On Tuesday the 14th of May the federal Treasurer handed down his third Budget. It is a Budget that seeks to provide relief from the high cost of living, continue our transition to net zero emissions by 2050, develop manufacturing capability and progress the government’s inclusive growth agenda, particularly for First Nations people. Deficits in the range of $24.3 to $42.8 billion are forecast each year over the forward estimates pushing net debt from $552.5 billion in 2024-25 to $697.5 billion in 2027-28. This is a significant change from the $9.3 billion surplus this financial year (2024-25) and the $22.1 billion surplus in 2022-23 mainly due to shifts in commodity prices and unemployment impacting tax revenue. The government has made it a priority to design its payment measures to not fuel inflation or prompt another interest rate rise by the RBA. This is the ultimate challenge in this Budget – to support monetary policy in getting inflation back to the target range of 2-3% (which is forecast for end of year) while achieving the government’s policy objectives moving into an election in 2025.

Like most Budgets the news headlines are on the big spending initiatives. These include nation building projects like $120 billion for an infrastructure investment pipeline, $50.3 billion for the national defence strategy, $19.7 billion for Australia to become a renewable energy superpower and $7.1 billion for construction of Snowy 2.0. While important for the country these will not have as much of a direct and immediate impact for our clients as the big cost of living relief and social service reform measures. These include $3.5 billion for energy price relief where a $300 rebate will be provided to all Australian households and a $325 rebate to eligible small businesses on 2024–25 bills, $3.4 billion for new and amended listings on the Pharmaceutical Benefits Scheme, $2.3 billion to strengthen Medicare and $2.8 billion to improve Services Australia’s service provision. Possibly the most talked about item in recent times, are the income tax cuts for all working Australians. From 2024–25:

• the 19 per cent tax rate will be reduced to 16 per cent
• the 32.5 per cent tax rate will be reduced to 30 per cent
• the income threshold above which the 37 per cent tax rate applies will be increased from $120,000 to $135,000
• the income threshold above which the 45 per cent tax rate applies will be increased from $180,000 to $190,000.

Two other tax changes likely to have a direct impact on our clients is an increase in the Medicare levy threshold for low-income earners and an extension of the $20,000 instant asset write-off by 12 months until 30 June 2025.

Our farmer clients will be particularly interested in a number of agriculture and disaster management portfolio payment measures:

• $107 million over five years from 2024–25 to support an orderly phase out of live sheep exports by sea.
• $14 million over two years from 2024–25 for the Clean Energy Regulator to administer the Nature Repair Market once open for participation.
• $519.1 million over eight years from 2024–25 from the Future Drought Fund for initiatives that provide improved support to farmers and communities to manage drought and adapt to climate change. This includes $83.2 million over five years from 2024–25 to continue the Farm Business Resilience Program to provide farmers, farm workers and advisers with access to learning and development opportunities and continue the scholarships program.
• $73.3 million over four years from 2024–25 (and $18.9 million per year ongoing) to further uplift the National Emergency Management Agency’s capacity to support Australians before, during and following a disaster.

The Government will also be terminating the Plantation Development Concessional Loans program and redirect the available loan provision ($37.5 million) to other loan products managed by the Regional Investment Corporation to maintain support for the farm business sector.

Finally, the Budget contains a number of significant announcements for the financial counselling sector:

• $138 million has been provided over five years from 2023–24 (and $35.4 million per year ongoing) to boost support for Australians in financial distress or experiencing financial hardship and to build financial resilience. While most of this is being allocated to front line financial counselling services, some of it will be given to Financial Counselling Australia to increase capacity and capability across the sector.
• $10.8 million has been provided over two years from 2024–25 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners program to continue to provide financial counselling and mental health support for small business owners.

These announcements continue key programs in our sector and validate the important work RFCS NSW do. 

Taxation is a critical component of financial management. GST, income tax, capital gains tax, rates and other taxes are charges from government on individuals and businesses for public services. They have to be paid, but how much you pay depends on how well you work the system.  

Tax planning involves accurately estimating your income and expenditure to the end of the financial year, understanding your estimated tax position, and putting in place appropriate strategies to better manage your tax. A well-developed tax plan  ensure you pay only pay what you have to pay. 

The financial counsellors at the Rural Financial Counselling Service NSW  are well experienced at helping people understand and take control of their finances. Counsellors are not taxation experts and can not provide taxation advice but they highlight through their case management model, tax requirements, issues, opportunities and options.

The top tips for tax planning from RFCS NSW are:

1. Always talk to professionals: Engaging with tax professionals ensures that you benefit from expert knowledge and are up to date with information on tax planning and compliance. Professionals can offer tailored advice, identify tax-saving opportunities and assist in making informed business decisions.  
2.  The earlier you start the better: Commencing tax planning early in the financial year allows you and your accountants to proactively manage finances and implement strategies effectively. Waiting until the last minute may overwhelm accountants during peak periods.  
3. Consider some of the big issues: While having a tax professional on your side is imperative, their knowledge is only as good as the information you give them. To get the most from your working relationship, it is important that you know your business inside and out and spend some time considering some of the conversations and issues you are likely to discuss during the planning process, including:

• Bringing forward or delaying income and expenses to pre or post-30 June
• Trust distributions and the effects on beneficiaries
• Review of farm management deposits
• Superannuation planning/contributions
• Major capital purchases
• Debt reduction
• Changes in off-farm income
• Impact of accumulated losses
• Impact of deferred income/forced sales
• Review of averaging position.

RFCS NSW can guide you through your preparation work, analyse  your financial circumstances and develop an action plan to help you improve your tax position and profitability.

As the end of the financial year approaches, the Rural Financial Counselling Service NSW is urging farmers to prioritise tax planning to improve the security of their financial future. 

“Tax planning should be ingrained in the normal financial management of every farming business,” says Craig Hough, CEO of RFCS NSW.

”A well-devised tax plan can mean the difference between facing a significant tax bill or enjoying a comfortable financial position for the farm and their family, not just for the current year but for years to come.”

Tax planning involves accurately estimating income and expenditure, understanding the estimated tax position and implementing appropriate strategies to manage tax liabilities effectively. For farmers there are numerous options available for improving their tax position, making it important to initiate planning early with the guidance of trusted tax professionals.

“When it comes to tax planning, RFCS NSW has three golden rules, always consult professionals, start planning early and address significant issues. No matter the size or complexity of taxes, a professional tax advisor can provide valuable insights and savings opportunities that may not be apparent otherwise,” he says.

Craig says, while having a tax professional on the farmer's side is imperative, their knowledge of the farmer's business is only as good as the information they give them. To maximise the benefits of working with a tax professional, farmers must have a deep understanding of their business and actively participate in the planning process.

RFCS NSW is a not for profit organisation that offers support to farmers in navigating tax preparation, understanding financial positions and developing action plans to achieve their goals.

Farmers are encouraged to contact their local Rural Financial counsellor on 1800 319 458 for personalised assistance and guidance in tax planning. 

ENDS

RFCS NSW Media Enquiries

Stakeholder and Communications Manager: Kate Anderson

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0487731788

“We’ve all heard some dramatic tales about succession planning within family units, but it doesn’t have to be that way,” says Craig Hough, CEO of the Rural Financial Counselling Service NSW. “Achieving a positive succession process requires open mindedness, planning, objectivity and respectful communication,” he says. Craig says that a succession plan requires significant time and effort to resolve various succession and financial arrangements: “What is the proposed business structure, personal changes and legal, insurance and other business contracts in the future? When will these things take place? What is the current value of the business? Are there any retirement payments required from the planned succession date and under what terms? What are the sale and buyout conditions if these are planned course of action? These and other questions are answered in a succession plan.” The solution for many farming families is to engage a professional to help with appropriate communication and planning for succession. “An independent person such as a Rural Financial Counsellor (RFC) can have those all-important initial discussions to educate you about succession planning so that you understand what is involved, how to navigate the process and which professionals to engage to help you with your succession plan. Whilst they can’t facilitate the succession planning process for you from start to end, they can help you to manage the process,” says Craig. Rural Financial Counsellors can also be involved in reviewing the past performance of the enterprise, building financial skill sets in the family and road-testing options through cash flows and enterprise budgets. “I recommend that families start the process early, make sure expectations are realistic, consider all parties fairly - including parents, farming children, non-farming children and in-laws, treat everyone respectfully and approach the process with appreciation rather than entitlement,” says Craig. “Speak to your local Rural Financial Counsellor about how your family can start a harmonious succession plan in 2024. We are here to support farming families."