Farmers struggling to get big ticket machinery delivered or new infrastructure built in time to beat next year's instant asset write-off deadline haven't received much hope of a reprieve in Jim Chalmers' budget address.
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The sunset date for temporary full expensing is June 30 next year.
To claim the popular instant asset depreciation write-off, an equipment or installation purchase must be on the farm and ready to use during this financial year.
In 2021 the Coalition Government extended the expiry date and lifted the limit on instant depreciation write-downs on capital investments.
However, rather than promise any more extensions prior to this year's federal election, then Treasurer, Josh Frydenberg, acknowledged the uncapped business investment incentive was probably contributing to Australia's inflation problem.
RSM Australia director and agribusiness specialist, William Laird, said while there was a logical argument that uncapped spending incentives were generally not needed in today's overheated economy, many farmers were being robbed of chances to claim the incentive this financial year because of long delivery delays for new gear.
Good seasons and prices during the past two years had finally provided the cash flow to fund some serious investment spending.
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"New, more efficient equipment is critical to the farm sector and any incentive that encourages farmers to put their money into into upgrading their assets is good for the economy," Mr Laird said,
"The sector was hopeful of an extension to the instant asset write-off, however the budget failed to address this measure and so it is likely to finish up in 2023 as planned.
"We really hoped the Treasurer might have given some indication he would support small and medium sized businesses by continuing it - even if full expensing was capped for capital expenditure under $100,000 or $200,000."
Mr Laird, in Toowoomba, said while many people talked about investing in new gear, he felt the instant write-off option had been "very much underutilised by the agriculture sector", partly because of supply constraints.
The 2017-20 drought years also tempered potential enthusiasm for farm and agribusiness spending in much of eastern Australia.
"Now that there's some money available to invest it would be good to encourage farmers to feel confident to keep spending on capital upgrades," he said.
If producers were not immediately inclined to invest in new assets their alternative strategy would be to park their money in a tax-friendly farm management deposits.
"FMDs are an excellent tool to smooth out the earnings peaks and troughs which come with good and bad seasons, but a key motivator for using these deposits is the tax deduction they provide," Mr Laird said.
"I think most people would consider a tax deduction for capital investment expenditure at least as relevant to a farm's future productivity as the tax savings you get after putting money into an FMD account."
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
