Tax benefits seen for orchardists

Press, 27 December 1985, Page 10

Tax benefits seen for orchardists

PA Tauranga Taxation changes announced recently offer substantial indirect benefits to orchardists, said the Bay of Plenty director of the Fruitgrowers’ Federation, Mr Leo Mangos. He was concerned that these benefits seemed to have been overlooked by professional advisers to the horticultural industry. “I keep hearing lawyers and accountants say there is nothing in the recent economic statement for horticulture,” he said. “That is simply not true. “The claw-back provisions of the 1982 Income Tax Amendment Bill No. 2, which caused so much uproar when they were introduced, have been removed, and nobody seemsto have noticed.” •

Mr Mangos said that removal of the provision, clause 129, meant an effective increase in equity for many growers. The provision had meant that where a property was sold within 10 years of purchase a form of capital gains tax applied and tax offsets had to be repaired. Now that requirement had ceased and the situation was the same as before 1982.

Mr Mangos said that he believed the change in taxation was a significant move. It would help dispel some of the despondency in the

minds of many connected with horticulture.

However, the president of the Real Estate Institute,, Mr Bill Matthewson, disagreed that orchardists would get substantial benefits from the diahjges. ; . ' ? He said that Mr Mangos was correct in suggesting orchard owners would noty need to cover “claw-back” when selling their properties after April next year. “But I do not see how that is going to be much real help,’.’ he said. “Equity is the difference between what you owe and what you can get when you sell a property.” Mr Matthewson said that abolishing clause 129 did not;. mean the market price of land would improve. “It is depressed and I think many people are going to receive a nasty, shock when the next Government; valuation, is released and itW is apparent how much land values have gone down.

“The real problem is that this measure offers help only to orchardists wanting to sell, and many of them don’t want to sell up. They need help to keep on producing.” Mr Matthewson said that abolishing clause 129 would have no significant benefit until the price of horticultural land stabilised at a level where owners could realistically cover costs.