Year Round Tax Planning Tips for Agribusiness

The agricultural sector is hugely important to our economy. In Australia, ensuring the self-sufficiency and prosperity of the farming sector requires not just compliance with tax regulations but smart navigation of the financial landscape.

As a specialised agribusiness accountant, Schofield Accountants know how to ensure that farming businesses not only remain compliant and reap the rewards but also smartly navigate the tax year.

Here are some key things to keep in mind when doing year-round tax planning for agribusinesses.


1. Seasonal Changes

Unlike most other economic sectors, the agricultural sector is directly affected by seasonal changes and associated weather events, such as floods and droughts.

Depending on the farm’s location and the types of crops being grown there, seasonal shifts between summer, autumn, winter, and spring require farm management strategies to flex along with them. 

Therefore, to make the most of the planting and harvesting seasons, farmers must carefully plan their finances throughout the year to ensure a smooth and stable operation.

These seasonal shifts cause major fluctuations in agricultural income throughout the year. As such, rather than planning month to month like most other business owners do, farmers need to plan for the full year, or even several years in advance.

To help farmers smooth out their income, the government-supported farm management deposit (FMD) scheme was created. Through the FMD scheme, private financial institutions can offer FMD accounts to farmers, wherein they can make deposits during prosperous periods and then receive payments when things get a little tough. 

This scheme, which is coordinated by the Department of Agriculture, allows farmers to save up to a maximum of $800,000 to tide them over in low-income periods.

A few tax breaks are also available through this scheme, which you can check out on the Australian Tax Office (ATO) website or by speaking to an expert at Schofields Accountants.

2. Minimising Surprises

Every business owner has occasionally been caught off guard by a tax liability they had no prior knowledge of. In some instances, it could just be a case of being ill-informed, while in other cases, it’s a result of recent changes to tax laws that caught you by surprise. Either way, if you fail to plan for something like this, it can cause serious disruptions to your cash flow.

Thus, it’s critical that you are well-informed regarding your agricultural tax obligations and to keep abreast of new laws and regulations.

To ensure that you don’t fall behind on your agricultural tax obligations, Schofield Accountants can help you with all things related to agricultural taxation and can keep your business compliant.

This kind of sure footing will not only put your mind at ease but will also help you ensure a more stable financial situation year-round.

3. Maximising Deductions

The ATO provides several tax breaks for agricultural businesses, which every farmer needs to be well-acquainted with. To make the most of this opportunity, farmers might benefit from help in determining which deductions they can make. Leveraging these deductions well can lead to significant savings at the end of the year.

In the agricultural sector, deductions can include expenses related to equipment, livestock, and land management, among other things. An important benefit for farmers to note in 2024 is the tax relief incentive from the Australian Government, which has been running since 1 July 2023 and will end on 30 June 2024.

Under this arrangement, farmers can benefit from an instant asset write-off for assets installed and/or first used during the period and valued at less than $20,000. The new instant write-off threshold can be applied to multiple assets since it applies on a per-asset basis. The hope is that this arrangement will improve cash flow for farmers and reduce the regulatory hurdles to being compliant.

In addition, the ATO also offers certain tax relief benefits to farmers who have suffered setbacks due to drought and other natural disasters. These include giving farmers more time to pay what is owed, waiving interest and penalties, providing interest-free payment periods, and allowing pay-as-you-go installment adjustments to suit the farmer’s financial circumstances.

Accounting for Agribusiness

Work With An Experienced Agribusiness Accountant

Effective year-round tax planning for agribusinesses is a multifaceted strategy encompassing seasonal adaptation, leveraging tools such as the farm management deposit (FMD) scheme, and capitalising on available tax breaks.

Schofield Accountants provides specialised expertise and crucial support in navigating agricultural taxation complexities. For more information and to get help from an experienced agribusiness accountant, contact us at Schofield Accountants today.

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