Bill introduced to allow farm tax write-offs

Press, 20 November 1987, Page 3

Bill introduced to allow farm tax write-offs

By

BRENDON BURNS,

political reporter

A tax reform bill said to contain particular benefits for farmers was introduced to Parliament yesterday.

The Minister for Revenue, Mr de Cleene, said the Taxation Reform Bill was a matter of some urgency.

The Opposition spokesman on revenue, Mr Doug Kidd (Marlborough), said the bill was of real importance to those farming families experiencing trauma.

bill appeared to provide a concession to allow Family Support to be paid to farmers who had been hit hard by the new livestock valuation system. Farmers are now allowed to spread their paper income from revaluation over two financial years (1987/88 and 1988/89). But Mr Kidd said that when Family Support was being sought, the valuation income was to be assessed over only one year. The cycle of poverty would be entrenched if this were how the new bill were to apply. While he welcomed the changes to allow estate and gift duty to be wiped where a debt write-off is involved, Mr Kid signalled that he would introduce a bill to end tax on gift duties completely. It was contrary to New Zealand society that assistance to members within farming families should be taxed, often at maximum rates, he said. The bill has been referred to a Parliamentary select committee for study.

In summary, the bill provides for. — • Financially troubled farmers who have certain types of debt written off, not to have that regarded as income for tax purposes. • Finance provided, by say a father to a farming son, and which is writtenoff, will not be included in calculating the father’s estate duties.

The legislation was an opportunity to remove uncertainties created by last year’s introduction of the accruals tax, he said. This had removed all distinctions between capital and income and had made forgiveness of debt in farming families taxable, said Mr Kidd.

• A similar provision applies when finance is gifted before death, meaning the recipient will not have to pay tax if the gift is not to be repaid. • A change to allow mostly deer and goat farmers to spread any paper income from the new livestock revaluation system over two tax years. Mr de Cleene said the changes to take debt write-offs away from assessable income, was to allow farmers who were debt-restructuring to get out of the industry.

That had been extraordinary. But while the Government now said it was facilitating debt restructuring and not applying tax, Mr Kidd was not sure that this would be achieved by the legislation.

The definition of debt in the legislation could still see a son penalised if his father wrote-off money he had lent. Mr Kidd said the Opposition would study the bill further.

“But if our fears and concerns are confirmed we will insist on changes.” Another clause of the