Here are some specific tax considerations for agribusiness.
Covid-19 temporary tax incentives
Asset write-off: Full expensing of the cost of eligible depreciating assets of any value, purchased between 7.30pm AEDT on 6 October 2020 and 30 June 2022, is available to businesses with turnovers of up to $5 billion.
Claw back past tax paid: Companies with turnovers of up to $5 billion can offset tax losses against past year taxed profits to generate a tax refund.
Business-as-usual tax incentives
Scrapping assets: Agribusinesses operate in a harsh environment, so review your asset schedule and identify any assets that have been scrapped.
Farm management deposits (FMD): Primary producers can reduce tax by making a FMD to a maximum value of $800,000. This can be used to offset a loan and there are concessions to withdraw in drought. The deduction can only offset primary production income. Non-primary production income cannot exceed $100,000 and, when the FMD is withdrawn, the amount is included as assessable income.
Water facilities and fencing: Primary producers can claim an immediate deduction for capital expenditure on water facilities and fencing, regardless of cost.
Fodder storage: Primary producers can claim the cost of fodder storage assets (for example, hay sheds) over three years.
Deferred profit: Primary producers can elect to reduce any profit earned from the forced sale of livestock due to drought, flood and other extreme events. The profit needs to be returned as income or offset against replacement cattle purchased within five years.
Research & development: If your company is spending money to experimentally solve technical problems or develop new products or services, you may be conducting activities that qualify as R&D under the R&D Incentive. This is a complex area of tax law so please call Advisory Partner to discuss.