Source: MIL-OSI Submissions
Source: Federated Farmers
The Government’s decision to make a legislative change to minimise the tax implications for farmers impacted by Mycoplasma bovis is great news at an uncertain and worrying time, Federated Farmers Vice-President Andrew Hoggard says.
Farmers affected are those whose dairy or beef breeding cows which have been, or are going to be, compulsorily depopulated (partially or fully) because their cattle tested positive to M. bovis AND their cattle are valued under the National Standard Cost scheme.
Farmers in these situations who replace their breeding animals may be liable for a significant tax bill as the cows they buy in will be valued at their purchase price and cannot be written down to the same value as the cows they replaced. While the extra tax will be clawed back over the next 5-6 years, as the replacement animals come onto the books at National Standard Cost, there will be significant cash flow and interest implications over that period.
“This affects a relatively small number of farmers but the impact on those farmers was looking to be immense – six figure tax bills at a time of little or no actual income,” Hoggard said.
When this was brought to its attention Federated Farmers requested at the end of 2019 that the Minister of Revenue initiate a legislative change. This kicked off a lot of hard work behind the scenes by officials engaging with Federated Farmers and the Chartered Accountants Association Australia NZ.
“Ministers have now agreed to advance the required change and Revenue Minister Stuart Nash and Agriculture Minister Damien O’Connor and their officials deserve a great deal of credit for getting onto this in such a timely manner. We thank them sincerely on behalf of some very worried farmers,” Hoggard said.
What’s being proposed?
The additional income could be evenly spread over the six income years after the year of the cull:
– if the culled livestock were substantially replaced within twelve months; and
– to the extent the income was derived from the culling of breeding stock (including their growing replacements) that have been valued under either the national standard cost scheme or the self-assessed cost scheme.