M.I.A.
OPINION: The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury.
Revenue Minister Stuart Nash says Cabinet has agreed to change the law. It means farmers may be eligible to spread their income over several years to avoid an undue tax burden.
“Farmers, like the rest of the primary sector, are facing much uncertainty from the impact of the COVID19 outbreak around the world,” said Nash.
“On top of this, many have already had to deal with the hardship of the M. Bovis outbreak. The decision to offer tax relief for payments related to M.Bovis losses will help alleviate some of those concerns.
As part of our plan to try to eradicate M. Bovis, stock had to be culled on farms where the organism was found. Farmers received compensation for the difference between the normal market value of the stock and the amount received when the stock was culled. They could then restock their farms to replace the culled animals.
A number of affected farmers are using certain cost schemes to value their breeding stock, which means a significant tax bill can arise in the year they receive a compensation payment.
“Following discussions with Federated Farmers and Chartered Accountants of Australia and New Zealand we’ve agreed the best immediate solution. We will change the law to allow the additional income to be evenly spread over the following six years, subject to some conditions,” says Nash.
“It will require legislation which is yet to go through Parliament. However it will apply retrospectively, from the 2017/18 income year. This should help farmers to deal with their tax obligation in what is an already stressful time,” says Nash.
Affected farmers, or their tax agents, can find technical information on Inland Revenue’s website, at https://taxpolicy.ird.govt.nz/bovis
