Forced to Sell Livestock Due to Drought? You May Be Eligible for Tax Concessions

Drought is one of the harshest challenges faced by Australian farmers. When feed and water supplies run dry, many are forced to make the difficult decision to sell off livestock early. While this can bring in much-needed income, it can also trigger an unexpected tax liability.

Thankfully, the ATO offers tax concessions to help ease the financial strain caused by drought-related livestock disposals. If you are a primary producer and have had to sell livestock due to drought, you may be able to defer or spread the profit from those sales over time.

Spread the Profit Over Five Years

This option allows farmers to include only 20% of the profit from drought-forced livestock sales in the year of disposal, with the remaining 80% spread evenly across the next four years.

Defer and Offset with Future Livestock Purchases

This option allows farmers to defer the entire profit and offset it against any livestock purchases made in the following five income years.

Who’s Eligible?

• You must be a primary producer.
• The disposal must be due to drought conditions—this may include government-declared drought zones or other supporting evidence.
• The profits from the forced sale of livestock must primarily be used to buy replacement stock or to maintain breeding stock for the purpose of replacing the livestock.

Need More Information?

Understanding which tax concessions apply, and how to correctly report them, can be complex. That’s where we can help. At Johnsons MME, our experienced advisers work with primary producers across the region and are well-versed in the unique challenges posed by drought conditions.

If you’ve been forced to sell livestock early due to drought, we’ll help assess your eligibility for the available concessions and guide you through the steps to apply them correctly. We can also assist with record-keeping requirements, timing considerations, and planning for future livestock purchases, ensuring you meet ATO obligations while maximising the financial benefit.

Don’t navigate this alone. Every farming business is different, and tailored advice can make a real difference. Contact your Johnsons MME adviser to discuss your options and ensure your tax treatment reflects your circumstances. We’re here to help you achieve your goals, even in the toughest seasons.