Accelerated depreciation for primary producers
For income years commencing on or after 1 July 2016, the Government will allow all primary producers to immediately deduct capital expenditure on fencing and water facilities, such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills. In addition, the Government will also allow primary producers to depreciate over three years all capital expenditure on fodder storage assets, such as silos and tanks, used to store grain and other animal feed.
The measure represents a significant reduction in the relevant asset lives, which are currently three years for water facilities, 30 years for fences, and up to 50 years for fodder storage assets.
The Government claims the measure will improve the resilience of primary producers who face drought, assist with cash flow, and reduce red tape by removing the need for primary producers to track expenditure over time; as well as improve environmental outcomes by incentivising fence construction.
These changes will come as a relief to the many pastoralists plagued by ongoing drought, as well as smaller family run agricultural businesses that may struggle with cash-flow constraints. In addition, the flow on effects will likely benefit a broad range of suppliers to the agricultural industry, helping boost rural economies; a welcome side-effect of the relatively small $70 million cost to the Budget.