Commercial Farming & Agriculture
In terms of tax depreciation and available deductions, farms tend to be skewed much more towards plant and equipment claims (Div 40) rather than structure (Div 43). Due to this, farm deductions tend to be very high, but also typically have a steep drop off where a large chunk of the depreciation is claimed in the first 5 years of the 40-year report.
Also due to a relative lack of structural claims, it is difficult to ascertain what rates would be “average” for farmstead structures but considering most of the claimable portions will simply be residential in nature then the average would be between $1,400-$2,200 per sqm.
There are several scenarios for farms dependent on the type of farm, however, MCG has found the following to be the most common.
Cattle Farms
Majority of deductions will be in Sheds, Dams, Fencing & Irrigation.
Wine Farms
Additional machinery is required to ferment and bottle the wines where Barrels, Winery fermenters, Grape crushers and holding sheds would add even more value.
Produce Farms
Most of the deductions will come from Trellis, Irrigation, Fences, Dams & Storage Sheds.
Outside of the above-mentioned scenarios, the most common value-adding assets across all farms are found below
1. Vehicles including Tractors, ATV’s, Utility vehicles & Trailers/Attachments
2. Silos & Fodder storage
3. Animal shelters
4. Shearing Sheds
5. Dairy Sheds
6. Cattle Crushes, Ramps and Walkways
Due to changes in the Australian Federal taxation legislation, farms can also fall under what is known as “Primary Production” which means that some assets such as fencing, dams and irrigation can be claimed in their entirety the year of installation so long as they were added after purchase. Coupled with this, a lot of farms will also fall under the “Small Business Entity” rules which allows the farms assets to be depreciated at an accelerated rate where existing items are immediately pooled and depreciated at a flat 30% until there is no value left and newly acquired assets will depreciate at 15% for the year of acquisition and then 30% each year thereafter. On top of this, there is also another ruling for immediate write offs for SBE primary producers which is as follows:
1. Assets acquired between 12 May 2015 and 28 January 2019 and purchased for less than $20,000 can be written off immediately.
2. Assets acquired between 29 January 2019 and 2 April 2019 and purchased for less than $25,000 can be written off immediately
3. Assets acquired between 2 April 2019 and 30 June 2020 and purchased for less than $30,000 can be written off immediately.
A Quantity Surveyor should be able to answer all of your detailed questions and will ensure that no items are missed, the maximum claim is made and that the report complies with the ever changing rules prescribed by the Australian Taxation Office (ATO).
We service Sydney, Newcastle, Parramatta, Melbourne, Brisbane, Adelaide, Perth & Regional Australia.
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maximising your tax depreciation deductions.