By Michael Burt
North Coast farmers have called for an urgent suspension of land tax compliance until the definition of primary production is updated to reflect modern farming systems.
Speaking at the NSW Farmers Annual Conference last week, Burringbar farmer Craig Huf highlighted the impact of recent Revenue NSW compliance activity is having on small and medium-sized farm businesses.
“The definition of primary production land in land tax legislation has not been updated in over 25 years and is at risk of no longer reflecting modern farm businesses,” Mr Huf said.
Working farms have traditionally been exempt from land tax, but vineyards with cellar door sales and farms with a shop or farm stay are being hit with land tax assessments.
“Land tax is fundamentally a tax on land, not a tax on income. Income derived from the land is already subject to federal income tax, and its inclusion in land tax assessments creates a form of double taxation.”
The NSW Farmers Far North Coast branch put forward a motion at the conference that asked NSW Farmers to advocate for income derived from on-farm accommodation and tourism to not affect primary production land tax exemptions.
“This income has traditionally helped farms remain resilient during droughts, market downturns, and seasonal volatility.”
“There is evidence that farmers are now withdrawing farmhouses from the rental market, further reducing rental availability in a housing crisis.”
Farmers from other parts of NSW told similar stories at the conference, citing examples of orchards with an on-farm shop being subject to land tax assessments.
NSW Farmers Business, Economics and Trade committee chair, John Lowe, said It is critical that the NSW Government acts now to ensure that the land tax exemption continues to support evolving, contemporary, and diversified farm businesses.”
“Not updating the current primary production definition for land taxes not only risks food security and business resilience but also risks the NSW Government’s existing government policies to promote agrifood development and agritourism being realised,” Mr Lowe said.
“Farm businesses that integrate small-scale value-adding, agritourism, processing activities on-farm or conservation that are directly linked to the cultivation or maintenance of that land should remain eligible for the exemption.”
Mr Lowe said the state government should align its land tax framework for primary production with other jurisdictions that support the sale of value-added agricultural products, such as Victoria.”
“The definition of “primary production land” must not exclude genuine primary producer – recognising diversified on-farm activities which are complementary to, not competing with primary production.”
“Where activities are a component of a genuine farm business but not the majority activity, farmers should not be penalised for land used for value-adding, landscape management and participation in environmental markets such as, nature repair and carbon credits.”
Mr Lowe said NSW Farmers will lobby for an immediate pause to further primary production compliance against the current interpretation until the definition is reviewed and updated.