12 May 2026
Proactive end-of-financial-year planning for primary producers
This article has been written by QFF Corporate Partner, Power Tynan.
As we approach 30 June 2026, it’s time to move beyond simple compliance. For farmers, EOFY decisions do more than just settle a tax bill - they dictate your cash flow, stocking capacity, and resilience for the coming season.
Acting now allows you manage your tax position, rather than reacting to a result after the books have closed. Here are the top 10 strategies to consider.
1. Know Your Numbers Early
Don’t fly blind. Start with a clear estimate of your current year profit and cash flow projection. Knowing your position now allows you to quantify exactly how much "room" you have for prepayments or investments before the deadline.
2. Strategic Prepayments
You can bring forward deductions by prepaying up to 12 months of eligible expenses (e.g., insurance, rent, or interest).
The Goal: Reduce taxable income in a high-profit year.
Key: Ensure you maintain enough liquidity to fund operations through the next season and make sure you can handle unexpected mid-season costs.
3. Maximize Immediate Write-Offs
Eligible businesses can immediately deduct the full cost of multiple new or second-hand assets costing less than $20,000 each. If you have planned capital purchases, ensure they are on-farm and ready for use by 30 June.
Note: The ATO requires the asset to be "installed and ready," not just paid for. If it’s stuck in transit on 30 June, the deduction may fall into the next financial year.
4. Primary Producer Specific Concessions
Take advantage of immediate 100% tax write-offs for:
Fencing and reticulation.
Water infrastructure (dams, tanks, pumps, and bores).
Fodder storage (silos and hay sheds).
Again these need to be installed and ready for use to be deductible this year.
5. Financing: Chattel Mortgage vs. Lease
Before signing for that new harvester or tractor, look at how you’re paying for it. The choice impacts your balance sheet differently.
Chattel Mortgage: You own the asset from day one. You can usually claim the full GST upfront and use depreciation (like the Instant Asset Write-Off or Immediate Write off for fencing, water infrastructure and fodder storage ) to slash your taxable income immediately.
Lease: The financier owns the asset, and you pay for use. This is often better for cash flow, as the monthly lease payments are generally 100% tax-deductible, but you don't get that big upfront depreciation hit.
6. Farm Management Deposits (FMDs)
FMDs allow you to shift pre-tax income from high-earning years into a reserve for leaner times.
Limit: Up to $800,000 per individual.
Your non-primary production income (like off-farm wages or investments) must be $100,000 or less to be eligible to make a deposit.
Timing: Funds must generally stay in the account for 12 months to retain tax benefits.
If you have an existing FMD and need cash, remember you can generally only withdraw it after 12 months to keep the tax benefit. However, in officially declared disaster or drought zones, these rules are often relaxed. If 2026 has been a tough season in your region, check if you can access your FMD early without losing the original tax deduction.
7. Weather Events & Managing Forced Livestock Sales
If drought or fire forced you to sell down stock, you may be eligible to defer the profit from those sales to fund replacements in future years. This is a critical tool for preserving capital during recovery.
If you’ve been forced to sell down stock due to drought, fire, or flood, you can often defer the profit from these "forced" sales.
The Strategy: You can choose to spread the profit over the next five years or use it to reduce the cost base of replacement stock.
The Benefit: This keeps your tax liability low while you’re waiting for the season to turn so you can restock.
8. The "Double Wool Clip" Election
If you’ve been forced to shear early because of environmental conditions (drought, fire, or flood), you might find yourself with the proceeds of two wool clips in one tax year. This "abnormal income" can push you into a much higher tax bracket.
The Strategy: Under Section 26BA of the Tax Act, you can elect to defer the profit from the second (early) clip.
The Benefit: You shift that profit into the following financial year. This keeps your current year’s income stable and ensures you aren't paying a premium in tax just because the weather forced your hand.
9. Cash Flow vs. Tax Savings
A tax deduction is only a "win" if it makes business sense. Avoid the trap of "spending a dollar to save 30 cents" if it leaves your business cash-poor during uncertain seasonal conditions.
10. Be "Audit-Ready"
The ATO continues to focus on accurate reporting, correct classification of primary production activities, and appropriate use of concessions. Good records and clear commercial reasoning behind decisions are essential to support your position.
The Bottom Line:
EOFY is not just about closing the year - it’s about setting up the next one.
The earlier you have the conversation, the more options we have available. Waiting until after 30 June removes many of the opportunities altogether.
If you haven’t reviewed your position yet, now is the time.