Farm Business Support - $20,000 instant asset write-off
As part of the 2023-24 Budget, the Australian Government announced it will increase the instant asset write-off threshold to $20,000. This will improve cash flow and reduce compliance for farm businesses. This will take effect from 1 July 2023 until 30 June 2024.
Businesses with an aggregated annual turnover or total income less than $5 billion can deduct the full cost of eligible depreciable assets costing less than $20,000. The assets must be first used or installed ready for use between 1 July 2023 and 30 June 2024.
The $20,000 threshold will apply on a per asset basis, so small businesses can write off multiple assets.
Assets valued at $20,000 or more that cannot be immediately deducted can go into the small business simplified depreciation pool. Under that arrangement, assets depreciate at 15% in the first income year and 30% each income year after that.
The Government’s temporary loss carry back scheme applies to businesses with a turnover up to $5 billion. Businesses can offset losses from the 2022-23 income year against previous profits going back to 2018-19 where tax was paid, to generate a refund.
Further information on the loss carry back scheme is available on the Australian Taxation Office website.
Primary producers affected by drought or natural disasters
The Australian Taxation Office can help farm businesses affected by drought and other natural disasters with:
- more time to pay
- waiving penalties or interest charged at a time you were affected by drought
- payment plans with interest free periods
- adjusting pay as you go (PAYG) instalments to better suit your circumstances
- tax incentives for primary producers.
More information is available at the Australian Taxation Office website, on:
In special circumstances, the Commissioner for Taxation may release individuals from payment of some taxes where it is shown that payment would cause serious hardship.
The Tax Office will look at circumstances on a case–by–case basis.
There are taxation measures and concessions available to drought–affected primary producers. These include:
- profit from the forced disposal or death of livestock
- proceeds from double wool clips
- insurance recoveries.
Taxation issues
There are also a number of other tax concessions available to primary producers, regardless of their locations or if they are in hardship, that can be broadly classified as tax offsets, tax deductions and concessional treatments.
Tax offsets
Primary producers, given their highly variable income streams and remote locations, can use these mechanisms to lessen their tax burden. These include:
Tax deductions
These relate to expenses that directly facilitate earning income and reduce assessable income. These include:
- Farm Management Deposits Scheme
- accelerated depreciation for water and fodder infrastructure and fencing
- depreciating assets
- water facilities deductions
- horticultural plants
- carbon sink forests
- electricity connections and telephone lines for small businesses
- forestry managed investment scheme
Tax concessions
These relate to a variety of assistance measures for individuals such as deferrals of tax liability that can help to reduce an individual’s assessable income in the current financial year. These include:
- fuel tax credits
- luxury car tax refund
- reduction in fringe benefits tax
- small business entity tax concessions
For further information on these measures contact the Australian Taxation Office on 13 28 66.
More information
- For drought assistance, contact the Australian Taxation Office Drought hotline on 1800 806 218 or visit Drought help on the Australian Taxation Office website for further information.
- For small business and primary producer assistance, phone the Australian Taxation Office business enquiries line on 13 28 66 or visit Primary producers on the Australian Taxation Office website.