2021-22 Budget changes - Temporary Full Expensing and the instant asset write off
As part of the 2021-22 Budget, the Government has extended the temporary full expensing incentive. The extension will provide businesses with additional time to access the incentive that will support new investment and increase business cash flows. Businesses with an aggregated annual turnover or total income less than $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use by 30 June 2023.
The Government has also extended the temporary loss carry back scheme which will allow businesses with a turnover up to $5 billion to offset losses from the 2022-23 income year against previous profits going back to 2018-19 on which tax has been paid, to generate a refund.
For more information of these new measures, please refer to page 29 and 30 of the 2021-22 Budget Paper No.2.
More information on the temporary full expensing incentive and changes to the existing instant asset write-off is also available on the Australian Taxation Office website.
Further information to the new loss carry back scheme is available on the Australian Taxation Office website.
Immediate deductions for fodder storage assets
Primary producers may be able to immediately deduct (rather than depreciate over three years) the cost of fodder storage assets, such as silos and hay sheds used to store grain and other animal feed, making it easier for them to invest in and stockpile fodder. Primary producers who store fodder for sale may also be entitled to this deduction.
This measure is available for fodder storage assets first used or installed ready for use on or after 19 August 2018.
Income tax averaging
Primary producers can, from 1 July 2017, re-commence income averaging 10 years after opting out. Prior to this amendment, a primary producer who had opted out of income averaging could not return to the arrangement.
Primary producers who opted out of income averaging for the 2006–07, or an earlier financial year, will be opted back in to income averaging for the first financial year after 2016–17 in which their taxable primary production income is greater than that for the previous financial year.
The legislative amendment enacting this change, the Tax and Superannuation Laws Amendment (2016 Measures No. 2) Act 2017 received Royal Assent on 28 February 2017. More information is available at Tax averaging for primary producers (Australian Taxation Office website).
Primary producers affected by drought and natural disasters
The Australian Taxation Office can help people 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 income tax, fringe benefits taxes and some other 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 a number of 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 location 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 location, can use these mechanisms to lessen their tax burden. These include:
Tax deductions
These relate to expenses that directly facilitate earning income and reduces 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.