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Farmers have flagged concerns with an attempted shakeup of trust taxation, set to be announced by the Labor Party this Sunday.
The National Farmers’ Federation (NFF) is seeking more information from, and consultation with, Labor about their plans to reform trusts.
The peak farming body only became aware of Labor’s proposed plans through media reports starting late last week, with senior Labor figures suggesting that changes to tackle so-called 'income streaming' practices will feature in their upcoming tax policy.
The latest figures from the Australian Tax Office reveal 27,971 trusts in the primary industries sector which stand to be impacted by any changes.
“It is disappointing that we have not, to date, been consulted on the change by any member of Labor Party,” NFF Chief Executive Tony Mahar said.
Mr Mahar said, while the actual policy is yet to be announced, the sector was concerned by reports, that if elected, Labor would make wide-ranging changes to taxation of trust structures.
“Family trusts play an important role in Australian agriculture. Any move to make changes to the way trusts are taxed or administered needs to be carefully considered.”
The warning from the NFF comes despite claims by Shadow Treasurer, the Hon. Chris Bowen, today that Labor had undertaken 'detailed consultation' as part of its policy development.
Farmers require tax and regulatory mechanisms that facilitate their growth and future prosperity
Tony Mahar, Chief Executive, National Farmers' Federation
Mr Mahar said trusts helped farmers manage the significant volatility a farm business faces year to year.
“A trust enables farmers to offset costs in the good years to weather the not-so-good years.
Mr Mahar said trusts also helped with the complex task of farm succession by allowing assets to be owned across generations.
“Securing the next crop of farmers is vital to the continued success of our sector.
“Tools, such as trusts, that make the succession process smoother, must be preserved.”
The NFF has contacted the Opposition looking for clarity on the party’s tax reform plans.
“As a matter of urgency, we have sought a conversation with the Opposition, to learn about Labor’s plans and to explain the manner in which the farm sector uses trusts.”
“Australian agriculture contributes more than $60 billion to the national economy each year –in on-farm production alone.
“Farmers require tax and regulatory mechanisms that facilitate their growth and future prosperity. Not hinders it.”
Mr Mahar called on Opposition Leader Bill Shorten, and Shadow Treasurer Chris Bowen to consider the wide application of trusts across the Australian business environment.
“I urge Labor not to be short sighted when it comes tax reform and to carefully consider the holistic implications of change to policy settings.”
“Cross-industry consultation, on any touted reform, including with the farm sector is crucial”.
Issue update: Labor pledges farm carve out
Labor spokesperson Anthony Albanese told media on Friday that farm trusts will be outside the scope of the proposed tax policy.
This announcement follows concerted advocacy efforts from the National Farmers' Federation.
Speaking to Sky News on Friday, NFF CEO Tony Mahar said the farm lobby had previously sought assurances as to the treatment of farm trusts and Labor had been unable to confirm they would be unaffected.
"This is certainly welcome news. We'll wait and see what comes to pass on Sunday, but if this is the case perhaps we'll both go happily on our way," Mr Mahar said.
Industry groups will be watching closely on Sunday when Labor finally releases the detail of its proposal to ensure promises regarding farm trusts are upheld.
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