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Did you know that the ATO allows for a 100% up front tax deduction on all water facilities for primary producers and those who supply water to primary producers? What's even better is the tax deduction is available on all water assets purchased in the income year in which the expense was occurred! The water facility does NOT need to be 'installed and ready for use' as in traditional depreciation claims! So, does this mean you can order and pay for your new pivot, pump, FieldNET system etc. before 30th June 2019 and claim it as a 100% deduction in the 2019 financial year? The short answer is YES!
What about other water assets I hear you ask...?
There are many water assets that fall under this tax deduction area including;
- Centre/lateral pivots
- Pumps
- Automated technology for pivots
- Variable rate irrigation technology
- Dams
- Underground Tanks
- Concrete, Plastic or Metal Tanks
- Bores/Wells
- Irrigation Channels
- Pipes
- Windmills,
- Capital repairs to plant or structural improvement that are primarily for the purpose of conserving or conveying water
Does this deduction only apply to new assets purchased? The answer to this is No, however generally a deduction is only available under the primary production rules if on-one else has deducted, or can deduct, an amount for the asset under this rule. This means it would be your responsibility to prove that no one else has deducted the asset previously.
This does not mean there are no deductions at all available for second-hand assets. Primary producers who are considered a small business entity may choose to use the small business simplified depreciation rules to claim any deductions for the second-hand facility.
As tax planning time approaches, the deductibility of any purchased water asset should be considered in your yearend tax planning calculations and in consultation with your tax specialist.
If you have any further questions regarding the deductibility of water assets and how Benparts Irrigation can help you in the lead up to the end of this financial year please contact our team on
M: 0427 619 331 (John), Adelaide
M: 0427 619 337 (Paul), Bordertown
E:
References : https://www.ato.gov.au/Business/Primary-producers/In-detail/Capital-expenditure/Water-facilities/
The information presented in this article is general of nature and not to be used, relied or acted upon without seeking professional advice to ensure that the information is applicable and appropriate for your individual situation and circumstances. Benparts recommends that you seek individual advice from your Taxation specialist regarding the deductibility of any water asset. Benparts accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice