Following the passage of the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 through the House of Representatives, the ³Ô¹ÏÍøÕ¾ Farmers’ Federation (NFF) is once again warning Parliamentarians of the Bill’s consequences on thousands of family farms and small businesses.
NFF President David Jochinke said the sector has expressed consistent concern about the potential impact of the Bill on hardworking farming families across the country.
“The farm sector is particularly worried that the taxation of ‘unrealised gains’ may force primary producers to sell their land assets in order to pay off their new tax bill,” Mr Jochinke said.
“Thousands of farms across Australia are currently held in a self-managed superannuation fund (SMSF) and are often leased to the next generation, providing both retirement income as well as an opportunity for the next generation to take over the business.”
Given asset values can experience growth but continue to generate only modest cash income, this new tax on ‘unrealised gains’ may see an increased obligation that represents a significant proportion of a farmer’s income derived from their farm.
“If this Bill was to continue through parliament in its current form, it may see some farmers have to sell their farms and homes, take out a loan, or even lift the rent they charge their own family members, just to cover the cost of the additional tax,” Mr Jochinke said.
“These are not people with hundreds of millions of dollars in their superannuation accounts, but rather hard-working Australians who have worked hard to build their farms in order to pass onto the kids and grandkids.”
An extraordinarily broad range of groups have raised concerns around the Bill and in particular the taxation of ‘unrealised gains’.
In a demonstration of the seriousness of these issues, in August, eleven leading financial industry organisations and associations including CPA Australia, Chartered Accountants Australia and New Zealand, the SMSF Association and the Financial Services Council sounded the alarm, outlining that they have concerns about “the impact on small business and primary producers who hold their small business premise and primary production land in an SMSF … Some small business owners will be forced to sell their business premises to save their business.”
Further, the University of Adelaide estimates that had this tax been introduced in the 2021 and 2022 financial years, over 13 per cent of impacted members would have experienced liquidity stress in meeting the new tax obligations.
“As the Bill now moves to the Senate, we urge all parliamentarians, in particular Senate crossbenchers, to continue to listen to Australian farmers, small businesses and the raft of financial experts who have all raised the same concerns,” Mr Jochinke said.
“We are calling on Senators to now do what is necessary to address the consequences of this Bill on thousands of hard-working farmers and small business owners across the country,” Mr Jochinke said.
