Keeping your farming business on track

With the end-of-financial year looming, tax and business planning is quickly moving up the priority list for many.

This time of year can be a source of heightened stress for businesses, but there are some key steps that you can take now to ensure that you maximise your tax position for this year and get the new year off to the best possible start.

1. Forecast your net profit to 30 June

Updating your budget and re-forecasting your business’s financial position at regular intervals is good practice year-round. It is particularly critical that you do this in the lead up to 30 June.

By re-assessing income sources for your business and identifying major expenditures – you can get a more accurate picture of your taxable income for the year. If your forecast is indicating a high profit position, you can work with your accountant now to put tax planning strategies in place.

2. Look into primary producer tax concessions

In the October 2020 Federal Budget, a key focus was on tax concessions for businesses across the board. This has meant that there haven’t been any significant changes to the primary producer tax concessions for the past 18 months.

End-of-financial year is the key time for you to review the concessions available and identify those that will help you to smooth taxable income and manage your cashflow prior to tax time.

The most common concessions and tax planning tools available to primary producers are:

  • Farm Management Deposits (FMDs)
  • Income averaging
  • Immediate deduction for capital expenditure relating to fences, water improvements and fodder storage assets
  • Deductions for the decline in the value of horticultural plants

It is important to remember that these concessions have eligibility requirements, so you need to assess how they fit your business .

You can find out more about the primary producer concessions by speaking with your accountant, and on the ATO website:

3. Plan for where you want to be

The end of the financial year is a great opportunity to reflect and strategize on what you can do to strengthen your business moving forward.

Take the time now to consider key matters, such as:

  • Does your broader structuring need to be reviewed?
  • Is business succession or transition on the cards?
  • Do you have the right financing arrangements in place?

The start of a new financial year is the best time to make any necessary changes at these levels so that reporting is easily managed, and all stakeholders can work towards a clear date.

Need help? Contact your Bentleys advisor – we’re here to help you get where you want to be.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.