02 Nov Australian Tax Relief for Drought-Stricken Farmers
As Queensland and New South Wales farmers suffer through another severe and long drought, it’s important they know of government payment plans that can be utilised to ease the stress of tax reporting.
When dry conditions force farmers to liquidate breeding livestock and early sales to market, farmers can look into applying for a special consideration from the government. There are two options available which provide less stress for farmers who may think they have large tax liabilities one year and no profit the next.
Tax Treatment 1: Spread the profit
Farmers can elect to spread the profit earned from the forced disposal or death of livestock over a period of five years.
Tax Treatment 2: Defer the profit
Farmers can elect to defer the profit and use it to reduce the cost of replacement livestock in the disposal year or any of the next five years. Any unused part of the profit becomes assessable in the fifth income year.
Tax Treatment for non-drought affected farmers
If the drought is yet to impact your farm in this way, the tax treatment scheme could likely be utilised if any of the following scenarios apply to you:
- You have received an official notification under Australian law that you must destroy livestock to prevent the spread of disease or if your livestock have died from a disease
- A state or territory government rents land from you in order to eradicate cattle ticks
- If your land including crops or fodder have been destroyed by natural disasters and you are intending to use the profits to buy replacement stock or to maintain breeding stock for the purpose of replacing livestock
- Obligatory repossession of your land under an Act.
Ineligibility for tax treatment
Farmers may be ineligible to apply for the tax treatment scheme if their business is impacted by:
- Bankruptcy or insolvency
- Permanent departure from Australia
- Ceasing to carry on the primary production business to which the election relates
It’s important that farmers are aware of these two options, because our Conrad Carlile accountants have witnessed the surprise from new clients who were completely unaware of this scheme. These tax treatments can only be used if the drought has caused sales to exceed the normal yearly sale level and farmers also don’t fall under an ineligibility category.
At Conrad Carlile, we understand that for every farmer there are different circumstances. Should you want to discuss if you are eligible for either of these tax treatments feel free to email our team at email@example.com, send an online enquiry or call us on 07 3871 1522. We’re always happy to help.