Tax relief for affected farmers

The Government is offering tax relief to farmers affected by Mycoplasma bovis in light of the extra burden created by coronavirus.

Farmers whose herds were culled may be eligible to spread their income over several years to avoid an undue tax burden, Revenue Minister Stuart Nash says. The Cabinet had agreed to the law change but it was yet to go through Parliament, he said.

Farmers were facing uncertainty from the fallout from the Covid-19 coronavirus around the world. For farmers that had been affected by M bovis, this was an extra burden and the decision to offer tax relief for payments related to M bovis losses would help alleviate some of those concerns, Nash said.

‘‘Farmers received compensation for the difference between the normal market value of the stock and the amount received when the stock was culled. They could then restock their farms to replace the culled animals.

‘‘A number of affected farmers are using certain cost schemes to value their breeding stock, which means a significant tax bill can arise in the year they receive a compensation payment.’’

Nash had been in discussions with Federated Farmers and Chartered Accountants of Australia and New Zealand and as a result of those talks decided to change the law to allow the extra income to be spread over six years.

While it would be subject to conditions, it would be applied retrospectively from the 2018 financial year. ‘‘This should help farmers to deal with their tax obligation in what is an already stressful time,’’ Nash said. More information is available at https:/ /taxpolicy.ird.govt.nz/bovis.

Federated Farmers national vice-president Andrew Hoggard said the problem only came to their attention during the

Christmas holidays. He was grateful the decision had been made quickly and in time for the end of the financial year.

Nash and Agriculture Minister Damien O’Connor and their officials deserved a great deal of credit for acting in such a timely manner, Hoggard said. ‘‘We thank them sincerely on behalf of some very worried farmers.’’

Federated Farmers general manager of policy and advocacy Gavin Forrest said the tax relief applied to farmers who had compulsorily culled either dairy or beef breeding cows, or would have to in the future and were valued under the national standard cost scheme.

The additional income could be evenly spread over the six years after the year of the cull, if the culled livestock were substantially replaced within 12 months; and if the income was from the culling of breeding stock (including their growing replacements) that had been valued under either the national standard cost scheme or the self-assessed cost scheme.

‘‘Anybody who ended up with a tax bill for an increase in the value of their cows on the books, book income that was not associated with a cash income, anybody in those circumstances should get relief from this.’’

Forrest could not quantify how many farmers would fall into that category but said it would not be that many.

However, those affected had been under huge stress. One farmer had a tax bill for $150,000 at the end of the month. Now there was certainty of relief.

The policy would also give confidence to farmers who were going through the trauma of culling cows right now, Forrest said.

STUFF Federated Farmers vice-president Andrew Hoggard says the law changes are ‘‘great news at an uncertain and worrying time’’. Left, Revenue Minister Stuart Nash says farmers whose herds were culled may be eligible to spread their income over several years to avoid an undue tax burden.