As we edge closer to 30 June, we’re continuing our proactive tax planning series — this time focusing on strategies relevant to Australian primary producers.
Farming and agricultural enterprises face unique income fluctuations, operational needs, and environmental conditions, all of which create opportunities for tailored tax planning. Here are some key areas we help our clients consider before year-end:
- Farm Management Deposits (FMDs)
FMDs let primary producers set aside pre-tax income in high-profit years, offering a tax deduction in the year of deposit.
- The FMD cap is $800,000.
- To qualify, non-primary production income must be under $100,000.
- FMDs are typically held for 12 months, but early withdrawals (e.g. due to drought) can be exempt from penalties if criteria are met.
- $20,000 Instant Asset Write-Off
Small businesses with turnover under $10M can claim an immediate deduction for eligible assets under $20,000, per asset, until 30 June 2025. - Accelerated Depreciation for Key Assets
Primary producers can claim instant deductions for:
- Fencing
- Fodder storage (e.g. silos, tanks)
- Water facilities (e.g. dams, irrigation, bores)
- Income Averaging
Fluctuating income is common in agriculture. Income averaging spreads profits over several years, reducing tax in strong years by offsetting against leaner years. Strategic planning across a farming group can help minimise complementary tax. - Landcare & Environmental Incentives
Expenditures on Landcare operations (e.g. levees, erosion control, fencing) are fully deductible in the year incurred. Carbon sink forest establishment costs are also deductible, supporting sustainability goals. - Business Structure Planning
Restructuring — for example, moving from a partnership to a company — may be done without triggering capital gains tax if certain conditions are met, offering opportunities for succession and operational efficiency. - Other Tax Concessions
Additional measures may include:
- Zone tax offsets for those in remote areas
- R&D incentives for agricultural innovation
- PAYG instalment adjustments to better align with variable income
If you’re a primary producer or work with clients in the agri sector, now is a great time to review your position and identify opportunities ahead of 30 June.
For a comprehensive assessment tailored to your specific circumstances, please reach out to a member of our team.