Taxation
Profitability should drive investment decisions, not taxation or incentive schemes. Paying tax means the business is profitable, which is a good thing. Saving tax generally means you are reducing profit. Ensure you understand the implications of any tax management strategy you have in place on the financial flexibility of the farm business. Seek advice from appropriate qualified professionals.
How much tax a business pays depends on its profitability, the business structure and how actively the farm manager manages taxation whilst maximising net profit after tax. Some tax management strategies include:
- manage the timing of income and expenditure, for example, deferring income or bringing forward expenditure
- use farm management deposits (FMD’s)
- establish superannuation accounts, including self-managed superannuation funds
- use family trust structures
- split or average income
- acquire essential plant and equipment
- consider investment gearing
- consider government allowances/rebate schemes
- seek out further tax and financial planning advice, particularly if you’re not completely satisfied with the services provided by your current accountant or financial planner
- always keep after tax profit in mind when making a decision.
For more information see the department's farm management deposits (FMDs) page or visit the Australian Taxation Office website.