Budget 2020: What’s in it for farm businesses

What was arguably the most important Budget in a generation has been handed down, and thankfully, farmers and the all-important agricultural industry have not been forgotten.

Here are the key measures announced in the Budget 2020 designed to help farm businesses and how you might benefit from it.

The Government has invested $328 million to modernise Australia’s export systems by slashing red-tape and streamlining regulation and service delivery for farmers.

“We’re making it faster and cheaper for farmers to get their product to market, while retaining the levels of quality and assurance that have made our exports world-class,” said Minister for Agriculture, David Littleproud.

“These investments form part of our Ag 2030 Plan, supporting industry to grow Australian agriculture to a $100 billion by 2030 through modern export systems.”

The support the Australian Government is providing includes:

“These investments will accelerate innovation and agricultural trade growth, build a resilient and agile agriculture sector and create jobs in rural and regional Australia,” said Minister Littleproud.

COVID-19 has wreaked havoc on the agricultural workforce, which largely depends on travellers and backpackers working and travelling through the country.

Therefore, the Government is investing $17.4 million in relocation assistance and $16.3 million to incentivise young Australians to take up farm work by temporarily changing Youth Allowance (student) and ABSTUDY independence eligibility criteria.

Through the ‘Relocation Assistance to Take Up a Job’ program, workers who relocate to take up short-term agricultural work may receive up to $6000 in assistance, and an extra $3000 if they’re relocating with a dependent.

The Government is investing $155.6 million over four years to support drought and flood-impacted communities. This includes:

The Government is also investing $60 million towards providing a blueprint for recovery from and resilience against future economic shocks as a result of natural disasters.

The investment will fund five locally led initiatives that support resilience, improve access to reliable and affordable telecommunications and energy services, increase disaster planning and preparedness, encourage economic diversification and support the mental wellbeing of young people.

Building on the new and improved Instant Asset Write-off scheme introduced earlier this year to increase investment in the wake of the global pandemic, the new ‘Temporary full expensing’ program not only extends eligibility but also value of the asset one can claim on.

From 7.30pm AEDT October 6, 2020 to June 30, 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of new, eligible, depreciable assets of any value in the year they are first used or installed ready for use.

That means businesses can purchase new combine harvesters worth $600,000 and write them off on their next tax return.

The Instant Asset Write-off scheme has also been extended from December this year to June 2021, giving businesses another six months to take advantage of the incentive.

Companies with turnover up to $5 billion will be able to offset tax losses against previous profits and tax paid in or after 2018-19, up to June 2022.

This measure is designed to help companies that were profitable and tax paying but now find themselves in a loss position due to the COVID-19 pandemic.

By allowing them to access their losses earlier, by way of a cash refund, it will provide a cash flow boost to keep their business running, retain their workers and invest.

In a move to entice employers to take on additional employees aged between 16 and 35, the Government has invested $4 billion in a new JobMaker Hiring Credit.

Under the program, eligible employers will have access to credit for each new job they create over the 12 months from October 7, 2020, for which they hire an eligible employee for a maximum claim period of 12 months from their employment start date.

The credit will be:

Since March this year, the Government has announced several packages to support apprentices in jobs, to the tune of $4 billion in total.

The most recent package, costing $1.2 billion, will go towards paying 50 per cent of new apprentices’ wages.

However, the incentive is capped at 100,000 places and will run from October 5, 2020 to September 2021 to a maximum of $7000 per quarter.

The Government is investing an additional $2 billion through the Research and Development Tax Incentive (R&DTI).

For small claimants with turnover less than $20 million, the Government will increase the refundable R&D tax offset to 18.5 percentage points above the claimant’s company tax rate, and there will be no $4 million cap on annual cash refunds.

For larger claimants, the Government will streamline the intensity test from three to two tiers and increase the non-refundable R&D tax offset rates. The new rates will be the claimant’s company tax rate plus 8.5 percentage points for initial R&D expenditure up to two per cent R&D intensity, and 16.5 percentage points for R&D expenditure above two per cent R&D intensity.

The Government will also increase the cap on eligible R&D expenditure from $100 million to $150 million per annum.

These changes apply from 1 July 2021 and is expected to support more than 11,400 companies that claim the R&DTI.

Other measures include:

The National Farmers’ Federation (NFF) has welcomed the Federal Budget 2020, saying it will help the farm sector achieve its goal of $100 billion in farm gate output by 2030.

"In what is arguably the most important Budget of a generation, Treasurer Josh Frydenberg has outlined a pragmatic but bold spending agenda that will accelerate agriculture’s growth and regional Australia’s contribution to the nation’s bottom line," said NFF President, Fiona Simson.

"The NFF welcomes a combination of big-ticket, future-focused regional infrastructure spends and immediate cash injections needed to stimulate growth and to address the COVID-induced challenges facing farmers, including critical labour shortages."

While the ag workforce support measures are welcomed, Simson said more needs to be done to address agriculture's ongoing labour challenges.

The NFF also lauded other important measures, including the export assistance package as well as spending on regional infrastructure.

"Australia like many other countries, is in enormously challenging times," Simson said.

"The Government has delivered a plan to help farmers kick-start our nation’s recovery, a plan which has agriculture and regional Australia at its heart."