Farmers who hold properties in self-managed super funds (SMSFs) have had a reprieve – for now – from proposed new regulations that would tax any increases in the family farm’s asset value if it were held in a SMSF worth more than $3 million.

Labor’s SMSF tax policy brought widespread condemnation from the farming sector and opposition government and will now be mothballed until after the next election.

Leader of The Nationals David Littleproud questioned Minister for Agriculture, Fisheries and Forestry, Julie Collins about the impact of the tax.

“Given cyclical nature and cash flows and farming, can the Minister explain under the Albanese Labor Government's changes to superannuation concessions, will a farmer who has their farm held in a self-managed superannuation fund have to pay tax on unrealised capital gains on that farm, and will that tax be paid even when they have had a failed season with no income?”

Ms Collins was blunt in response.

“The government is targeting tax breaks and superannuation to make them fairer, particularly for individuals with super balances of more than $3 million and all Australians will continue to receive their tax concessions to help them save for retirement.

"Can I say that all superannuation, including self-managed funds, are required to have sufficient liquidity?

"That's already principle and requirement of our current superannuation system.

"So, under existing superannuation law, funds are required to have some liquid assets to meet any existing and prospective liabilities, cash flow requirements and expected tax concessions and consequences of their investments.”

Minister for Agriculture, Fisheries and Forestry, Julie Collins has drawn ire from the agricultural community for her views on the proposed SMSF tax changes.

 After the Nationals strong campaign against the tax, Mr Littleproud guaranteed farmers they would continue to have his party’s support.

“A future Coalition Government will ensure this bad policy never sees the light of day,” Mr Littleproud said.

“The Nationals will always stand up for our farmers and that includes their assets.

"Just last week Labor refused to rule out forcing farmers to pay tax on the unrealised capital gains of a farm in a SMSF, even if farmers have a bad season with no income.

“Labor has shown callous disregard for our farmers and thought it would be okay to tax them for on-paper gains during a cost-of-living crisis.”

The NSW Farmers’ Association told Western Plains App that they were still concerned about the introduction of the bill in the future.

“While it’s pleasing to see this tax on family farmers shelved, it is vital that this bill blocked is for good,” the spokesperson said. 

“The fact that a common business structure has been completely ignored in these laws is beyond belief, and we can’t stand by and let this superannuation tax fail our farming families.

“NSW Farmers would support consideration of fit-for-purpose amendments to super that will set Aussies up for a better future, and that includes our farmers who are feeding and clothing the world.”

Mr Littleproud said many families had previously set up SMSFs as their future retirement and savings, unaware Labor could come for their assets.

Labor was also unable to say how many primary producers, small and family business owners would be impacted.

“Throughout the process, Labor proved they have no understanding of the vagaries of farmers’ cash loss that are impacted by not just weather but commodity prices.

“Labor broke an election promise but is now backing down due to fierce backlash. The Nationals will continue to fight for our farmers and their future.”