Home' Smart Farmer : May 2012 Contents May 2012
By MAX OPRAY
ITH tax time approaching, the
Australian Tax Office's Kamal
Hassan has some choice bits of
advice for those about to get stuck into their
He says farmers can fall under one of three
different tax categories -- individuals, small
and large businesses -- with each facing
unique rules and regulations. The ATO does
not have a risk profile specific to primary pro-
"Common mistakes made by individuals
that would be most applicable to farmers are
not maintaining accurate records, incorrectly
claiming fuel tax credits, incorrectly account-
ing for GST, and incorrect claims for deduc-
tions," Mr Hassan said.
He urges anyone with doubts about how to
get taxed at the right rate to check the ATO
website which has plenty of information for
Chief among the problems he has identified
is record keeping.
The ATO advises primary producers to
maintain a small library of record books, such
as a cash receipts for keeping track of income,
a cash payments journal for supplier pay-
ments and a wages record for employees.
Farmers are even encouraged to go back to
their driving school days by maintaining a log
book to substantiate motor vehicle expenses.
When it comes to claiming fuel tax credits,
there is more to it than keeping accurate. Fuel
tax can't be claimed for private purposes, nor
when travelling on a public road in vehicles
that weigh less than 4.5 tonnes.
Likewise, fuel credits are not applicable to
heavy diesel vehicles bought before 1996 that
fail to meet environmental criteria.
It is important to apply the correct rate, as
the number of cents reimbursed for every litre
can vary dramatically, depending on what the
fuel is used for and the type of fuel.
For example, duty paid LNG for residential
use only nets a rebate of 2.5 cents a litre
whereas kerosene used as a mould release is
eligible for a whopping 38.143c/L.
GST is another area the ATO identifies as
Those registered for GST need to keep
source records and records of all sales and
purchases regardless of whether they were
taxable, GST-free or input-taxed. These docu-
ments should be kept for five years.
Problems with GST frequently come about
because of problems with a computerised
People often use the wrong GST defaults or
codings. For example, they have taxable sup-
plies coded as non-taxable.
Sometimes formulas in spreadsheets can be
accidentally changed, or were wrong to begin
Another major issue is failing to capture
transactions processed outside computerised
accounts payable or receivable systems, such
as payments direct from bank accounts for
one-off or unusual transactions.
Finally, it is important to keep up with new
changes in the tax system. For instance,
Federal Parliament last year voted that the
farm management deposit tax concession
could be claimed by a primary production
trust even when it reported a loss for the year.
Any chosen beneficiaries of a primary pro-
duction trust are eligible.
• Need to know more?
Clarify taxing issues
Maintain a library of record books
Hold on to GST source records
Work around fuel tax credits
1069 GREENHILL RD
SUMMERTOWN, SA 5141
• 25.5HP Kubota diesel engine
• 3 point hitch as standard
• Deluxe reclining seat
• Spacious operator area
• 4-position control valve
• 4 wheel drive
• Halogen headlights
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