Farmers underscore instant asset write-off extension

The National Farmers’ Federation ran a campaign urging the Coalition government to extend the taxation measure in perpetuity, when handing down this year’s federal budget.

But the peak lobby group had to be content with a 12-month continuation out to June 30 June 2018, now allowing small businesses with an annual turnover of up to $10 million to immediately deduct eligible assets, each costing less than $20,000.

Mr McCormack said, as the first country-based and Nationals’ MP to become the Small Business Minister, he understood how “vital” small business support was for regional communities, especially farmers.

“Around a third of my electorate’s small businesses are farmers and I have made sure my nationwide small business roadshow spends a lot of time in the regions,” the NSW Riverina MP said.

“Across Australia I spoke to farmers in dozens of communities and heard how helpful the instant asset write-off is for investment in capital equipment on the farm and in the office.

“From new computers or iPads to make doing farm books simpler, to tools and machinery in the shed, the write-off means farmers can buy the capital equipment the business needs and write it off immediately.

“I have seen firsthand how successful the program is and taken that feedback to the budget process and delivered a one-year extension.

“We are the government for small business and farmers are certainly key in our plan to create more jobs in country communities.”

 Mr McCormack said small business had a big impact on the Australian economy with 3.2 million of them, including employing 5.6m Australians.

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell said extending the $20,000 instant asset write-off scheme in this year’s budget was a positive move for small businesses.

“We would have liked a lift in the $20,000 threshold for the instant asset write-off because for some industries, like farming, the $20,000 threshold is too low to enable them to purchase equipment,” she said.

NFF’s pre-budget submission warned the increased immediate deduction threshold for small businesses - introduced in the 2015-16 budget - was due to expire on July 1 this year and the drop from a threshold of $20,000 to $1000 was likely to have a “significant impact”.

“The increase in the threshold to $20,000 was beneficial although there were a number of issues with the way this was implemented,” it said.

“First, the threshold only applied to items with a total value of $20,000 or less, which may have encouraged the purchase of multiple low-value assets, rather than a higher value and potentially more productive asset.

“Second, the sudden cut off may produce a surge in uneconomic investment in low value assets to ‘beat the deadline’.”

NFF also said there were approximately 132,000 farm businesses in Australia, 99 per cent of which were Australian family owned and operated.

“Each Australian farmer produces enough food to feed 600 people, 150 at home and 450 overseas. Australian farms produce around 93pc of the total volume of food consumed in Australia,” the submission said.

“The agricultural sector, at farm-gate, contributes 2.4pc to Australia’s total Gross Domestic Product.

“The gross value of Australian farm production in 2016-17 is estimated to be $58.4b – a 3.3pc increase from the previous financial year.”

NFF president Fiona Simson said the one year extension of the instant asset write-off would also allow farmers to lobby for its continuation for another year.

During his post-budget address to the National Press Club, Treasurer Scott Morrison spoke about the impact of the $20,000 instant asset write-off for oyster farmers Simon and Megan Turner who produce for domestic and overseas markets at Turner’s Oyster Farm in South Australia.

He said Mr Turner wanted to grow the business and can, because “to back him in, we announced a further extension of the instant asset write-off rules for another 12 months.

“Giving businesses with an annual turnover of up to $10 million - that's five times what it was when we first started this program several years ago - the chance to instantly deduct the cost of equipment and assets less than $20,000 in value,” he said.

“It's a policy that Simon is very familiar with - he's used it in the past, to free up cash flow and help his business function more efficiently.

“The good news for the local boat shop owner down there is Simon's coming your way.

“He let us know he'll be using the instant asset write-off this year again to buy more outboard motors and oyster grading equipment.

“A purchase he wouldn't have made without this measure being in place.”