Home' Smart Farmer : July 2010 Contents July 2010
WE are again at the end of
another tax year and the
time has come to start
getting together all the information
for your accountant to prepare and
lodge 2010 tax returns. This article
is aimed at outlining some of the
major issues that should be consid-
ered by primary producers in relation
to their tax affairs during the 2009-
2010 tax year. It is not meant to be a
comprehensive analysis of the issues
and concessions available, but more
of a reminder of things to be consid-
ered and questions to be asked.
Some of the major issues for pri-
mary producers can be summarised,
and there are a range of concessions
available to small business entities
(those with a turnover less than $2
million per annum), including:
• Simplified trading stock (which
includes livestock), if values have not
changed by $5000 or more.
• Simplified depreciation rules,
including writing off of assets costing
less than $1000 and accelerating
depreciation on other assets.
• Certain prepaid expenses can be
deducted (12 months or less in
• Cash basis reporting for GST pur-
• Capital gains tax concessions
(maximum net asset value of $6m
s: The cost can be
written off over three years.
u A deduction can be
claimed for the decline in value of
horticultural plants and grapevines.
ations A deduction
can be claimed for capital expendi-
ture on landcare operations, such as
fences, combating land degradation
and some drainage works.
tel phone A deduction
is available over 10 years for capital
expenditure on electricity and tele-
phone line connections.
Profit from the forced disposal of live-
stock can be spread over five years.
This also applies to insurance recov-
eries from livestock losses.
g ng Primary producers
can use a five-year running average to
determine the tax rate applicable to
Manag ment Deposi
S hem Primary producers can
obtain a tax deduction from deposits
into the FMDS and any amounts
withdrawn are assessable income.
The limit is $400,000 for total
This is a small sample of the issues
for primary producers to consider.
Other factors to take into account
• Keeping good records to enable
efficient and cost-effective prepara-
• Utilising superannuation contri-
bution concessions, particularly for
those 55 and over.
• Estate planning.
• Succession planning.
• Loans and payments to individu-
als and associated entities from the
• Capital gains tax planning.
• Getting your tax return prepared
early so you can plan tax payments or
receive refunds as soon as possible, if
• Varying tax instalments, where
income levels are down.
• Accounting for private use of
business assets and produce.
• Check on tax offsets available (eg
medical expenses $1500, education
expenses, franking credits, depen-
• Investment allowance deduction
on new plant and equipment
acquired before December 31, 2009
(can be a 50 per cent, 30pc or 10pc
deduction, depending upon whether
you qualify as a small business entity,
when the equipment was actually
acquired and when it was installed
ready for use).
It is not possible to cover all the
issues to be taken into account from
a tax perspective in this article.
The role of your accountant is to
minimise the amount of tax payable,
by utilising all the legitimate deduc-
tions, offsets and concessions avail-
• Need to know more?
Terry Lewis, partner, Lewis Richmond -
Chartered Accountants, 104 Payneham
Road, Stepney SA 5069, 08 8362 2444
Plans to minimise tax
A deduction can be claimed for the decline in value of horticultural plants and
FMDs offer good option
Keep comprehensive records
Check on tax offsets
with TERRY LEWIS
Smart Ta x
Farm top tips for 2010
Review your cashflow forecast with
a best and worst-case scenario and
work out if you have reserves or
need to borrow.
If you have extra cash, consider a
farm management deposit or high-
interest account until you need it.
Consider diversifying assets outside
the farmgate to continue to provide
income even when farm receipts are
below average. .
Start planning now for how to
handle the next drought or flood -
financially and in terms of storing
Plan to manage exposure to interest
rate risk. Splitting loans between
variable, fixed and capped rates can
limit the effects of rate rises, friends
Source: National Australia Bank
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• Lambgrow pellet for lot feed sheep and lambs
• Drenchable Vitamin A and E combinations
• All Weather Formula stock licks
• Transforce soluble transition supplement for sheep and
• Feedlot Raw Materials stock lime, salt, bentonite etc
• Ration Formulation
• Stud Stock Rations, Calf Feeds, Concentrates etc
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