GRAIN farm businesses are operating like a two-speed economy after emerging from the drought-busting years of 2010 and 2011.
According to Albury agribusiness consultant Jason Croker, some farm business have cleaned up losses and are now faced with minimising tax.
"Others are still struggling to keep their heads above water," Mr Croker said.
"Last year we were blown away by how quickly some people were able to recover from significant losses and had bounced back really quickly."
Speaking at a southern Riverina pre-season forum, Mr Croker, of RSM Bird Cameron, said paying tax this year was a sign of a healthy farm business.
Tax losses from the drought were being used up and farm business structure was important for managing tax effectively into the future.
Mr Croker said business structures needed to provide access to primary production averaging, farm management deposits and the capacity to cap taxation rates.
They should also allow access to capital gains tax concessions and the small business entity regime.
An aggregated turnover of less than $2 million makes a business eligible under the small business entity regime.
It enables a farm business to immediately write off assets costing less than $1000. This increases to $5000 from July.
The business can access the small busines capital gains tax concessions, accelerate depreciation and defer any profit on the disposal of plant.
Mr Croker said the 2010 and 2011 financial year results showed many grain growers would exceed a $2 million turnover for the first time in years.
He said taxation concessions might no longer be available.
"If (their income level jumps over $2 million) again in 2012, they will fall outside of the small business entity system," Mr Croker said.
He said the drought years had meant many plant updates were deferred or cancelled. This was acceptable during the drought, but plant would eventually wear out or become obsolete.
"Farming businesses need to instigate a plan whereby essential plant is renewed or updated to maintain efficiency and productivity over a given period," Mr Croker said.
"Do an analysis of the business case, crunch numbers and do the budgets."
Albury accountant and farmer Gerard O'Brien told the forum interest rate subsidies under drought provisions were no longer available. He said farm businesses needed to be made "bullet proof" against seasonal variations.
He said grain marketing and business risk management would be critical this year.
"With the Reserve Bank cutting interest rates, there is an opportunity to lock in some cheaper money, but the outlook going forward is not as rosy as some commentators have us believe," he said.
