With the end of another financial year approaching, now is the time to consider your farm financial position and plan for tax time.
Rural Bank’s Regional Manager Agribusiness Wimmera and Mallee, Greg Kuchel, caught up with BCG recently to share his list of the top five things farmers should be talking to their accountant or financial adviser about this EOFY.
- If you haven’t spoken to your accountant already – do it now! While tax minimisation is important, make sure your accountant understands that while you want to reduce tax, you may also want to achieve other farm business goals which can impact on the types of decisions you make.
- Will purchasing equipment have an impact on your tax position? Tax averaging allows growers to even out the amount of tax payable over a five-year period. Your accountant will be best placed to look at your long term income and see if tax will be a problem for you this financial year.
- If you stored a lot of grain after the 2016 harvest due to the high yields and low prices, be mindful of how much was sold this financial year as your income for the year may look higher than anticipated.
- Depending on your circumstances, you may be looking for options to minimise tax. You could consider pre-paying expenses, such as chemicals and urea, as an easy last-minute option, while deferring grain sales and any other relevant income until next financial year may also be of assistance in this instance. Discuss these opportunities with your financial adviser before making any decisions.
- Remember that the cap for Farm Management Deposits (FMDs) is now $800 000, your accountant will be best placed to assist you here.
- Instant asset write offs for equipment purchases under $20 000 are still available. Small businesses with turnover of less than $2 million to less than $10 million are eligible. To claim this deduction, the asset will need to be used or installed for the 2017/18 income year.
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
