22 Nov Tax savings that accounting firms are achieving for their clients

By Michael Stout

The numbers tell the story.  And it is a story of those that DO and those that DON’T.

For Michael Stout, it is a test case of working closely with the more progressive regional accounting firms really defines the farmer / advisor collaboration in order to drive higher financial performance from the farming businesses.

They say a dollar saved is four dollars earnt.  Therefore, saving a dollar is four times more effective than earning a dollar.  In lean times with tough seasonal conditions, nothing can be truer to the significance of this phrase.

Farm tax depreciation benefits are derived from the infrastructure that comes with the farm when it is transferred into your entity after acquisition.  These benefits have a long tail (up to 40 years of benefits), so it does not matter if the farm was transferred or purchased 10 years ago as the residual benefits are material.

As each year passes, these benefits are applied to reduce your taxable income.  If there are tax losses, then these benefits are carried forward to offset future profits.  Tax benefits are therefore a real currency.  It is cashflow to your bottom line. An no farming business should miss out on these entitlements.

Below is a snapshot of Michael Stout’s* results of two projects working with two astute accounting firms.  The principle accountant on both occasions trawled through their data base of farming clients to qualify opportunities and a total of $32,000,000 of farm depreciation tax benefits was achieved for the farmers.  I believe that may cover a life time of accounting fees.  A great win.

Happy farmer Happy wife!

NSW Accounting Firm

27 farming clients

51 farms in total

Ave farm depreciation tax saving per farm                                                $447,398

Ave farm depreciation tax saving per farmer                                            $845,085

Total farm depreciation tax savings across clients                                 $22,817,290

SA Accounting Firm

16 farming clients

30 farms in total

Ave farm depreciation tax saving per farm                                                $335,645

Ave farm depreciation tax saving per farmer                                            $629,334

Total farm depreciation tax savings across clients                                 $10,069,343

*Michael Stout’s reporting is backed by a qualified ATO tax compliant Quantity Surveyor who specialises in agricultural assets in order to maximise the depreciation tax benefits.

The satisfaction from our collaboration with accountants and their clients is mutually shared.  When support reaches deep into all our respective skills and experiences, the farmer’s business achieves hybrid vigour and financial strength.