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Accelerated Depreciation for Farmers

From 12th May 2015 the following accelerated depreciation applies to primary producers:

• Immediately deduct the cost of fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills.

• Depreciate over three years the cost of fodder storage assets such as silos and tanks used to store grain and other animal feed.

Primary producers who are small businesses (turnover less than $2m pa) are also able to deduct depreciating assets that have a cost of less than $20,000 each.

This means that primary producers who meet the definition of a small business entity and are otherwise eligible may choose to use the accelerated depreciation for primary producers or the accelerated depreciation for small businesses for each depreciating asset.

For example, Tom is a chicken farmer and invests $40,000 on construction of a new dam, $30,000 on new fencing, and $19,000 on a grain storage silo. The $40,000 dam and $30,000 fencing are now an immediate deduction. As Tom is a small business he can choose to claim an immediate deduction of $19,000 for the silo rather than depreciate it over three years under the primary producers’ measure.

Typical fodder storage assets include:

• Silos,
• Liquid feed supplement storage tanks,
• Bins for storing dried grain,
• Hay sheds and grain storage sheds, and
• Above-ground bunkers.