30 Aug Attention : Primary Producers – Special Tax Concessions

Did you know that primary producers are provided with special tax concessions due to the nature of their business? There are major tax concession available in regards to some depreciating assets.

A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value (depreciate) over the time it is used. Some assets, such as land and trading stock, are not depreciating assets.

Deductions for the following primary production depreciating assets is worked out using special rules

• water facilities used to conserve or convey water
• fencing
• fodder storage

Water facilities

As a primary producer or irrigation water provider, you can claim an immediate deduction (previously the deduction was spread over three years) for certain capital expenditure you incur primarily and prin

cipally for conserving or conveying water for use in a primary production business on land in Australia. You can claim the deduction even if you are only a lessee of the land.

A water facility includes plant or a structural improvement, or an alteration, addition or extension to plant or a structural improvement, that is primarily and principally for the purpose of conserving or conveying water.

Water facilities include:

• dams
• earth tanks
• underground tanks
• concrete or metal tanks
• tank stands
• bores
• wells
• irrigation channels or similar improvements
• pipes
• pumps
• water towers
• windmills
• extensions or improvements to any of these items.

Things that are reasonably incidental to conserving or conveying water include:

• a culvert
• a fence to prevent livestock entering an irrigation channel
• a bridge over an irrigation channel.

The water facilities tax concession can be claimed by primary producers and irrigation water providers. An irrigation water provider is an entity whose business is primarily the supply (other than by using a motor vehicle) of water to primary producers.

No deduction is available for capital expenditure incurred on acquiring a second-hand commercial water facility unless you can show that no-one else has deducted or could deduct an amount of earlier capital expenditure on the construction or previous acquisition of the water facility.

Fencing

As a primary producer, you can claim an immediate deduc
tion for the cost of fencing you incur primarily and principally for use in a primary production business on land in Australia. You can claim the deduction even if you are only a lessee of the land.

The term ‘fence’ takes its ordinary meaning and includes an enclosure or barrier, usually made of metal or wood, as around or along a field or paddock. A fencing asset includes a structural improvement, a repair of a capital nature, or an alteration, addition or extension, to a fence.

A fencing asset extends to parts or components of a fence including:

• posts
• rails
• wire
• droppers
• gates
• fittings
• anchor assemblies.

Fodder storage assets

As a primary producer, you can depreciate over three years the cost of fodder storage assets you use primarily and principally in a primary production business on land in Australia. You can claim the deduction even if you are only a lessee of the land. A fodder storage asset is an asset that is primarily and principally for the purpose of storing fodder.

Fodder storage assets include:

• silos
• liquid feed supplement storage tanks
• bins for storing dried grain
• hay sheds
• grain storage sheds
• above-ground bunkers

All information has been reproduced from the Australian Taxation Office Website[1]

[1] https://www.ato.gov.au/Business/Primary-producers