Spring 2018, Vol. 15, No. 3

Tax and regulation for farm business sustainability

‘Nothing is certain but death and taxes’: it is appropriate that the proverb about the unavoidability of tax is attributed to many sources. Regulation (including tax) that impacts on farm business sustainability is a many-headed monster originating from multiple legislative agendas and political platforms. In the modern political climate, it seems increasingly difficult to make substantial change to harmonise and simplify the tax and regulatory system. As is made clear in this journal, there are many tax and regulatory issues impacting on farm business performance, management and sustainability. What also emerges is that there are multiple ways of addressing those issues – because, while death and taxes are certain, so is the certainty that fair taxation and regulation to deliver a viable agriculture sector will provoke intense and varied opinion.
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Taxation for the economy and agriculture

John Freebairn

After an overview of the different Australian taxes, the paper describes and evaluates tax base exemptions and lower rates which reduce the effective tax burden on agriculture. Agriculture sector-specific tax base exemptions include Farm Management Deposits, land tax, and basic food from the GST. Economy-wide small business tax concessions (including for some capital gains, accelerated depreciation and lower income tax rates) favour agriculture with its relatively high share of small businesses when compared with other sectors of the economy. Potential reforms to the current clumsy special taxes on alcohol products and motor vehicles would alter effective tax rates within the agricultural sector. Buy now

Tax policy considerations for Australian agriculture

Dale Miller & Amelia Shaw

Australian agriculture is a notably volatile industry from the environmental and market perspectives. It is in the nation’s interest to have a continually improving tax system that delivers taxes that are ‘lower, simpler and fairer’ and this paper contains some principles and perspectives on what needs to be considered in delivering this outcome in an agricultural context. While agriculture pays relatively low rates of tax compared to other sectors, this should be viewed in the context of the extensive secondary economic activity built on the sector and low levels of public funding support. Buy now

Using FMDs to create sustainable farm businesses

Brian D Wibberley

Farm Management Deposits (FMDs) were designed by the Australian Government to allow farmers to manage their cash flow risk while conducting their business in uncertain climate, environment and market conditions. Much of the recent focus and attention on FMDs has been on the taxation benefits these financial products provide the business. The aim of this article is to outline and demonstrate that where primary producers implement a suitable FMD strategy to suit their business, they become an essential tool to manage financial risk for wealth creation, consolidation, expansion and the overall family business success. Buy now

Does renewable energy sustain Australian agriculture, or drive it offshore?

Geoff Carmody

Renewable energy targets (RETs) and associated subsidies dominate Australian policies claiming to reduce local greenhouse gas emissions. Our RETs increase direct and indirect costs for electricity generation. These affect power embodied in all local production, including for export. They don’t affect emissions in Australian imports. Australia’s RETs also make our agriculture sector (and other industries) less internationally competitive, as our trade competitors don’t apply the same RETs. If such emissions taxes are extended, Australian competitiveness will decline even more. Buy now

Australia needs a feasible business model for rural conservation

Paul Martin

This paper discusses the effectiveness, fairness and viability of the business model Australia uses to slow the inexorable decline in rural biodiversity. Ongoing poor environmental outcomes create political pressures for tighter farm regulation, which fuels a movement against ‘green tape’ to reduce the increasing costs and complexity of regulation and administration. All other things being equal more protection will require more resources from rural Australia, and this is beyond its capacity to provide because of economic and demographic fundamentals and climate. Buy now

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