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13. How would farms be treated?

13. How would farms be treated?

Answer

Well they’re just another business so if the taxable earnings exceed the minimum required rate then the change doesn’t affect them. If it’s under they would be required to top up. Farms typically have cyclical swings in earnings so they’d be able to take advantage of any smoothing mechanisms the minimum required declared earnings regime might offer.

Showing 3 reactions

  • Deirdre Kent
    followed this page 2016-12-09 17:26:42 +1300
  • Alistair Newbould
    commented 2016-12-07 20:51:01 +1300
    More difficult is how to treat forestry where the income cycle is 28 years. For big players with stands of trees at different ages this is averaged over the time frame you consider. But for smaller players, where all the trees are the same age all the expense is at the front end and income at the end of the rotation. Foresters accept a large capital investment with no return until harvest. Having to pay tax on the capital annually would put people off planting trees. Small scale forestry is an important tool in our path to a low / no carbon economy. The averaging (“smoothing mechanism”) for forestry needs to be much longer. On the other hand, if the tax paid during the time of tree growth was credited against the income earned at harvest, then the disincentive would be lessened (but I think still present).
  • Oliver Krollmann
    followed this page 2016-12-07 09:52:02 +1300