Wednesday, 15 May 2024

Windfall gains tax

Bev McARTHUR (Western Victoria) (18:58): (901) My adjournment debate is for the Treasurer and concerns the distress caused by the application of Victoria’s windfall gains tax on small family farms. Budget figures show revenue expected from this new tax measure will be $40 million in 2023–‍24 rising to $97 million in 2026–27. There is no doubt that it will have a significant impact on the businesses and tax bills of Victorians, including small family farms. The action I seek is a response from the Treasurer to a number of concerns which have been raised with me by those affected and their professional advisers.

Point one relates to concerns that small family farming businesses would face double taxation, being liable both for the new state windfall gains tax as well as for the federal capital gains tax on the same property value. The federal code in the Income Tax Assessment Act 1977 explicitly recognises land tax costs at section 110.25. It does not, however, recognise windfall gains tax, and the implications of this are concerning. Is an amendment required? Secondly, provisions of the Windfall Gains Tax Act 2021 at section 42 grant the state government precedence over other lenders as the first charge on land. It has been suggested that this may breach existing bank lending covenant conditions, potentially triggering the call in of bank loans and jeopardising family farm businesses and the livelihoods of many people. Where windfall gains tax assessments have been deferred for up to 30 years or until the next dutiable transaction, this security for the government would create a real financial risk for lenders. Finally, what is the impact on succession planning on family farms? Does section 32 of the Windfall Gains Tax Act mean that any intergenerational transfer of land, a common part of succession planning for small family farms, will trigger a windfall gains tax debt? If so, making payment due within 30 days would force land sales and make this practice impossible.

I am not talking here about farmers who want to sell their land for development; I am talking here about parents who want to hand on their land and businesses to their sons, daughters and grandchildren. Windfall taxes should never be payable when no money is realised – when there literally has been no windfall. I ask the Treasurer to respond to these points and preferably to produce an exemption to the tax for family farmers, who simply want to keep on farming without being treated like would-be speculative property developers.