Farming families and small business owners across the country have been left speechless by the Agriculture and Small Business Minister Julie Collins’ response in question time today regarding proposed changes to superannuation.
When asked whether the changes would result in a tax bill on unrealised gains even in years with zero or negative income, the Minister confirmed farmers would have to find the cash – potentially forcing the sale of family farms.
NFF Deputy CEO Charlie Thomas said the comments underscored the sector’s concerns about taxing unrealised gains.
“The farm sector has consistently flagged that this bill will leave farmers in a terrible situation where they may have to sell their assets out from under the next generation.”
“What the Minister explained in question time today is that this may happen sooner than we think – with self-managed funds needing to hold liquid assets to meet theoretical future tax liabilities. That means farmers might be faced with the choice: sell now, or breach liquidity requirements.
“This whole idea of taxing farmers for fluctuations in the property market is an absurd precedent which has no place in our tax system.”
While the question was related to farming families, Council of Small Business Associations of Australia CEO Luke Achterstraat said these same issued apply to small and family business owners.
What saw today by the Minister for Small Business was sends an alarming signal not just to farming families but to Australian small business owners.
“This new tax on the unrealised gains on assets held in the SMSF may see an increased obligation that represents a significant proportion of an owner’s annual income, or even exceed it.
“This may see a farmers left in a terrible situation where they may have to sell their assets to meet this new tax obligation or increase lease rates to their children so much that their own children’s business may become unviable.”
“The Government has consistently said this Bill targets the top end of town, people with hundreds of millions of dollars in their super accounts – not hard-working, family-run small businesses. What we saw from the Minister today shows that is simply not true”
Additional Background on SMSF
Self-Managed Superannuation Funds (SMSF) are a common tool in small businesses to manage assets and business succession. In the case of agriculture, older farmers will often hold their assets in a SMSF and lease the operations to their children, providing both retirement income for them as well as an opportunity for the next generation to start farming.
In evidence provided to the Senate Economics Committee Inquiry into the Bill by the SMSF Association, it was estimated that over SMSF 17,000 accounts in 2021/22 held farming land. With over 3,500 of those immediately impacted by the new tax, and substantially more of the remaining likely to be captured in the coming years. Additionally, it was estimated that there are 13,000 SMSF’s holding business real property who will be impacted by this tax.
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