Tax specialist: will new offsets work for drought affected?
A QUEENSLAND tax specialist has questioned whether drought-stricken farmers will actually be able to take advantage of measures to make them more resilient on the land.
Mark Molesworth, from worldwide audit and tax firm BDO, said allowing businesses in primary production to immediately write off fencing costs, previously deductible over 30 years, from July 1 next year was a positive move.
In a move to help drought-proof land, the new Federal Budget also allows primary producers to write off new water infrastructure - such as dams, tanks, pumps and irrigation lines.
Many of these could be written off over three years previously.
Fodder storage assets, such as silos, now will be deductible over three years, down from various periods up to 50 years.
"That is actually a big bring-forward of deduction," Mr Molesworth told a post-budget breakfast event in Brisbane on Thursday morning.
A record 80% of Queensland is now officially declared in drought - the largest area ever officially recognised.
Mr Molesworth noted these same farmers, no doubt struggling to make ends meet in such harsh conditions, would need to find the cash to the pay for the fencing upfront to claim the deduction.
But he said there were no set time limits to take advantage of the new deductions.
"Given that ... 80% of Queensland is drought-declared at the moment, how many primary producers will actually have taxable income against which to offset these deductions may be questionable," Mr Molesworth said.
"The idea behind this policy was to attempt to make primary producers more resilient to drought, to allow them to fence off watercourses, to allow them to put in additional water storage...
"These changes to the tax system are not time limited; primary producers will not have to do this within the next two years.
"They'll simply have to do it before the next government comes along and decides they don't like this any more and change the policy.
"These are some reasonable concessions for primary producers."
Referring to a media investigation into working holiday visa holders forced to work on farms at below minimum wage, Mr Molesworth received a loud crowd response when he mentioned they would now automatically be taxed as non-residents.
"The ABC did an expose on Four Corners about how pitiful the wages were that those people were receiving so the government has responded to that by saying those pitiful wages will be taxed at 32.5 cents in the dollar from the first dollar," he said. - APN NEWSDESK