2015 Budget – Accelerated Depreciation for Primary Producer’s Analysis

Published May 19, 2015 | By Napier & Blakeley

The federal government will sanction all primary producers, an immediate deduction for the cost of new fencing and investment in water facilities (such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills).

The Government will additionally allow primary producers, a 3 year deprecation allowance for all capital expenditure on fodder storage assets (such as silos and tanks used to store grain and other animal feed).

Currently, the effective life of the above mentioned assets are:

Fences – up to 30 years
Fodder storage assets – up to 50 years
Water facilities – 3 years

The measures outlined will be welcomed by the primary production industry however, extra works are required to be carried out in order to reduce the financial burden met by drought effected farmers.

Our National Director of Property Tax, Paul Mazoletti briefly explains the below example, which demonstrates the cashflow benefits of these measures:

Previously if you have spent $20,000 on a fence it would depreciate over 30 years with an annual deduction of $666 per annum. Currently, in the 2016/2017 income year you will be able to claim the full $20,000 as a 100% deduction. This means more money to spend, invest and pay off debt.

We have found that the depreciation available for primary producers is significant and in fact often exceeds that available to conventional commercial and industrial property owners. This is a result of the relevant Tax Rulings as applied to primary production activities by the ATO.

We make agribusiness property more valuable.

For more information or assistance, please contact the following: