Specialised Areas

Primary Production Accounting

Working on your farm is a lot of hard work. Along the way, there are many things to keep in mind and plan for. If you’re unsure about where to turn next, we can help. 

For more information about what we can do for you, contact us today for an obligation-free consultation.

book now
Get started

From accounting services and planning up to purchase agreements and sustainability practices, Carrazzo Consulting can provide expert advice that will be catered specifically to your needs. We also offer financial consultations that include everything from cash flow management and budgeting for production expenses like loans or operating Capex (Capital Expenditures). Our team is made up of experts with years of experience in managing agriculture businesses providing solutions tailored directly to farming specific issues.

Carrazzo Consulting

Our Primary Production Services

We Do Things Differently

Why The Best Work With Carrazzo Consulting

We make difficult concepts easy for our clients to understand.

We have the experience and knowledge to provide you with the best solutions.

We listen to our clients needs and treat you as unique individuals.

We are invested in our clients and care greatly about your financial well-being.

We help reduce our clients exposure to tax during their lives – and for future generations.

We are strong leaders and tough players so you win.

We’re here to help

How Can Carrazzo Assist You With
Your Primary Production Business?

Carrazzo Consulting is a well-respected accounting and consulting firm offering services for primary producers. We are experts in the fields of budgeting, cost control, risk management optimisation, market access planning, finance and taxation law. We work hard to keep up with advancements in these areas. And not just because it’s our job! We are passionate about providing you with better advice that helps save you time and money.

Primary Productions

What you need to know

I am a share trader. Must I pay GST when I sell shares?

No. The sale of shares is a financial supply and therefore input taxed.

Is the sale of a farm property GST-free?

The sale of a farming property will be GST-free if:

there has been a farming business carried on, on the land, for at least the five years preceding the sale, and
the purchaser intends that a farming business be carried on, on the land.

This concession is limited to the land, including fixtures and improvements. It does not apply to livestock, plant or equipment.

It is, however, not necessary that the seller of the land be the entity that was carrying on that business or that the recipient be the entity that will carry on that business.

What should I consider in determining the business structure I should use?

The business structure used should be chosen having regard to the following:

What type of business is it (business income or personal services)?;
Who will be the principals?;
What assets does the professional and his family own?;
What debts does the professional have?;
Do the principals want to borrow money from the company?;
Are new partners to be admitted into the future?;
Marriage status (children, etc) of the business owner?;
Rules of regulatory bodies?; and
How old are the principals? Is superannuation a major issue?

A taxpayer in business acquires an ABN, but due to turnover and projected turnover being less than $75,000, chose not to register for GST. If that taxpayer turnover subsequently exceeds $75,000, must he or she register for GST immediately? Is GST payable

The taxpayer must immediately register for GST when sales exceed $75,000. GST is payable on the sale proceeds and tax credits can be claimed only from the date of registration.

Many small businesses will be caught out by this requirement. Accordingly, I strongly suggest that registration take place well in advance of the turnover exceeding $75,000 - at least 10% GST can be added to the sale prices and the taxpayer will not be "out of pocket" for 1/11th of the sale proceeds.

A car is used partly for business. Can input tax credits be claimed?

If you are not registered for GST because, for example, you are an employee, you cannot claim input tax credits. Even if you are registered for GST, you cannot claim input tax credits in respect of the use of your car for employment purposes. If you run your business as a sole trader and are registered for GST, you will be entitled to input tax credits if you use your car for business purposes.

Can an entity that accounts for GST on a cash basis, pay the GST up front on a motor vehicle hire purchase and claim the input tax credits immediately?

No. The common consensus is that the hirer cannot make a lump sum payment for future GST up front and say all future monthly payments are simply the remaining GST exclusive amounts. The amount of input tax credit should simply be 1/11th of any amount paid.

Reminder - GST credits cannot be claimed for any new motor vehicles acquired before 1 July 2001.

Can GST registration be cancelled within 12 months of being registered?

Yes - a new law allows the ATO to cancel voluntary registration from as early as 1 July 2000, subject to certain conditions.

A taxpayer has two small businesses, each with an annual turnover of $30,000. As the turnover of each small business is under $75,000, does he or she have to register for GST?

Yes. If your total (or projected) annual turnover from all businesses is $75,000 or more, you must register for the GST. You do not look at each business in isolation. In terms of completing the BAS, the details of both businesses are consolidated by the entity.

Must a tax invoice show the amount of GST payable separately?

No. The tax invoice must show the GST inclusive price and need not show the GST separately if the GST payable is merely 1/11th of the GST inclusive price. If it is not 1/11th of the GST inclusive price, for example it is a mixed supply, the GST must be shown separately.

Will MYOB software assist me with my GST reporting obligations?

Even the most basic of MYOB's software range will greatly assist the business person preparing monthly or quarterly BAS returns. The software accommodates businesses no matter what their chosen GST accounting method, i.e. Cash or Accruals.

All reports required to generate a BAS are found in the "GST Reports" area.

Do all entities have to prepare Financial Statements fully compliant with Australian Accounting Standards?

No. Entities that can be classified as "Non-Reporting Entities" need not prepare fully compliant Financial Statements. The following will often be Non-Reporting Entities:

Small proprietary companies;
Family trusts;
Partnerships;
Sole Traders; and
Wholly owned subsidiaries of Australian reporting entities.

Does a car log book have to be kept for every year?

A log book does not have to be kept every year. The business percentage is valid for five years. That is, the year that the log book is kept and the subsequent four years. Once you have established the business use percentage, you are not required to complete a new log book unless required to do so by the legislation, or otherwise directed in writing by the ATO. This business percentage is used as a basis for you to arrive at your reasonable estimate of the business use percentage in each income year as noted above.

Note: You must keep odometer records every income year.

I want to claim a deduction for using my car in my business or for employee duties. What is business travel?

Business travel is travel which is undertaken in gaining or producing your assessable income or carrying on a business for that purpose. Travel between home and a person's regular place of employment or business is ordinarily private travel. While travel to work is a necessary prerequisite to earning income, it is not undertaken in the course of earning that income. Put at its simplest, travel to work is private; travel on work is business.

I am setting up my own small business, what are the available tax structures I can use?

ole Trader: A sole trader is the simplest business structure. The structure is inexpensive to set up because there are few legal and tax formalities.

If you operate your business as a sole trader, you trade on your own and control and manage the business. You are legally responsible for all aspects of the business - debts and losses cannot be shared.

The business income is treated as your individual income and you are solely responsible for any tax the business must pay. This means that, after claiming a deduction for all allowable expenses, you include all your business income with any other income and report it on your individual tax return.

As a sole trader, you are responsible for your own super arrangements. You may also be able to claim a deduction for any personal super contributions you make. Before you can claim a deduction, you have to notify the fund of your intention to claim the amount as a deduction and wait until the fund confirms that you can claim the amount as a deduction. Once you receive this confirmation, you can claim the super as a personal deduction on your tax return.

Partnership: For tax purposes, a partnership is an association of people who carry on a business as partners or receive income jointly. A partnership is relatively inexpensive to set up and operate. A formal partnership agreement is common, but not essential.

If you operate your business as a partnership, control or management of the business is shared. Income and losses are shared among the partners. Each partner is responsible for the debts of the partnership, even if you did not directly incur or cause the debt.

A partnership is not a separate legal entity and doesn't pay income tax on the income it earns. Instead, you and each of your partners pay tax on the share of net partnership income you each receive.

While the partnership doesn't pay tax, it does have to lodge an annual partnership tax return to show all income earned by the partnership and deductions claimed for expenses incurred in carrying on the partnership business. The tax return also shows each partner's share of the net partnership income

As a member of a partnership, you are responsible for your own super arrangements because you are not an employee of the partnership. You may also be able to claim separately a deduction for personal super contributions you make. If you have any eligible workers, you must pay a minimum of 9% of their ordinary time earnings as super guarantee contributions on their behalf.

Company: An incorporated company is a distinct legal entity, regulated by the Australian Securities & Investment Commission (ASIC).

A company is a complex business structure, with higher set-up costs and administrative costs because of additional reporting requirements.

A company's operations are controlled by its directors and the company is owned by its shareholders. A company provides some asset protection but directors can be legally liable for their actions and, in some cases, the debts of a company.

A company can register for GST if it is carrying on an enterprise. It can do this on the ABN application form. A company must be registered for GST if its annual GST turnover is $75,000 or more. The registration threshold for non-profit organisations is $150,000.

If the company has any eligible workers, it must pay a minimum of 9.25% of their ordinary time earnings as super guarantee contributions on their behalf. This includes you, if you are a director of the company, and any other company directors.

Trust: A trust is an obligation imposed on a person - a trustee - to hold property or assets (such as business assets) for the benefit of others. These others are known as beneficiaries.

Setting up a trust can be expensive, as a formal deed is required and there are formal yearly administrative tasks for the trustee to undertake. A trust deed outlines how the trust is to operate.

If you operate your business as a trust, the trustee is legally responsible for its operations. A trustee of a trust can be a company, providing some asset protection.

If the trust is carrying on an enterprise, you can register for GST as trustee of the trust. You can do this using the ABN application form. A trust must be registered for GST if its annual GST turnover is $75,000 or more.

Whether or not a trust is liable to pay tax depends on what type of trust it is, the wording of its trust deed and whether any of the income the trust earns is distributed to its beneficiaries.

Where the whole of the net trust income is distributed to adult resident beneficiaries, the trust is not liable to pay tax. The trust may be able to access some tax concessions.

If the trust has any eligible workers, it must pay a minimum of 9.25% of their ordinary time earnings as super guarantee contributions on their behalf. This may include you as the trustee if you are also employed by the trust.

Joint Venture: A joint venture is when 2 or more businesses combine resources, knowledge and skills to achieve a goal. It is similar to a business partnership, with one key difference: a partnership generally involves an ongoing, long-term business relationship, whereas a joint venture is based on a single business transaction.

All joint ventures are initiated by the parties' entering a contract or an agreement that specifies their mutual responsibilities and goals. The contract is crucial for avoiding trouble later; the parties must be specific about the intent of their joint venture as well as aware of its limitations. All joint ventures also involve certain rights and duties. The parties have a mutual right to control the enterprise, a right to share in the profits, and a duty to share in any losses incurred.

For the Commissioner to be satisfied that a joint venture exists for GST purposes, the first feature, ie sharing a product or output, must be present.

A joint venture must lodge an annual tax return in the same way a partnership would.

When do I need to register my new business for WorkCover? How much will it cost me? Can you briefly summarise the rules?

WorkCover is Victoria's injured workers' compensation system.

If you are a Victorian employer and your annual remuneration is $7,500 or more, you must take out a WorkCover policy and pay WorkCover premiums for your workers (refer definition below).

An employer's WorkCover premium depends on a number of factors:

the size of your payroll (remuneration);
your safety or claims experience; and
your previous premium rate (which, for small employers is mainly based on the risk rating of their industry).
Your insurer must be advised of your annual remuneration to calculate the premium. The premium can be payable yearly in advance (a discount applies) or by instalments.

In what circumstances can I claim Home Office Expenses?

The ATO will generally not allow a taxpayer to claim for expenses associated with their home office unless their employer considers it necessary for them to work from home and the following criteria can be established:

It is normal practice in the employee's industry to perform some work duties from home;

It is a part of their current job specification; and

It is a condition of their employment, although not necessarily evidenced/documented in writing.
Generally speaking, "running expenses" are able to be claimed by salary and wage earners who satisfy the above criteria, "Occupancy expenses" may be claimed by people running a business from home. For discussion as to what the ATO considers to be a "place of business", refer to Paul Carrazzo's feature article on this issue, published in the June 1999 issue of The Australian Bloodhorse Review.

I am about to go overseas on work, which records should I keep to substantiate my travel expenses?

If you received a bona fide travel allowance and the deduction exceeds the Commissioner's reasonable allowance amount, you must fully substantiate all travel claims by providing the following records:

details and evidence to support the type and specific amounts of allowance received for travel expenses, such as accommodation, meals and incidentals
details of specific overnight travel undertaken, including:
dates or period travel was undertaken
specific purpose of travel
if the travel involves being away from home for six or more nights in a row, a travel record (diary) is required to be kept
evidence that you actually undertook the travel and incurred the accommodation and meal expenses, such as receipts or other documents.

If you did not receive a bona fide travel allowance or received a token travel allowance, you will be asked to keep the following records:

details of specific overnight travel undertaken, including:
dates or period travel was undertaken
specific purpose of travel
if the travel involves being away from home for six or more nights in a row, a travel record (diary) is required to be kept.
sufficient information to ascertain how specific expenses were incurred in the course of earning assessable income

What tax rate does my superfund pay when I contribute deductible super contributions?

In last year's Budget, the government announced that, with effect from 1 July 2012, the rate of tax that applies to the concessional contributions for people with income above $300,000 would be increased from 15 percent to 30 percent.

If your income is less than $300,000 or less, the tax rate is only 15%.

What are reportable employer superannuation contributions?

Reportable employer superannuation contributions are contributions made by an employer under a salary sacrifice arrangement or contributions for an employee above the minimum amount required by law.

A reportable employer superannuation contribution for an individual for an income year is an amount contributed:

  1. by an employer of the individual, or an associate of the employer, for the individual to a superannuation fund or RSA
  2. to the extent that the individual has the capacity, or might reasonably be expected to have capacity to influence:
    1. the size of the amount, and/or
    2. the way the amount is contributed so that their assessable income is reduced
What is the timing for contributing superannuation for deductibility purposes?

The time an employer contribution is made is important because the employer can only deduct a contribution "for the income year in which you made the contribution".

The timing of a contribution is not only significant for an employer's deduction entitlement, but may also affect:

  • When an employer's superannuation guarantee contribution is made
  • A member's entitlement to a tax deduction for a year
  • A member's liability to excess contributions tax
  • Eligibility for a government co-contribution in year, and
  • The inclusion of the contribution in a fund's assessable income for the year

The ATO view on when a contribution is made is that a superannuation contribution is made when the capital of the fund is increased. This may be when an amount is received, when ownership of an asset is obtained or when the fund otherwise obtains the benefit of an amount. In the ordinary case:

  • A contribution in cash is made when received by the fund
  • A contribution by EFT or internet banking is made when the amount is credited to the fund's bank account – this may occur sometime after the contributor has done what is necessary to effect the payment, and
  • A contribution by cheque is made when the cheque is received by the fund, unless it is subsequently dishonored
Are any employees excluded from superannuation requirements?

The time an employer contribution is made is important because the employer can only deduct a contribution "for the income year in which you made the contribution".

The timing of a contribution is not only significant for an employer's deduction entitlement, but may also affect:

  • When an employer's superannuation guarantee contribution is made
  • A member's entitlement to a tax deduction for a year
  • A member's liability to excess contributions tax
  • Eligibility for a government co-contribution in year, and
  • The inclusion of the contribution in a fund's assessable income for the year

The ATO view on when a contribution is made is that a superannuation contribution is made when the capital of the fund is increased. This may be when an amount is received, when ownership of an asset is obtained or when the fund otherwise obtains the benefit of an amount. In the ordinary case:

  • A contribution in cash is made when received by the fund
  • A contribution by EFT or internet banking is made when the amount is credited to the fund's bank account – this may occur sometime after the contributor has done what is necessary to effect the payment, and
  • A contribution by cheque is made when the cheque is received by the fund, unless it is subsequently dishonored
How is the required superannuation calculated?

Employer superannuation support under this scheme is measured in terms of a percentage of an employee's notional earnings base/salary and wages. For the current year, the percentage of that base that must be contributed is 9.25%.

The government has announced changes that will gradually increase the superannuation guarantee rate (charge percentage) from 9% to 12% between the 2013-14 and 2019-20 years. We will publish updated guidance if these announced changes become law, given that the coalition have flagged the deferral of these increases by 2 years.

I am thinking of commencing business. In what circumstances do I need to pay employee superannuation under the Superannuation Guarantee Scheme?

The superannuation guarantee scheme is designed to encourage employers to provide a minimum level of superannuation support for employees.

Where an employer provides less than the required level of support, they will be liable to pay a non-deductible charge called the Superannuation Guarantee Charge (SGC).

An "employee" for superannuation guarantee purposes is anyone who is an employee at common law. Generally, the degree of control exercised by the "employer" over the "employee" and the degree to which the "employee's" services are an integral part of the "employer's" business will be significant whether an employer-employee relationship exists.

I elect to lodge my GST return monthly. Does this mean I must pay my FBT, PAYG etc monthly?

No. You look at each tax separately and pay it according to its own payment rules. Even though you will be lodging a BAS each month, you will not be completing the PAYG boxes if you only have to pay PAYG quarterly.

What types of Super Funds are there?

There are several different types of superannuation funds. The mains ones are:

  • Employer / Corporate / Staff funds – (funds established by an employer for the benefit of their staff)
  • Personal Funds
  • Industry Funds
  • Self-managed super funds
If you would like more information about the different types of super funds, speak to one of our Matrium Financial Advisers.
Can I withdraw the money that I have in super?

Usually, you are restricted from accessing your super money until you reach your preservation age. Your preservation age is based on your date of birth and ranges between 55 and 60. In very specific circumstances you may be able to access your super funds on compassionate grounds, however, these situations are limited. For more information talk to our financial adviser’s or go to the APRA website.

When can I access my super?

Generally, you can only access your super savings when you reach preservation age. This is to ensure your super savings are used for when you reach retirement.

Your ‘preservation age’ determines when you can access your money, even if you have not retired. It is based on your date of birth and ranges between 55 and 60.

Testimonials

What Our Clients Say

Name