A clever strategy for Farmers to save tax
With the end of financial year fast approaching, it is essential that all business owners review their taxation situation and optimise their income tax deductions in the 2018 year. A number of rural agencies are offering prepayment facilities to enable the prepayment of expenses in June, and claim a tax deduction this year instead of next. (Note: this is provided you meet the definition of a Small Business Entity as per the ATO)
These facilities work by accepting an upfront payment, from which they will pay around a 4% reward on, and then over the next 12 months, goods are purchased to use up the amount of the prepayment. Below are links to rural agencies who supply this prepayment facility.
These prepayments can work very well if you have a high income year and are looking to bring forward and maximise tax deductions this financial year.
If you are thinking of using this facility to increase your tax deductions, it is important to take into account the commercial aspects (like would you normally spend the prepayment amount with that agency). You should also contact your Kennas accountant to ensure you are eligible to benefit from these prepayment facilities.