Helping farmers in drought
Helping farmers to manage through and recover from drought
The Government is committed to supporting farmers who are suffering through the effects of drought.
We will provide $250 million to continue the Drought Concessional Loan Scheme and the Drought Recovery Concessional Loan Scheme for one additional year.
We will also provide $25 million from 2015‑16 to assist farmers to reduce the impact of pest animals in drought-affected areas.
To encourage drought preparedness, the Government will provide an immediate tax deduction for water facilities and allow farmers to depreciate over three years capital expenditure on fodder storage assets from 1 July 2016. Additionally, we will allow farmers to immediately deduct the cost of fencing from 1 July 2016.
Supporting communitiesWe have allocated $35 million for a grants programme to fund civil and civic infrastructure projects in drought affected areas. Projects may include social and cultural infrastructure, town facility developments and water infrastructure.
In 2015‑16, $20 million will be provided to extend existing social and community support services for farmers to 70 local government areas that are experiencing a severe and prolonged rainfall deficiency (up from 50 in 2014‑15). The Government will also provide $1.8 million to fund 10 additional counsellors under the Rural Financial Counselling Service.
What does this mean for farmers?
Doug installs 25 kilometres of fencing, at a cost of $25,000, on his cattle farm in 2016-17. Currently, he is able to depreciate his fencing costs over 30 years and claims a depreciation deduction of $833 each year.
Now, Doug will be able to deduct the full cost of $25,000 in the 2016-17 income year, giving him $24,167 more in tax deductions in the first year. The additional deductions mean that Doug has to pay less tax in 2016-17 if he makes a profit. Assuming Doug’s marginal tax rate is 39 per cent, including the Medicare Levy, his tax liability would be reduced by $14,742, meaning he will have more to spend, invest or pay off debt.