Fears that family farms will endure a forced sale due to superannuation changes were tempered with anger in Federal Parliament question time this week when Agriculture and Small Business Minister Julie Collins’ comments left farming families and small business owners speechless.

Ms Collins was commenting on Labor’s proposed changes to superannuation where there would be a tax on super balances above $3 million.

When asked whether the changes would result in a tax bill on unrealised gains even in years with zero or negative income, the Minister confirmed farmers would have to find the cash – potentially forcing the sale of family farms.

Self-Managed Superannuation Funds (SMSF) are a common tool in small businesses to manage assets and business succession.

In the case of agriculture, older farmers will often hold their assets in a SMSF and lease the operations to their children, providing both retirement income for them as well as an opportunity for the next generation to start farming.

Farmer advocacy groups, such as NSW Farmers and the National Farmers’ Federation (NFF) are furious, stating the sector’s concerns about taxing unrealised gains.

Farm leaders have urged the Federal Government to consider the unique circumstances of family farming businesses in changes to superannuation laws that passed the House of Representatives this week. 

“The farm sector has consistently flagged that this Bill will leave farmers in a terrible situation where they may have to sell their assets out from under the next generation,” NFF Deputy CEO Charlie Thomas said.

“This whole idea of taxing farmers for fluctuations in the property market is an absurd precedent which has no place in our tax system.”

The SMSF Association provided evidence to the Senate Economics Committee Inquiry, revealing that over 17,000 SMSF accounts held farming land in 2021/22.

Of these, more than 3,500 are directly affected by the new tax, with many others likely to be impacted in the future.

Additionally, it was estimated that 13,000 SMSFs holding business real property will also face consequences under the new tax.

NFF Deputy CEO Charlie Thomas called the proposed tax an "absurd precedent"

A NSW Farmers spokesperson told Western Plains App that the current situation is high on the agenda for their group. Business Economics and Trade Committee chair John Lowe said the changes would impose new taxes on unrealised gains in superannuation holdings, including family farms – meaning farmers could be taxed for income they will never see.

“This law is not going to affect the people with hundreds of millions of dollars in their superannuation accounts, but rather the hard-working Australians who own their businesses or farm assets in structures such as self-managed superannuation funds,” Mr Lowe said.

“Self-managed superannuation funds are a common tool farmers use to manage their farms and aid business succession, and now, their farms are at risk because the government wants to rush through new tax laws without considering how agriculture operates.”

As several accounting bodies and financial associations also raised their concerns around the bill, Mr Lowe said it was critical that any changes made to tax laws did not place unfair financial pressure on family farms among other small, family-owned businesses. 

“These proposed changes could well force many farmers to sell the farm they operate or lease to their children, unless they’re able to take out even more loans to try and meet new tax obligations,” Mr Lowe said. 

“NSW Farmers supports sensible amendments to super – not taxes that will enable the super-rich to continue unaffected, while the small businesses and farm family businesses suffer.

“Aussie families and young Aussie farmers all deserve to be able to run their own businesses without crippling bureaucracy and taxes and there’s no doubt we need our family farms to stay if we want to have our own, homegrown food and fibre.”

Small business will also suffer

While the question was related to farming families, Council of Small Business Associations of Australia CEO Luke Achterstraat said these same issued apply to small and family business owners.

 “What we saw today by the Minister for Small Business sends an alarming signal not just to farming families but to Australian small business owners. 

 “This new tax on the unrealised gains on assets held in the SMSF may see an increased obligation that represents a significant proportion of an owner’s annual income, or even exceed it.

 “This may see farmers left in a terrible situation where they may have to sell their assets to meet this new tax obligation or increase lease rates to their children so much that their own children’s business may become unviable.

“The Government has consistently said this Bill targets the top end of town, people with hundreds of millions of dollars in their super accounts – not hard-working, family-run small businesses. What we saw from the Minister today shows that is simply not

true.”