Rising anxiety among farmers over super changes

Agribusiness Australia has slammed the federal government’s proposed tax changes for superannuation funds over $3m, saying it may hurt farmers who had their properties in super.

Agribusiness Australia chairman, Mark Allison, has slammed the federal government’s proposed tax changes for superannuation funds over $3m, saying it may hurt farmers who had their properties in super, with agriculture subject to significant annual income swings.

The peak body backed the concerns expressed by the National Farmers’ Federation over the proposed changes, which would levy a tax of 30 per cent on earnings from super funds with more than $3m.

“In a lot of pre-farm gate succession planning, properties are in super,” Mr Allison said. “This hits them. Farmers will always be high in assets and low in cash.”

While taxation of the farming sector was built on an approach of income averaging that recognised the swings in farm incomes, he said the proposed tax changes failed to take this into account.

National Farmers’ Federation chief executive Tony Mahar said his federation was getting an increasing amount of calls from members worried about the implication of the proposed changes and what it meant for their businesses.

He said the proposed changes could impact thousands of farmers who had their properties in their super funds, with many farms currently valued at more than $3m.

The NFF is calling for consultation with the government over the proposed changes to spell out how they could hit farmers.

“We don’t think this has been thought through when it comes to farmers and the implications for investment in agriculture,” Mr Mahar said in an interview with The Australian on Thursday.

“We are concerned about it. It is one of the growing sectors of the economy. We don’t want to see the agriculture sector ignored on this one.”

The NFF boss said the proposed changes could unduly hurt the farm sector and make agriculture a less financial attractive investment.

“We are calling on the Treasurer to start understanding agriculture and farming.”

The proposed changes had “come out of the blue” – according to Mr Mahar – with no consultation or understanding as to how they may unduly affect farmers.

He said the situation facing farmers, their business structures and highly variable incomes were substantially different from other workers with superannuation.

Mr Mahar said there was “not a lot of detail on how this is going to be rolled out” but he said farmers now had to be able to plan for its introduction in 2025.

Farmers were concerned to discuss the situation with government before the legislation was presented to parliament, which could be in the next few months.

“It’s not like they can say this doesn’t occur until 2025,” he said.

“If they are going to make plans for it to take effect, let us know about it now, not in 2025.”

Mr Mahar said the proposed changes could see a farm that was held in a super fund having to be revalued each year.

“This could mean a tax bill every year that you weren’t accounting for.”

He said it could be “really challenging around succession planning for farmers”.

“Most farms really struggle with succession planning,” he said.

“If you start putting this on top of it, it adds another layer to what already is a challenging scenario for most farmers.

“It makes the situation really difficult if you have assets tied up with multi generations and tax implications coming in annually.”

He said there was a danger of legislation being put in place that could “whack the farm industry unnecessarily or inadvertently”.

“It sounds a lot but there are very few decent sized farms which would be under $3m.

“If that is all in super funds, it would mean there are thousands of farmers it might impact who might have assets tied up in self managed super funds.”

He said farms were often the only superannuation savings for farmers.