Farmers have trust issues over Labor tax plan
Wednesday July 26 2017
A new plan to overhaul the federal tax system, flagged this week by Opposition Leader Bill Shorten, could risk hitting primary producers who use family trusts to manage their incomes during leaner years.
The Victorian Farmers Federation slammed the proposal as a political ploy designed to attack corporations with little thought for smaller operators who could be caught in the crosshairs.
The Tax Institute reports that 85 per cent of the 823,000 trusts currently registered belong to small operators, including an estimated 27,000 farm businesses.
“Farmers rely on trusts because we operate in an industry with highly volatile returns and need to manage the tax burden in good and poor years,” VFF President David Jochinke said.
“They are our safety net.”
Mr Jochinke said many farmers also used trusts as a valuable tool to secure the next generation of farmers.
“I have a trust, which I use to help with succession planning. Trusts allow assets to be used across generations, and this is why they need to be preserved,” he said.
With the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) tipping total farm production to reach $59.9 billion in 2017-18, Mr Jochinke said any move to add more regulations to the tax system would undermine the viability of the farm sector.
“Farmers require a tax and regulatory mechanism that facilitates their growth and future prosperity,” he said. “Any proposal to increase taxation to the family trust system is not the answer.”
The Opposition has not officially unveiled its taxation policy, but the farm sector was not consulted before Mr Shorten and Labor Treasury Spokesperson Chris Bowen publicly floated the idea of wide-ranging reforms that could involve changes to the family trust system.
Mr Jochinke said any public discussions around tax reforms that could hurt small business were cause for concern.
“We cannot afford another tax debacle like the mining tax and we can’t have the endless ratcheting up of revenue raising measures,” he said.
“Let’s be clear: every extra tax dollar raised from agriculture takes direct revenue out of rural communities. No ifs, not buts.”
David Jochinke, VFF President: 0427 834 524
Ashley Mackinnon, VFF Public Affairs Officer: 0417 165 784