Asset investment write-off extension gives farmers and suppliers options
Farmers have applauded the federal government’s decision to extend its $150,000 instant asset investment write-off offer until December after many businesses highlighted the previous deadline was too short to make practical use of the incentive.
The instant investment depreciation write-off was initially announced in March for any business with annual turnover of less than $500 million. However, it would have reverted back to just $1000 for small businesses with revenue of $10m after June 30.
Treasurer Josh Frydenberg said the extra six-month spending opportunity could cost the government about $300m in instant depreciation payments, but was also likely to help up to 3.5m businesses make extra investment plans and contribute to kick-starting economic activity after the coronavirus shutdown.
Farmers have already responded strongly to the chance to buy new or used machinery, plant and vehicles priced within the $150,000 spending threshold, which was previously limited to $30,000.
However, while there is no limit to the number of equipment items a business can buy and claim against their taxable income for an instant asset depreciation write-off, until this week all deals had to be done before the end of the financial year.
Equipment also had to be installed and ready for use on the farm by June 30.
The extension was an “excellent commonsense decision” by Canberra and welcomed across the sector.
Many farmers were quick to take up the offer, but quite a few farm equipment suppliers and manufacturers were caught out by the strong inquiry levels and supply chain bottlenecks caused by the pandemic.
Lockdowns and general disruption to business activity around the globe have restricted the availability of some imported machines or components used for locally made gear.
The new 31 December 2020 deadline is widely expected to help ease congestion within the machinery industry and encourage more farm sector enterprises and regional businesses to take advantage of Canberra’s stimulus initiative.
This extension gives farmers, manufacturers and retailers some welcomed breathing space. Importantly, it will allow more farmers to benefit from the tax break, too.
Giving farm businesses the ability to immediately write-off the cost of new assets worth up to $150 000 was of tremendous importance to the industry and a major incentive to invest in assets which improved on-farm productivity.
Mr Frydenberg acknowledged a number of businesses had been finding conditions “very tough” during the pandemic, but they were not just focused on their immediate needs – “they’re looking at tomorrow”, he said. He hoped the extension would encourage enterprises to grow and invest as they emerged from the coronavirus pandemic.
The criteria have changed over time so make sure you check whether your farm or business is eligible. Please give us a call on 07 4963 4800 if you have any questions or would like to discuss if your business is eligible or visit the ATO website.
Source: Tax write-off extension to December 31 wins farm sector applause retrieved from https://www.queenslandcountrylife.com.au/story/6786042/tax-write-off-extension-to-december-31-wins-farm-sector-applause/?cs=17267 (2020)