There is a wealth of information that farmers should be equipping themselves in order to prepare their taxes appropriately. This, on top of all other expectations of a farm as a business, can simply become an overwhelming experience.
The pressure to do well perhaps exceeds that of many other business opportunities because a farm is a livelihood; there is no cutting your losses, no trying again with something new.
We get it. Here at MBC, we specialize in farming accountancy and know our client’s needs from an accountant and financial advisor. Let’s briefly go over just a few of the many essential factors that we need to consider when tax planning for farming businesses.
1 . Deferring income or prepaying expenses
An opportunity can arise to defer income into the next financial year. And bring forward business expenses in order to reduce the amount of tax payable. You may also be able to prepay interest in a loan to create additional tax deductions for this year.
2 . Accelerated Depreciation
If bought before 6th October 2020, you may be able to deduct assets up to the value of $150,000 as a governmental response to the extensive changes to depreciation caused by COVID-19. There are some finer points to be made on this that we can speak to you directly about if you are eligible for this planning strategy.
3 . Wages
The ATO generally permits wage allowances up to a certain amount to be claimed as a tax deduction. For many farming businesses, families are included, and such allowances, such as meals, can be additionally tax-deductible.
Considering family, wages to children are permitted in a round-a-bout kind of way, as children growing up on farms generally help out. Therefore are entitled to payment for their work. Private expenses such as school fees can be allocated as wages and thus become tax-deductible.
These are but a few of the many very complex concepts that we can use to support our clients as they approach their tax planning. By understanding the vast ways in which you can legally reduce your final tax bill, you can better use that money saved to grow your business, support your community and the Australian economy.
What is essential, is ensuring that the information that we send to the ATO on your behalf is concise and clear, creating a hassle-free and seamless experience for everyone. By choosing professionals who have worked in your particular industry for years. You are ensuring the best possible outcome for the tax planning of your farm. Contact our team today at one of our offices near you: