Australia’s New Tax Proposal: A Disaster for Family Farms

All too often, public policies conceived in the distant halls of old Britain travel and morph to find their way to Australia like a tidal wave, bringing disaster in their wake.

In the UK, farming advocates have raised the alarm over a new type of policy tsunami: an inheritance or death tax that they warn will “kill family farms”. 

In the UK, there are broadly two farming models: leased farms, where farmers rent from landowners, often on long-term agreements, and family-owned farms, where land has been passed down through generations.

Traditionally, common sense dictates that food security is best promoted by helping families remain on the land leased or owned. To this end, existing policies have provided exemptions from such taxes.

The issue with an inheritance-style tax is that farming is rarely a lucrative enterprise. The work is gruelling and rising land values do not translate to higher profits or realised capital gains. 

Instead, this bureaucratic policy forces families to sell land to meet their tax obligations, breaking up farms and making agriculture increasingly unviable.

There is no sudden wealth generated when a property is handed down. Land does not magically become more productive, and when farmers are compelled to sell, the resulting loss of agricultural land undermines food security.

The UK government, acknowledging that farmers cannot squeeze more profit from their operations, has proposed interest-free, 10-year instalment plans, to allow farmers to pay off their tax debts. This is an outrageous and fanciful solution for bad policy and essentially a tax on unrealised capital gains.

Unfortunately, Australia appears poised to follow suit. The Federal Government has recently introduced the Treasury Laws Amendment Bill, which proposes a new tax on unrealised capital gains.

Marketed under the euphemistic title “Better Targeted Superannuation Concessions and Other Measures,” this legislation is a thinly veiled attempt to impose additional taxes on farmers and small family business owners. 

The Federal Government claims the bill will only impact a small number of individuals with large superannuation balances. However, estimates suggest that 17,000 self-managed super funds will be affected, including 3,500 family farms that meet the proposed threshold.

By failing to engage meaningfully with the farming community, the government is penalising farmers who rely on self-managed superannuation funds to maintain their agricultural land, secure income for retirement, and preserve their family farms for future generations.