Mount Gambier is a great agricultural centre and home to many farming families and businesses. Tax planning is incredibly important when you are working in the farming industry because there are so many variables to work with. It’s important your accountant understands your industry to ensure tax planning is effective.
As anyone employed in primary production knows, there are good years and bad years. In this environment tax planning can assist greatly in negotiating these ups and downs. Farm Management Deposits (FMDs) are a useful tool available to farmers in these circumstances, and thanks to recently announced changes their utilisation is more effective than ever. Farmers can now have up to $800,000 in FMDs and more importantly the deposited funds can be used to offset your farm debt.
Of current relevance are the accelerated depreciation rates that are in place up to 30 June 2017. These allow small business (with an annual turnover less than $2 million) to claim an immediate write off for newly purchased assets up to the value of $20,000, with other special provisions relating to fencing, water improvements and fodder storage.
Superannuation can also be an attractive management tool as contributions into superannuation are tax deductible. Furthermore, when combined with Capital Gains Tax (CGT) concessions and FMDs, a highly effective farm succession plan can be developed. It has been possible, through the use of varying combinations of these arrangements, for some of our clients to transfer their farms to the next generation whilst building up off farm assets with minimal tax impact.
These are a few of the opportunities currently available to assist farmers. With June 30 fast approaching, now is the time to be reviewing your current financial year and plan for the future. With effective use of these and other tax planning tools; our Mount Gambier-based professionals can help your farming business through the difficult times and maximise the benefits in a good year.