As you may be aware, I work with a lot of farming families from Esperance, to Ravensthorpe and beyond. The clients I’ve spoken to this past week have let me know they’re beginning to feel recovered after an absolutely ginormous harvest and starting to mentally prepare for the seeding season.
Off the field and into the ins-and-outs of the business side of things, many agribusinesses across the region are considering how to utilise the harvest proceeds to reduce debt and help build future wealth.
Reduce Debt
Having worked with farmers for a long time now, I know the priority is usually to reduce debt. When considering your cashflow for the remainder of the financial year, and into the 22-23 financial year, you might consider a term deposit or Farm Management Deposit (FMD). The benefit of an FMD is that it will delay the tax payable on the amount you deposit, so long as you do not withdraw from the account for minimum 12 months.
Invest your Money
Some agribusiness owners utilise investment portfolios. If this is an option you are interested in, I can put you in touch with one of the financial advisors I usually recommend clients to.
Putting harvest funds into a conservative investment portfolio means you can usually convert these back to cash within 3-5 business days. The upside is that the returns on funds are generally better than term deposit rates, but the downside is there is always a higher level of risk.
Invest in the Farm
There’s no better time than now to utilise the instant asset write-off (now dubbed ‘temporary full expensing’) to purchase eligible items. Along with considering the costs of inputs, this may form an integral part of your 2022 tax planning.
As always, feel free to talk to me today if you have any questions. I’d love to chat.
-Cheryl
