Budget targets tax-dodging farmers

Last updated 15:54 24/05/2012

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Budget 2012

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Tax-dodging farmers who could have short-changed the Government by $275 million over the next six years are targeted by a revamp of farm livestock valuation schemes in the Budget.

In heralding the change in March, Finance Minister Bill English and Revenue Minister Peter Dunne said the rules were too loose.

But farmers and accountants said the change was too heavy-handed and put at risk plans by older farmers to pass on their farms and livestock to their children.

They are waiting to see the fine print of a bill and will challenge it in the select committee stages.

The Government has changed the rules so a farmer cannot switch from one scheme to another to avoid paying tax. It has been backdated to August 18 last year.

The Herd Scheme treats a farmer's base stock as capital items so that yearly fluctuations in livestock values do not affect taxable income. 

The other, the National Standard Cost, is a Government-calculated average of the cost of rearing and growing each livestock class each year and is used to work out taxable income.

Dunne said it was never the intention of the scheme, introduced in the 1980s, to allow farmers to pick and choose valuation methods to minimise their tax.

"While the majority of farmers and their accountants have complied with the intention of the law, we have evidence some have chosen to change schemes for no other reason than to secure a tax advantage.

"That is clearly unfair to the majority of farmers who apply the livestock election rules as intended and pay the amount of tax they should."


Horticulture New Zealand is disappointed increased biosecurity did not get a mention in the Budget, despite the recent brush with the potentially disastrous Queensland fruit fly.

HortNZ president Andrew Fenton said the grower organisation was looking for stronger investment in securing New Zealand's borders.

"Any cost-cutting at the border is short-sighted. It risks devastating our primary industries and tourism for years to come," he said.

"The Government's short-sighted 'direct exit' policy has allowed 2.1 million passengers to enter New Zealand unchecked in the last 18 months. That's unacceptable to horticulture."

For the last eight months, no sniffer dogs had been at Wellington airport where more than 50 international flights landed each week.

"The recent Queensland fruit fly scare shows just how vulnerable our borders are. The Government's lax border security is putting New Zealand's economy and Primary Industry at unnecessary risk."

The Primary Industries Ministry said today no further fruit flies had been found in 1025 traps in Auckland since the first fly was discovered two weeks ago.

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If the traps remained empty tomorrow, restrictions on taking fruit out of the Avondale zone would be lifted on Saturday, the ministry said.

No adverse reactions had been felt in overseas markets.

- BusinessDay.co.nz

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