AUSTRALIAN-owned farm businesses stand to benefit from changes designed to close a tax loophole currently available only to foreign investors buying up agricultural land.
Minister for Agriculture and Water Resources David Littleproud welcomed changes announced by the Treasurer last week to exclude agricultural land from being an eligible investment business and attracting a lower tax rate.
“The current state of play provides foreigners with a competitive advantage over domestic investors when purchasing agricultural land,” Minister Littleproud said.
“The Government wants to ensure purity of market and a level playing field for Australian investors, so we’re making changes,” he said.
Foreign investors currently have access to tax concessions, which means they pay less tax than domestic investors on their investment in agricultural land – around 15 percent (or less) compared to Australian investors who pay tax at their marginal rates (up to 47 percent currently).
“The concessions are possible through the use of managed investment trusts that lease-out farming land. Increasingly, complex arrangements called ‘stapled structures’ have been adopted, which allow taxpayers to own and run a farm and still achieve a lower tax rate of 15 percent,” Mr Littleproud said.
This could distort investment decisions and encourage higher foreign ownership of agricultural land, he said.
“Where possible we want to encourage Australian ownership of Aussie farmland and ensure fairness for domestic investors who pay a higher rate of taxation on agricultural land purchases.”
The changes will take effect from 1 July 2019.