A little pre-tax planning brings big rewards
The end of financial year is fast approaching. For most Australian farmers, the year has been a good one, with cattle, sheep, wool and many grains prices up.
For many however, this may mean a higher tax burden. Don’t worry, there’s still time to put in place strategies to reduce that burden. Elders offer products which can help.
Pre-pay your farming products
Purchasing your farm supplies has never been easier, or more rewarding!
Simply pre-pay a minimum of $10,000 into your Elders Rural Product Pre-payment account and the amount may be used as a tax deduction in the year it was paid. *
You can then use the funds to purchase rural products from Elders over the following 12 months. You’ll even be rewarded with 4.2 per cent applied to the balance in your account.
The funds can be applied to purchases such as animal health products, fertilisers**, cropping chemicals – things that you’d typically be having to find funds for anyway.
The Rural Products Pre-payment account is great for cashflow and really handy to have when items are on special or conditions change and you suddenly need to purchase unexpected items.
“Having funds in the pre-payment account means you’re not purchasing farm inputs then left holding them if seasonal circumstances change and they’re no longer required” explains Scott Cameron of Elders St Arnaud.
*Advice is general and independent financial advice should be sort before transacting. Terms and conditions apply. **Unable to be applied to fertiliser in Western Australia.
Farm Management Deposits (FMD)
Farm Management Deposits (FMDs) are a valuable risk management tool to assist Australian farmers to manage the volatility of farm incomes.
“There are good years and not-so-good years – that’s part of farming. We want an easy way to put aside money in the good years that will help us when things are a bit tougher.”
The Federal Government Scheme allows primary producers to set aside pre-tax income which they can draw on in future years when they need it. Your deduction is claimed when the deposit is made and it only becomes taxable income the year it is withdrawn.
To be eligible you’ll need to keep the funds in the FMD for a minimum of 12 months. You can have a combined total of up to $800,000 across multiple FMD accounts. ***
Through our financial partners Rural Bank, Elders offer a range of both fixed term and variable rate options.
***Aggregate balance of all FMD accounts, must not exceed $800,000, this includes FMDs that are held at different FMD providers. Products are issued by Rural Bank – A Division of Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL/Australian Credit Licence 237879. Individual circumstances may vary and special legislative requirements must be adhered to. Before making any investment decision you should consider consulting with your taxation adviser to ensure you meet legislative requirements. Terms, conditions, fees and charges may apply. Full details are available on application by phoning the Rural Bank Customer Service Team on 1300 660 115 or online at www.ruralbank.com.au or by visiting your local branch. All information is subject to change. For deposit products Elders Rural Services Australia Limited may receive a commission based on the average account balance. Full details are available in the Elders Financial Services Guide (FSG). Products are distributed by Elders Rural Services Australia Limited ABN 72 004 045 121 AFSL 237757.