Farmers have been given a helping hand with a cap on the ‘effective life’ of tractors and harvesters for income tax purposes, Minister for Revenue and Assistant Treasurer, Peter Dutton, announced today.
“The strong economic management of the Howard Government over the last decade allows us to provide practical help to Australian farmers, ” Mr Dutton said.
“With the drought continuing to affect farmers and their families across Australia, the last thing they need is to be faced with a change in the tax treatment of their valuable farm equipment,” Mr Dutton said.
Taxation changes that were passed by both Houses of Parliament on 29 March 2007 (and which now await Royal Assent) in Tax Laws Amendment (2006 Measures No. 7) Bill 2006 will assist them as follows:
Depreciation of tractors and harvesters
“The Government believes farmers should have certainty with regard to the depreciation life of tractors and harvesters. Farmers won’t have to bear additional compliance costs as they struggle to run their farms,” Mr Dutton said.
“That’s why the Government has implemented a statutory cap to preserve the current 6⅔ year period over which farmers can depreciate tractors and harvesters.”
Tractors and harvesters used in the primary production sector will benefit from a statutory cap of 6⅔ years. This cap will apply in the situation where the Commissioner of Taxation has determined a longer effective life and the taxpayer chooses not to self assess the effective life.
The statutory cap preserves the current safe harbour period over which such tractors and harvesters are depreciated.
“This can mean no change to the depreciation treatment of harvesters and tractors,” Mr Dutton said.
Farm management deposits
In addition, the Howard Government is providing support to primary producers by increasing the
non-primary production income threshold for making farm management deposits will increase from $50,000 to $65,000 and the total deposit limit will increase from $300,000 to $400,000.
This amendment will apply from the income year in which the Bill receives Royal Assent.