We’re warning Federal Treasurer Jim Chalmers to rule out changes to capital gains tax concessions on farm transfers in next Tuesday’s Federal Budget, warning that asset-based taxes applied to working farms would amount to an inheritance tax on family farming and threaten its viability in Victoria.
VFF Acting President Peter Star said the gap between what a farm is worth on paper and what it earns has never been wider.
“Farmland is not like any other asset. It is held and handed down, not bought to flip, traded for capital growth, or sold at the top of the market. It is a working asset, stewarded across generations specifically, so it does not need to be sold. Governments need to understand that distinction before they reach for the tax lever.”
“When a farm passes between generations, limited money changes hands and no income is realised and no buyer arrives with a cheque.”
“To tax that transfer as if it were a sale invents a gain that does not exist and sends the bill to the next generation before they have planted their first crop. That is an inheritance tax by another name, and Australia abolished those decades ago for a very good reason,” Mr Star said.
Mr Star pointed to ABARES data showing the average broadacre farm business profit sits at around $11,400 per farm, while farmland values have surged well into the millions, driven by farmers chasing scale to remain viable, and city money chasing rural lifestyles.
“The hard truth is that farm asset values and farm profitability are no longer connected. A multi-million dollar valuation does not pay the diesel bill. It does not service debt, or replace a header, or feed a family through a dry year. Any tax calculated off the asset, rather than the income the asset produces, is operating in a different reality from the one farmers are living in.”
Mr Star said the VFF is working closely with the National Farmer’s Federation who are engaging directly with decision makers on this issue ahead of the Federal Budget.