EOFY Tax Planning Tips for Primary Producers 2026-27

1. Fencing and storage assets

Primary Producers can immediately deduct capital expenses for fencing and fodder storage assets

Fodder Storage assets include assets or structural improvements used primarily and principally for the purpose of storing fodder. Dual purposes assets must primarily store fodder.

Fencing Assets include posts, rails, wire, droppers and gates. Fencing assets includes structural improvements or assets that are a fence, or a repair of a capital nature or an alteration, addition, or an extension to a fence.

2. Prepayment products

Primary producers can also access tax deductions by making prepayments through various businesses prepayment products.

This allow prepayment for future farming needs, typically in the following financial year. Customers can also receive a credit as a reward for the extended payment-collection period, credited bank to their supplier account. 

This reward cannot be redeemed as cash but only as a credit. These arrangements rely on an ATO Product Ruling to support a full deduction in the year of payment.

Clients should confirm with their RSM adviser that a relevant Product Ruling applies.

3. Expenses for Landcare operations 

Primary producers can immediately deduct expenses for Landcare operations aimed at Environmental conservation and sustainable land management.

These include drainage works to combat salinity, erosion control measures and installing fences under approved management plans.

4. Profit from forced disposal of livestock

With many areas around Australia being affected by adverse weather conditions, some farmers have been forced to destock pastures ( Flood and drought).  

This includes spreading the profit on disposal of livestock over a five-year period or electing to defer the profit to reduce the replacement cost of livestock to reduce the tax impost in the year of disposal.

5. Primary production income averaging

Primary production averaging can be used to average the income of primary producers over a five year period.

When a primary producer’s average income is less than their taxable income, they are entitled to an averaging tax offset. If their average income is more than their taxable income, they will be subject to pay complementary tax.

Careful planning and review within a farming group could result in significant tax savings through attaining averaging benefits as well as minimising any complementary tax.

6. Farming management deposits (FMD)

Farm Management Deposits (FMDs) are designed to assist primary producers to manage income volatility arising from seasonal and market fluctuations. 

FMDs allow eligible taxpayers to reduce assessable income by making tax deductible deposits in higher income years and include withdrawals as assessable income in lower income years.  

From 1 July 2018, the maximum amount of all deposits that can be held by an individual is $800,000, with a minimum amount remaining at $1,000.

Tax deductions are available for FMD’s made in the same year if not withdrawn within 12 months. Farmers earning more than $100,000 of non- primary production income won’t be eligible to claim the deduction for an FMD. Farmers hit by natural disasters like drought can withdraw FMDs within 12 months without losing tax benefits under specific conditions such as proving six- month rainfall deficiency. In certain circumstances FMD’s can now offset farm business debt interest costs.

If you are experiencing financial hardship and wish to access your FMD early, please contact on RSM Advisor to discuss what options may be available.

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