Minister calls on Federal Government to reconsider MIS tax decision

7/2/07
Agriculture and Food Minister Kim Chance has called on the Federal Government to reconsider its decision to exclude the grains industry and new agricultural industries from upfront tax concessions under managed investment schemes (MIS).
In an announcement made by the Federal Government last night, from July 1, 2007, investors in managed investment schemes for non-forestry products may no longer be able to claim upfront tax deductions.
Mr Chance is concerned that this decision could have a significant impact on the future growth of new agricultural industries in Western Australia and on the emerging use of MIS schemes as a risk management tool in broadacre agriculture.
"For instance, there is significant opportunity for the development of a new red grapefruit industry in the Kimberley to supply a strong and growing Asian export market," he said.
"But the investment required is of such a magnitude that it would be unlikely to proceed without the taxation benefits that MIS can provide.
"In broadacre cropping, MIS products allow farmers to better manage the risks associated with price and adverse weather events.
"This is clearly a benefit for the State's grain producers who are required to rely on increasingly uncertain rainfall patterns.
"I believe that the use of MIS tax concessions for these types of examples or where there is clear market failure is defendable.
"While I am supportive of parts of the Federal Government's announcement, by excluding new industries and broadacre farmers the Federal Government does appear to be throwing out the baby with the bath water.
"I have previously expressed concerns about the impact of some MIS schemes pushing up land prices and causing difficulties for farming families in some areas and I believe these problems can be addressed without dismantling the whole scheme."
The Minister urged the Federal Government to respond quickly to these issues and to ensure that the Australian Taxation Office provided business certainty as to what did or did not constitute the operation of a business in the context of MIS.
He said any proposals to restructure the MIS should be done through a fully consultative process between industry and government.
Minister's Office - 9213 6700