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Tax Doesn’t Grow On Trees, But Primary Producers Still Need To Know What They’re Up For At Tax Time

Across the country, many individuals, trust or companies may be involved in a business that deals with primary production. These are known as primary producers, who are involved in businesses undertaking plant or animal cultivation, fishing or pearling or tree farming or felling operations.

The taxable obligations of one who is involved in primary productions need to take into account whether or not the activity is a business of primary production, which is outlined in the Australian Taxation Office’s Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production?

The indicators which suggest that a business is being carried on (under the ruling) include:

  • That it is a significant commercial activity
  • Purpose and intention of the taxpayer in engaging in the activity
  • An intention to make a profit from the activity
  • Activity is organised and carried out in a business-like manner and systematically
  • Records are kept on the activity’s goings-on.
  • A business plan exists
  • There are commercial sales of the product.

Your Tax Obligations

Small Business Concessions

If your business could be considered to be involved in primary production and you are a small business entity, you may be eligible for small business entity concessions. This eligibility will need to be reviewed every tax year, with all conditions satisfied that apply to particular concessions.

For example, if you are a primary producer and would be a small business entity if the aggregated turnover threshold was less than $50 million, you can choose to immediately deduct prepaid expenses.

Simplified Depreciation Rules

You may be able to apply simplified depreciation rules to your depreciating assets when calculating deductions. These rules include:

  • An instant asset write-off for assets that cost less than the relevant threshold
  • A general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction

If you choose to use simplified depreciation, the temporary full expensing rules with some modifications will apply. This temporary full-expensing for assets cannot be opted out of during the application of simplified depreciation rules.

Simplified Trading Stock

Small business entities only need to conduct stocktakes and account for changes in the value of trading stock in limited circumstances.

For example, oyster farmers must account for oysters on hand as trading stock (including oysters held on sticks or in trays, or harvested and ready for sale). The farmers can choose to value their trading stock on hand at the end of the income year at cost, market selling value or the replacement value. They may also (if using the traditional stick farming method) use the ‘per stick’ farming method of valuation.

If you are involved in primary production as a business owner, you may have additional tax consequences and obligations that we can assist you with. Start a conversation with us today to find out more.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier