How the Australian Government stimulus can assist your Agricultural asset

April 17, 2020 10:52 am

The Agricultural sector is steering a steady course, helped by strong commodity prices, favourable seasonal conditions and the rising demand for food security amid panic buying.  The rural property sector remains firm, as global food demand soars and the drop in the Australian dollar making Australian agricultural assets look attractive.

The Australian Government announced several stimulus packages to combat the economic shock of COVID-19, some of which can benefit and assist agricultural businesses. The stimulus measures are a welcome boost which will benefit farmers and agricultural businesses.

Cash flow assistance for business

Snapshot: Eligible businesses can claim up to $100,000 against income tax costs of their staff.

Eligible small to medium-sized businesses will receive a cash boost of a minimum $20,000 up to a maximum of $100,000. The payment will be available to businesses with a turnover of less than $50 million who employ staff.

Payments will be processed as a ‘refund’ of 100% PAYG withholding from salary & wages, based on the PAYG withholding for the March Quarter (or month of March if a monthly withholder) up to 30 June 2020.  On lodgement of relevant Activity Statements, the payment will be credited by the ATO – from 28 April 2020 (for the March month/March quarter).   The additional payment will be equal to the “initial payment” (up to $50,000) and the payment will be credited over the Activity Statements for June to September.

Summary: A significant tax saving for Ag businesses with turnover under the $50 million with employees.

Delivering support for business investment

 Snapshot: Instant asset write-off for assets up to $150,000.

Available for businesses with an aggregated turnover of less than $500 million. This applies to all purchases from 12 March to 30 June 2020, with the asset first used or installed ready for use by 30 June 2020 to qualify.

Businesses with an aggregated turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.  This is intended to apply immediately and to all purchases to 30 June 2021.

Summary: Perfect for farming businesses who are machinery intensive to purchase a tractor, quad bike, planting equipment etc. or any asset that could be built and used before the 30 June 2020 cut off.

Assistance for severely affected regions

 Snapshot: Support to regions and communities significantly impacted by the economic impacts of Coronavirus.

Regions heavily reliant on industries such as tourism, agriculture and education will be supported by the Governments pledge of $1 billion support package. The also includes additional assistance to help businesses identify alternative export markets or supply chains.

Summary: Great news for our regional towns with this cash injection.

Employer wage subsidy

Snapshot: Employer wage subsidy of $1,500 per employee per fortnight

The package is intended to incentivise both the employer and employee to remain in contact so that the employer can continue to pay employees $1,500 per fortnight and resume operations post lockdown. The subsidy commenced on March 30th, with first payments to be received by employers in the first week of May.  Conditions include 30% decline in turnover, for employees as at 1 March or self-employed.  There are ongoing reporting requirements to ensure continued eligibility.

Summary: Any business including ag businesses that had to stand down employees due to a reduction in turnover to keep them employed.

Further details can be found at the Government website below or contact your tax advisor for assistance.

Australian Government support for businesses

More information to assist your business through this global pandemic

What are the potential impacts on Agriculture assets during the COVID-10 pandemic?

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