The all new Asset write-off & loss carry-back scheme ✔️
Posted Oct 12, 2020
The Asset write-off & loss carry-back scheme announced in the Federal Budget should be welcome news for primary producers planning to invest this year and in the future!
This incentive looks like a great opportunity for Ag Business to get ahead, invest in new machinery and really ramp up production and profitability.
The Stock and Land reported today (12th October):
'The multi-year run of federal government equipment depreciation write-off offers to farmers continues to grow more generous.
In addition to this year's federal budget allowing producers to spend unlimited amounts on new machinery and eligible farm infrastructure and then claim an instant tax write-off, they can now write off outstanding depreciation entitlements left over from past equipment purchases.
When tax time rolls around next July small businesses with less than $10 million turnover will be able to deduct the entire outstanding sum in their simplified equipment depreciation pool spanning assets they may have acquired years ago.
Under normal circumstances the book value of a farm's plant and equipment would be slowly depreciated annually, initially at 15 per cent of the purchase price, then 30pc.
However, at the end of this financial year, rather than continuing the gradual depreciation, write-downs over a six- or eight-year timeline will be replaced by a once-only clearance opportunity.
That, in turn, will deliver an up-sized credit against the farm's 2020-21 tax bill.'1
The article goes on to outline how this incentive works detailing a hypothetical farming company which when spending money on a new implement was able to offset losses made in the 2020-21 FY, against tax paid in previous years to receive a tax refund.
Also outlined is advice from commercial and residential depreciation specialist BMT Tax Depreciation which urges business owners to start planning now to they can be sure to cash in on the benefits.
"It's pretty simple. Do your depreciation now, work out your tax loss and amend your prior returns to receive tax you've already paid as a refund."
"There's always been the ability for individuals to back-claim for two years of amendments, but now the government has given businesses that benefit, too."
Be sure to contact your accountant and make sure your eligible to be a part of this scheme. It's a great incentive and truly beneficial if you're trying to invest and get ahead in your farming business.
Credit must go to the following source:
1 Stock&Land - Article "Budget adds more tax credit chances with one-off write-down offer"
Note this article is not tax advice, Delmade strongly advises all business owners to talk to their accountant and make sure they are eligible to participate in these great schemes.