Farm management deposits

One of the best tax planning measures available to primary producers is to utilise the farm management deposits (FMD) scheme. This has become an even more effective business and cash flow planning tool this year due to legislative changes that took effect from 1 July 2016.

The changes include doubling of the cap on deposits from $400,000 to $800,000, the re-establishment of an early access trigger during drought, and allowing FMDs to be used to offset the interest costs on primary production business debt.

Income averaging

There have also been some changes to income averaging arrangements to allow primary producers to return to income averaging 10 years after they opted out.  Primary producers who opted out of income tax averaging for 2006-07 – or an earlier financial year – will resume income tax averaging for the first financial year after 2017-18, in which their taxable primary production income is greater than in the previous financial year.

Other primary producer-specific tax concessions

Don’t forget to consider the uncapped immediate write-off for capital expenditure on water facilities and fencing assets, the outright deduction for landcare operations, and the accelerated write-off for horticultural plants and grapevines.

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