Accelerated depreciation for primary producers

In the 2015-16 Federal Budget, the government announced that it will allow all primary producers to:

• immediately deduct the cost of fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills!
• depreciate over three years the cost of fodder storage assets such as silos and tanks used to store grain and other animal feed

Under previous arrangements, primary producers can claim a deduction for the decline in value of:

• fences over a period up to 30 years
• water facilities over three years and
• fodder storage assets over a period up to 50 years.

This measure applies to eligible assets and expenditure incurred from 7:30pm (AEST) 12 May 2015.

The government has also announced changes to accelerated depreciation for small businesses to allow those with aggregated annual turnover of less than $2 million to immediately deduct each asset that cost less than $20,000.

Those primary producers who meet the definition of a small business entity and are otherwise eligible may choose to use the accelerated depreciation for primary producers or the accelerated depreciation for small businesses for each depreciating asset.

For example, Anthony is a sheep grazier and invests $19,000 in a new silo to store feed.  As Anthony is a small business he can choose to claim an immediate deduction of $19,000 for the silo rather than depreciate it over three years under the primary producers measure.

Legislation and supporting material

The Tax Laws Amendment (Small Business Measures No. 2) Act 2015 (No. 67 of 2015) and associated Explanatory MemorandumExternal Link received royal assent on 22 June 2015 and is now law.

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