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Beyond the Bale : December 2017
Agricultural land not protected by climate buffers, or shelterbelts, is less productive. A shelterbelt is a line of trees or shrubs planted to protect an area from weather. Shelterbelts can be used to: • protect crops and livestock • improve biodiversity • improve animal welfare • improve production • reduce impacts of wind, heat, and cold on people, stock, and crops • buffer farm assets and rural communities from extreme weather events • increase landscape water retention • sequester carbon • provide alternative income streams – eg honey/seed/bush foods • prevent or fight land degradation – for example, soil erosion or degradation of vegetation. In addition to all the benefits listed above, shelterbelt costs can also be tax deductible. The Basalt to Bay Landcare Network wants to get more farmers becoming aware of the importance of trees and shrubs to buffer their production from the weather – then take that knowledge and enable it. They are actively seeking partners to help realise that vision, because having industry connected to education increases the likelihood of action. They are encouraging more farmers to plant (preferably native) shelterbelts to help tackle climate change. Lisette Mill from Basalt to Bay Landcare Network agrees that we have a collective responsibility to focus on making farming enterprises and the communities they support more resilient to the weather, so she asked the ATO to ‘work with us to help primary producers to plan ahead to address The ATO fact sheet: Establishing shelterbelts on land used in primary production business: Can I claim a tax deduction? What you need to know is available from www.basalttobay.org.au/publications Chris Jordan AO, Commissioner of Taxation: “This targeted support for local communities is an example of how we’re working to ensure people experience a friendlier, more helpful and streamlined ATO.” WHAT SHELTERBELT EXPENSES ARE TAX DEDUCTIBLE? There are plenty of potential productivity and biodiversity benefits for woolgrowers who establish shelterbelts on their property. Did you also know there could also be tax advantages? AWI’s friends at the Basalt to Bay Landcare Network in Victoria have liaised with the Australian Taxation Office (ATO) to produce an easy-to- understand fact sheet about the tax incentives. Read the article below, specially prepared by the ATO for Beyond the Bale. more service oriented approach.” The ATO has comprehensive information on its website about the deductibility of fencing and reticulation expenses relating to shelterbelts. For example, did you know that replacing fencing around a shelterbelt that is established for any primary production purpose is fully deductible when using new components? In addition, installing reticulation for a shelterbelt that is established for any primary production purpose is fully deductible when using new components. Reticulation includes items such as pipes, fittings, sprinklers, pumps and bores (and installation costs). The ATO’s website has more information about reticulation expenses, which are included under “water facilities”. To find out what expenses you can claim, search ‘fencing and fodder storage assets’ and ‘water facilities’ on www.ato.gov.au. The ‘Establishing shelterbelts on land used in primary production business: Can I claim a tax deduction? What you need to know’ fact sheet can be downloaded from the Basalt to Bay Landcare Network website at www.basalttobay.org.au/publications. In the same location is also the ATO fact sheet on forestry. The Basalt to Bay website also has PDF copies of a multitude of Australian relevant fact sheets on the benefits of shelterbelts for a variety of climates and farming types. More information about the tax deductibility of shelterbelts, fencing and reticulation expenses can be found on the ATO website www.ato.gov.au, search ‘shelterbelts’. Note: AWI is not providing taxation advice. It is recommended that woolgrowers seek independent advice to determine whether the tax deductibility is applicable to their individual circumstances. Product for subject Fact sheet for primary producer s – expenditure on establishing shelter belts Establishing shelterbelts on land used in a primary production business Can I claim a tax deduction ? What you need to know. This fact sheet explains your entitlement to claim an income tax deduction for the cost of establishing shelterbelts on land you use to carry on a primary production business. A shelterbelt is a line of trees or shrubs planted to protect an area from fierce weather. They are often created on a farm to protect crops and livestock, reduce soil erosion, control salinity and improve biodiversity. Whether you can claim a deduction will depend on the type of expense and the purpose of the shelterbelt. You cannot claim a deduction for a shelterbelt created for a private purpose, such as to protect a home. What kind of expenses can I claim? If you create a shelterbelt for a primary production purpose, you can claim an immediate deduction for any new fencing and reticulation costs related to the shelterbelt. You can only claim for expenses such as site preparation, chemicals and trees if the shelterbelt is established primarily and principally for the purpose of preventing or fighting land degradation. If you recoup any of the expenditure that you can claim as a deduction (for example, under a government assistance program), that amount is included in your assessable income. What is land degradation? Land degradation is the process by which land deteriorates through the action of natural agents (such as water, wind and temperature), or as a result of land use or management practices. Soil erosion and salination are examples of land degradation, as are harmful changes in soil structure such as acidity and compaction. Degradation of vegetation is also a component of land degradation. What if I can’t claim a deduction? If the shelterbelt is not established primarily and principally for the purposes of preventing or fighting land degradation, you cannot claim a deduction for capital costs associated with site preparation or the planting of trees. Also, you cannot treat the trees as depreciating assets. These expenses will form part of the cost base of the land for capital gains tax purposes. Other deductions to check. Replacing fencing around a shelterbelt that is established for any primary production purpose is fully deductible when using new components. We have comprehensive information on our website about fencing expenses. Search Fencing and fodder storage assets on ato.gov.au. Installing reticulation for a shelterbelt that is established for any primary production purpose is fully deductible when using new components. Reticulation includes items such as pipes, fittings, sprinklers, pumps and bores (and installation costs). We have comprehensive information on our website about reticulation expenses, which are included in what we call “water facilities”. Search Water facilities on ato.gov.au . More information For more information call the ATO on 13 28 66. For a callback from an ATO officer, email TaxAdvice@ato.gov.au This flyer was produced for The Profit Impacts of Weather Event. Our commitment to you We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us. This publication was current at November 2016. © Australian Taxation Office for the Commonwealth of Australia weather impacts by accessing the tax incentives that already exist’. The result of this collaboration is an easy-to- understand fact sheet about tax incentives for anyone connected with primary production, entitled: Establishing shelterbelts on land used in primary production business: Can I claim a tax deduction? What you need to know. Lisette said, “Everyone I show it to thinks it is brilliant and really needed. So many people connected with farming do not know about these deductions and that is a barrier to them accessing them, which we need to change”. Through initiatives such as this, the Basalt to Bay Landcare Network are well on the way to achieving their goal ‘to harness the power of people and their knowledge to protect and improve ecological health in our corner of the world’. Chris Jordan AO, Commissioner of Taxation said: “This targeted support for local communities is an example of how we’re working to ensure people experience a friendlier, more helpful and streamlined ATO. The collaboration with Basalt to Bay Landcare Network is a good example of our ON FARM 37