EOFY Financial Review for Farmers

Review Income and Expenses

Farmers should thoroughly review all income and expenses for the past financial year. It is important to document all income sources, such as sales of crops, livestock, and farm-related services, as well as expenses. Keeping meticulous records of cash income and expenses, accounting for personal drawings, and separating private expenses from business expenses are also essential.
 

Superannuation Contributions

Farmers may be entitled to a deduction for personal superannuation contributions paid from after-tax income, with the concessional contributions cap for the 2024-25 income year being $30,000, which includes employer contributions. Unused contributions caps from previous years can be carried forward to increase deductible contributions. It is important to ensure all employee superannuation contributions are paid and actually banked into the superfund’s bank account by June 30, otherwise, the deduction may not be allowable until the following income year. From July 1, 2025, the superannuation guarantee rate will increase to 12%. Concessional superannuation contributions may incur an additional 15% tax if the total adjusted taxable income exceeds $250,000.
 

Livestock and Fodder Considerations

An accurate stocktake is essential and should be completed as close as possible to the end of the financial year, usually on June 30. For each type of livestock, such as 2-year-old steers, farmers need to identify the stock on hand from July 1, along with the number purchased, sold, and any natural increase, deaths, or stock killed.

Stock can be valued at the lower of its cost, market selling value, or replacement value. Assessing the cost of livestock production at EOFY helps in making informed decisions to potentially lower input costs.
 

Review Business Structure

The EOFY is an opportune time to review the farm’s business structure (e.g., sole trader, partnership, trust) to ensure it remains the best fit as operations grow or family circumstances change. For trusts, the Trustee must resolve to distribute income to beneficiaries before June 30, and ensure any unpaid present entitlements to companies are paid or placed onto complying Division 7A loan agreements.
 

Insurance Review

Reviewing insurance policies is an essential EOFY task to ensure they align with the scale and needs of the farm, covering machinery, infrastructure, or crop risks. This involves reviewing current policies, assessing coverage needs, considering consolidating policies, and updating sums insured.

Farmers should also remember that insurance premiums are generally tax deductible business expenses.
 

Record Keeping

Maintaining accurate and organised farm and financial records is critical. This includes profit and loss statements and records of asset purchases or farm improvements. Key details to retain include supplier names, nature of goods/services, expense amounts, payment dates, and document dates.
 

Goal Setting

After reviewing performance, farmers are better placed to set clear goals for the upcoming financial year. These goals can include improving farm operations, preparing for audits or handover, enhancing pasture management, building drought resilience, or aligning with long-term personal and business priorities. Goals should balance personal, social, environmental, and financial components of the business.
 

Budget Creation

Creating a comprehensive annual budget is a crucial step in managing farm finances. A budget allows farmers to track expected income and expenses, allocate resources efficiently, identify when to seek financing or cut expenses, and forecast cash flow for cycles like planting and harvesting. Developing a complete budget helps manage income, expenses, and financial performance, ensuring long-term stability and resilience against unexpected challenges.
 

 Always consult with a qualified tax professional to ensure that all advice is specific to your circumstances.