Proposed super changes spark concern

By Ben Bennett, President, Australian Dairy Farmers

A government move to tax 'unrealised gains' has - quite rightly - ignited serious concerns among farming businesses, family enterprises, and small businesses across the nation.

In February 2023, the Australian Government announced plans to reduce superannuation tax concessions for individuals with balances exceeding $3 million.

This initiative aims to adjust the taxation framework of superannuation and is expected to significantly impact high-balance accounts.

The proposed legislation (Better Targeted Superannuation Concessions and Other Measures Bill) on unrealised gains-essentially taxing the increase in value of assets that have not been sold-could place undue financial burdens on dairy farmers.

Many of us rely on asset appreciation, particularly land value, for long-term financial stability and retirement planning.

As the National Farmers Federation (NFF) has warned - this unprecedented move could force farmers to sell parts of their farms to meet tax obligations, undermining the viability of family-owned agricultural enterprises.

It's unfair and sets a dangerous precedent.

For farmers, whose assets are typically tied up in land and machinery, this could mean selling off parts of their livelihood just to pay a tax bill on paper profits that don't translate into cash flow.

These apprehensions are echoed by several organisations, including the SMSF Association, the Tax Institute, the Financial Advice Association of Australia, and the Institute of Financial Professionals Australia.

They argue that taxing unrealised gains could have unintended consequences for investment and retirement planning, particularly affecting those who are asset-rich but cash-poor.

Clearly, Australian Dairy Farmers (ADF) supports this stance.

We'd like to see an immediate halt to the proposed superannuation changes, emphasising the detrimental impact they could have on dairy farmers.

Dairy farming, much like other agricultural sectors, involves significant investment in land and equipment.

The proposed tax could jeopardise the financial sustainability of these businesses, many of which are family-owned and operated.

As we know, dairy farmers already face tight profit margins and volatile market conditions.

Introducing a tax on unrealised gains would exacerbate these challenges, potentially leading to a reduction in investment in the sector and threatening Australia's dairy production capabilities.

ADF welcomes the work of NFF in opposing the Bill, including its engagement with MPs and Senators, and their staff, as well as its collaboration with the Council of Small Business Organisations Australia (COSBOA) and the Family Business Association.

Together, they have developed a comprehensive document outlining their position, which has been distributed to lawmakers.

This united front aims to highlight the widespread concern over the potential impact of the proposed superannuation changes on small businesses and the agricultural sector.

The collective advocacy efforts have gained significant traction in the media and among policymakers.

The core issue lies in the nature of farming and small business assets.

Unlike liquid assets, such as stocks or cash, the value of farmland, equipment, and infrastructure is not easily accessible without selling the asset.

For many farmers, their superannuation is intrinsically linked to the value of their farm.

Taxing unrealised gains could force them to liquidate essential assets, disrupting operations and threatening the long-term viability of their businesses.

The proposed changes also raise concerns about intergenerational transfer of family farms.

With additional tax burdens, the ability to pass on the family business to the next generation becomes more complex and financially challenging.

This could lead to a decline in family-owned farms, which have been integral to Australia's agricultural heritage and rural communities.

The NFF, ADF, and our allied organisations are calling on the government to reconsider the proposed changes and to engage in meaningful consultation with affected stakeholders.

We need policies that support the sustainability and growth of farming businesses and small enterprises, rather than imposing additional financial burdens.

In response to the growing opposition, some Parliamentarians have expressed willingness to engage in dialogue.

The hope is that through collaborative efforts, a more equitable solution can be found that addresses the government's objectives without disproportionately impacting farmers and small business owners.

The debate over the proposed superannuation changes underscores the delicate balance between policy objectives and the practical realities faced by different sectors of the economy.

As the Bill moves through the legislative process, it is crucial for lawmakers to consider the far-reaching implications and to ensure that the voices of those most affected are heard.

It is imperative that policymakers carefully evaluate the proposed changes to avoid unintended consequences that could undermine the financial stability of farming industries and our hard-working dairy farmers.

The farming community and small business sector remain hopeful that through continued advocacy and engagement, the government will acknowledge these concerns and adjust the proposed legislation accordingly.

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