Senate Rural and Regional Affairs and Transport Legislation Committee, , 2:48:31 to 2:53:02
Analysis of the number of farm businesses using trusts and the total value of deposits held in the FMD scheme, estimated at $6.3 billion across 41,000 accounts.
Topics: Agricultural productivity, Government spending
Speakers: Chris Toyne, Hon Matthew Canavan, Matt Lowe, Unknown Speaker
impacted by these changes?
Um again as I say the the impacts or the application of the tax changes to uh farm businesses will depend on the individual circumstances of those farm businesses. So it's hard to generalize. Obviously uh all farm businesses are impacted by the tax sector. Um so they'll be impacted they'll be the tax changes will apply to them to some extent. um uh but in terms of you know discretionary trust as I say approximately 22% I think by ABS numbers of farm businesses are operated through trusts um so that's it's the the discretionary tax trust changes won't impact all businesses the same uh um but as I say it's it's hard to generalize across the sector or for businesses
>> the um the budget said that this this these changes ES to trust tax legislation will uh raise $4.5 billion a year. How much of that comes from
>> I don't think we've got information on that, Senator,
>> I don't think saying the farm income is exempt, but >> farmers will pay some of this tax.
>> But we're just simply not in a position to come in, Senator. Best directed to Treasury, I think.
Um have you done any modeling on on how much access to FMDs could be lost from these changes?
>> Um we have done analysis Senator and and as um Mr. to um advise that has been one of the principal areas of of of where we have worked with Treasury uh to ensure that um we understood and they understood the potential implications of the changes to the tax system as they related to um farmers ability to access farm management deposits. So um rather than modeling per se um we certainly shared spec agriculture specific analysis of the measures um and Abe's data um with treasury in relation
>> how many what what how how what's the size potentially here of far management deposits that are at risk of of some uh changes with these tax laws? Yeah, I
mean as we say the introduction of the uh partial rollover provisions allow uh businesses, farm businesses the the option I suppose of structuring the business so it doesn't impact it. So it's very hard to say. Um again I come back to the it depends on the specifics of the business. Um what I can note and and as you did before um you know uh approximately 81% of the uh income to discretionary trusts uh is uh primary production income which is exempt. Um and uh so we're looking at a minority of income in a minority of uh farm businesses uh is potentially affected but but again beyond that uh it's not something that we can generalize on just because of that uh it'll depend on the business.
>> So um but you did say you prepared some information some data by the sounds of it for Treasury. So what what number did you provide to Treasury in terms of
>> Yeah. So it was it was the sort of numbers that we've been talking about. So it's the proportion of um uh uh income to discretionary trusts to uh discretionary trusts held by farm businesses that is primary production income to give an idea of the sort of potential scope problem.
>> So what's that number?
>> Uh so that number is uh so atto data in 234 81% of business income reported by agricultural trusts was primary >> so yeah 18.9 19 19% was non primary production income. Uh and so would therefore be potentially um uh subject to that minimum 30% tax and therefore potentially a farmer might think about what
>> and of those trusts how many FMDs do they hold or
>> uh yeah so we haven't done any analysis looking at sort of cross matching that data. Uh what we did do with with treasury was sort of discuss the potential size of the problem and also identification of the problem. um that that you know uh that potentially restructuring a business uh might impact on the FMD's uh access to
>> what is the total size of fire management deposits at the moment?