation (or both)
- Fishing or pearling (or both)
- Tree farming or felling (or both)
We provide services for several primary production clients at BLG, the most common being dairy farmers.
A primary producer is able to claim an immediate tax deduction for certain primary production assets including:
- Facilities used to conserve or convey water (e.g. tanks, dams, bores, pumps, irrigation channels);
- Fencing assets, including alterations and extensions (however does not include stockyards, pens or portable fences); and
- Fodder storage assets (e.g. silos, grain storage sheds, hay sheds, grain bins).
Tax Averaging for Primary Producers
In the primary production industry, some years are good and some are bad. The tax averaging system was introduced to allow for those fluctuations by averaging your income over a maximum five year period to ensure that you don’t pay more tax over time than taxpayers on comparable, but steady, incomes.
NSW State Government Measures
The Emergency Drought Relief Package was announced on 30 July 2018 to support farmers impacted by the drought conditions. Some of the measures introduced include:
- Drought Assistance Fund - one-off $50,000 interest free loan for eligible expenses. The loan term is seven years with no repayments required in the first two years.
- Regional Investment Commission (RIC) Low interest loans – up to $2 million for those within the eligible area map defined by the RIC. Loan is interest free for five years, with a loan term of 10 years and is required to be refinanced at the end of the term with a commercial lender. Current interest rate is 3.58%
- Drought Transport Subsidy – covering 50% of the full cost of transporting fodder, stock or water – maximum $5 per km and 1,500km per trip. Eligible for costs incurred from 1 January 2018 – 30 June 2019 capped at $40,000 per farm over the 18 month period.
- Emergency Water Infrastructure Rebate Scheme – rebate of 25% of the cost of purchase, delivery and if applicable, labour costs for installation of water infrastructure for animal welfare needs – maximum of $25,000 per farm – eligible purchases from 1 July 2018 to 30 June 2021.
- Local Land Services rates for 2019 have been waived.
- New registrations and renewal fees for eligible Class 1 agricultural vehicles have been waived from 30 July 2018.
- Heavy vehicle registration costs waived from 1 July 2018 up to 30 June 2020.
Federal Government Measures
- Farm household allowance (FHA) for a maximum of a four year period
- Supplement lump sum payments of up to $12,000 per family/household if receiving the FHA – households can receive up to two lump sum payments if eligible.
- $20,000 Instant asset write-off extended to 30 June 2019
- Australian Taxation Office offering:
- tailored payment plans with interest-free periods
- more time to pay tax
- waiving penalties or interest that may be incurred during drought
Accessing the above measures can help with your cash flow, and maximising the available concessions is an important consideration if you are in the primary production industry. As with all concessions, you need to meet certain eligibility criteria.
Governments introduce new measures and change current measures quite often, especially leading up to elections. To ensure you are up-to-date with the current measures and their criteria, get in touch with our team at BLG Business Advisers online or by calling (02) 4229 2211.