Tax in Agriculture

AgriFutures Australia - Boyce Chartered Accountants and Su McCluskey

Type: Research Paper
Knowledge level: Advanced

Farm Table says:

Australia’s continued economic wellbeing depends on all levels of government facilitating an environment that drives economic growth and ensures current living standards can continue or improve, while also protecting the prosperity of future generations. The Australian agricultural sector is a strong contributor to the economy and plays a vital role in the social, economic and environmental sustainability of the nation.

What is the problem?

Australians have largely benefited from the strong economic growth that came from implementing major reform measures, such as the introduction of the new tax system in 2000, including the GST. But environments are ever changing and this means that reform needs to be ongoing or we run the risk of stagnating. Putting in place reform measures now can lead to a better future for ourselves, our children, and future generations to come.

What is the problem?

This report identifies a number of areas of the tax system that currently facilitate positive productivity and sustainability outcomes for farmers and regional communities, along with those measures that may be impeding the sector. It aims to provide a resource for the agricultural sector to draw on to enable it to proactively engage in the tax reform debate, both now and into the future.

The overall objective of the project is to develop a shared understanding between key agricultural groups, of the tax reform issues facing the agricultural sector that industry and governments should be focusing on in relation to tax reform.

What did the research involve?

Initially a selection of submissions to the Australian Government’s White Paper process were reviewed. Those selected were the submissions that specifically focused on the agricultural sector. The key issues were summarised and presented to an initial workshop with stakeholders in December 2015 to confirm the key areas of focus and scope of the project.

The second phase of the project and preparation of this report has included broader research on each of the topics. While not in the scope of the project to complete primary research, the authors have completed research of other work such as the Henry Review of Taxation as well as statistical
information from ABS and ABARES to assist in building the evidence. The authors have also used their experience and knowledge as tax professionals to develop suggestions of alternatives to the existing system. The focus has been on developing alternatives consistent with the objectives of the report, but also with a priority of practical application.

The third and final stage of the project has incorporated proposals announced in the 2016 Federal Budget that were relevant to the key issues identified in the report.

What were the key findings?

This report has been framed in terms of the desirable outcomes for the agricultural sector and how Australia’s regulatory environment, specifically the tax system, helps or hinders the sector in achieving these outcomes. Desirable outcomes include increased productivity and profitability, regional
development, risk mitigation, innovation and succession planning. The aim has been to highlight those areas of the tax system that facilitate achieving these outcomes, providing a case for their retention as well as pinpointing areas where barriers exist and identifying possible alternative approaches.
Participating stakeholders have been engaged during the process with two workshops to provide input into the process and feedback on the report.

Final comment

A good tax system raises the revenue needed to finance the provision of government services and activities without imposing unnecessary costs on the economy. Tax reform is about improving the tax system as a whole and is not just about raising revenue. While expenditure constraints are acknowledged, tax reform should be based on longer term economic efficiency.

The community expects governments to maintain a strong and sustainable social safety net. However, with an ageing population, in the absence of tax reform, significant pressure would be placed on the health system and social welfare expenditure.

2016 - AgriFutures Australia - Boyce Chartered Accountants and Su McCluskey
Read ArticleSave For Later

About the Organisation

Name: AgriFutures Australia

AgriFutures Australia is a new beginning for the Rural Industries Research and Development Corporation. We are an organisation that proudly focuses on the future of Australian agriculture. We live and work in the regions and represent the interests and aspirations of farmers and rural communities.

Our vision is to grow the long-term prosperity of Australian rural industries. In practical terms, this means:

Initiatives that attract capable people into careers in agriculture, build the capability of future rural leaders, and support change makers and thought leaders.
Research and analysis to understand and address important issues on the horizon for Australian agriculture.
Research and development for established industries that do not have their own Research & Development Corporation (RDC), including the Rice, Chicken Meat, Honey Bee and Pollination, Thoroughbred Horse, Pasture Seeds, Export Fodder, Ginger and Tea Tree Oil industries.
Research and development to accelerate the establishment and expansion of new rural industries, such as Deer, Buffalo, Kangaroo and Camel Milk.

Related Resources