Farmers fear big tax bills could force them to sell off their land
Farmers could be stuck with unaffordable bills under Treasurer Jim Chalmers' proposed tax for self-managed superannuation funds, as the agriculture sector warns that rural landowners who own valuable land would struggle to generate enough profit to pay their debts.
The tax is set to take effect from July with a 30 per cent tax rate on earnings for the portion above $3 million in a super fund.
However, the Albanese government needs support from either the Greens or the opposition in the Senate to enact its reform, and farmers are demanding a rethink of the policy's design.
Controversially for farmers, Chalmers' tax will also apply to unrealised capital gains above $3 million, which represents a doubling of the current 15 per cent tax rate for superannuation earnings.
Many older farmers have placed their farms in a self-managed super fund and lease it to their children, which generates retirement income for their parents while the younger generation can build businesses.
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National Farmers Federation president David Jochinke said many farmers would not be able to pay the increased tax bill.
He argued that the value of rural land, which has grown steadily for decades and shot up recently, did not necessarily reflect the earning capacity of a farming operation, as a high proportion of revenue is often gobbled up by costs.
'Taxing something that has only paper value, and no relation to your ability to pay that tax, is flawed. Farms will be sold and generations of farming discontinued purely on this decision,' Jochinke said.
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