What the Federal Budget's expansion of instant asset write-off means for agribusiness
If you're a farmer or other professional in the field of agriculture, now might be the time to make the purchase you've been dreaming of. The Australian 2020-21 Federal Budget, released on October 6, 2020, expanded the scope of the instant asset write-off to help Aussie farmers during these uncertain times.
How does the write-off work?
Businesses with an annual turnover of $5 billion or less can now instantly 'write off', or claim a tax deduction for, the full cost of any eligible capital asset they purchase and any improvements they make to existing assets. This measure will remain in place until June 30, 2022.
The government has also instated a 'loss carry-back' capacity, allowing farmers to carry back tax losses from the financial years between 2019 and 2022 to offset against purchases made in or after the 2018-19 financial year. In effect, they could receive a refund of tax paid in the past two financial years by purchasing machinery and instantly deducting the cost, creating a tax loss.
Small and medium-sized enterprises (SMEs) with an annual turnover of $50 million or less can also do the same for second-hand assets.
What will it mean for machinery purchases?
Demand for John Deere tractors like this one is likely to increase in light of the new tax measures
Machinery sales are expected to spike following the release of the Budget and announcement of the expansion of the instant tax-write off, and dealers are already preparing for the increase in purchases.
Patrick Fox, who is a regional operation manager with John Deere dealer Emmets, told the ABC, "This is going to spark some enthusiasm to complete the purchase they may have been thinking about."
Here at GoRegional, we want to encourage those who could potentially benefit from these new tax measures but may not have heard about or fully understood them to reach out to a finance professional and explore the possibilities of growing their business through instant asset write-off.