Are you aware that as a farmer, there are many concessions available to you to minimise yearly tax payments? One such concession is the Income Equalisation Deposit (IED) Scheme.
Basically speaking, the IED is a way to ‘smooth’ out your income from year to year. Instead of having spikes and crashes in a line chart, having the ability to carry over some income to your lean income years means a more evened-out income and hence, predictable and business-friendly taxes.
Let’s say you’ve had a good year with a very significant increase in income. That usually means having to pay higher taxes. Under the IED Scheme, farmers can better manage income and taxes by moving income from one year to the next. This is done to minimise income tax, or in some cases defer payments. This is completely legal for foresters, growers and farmers. By allocating income to a future year when you’ve predicted you’ll have lower income, and hence less taxes, you may avoid paying hefty taxes for this year. This smooths out both your income and tax payments and assists with budgeting and forecasting. It is all about good financial management and planning.