Government Assistance For Farms Doing It Tough

Australia is facing one of the worst drought crises on record to hit Aussie farmers over the past few decades. With 98 per cent of NSW, over half of Queensland, accompanied with sections of Victoria, South Australia and Western Australia being drought stricken, the NSW Australian government has recognized the severity and on-going extent Australian Farmers are being affected by. To support farmers devastated by drought and its conditions, the NSW Government released an Emergency Drought Relief Package valued at $500 million on the 30 July 2018 to assist in deficiency management.

Since release, consistent extension and alterations throughout the first quarter of 2019 have been added to this package, now valued at over $1.1 billion with various beneficial Financial and Taxation assistance. If you have direct connection, or have affiliation with drought-affected taxpayers, it’s important in this current ambiguous climate to be aware of any financial assistance made available to taxpayers by the Australian Tax Office (ATO) to aid in the process of drought recovery affecting on-going rural businesses.

Assistance for Individuals and Business in Financial Difficulty
The Australian Taxation offers a range of financial measures through their recognition of struggling farmers facing high levels of debt. Lodgement of activity statements and tax returns remain a requirement of taxpaying individuals/businesses to be made on time, even if payment cannot be made by the due date.  Drought help initiates via:
  • Prioritising any refunds/payments across regional, rural and metropolitan areas to help manage tax
  • Release of tax debt that would cause serious hardship
  • Early and compassionate release of your superannuation
  • Tailored payment plans
  • Small business tax concessions
Assistance for Primary Producers
The devastating affects on agricultural commodities, such as cattle and sheep, lead to the design of various programs to aid Primary Producers. Immediate tax deductions, rather than depreciable methods, for capital expenses on fencing infrastructure, on-farm water storage facilities and fodder storage assets have been granted, improving rural investment ease.

Initiatives and Subsidies
Early access to Farm Management Deposit (FMD) accounts, that provides support for primary produces to manage fluctuations in cash flow more effectively, have been granted. The FMD scheme is offered to increase the self-reliance of Australian primary producers via financial risk mitigation and plan for low-income years by building up pre-tax cash reserves with the income threshold being less than $100,000 p.a and limit of $800,000 maximum balance. Deposits being tax-deductible during the financial year credited. Withdrawal of reserves is only permitted during short cash flow future years with required, such as replanting or restocking.

Loans
A one-off interest-free Drought Assistance Loan (DAL) of $50,000 with a seven year term and no repayment required within the first two years is available to support transport stock, fodder and water, genetic banking of breeding herds and installing on-farm fodder and water infrastructure. Low interest loans are also available if requirements are not met for the DAL.
To aid in on-farm efficiency the Farm Innovation Fund, a Capital works loan scheme valued up to $250,000 for infrastructure works (silos, water storage, sheds) has been offered to taxpayers.

Through provision of grants and aid beyond just the above list, the Australian Government as a whole and its response to rural individual and businesses via drought relief schemes have continued to provide a range of assistance to drought stricken primary producers and farmers. Taxpayers are encouraged to tax advantage of such financial supports to help manage the effects of drought and other business related challenges.
For further details, it is encouraged to search the Department of Agriculture and Water Resources section of the Australian Government website, alongside the ATO and our services provided at Walker Wayland.

Article written by Jody Conyngham