AUSTRALIAN farmers are calling for an indefinite extension of the successful accelerated tax depreciation measures for farm business assets, saying ending the program is likely to have a “significant impact”.
Delivered in the 2015 federal budget, the $1.8 billion program allowed all small businesses to immediately write off assets under $20,000 – but it’s due to sunset on July 1.
Also, another $70 million program was introduced where farmers could immediately write off farm assets like fencing, water facilities and fodder storage.
However, ahead of this year’s May 9 federal budget being handed down, the National Farmers’ Federation (NFF) has been pressuring Treasurer Scott Morrison to preserve the popular taxation measures and recognise the benefits.
The NFF has launched an online campaign, #SaveTheWriteOff to back its demands, with supporters being urged to write to Mr Morrison expressing their views.
NFF President Fiona Simson said farmers had gained from both of the accelerated depreciation measures and wanted both to continue.
“We’ve seen the benefits this has provided not only for farmers but also to regional communities and we really think it should be extended,” she said.
“It’s actually one of the smaller items but probably one of the more achievable measures that the government could deliver for farmers, in this year’s budget.
“We need some certainty that it’s going to continue.
“These are income producing assets and any income that goes into regional communities helps the dollars go around and that helps maintain the viability of regional communities.
“I think we could allow some of these accelerated depreciation measures to go ahead permanently and at the moment it’s something the government could keep doing for farmers, which would be extremely beneficial.”
Ms Simson said the tax program had worked extremely well because many farmers, had come out of several years of drought and were being supported by the government to investment.
“These are often relatively small amounts of money that farmers are actually investing in their businesses, but they’ve been able to immediately write these assets off and buy them locally,” she said.
“Whether it’s fencing or watering items, the farmers can spend those dollars in their local communities which helps the dollars go around and around, in regional Australia.”
A spokesperson for Mr Morrison said the government wouldn’t speculate on the budget’s likely content.
But they said the instant asset write-off that started on May 12, 2015, was scheduled to end on June 30 this year and the federal budget was in May.
In its pre-budget submission, the NFF recommended the federal government consider amending the accelerated depreciation arrangements for small business to permanently allow the first $5000 of all investments to be immediately depreciated, with the remainder of asset values to be depreciated according to existing rules.
The peak national farm lobby group also called on the government to increase the low value pool threshold to $5000 for all other businesses and retain the specific depreciation and capital write-off provisions for primary producers.
“The increased immediate deduction threshold for small businesses in the 2015-16 Budget is due to expire on July 1, 2017 - the drop from a threshold of $20,000 to $1000 is likely to have a significant impact,” it said.
“The increase in the threshold to $20,000 was beneficial although there were a number of issues with the way this was implemented.”
“First, the threshold only applied to items with a total value of $20,000 or less, which may have encouraged the purchase of multiple low-value assets, rather than a higher value and potentially more productive asset.
“Second, the sudden cut off may produce a surge in uneconomic investment in low value assets to ‘beat the deadline’.”
The NFF submission said the depreciation and capital write-off provisions also apply to Landcare expenses, as well as water improvements, fencing and fodder storage assets.
“These provisions recognise the environmental benefits that accrue to the broader community from undertaking these investments and therefore should be retained in perpetuity,” it said.
GrainGrowers said the tax stimulus had enabled growers to achieve renewed efficiency and productivity in their operations at the right time - to take maximum advantage of a record grains harvest, as well as having a flow on positive effect on local businesses which have been able to hire more workers due to an increase in sales.
After being announced in the 2015-16 federal budget, the accelerated depreciation measures for farmers were due to commence in 2016.
But the program brought forward a year after the starting date failed to align with the Agricultural Competitiveness White Paper process.
Ms Simson is also putting her money where her mouth is, having utilised the tax measures on her family farm, on the Liverpool Plains in northern NSW.
“We’ve taken the opportunity to install some new seed silos and put in some new watering arrangements on our farm and the immediate tax depreciation is good;” she said.
“You don’t need to write those assets off over a long time and it’s also good to support local businesses that have been doing it tough, in recent times.”