Fonterra has recently announced the opening payout for the 2019/20 season and we are nearing the final provisional tax payment for May balance date clients on 28th June 2019 so it is timely to look at how the payout is currently shaping up.
The opening payout for the 2019/20 season is $6.75 per kgMS compared with the current 2018/19 payout of $6.35 and the final 2017/18 payout of $6.69. From a tax and cashflow point of view, the payout profile is fairly consistent between the years as shown below:
*These are derived from the base advance rate plus the capacity adjustment and will vary slightly across farms.
With the payout having been better for a couple of years now and the prospect of a similar payout next year, we are seeing instances where provisional tax is being paid for the first time in 2019. IRD interest generally only applies from the final instalment date (being 28th June) so if you expect a large profit in 2019, we encourage you to contact us to arrange a review of your tax position before the June tax is due.