Minister to look into concerns farmers liable for tax on culled M bovis cattle

The Minister for Revenue has asked his officials to look into a tax issue which could see farmers affected by the M bovis outbreak end up with a hefty bill.

The has issue been raised by Federated Farmers which wants ministerial support for a change to tax legislation for farmers whose breeding stock have been culled as part of the eradication effort.

"Currently farmers whose dairy or beef breeding cows are valued on their books under the National Standard Cost scheme and whose cattle are culled as part of the Mycoplasma bovis response will most likely end up with a hefty tax bill," said Federated Farmers economics spokesperson Andrew Hoggard.

"This is not a fair outcome for affected farmers and we believe it's an unintended consequence of the tax legislation."

Hoggard said farmers owning cows culled under a Notice of Direction from MPI will be liable for tax on the difference between the total proceeds received (slaughter returns plus top-up compensation) and their book value. 

"For farmers on the Herd Scheme, there should be no significant tax issues. 

"However, for farmers valuing their cows on the National Standard Cost Scheme, the difference between total returns per animal and their book value can amount to hundreds of thousands of dollars, and they cannot offset this taxable income by writing the value of the replacement cows back down to the value of the cows they replaced in their books," he said.

Revenue Minister, Stuart Nash has asked his officials to look at a way forward.
Revenue Minister, Stuart Nash has asked his officials to look at a way forward. Photo credit: Newshub

A spokesperson for Revenue Minister, Stuart Nash, said he was aware of the issue and had asked his officials to look at a way forward. 

"It appears to affect tax returns for the 2018-19 year which are due by the end of March 2020," they said.

Nash will respond to Federated Farmers once he receives advice from IR about options for addressing the concerns.

"He is committed to ensuring the tax system is fair and is simple and efficient to operate."

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