The farm expenses you can and can't claim to reduce your tax bill

Avoid spending first and regretting that the expenditure doesn’t give the tax deduction

Capital expenses such as livestock purchases are not actually tax deductible at the point of purchase but the costs are brought into account when the animals are sold. Picture: iStock

Most farmers have a decent enough grasp of what expenditure they can claim against their income for the purposes of establishing their farming profits. 

The tax rules which govern the tax deductibility of expenditure are generous in the case of sole traders with the general rule being that expenditure incurred wholly and exclusively for the purpose of the trade qualifying for a deduction. Day-to-day expenditures such as fertiliser, lime, fencing materials, land rent, feed, fuel and contractor payments pose no problem. Some expenditure is statutorily barred from qualifying for a deduction such as ‘sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession’.