Farmer bodies say budget’s investment incentives fall short

Sheep Central, May 10, 2023

NFF president Fiona Simson

FARM business incentives in the Federal Budget have been welcomed, but fall short, according to the National Farmers Federation and NSW Farmers.

The Federal Government will temporarily increase the IAWO for small businesses from $1,000 to $20,000 from 1 July 2023 until 30 June 2024.

The Australian Tax office said the measure is not yet law.

But the ATO said small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets, the ATO said.

Assets valued at $20,000 or more, that cannot be immediately deducted, can continue to be placed into the small business simplified depreciation pool and depreciated at 15 percent in the first income year and 30pc each income year after that, the ATO said.

The NFF also welcomed support for small businesses to invest in electrification and energy efficiency through the Small Business Energy Initiative. This means farmers will save on energy bills with an extra 20pc deducted on eligible depreciating items like energy efficient fridges, heat pumps and batteries, but it fails to include renewable energy generation like solar panels.

However, NFF president Fiona Simson said the SBEI deduction combined with the Instant Asset Write-Off extension, capped at $20,000 per asset is “a lopsided compromise.”

“Farmers are looking at ways to bring down the increasing energy burden and the incentive will help spur this along.

“But it’s disappointing the two incentives fall far short of the previous uncapped Instant Asset Write-Off which gave farm businesses far more reach to increase productivity.”

The NFF has also pointed to road funding, tax incentives and measures to address worker shortages as areas where the Federal Budget falls short.

“Right along the supply chain, the businesses which grow, process and transport our food and fibre are under immense pressure.

“Whether it’s workforce shortages, damaged roads, or the cost of capital upgrades – there are issues that need urgent attention if we want to achieve price relief for consumers,” Ms Simson said.

“Sadly, (the) budget fails to act on these in any meaningful way.”

NSW Farmers also concerned about inadequate road expenditure

The NSW Farmers Association also welcomed deductions of an additional 20 per cent of the cost of depreciating assets that support more efficient use of energy, but is concerned about inadequate spending on improving regional roads and infrastructure and the new capping of the Instant Asset Write-Off to assets valued up to $20,000.

NSW Farmers president Xavier Martin said the association is pleased; however, to see Australia performing well despite the global challenges and remaining competitive amongst the uncertainty facing many parts of the world.

“Let’s not forget the role Agriculture and rural Australians  have played in contributing to this,” Mr Martin said.

“On the upside, the budget has allowed for moves to improve apprenticeship support services and drive-up apprenticeship completion rates. Worker shortages is a real problem across our sector, so it’s a step in the right direction.”

Other welcomed announcements include the investment in rural health with a boost to the amount paid to rural doctors bulk billing.

“Overall, the farming community will likely feel like they’ve been forgotten in this  budget.
“It’s a pity as this was a golden opportunity for the Albanese Government to show a commitment to improving cost of living pressures, not just for people in the city, but also for those of us in the regions,” Mr Martin concluded.


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