Producers in Australia are people who produce goods for sales, such as livestock farmers and orchardists.

These types of producers need to be aware of the common tax advice which should help them manage their financials throughout the year to maximise their business’ productivity.

To deeply know more about what is a primary producer, just click it. 

Tax Tips For Primary Producers

1.) RECORD ALL EXPENSES

Keep records of all expenses that you incur during your day-to-day operations. This can include items such as food and drink for staff events, fuel, vehicle costs and work attire.

Make sure to record every single expense so you have a good understanding of where your money has been going.

If possible, try to separate these expenses into sections so anything similar goes under a specific heading, such as vehicle expenses or tools and equipment.

2.) GET A BASIC BUSINESS BANK ACCOUNT

Most primary producers run a business account to manage their everyday financials, however, it is important to also have a basic business bank account for any other transactions that you may need to make.

This will save time and effort when balancing your accounts at the end of the financial year as you won’t have transactions from both accounts getting mixed up.

3.) RECORD ALL INCOME FROM SELLING PRODUCTS OR SERVICES

Vehicle sales should go under the section labelled ‘trade sales’ in your business bank account. If selling livestock or produce, this income’s should be recorded in the appropriate section on your business bank account.

4.) RECORD ALL EXPENSES THAT YOU BEGIN TO CARRY OUT IN THE YEAR BEFORE YOU DESIRE THEM TO BE LISTED AS DEDUCTIONS

A common mistake many primary producers make in regards to expenses is forgetting they carry out certain actions before the end of their financial year and only listing the expense come tax time, when in fact they should be listed under a separate heading at the end the financial year. 

These types of expenses go under ‘previous expenses’. Make sure you keep every receipt for everything you intend on claiming as a deduction in case your business tax advisor asks to see them.

5.) MAKE A NOTE OF ALL DEPOSITS MADE BEFORE THE 30TH OF SEPTEMBER

Make a note of every deposit you make before the end of September so your accountant can credit these to your annual expenses. This will ensure you aren’t taxed on any deposits, as they could be considered income if not recorded beforehand.

6.) RECORD ALL ITEMS YOU PURCHASED FOR DIVIDENDS AS ‘TRADE 

Any items that you purchased with the intention of re-selling or renting out should be included in this section.

Purchasing an item for personal use and later selling it is still seen as taxable income, however, if you purchase an item specifically for business purposes, make sure to file it under here under ‘trade equipment’.

7.) RECORD ALL INTEREST AND DIVIDEND INCOME AS ‘DIVIDENDS’ IN A BUSINESS BANK ACCOUNT

Interest and dividend income go under this section, as do any dividends received from other businesses. These types of income should always be recorded in the ‘income from portfolio’ section on your business bank account.

This is to ensure that it is not treated as a dividend and you are taxed at the lower rate of 15%.

8.) DONATE ANY USED GOODS OR UNWANTED ITEMS TO CHARITIES (INCREASES DEDUCTIBLE EXPENSES)

If there are any items that you no longer need or you could donate to charity, consider giving them to a good cause. This will be an instant tax deduction as long as you have proof of the donation.

It is advised that you keep written records of all donations, along with receipts from the charity or other third party which shows what was donated and how much it was worth.

9.) GET ANY DIESEL FILTERS CHANGED AS SOON AS POSSIBLE TO BE LISTED AS A DEDUCTION

The cheapest time for businesses to get their diesel filters changed is before 1st July, however, this depends on how much your business spends on diesel during the year, so if you can afford it, getting them changed earlier than that can still benefit you come tax time.

Make sure though that you keep your receipts for this type of expense in case you need them to show proof.

10.) MAKE A NOTE OF ALL INTERNAL LEASING ARRANGEMENTS

If you have any equipment that has been leased either internally or externally, make a note of these arrangements under the ‘other’ section on your business bank account.

This will ensure that the right amount of money is transferred into the correct tax report at the end of the financial year.

11.) DON’T FORGET TO CLAIM ANY GIFT CARDS CREDITED TO YOUR BUSINESS AS A DEDUCTION

If you’ve received gift cards that can be used as vouchers, credit them to your business and treat them like cash. This means you can claim them as a deduction, however, make sure to keep records of these in case your tax advisor asks to see them.

12.) KEEP RECORDS OF ALL BUSINESS EXPENSES AND OTHERS UNDER ‘OTHER’ IN YOUR BUSINESS BANK ACCOUNT

If any expenses don’t fall under any of the other categories, consider listing them here under ‘other’.

The chances are that the majority of your deductions will be listed either under previous expenses or business expenses, but by keeping all receipts together in this section any unexpected deductions will be easily accessible should they be needed at a later date throughout the year.

13.) USE A TAX PREPARER EVERY YEAR AS THEY CAN SPOT TRENDS IN YOUR BUSINESS TO IMPROVE

If you haven’t done so already, consider using a tax preparer as they can help to improve your business’ performance significantly.

By showing them your business over a few years and asking for their opinion and advice, they should be able to spot any trends or mistakes that you may be making which could easily be fixed with just a few adjustments here and there.

Using them every year will ensure that you aren’t caught out by the end of the financial year when it comes time to process your tax return.

14.) KEEP ALL FINANCIAL RECORDS FOR 7 YEARS

All records, receipts and other important pieces of information should be kept for at least seven years from the date they were created. This is so that if any discrepancies come up or your accountants request to see them, you have enough time to provide this information as needed during tax time.

Keeping all financial records organized is key to having a good system in place – it allows you – and those who are helping you – to keep track of everything more easily.

15.) ASK YOUR ACCOUNTANT TO CLAIM ALL AGE PENSION CREDITS FROM THE ATO FOR YOU

The Age Pension can be a valuable source of income but it is important to know how it works. The Age Pension is a payment made by the government for those over the age of 65 who meet certain eligibility requirements.

It is intended to support you in your retirement, but many people are unaware of how this pension operates.

There are two types of Age Pension: the aged pension and the disability support pension (DSP). You can claim both pensions at once or one of them at a time depending on whether you qualify for each of these pensions specifically.

However, there are differences between both of these pensions that must be understood before you can make an informed choice about which one you should claim.