Federated Farmers oppose capital gains tax over succession

Andrew Hoggard

Southern Rural Life reporter Yvonne O'Hara asked Federated Farmers' national vice-president, Andrew Hoggard, for his thoughts on the Tax Working Group's (TWG) recently released Interim Report. He said while a full analysis of the report would take some time, one of the areas highlighted was the issues around capital gains tax (CGT).

The industry body is opposed to a "significant broadening of the capital gains tax, particularly if it taxes unrealised capital gains", says Andrew Hoggard.

"At the moment the main concern is around the potential taxing of capital gains, and what the details of that might look like, and understanding the implications on our members," Mr Hoggard said.

He said there could be implications for farmers and family succession.

"We feel this would be very important that, if a CGT were to come in, it would recognise the long-standing pathways to farm ownership.

"Without these considerations, that could make family succession and individual progression very difficult.

"It recognises that in these situations, it's not a case of speculative behaviour, which seems to be what a lot of the narrative we hear for a CGT is about."

He said the TWG specifically covered the issues Federated Farmers raised in its submission regarding exemptions from tax on capital income (roll-over relief) for sale to family members and stepping-stone sales and purchases, where farmers were selling a small farm and buying a larger one.

Mr Hoggard said Federated Farmers had submitted to the group about environmental taxes and were concerned about the negative impact for farmers.

"While the TWG suggests that the potential benefits (and problems) with environment taxes should be further explored, it is pleasing that the TWG recognises that 'taxes are not well suited to all environmental problems'," he said.

"Farmers are already faced with numerous regulations around environmental standards and having taxes on top of that would, quite frankly, just be a double whammy," he said.

"Also, in most cases, the environmental concerns vary from catchment to catchment, so catchment-specific actions are far more effective in driving the outcomes that you want rather than some broad-brush nationwide tax regime.

"However, we did encourage them to consider tax rebates and other ways the tax system could provide a few carrots to farmers for good environmental work, rather than just sticks."

In an earlier press release, he said Federated Farmers thought the report was a good piece of work that would be a useful resource for improving New Zealand's tax system.

"The report clearly articulates and explores the issues we raised in our submission. It's a highlight when you can see you have been heard."

He said it was also pleased the TWG was not proposing any new wealth taxes, including a land tax, and that it supported the current GST regime and "that it should remain clean with as few exemptions as possible".

Federated Farmers was keen to work with the group further to ensure the New Zealand tax system remained simple, fair and equitable to all.

yvonne.ohara@alliedpress.co.nz