In a letter addressed to Federal Treasurer Jim Chalmers, the Victorian Farmers Federation has said that outdated concessions are making it harder for farmers to pass down their farms.
VFF acting president Peter Star said the concessions do not reflect the realities of modern farming businesses.
“Family farms are being locked out of concessions that were specifically designed to help them transition between generations,” Mr Star said.
“Farmland values have increased dramatically over the past 20 years, but the thresholds governing access to CGT concessions have stayed frozen in time.”
Many of the concessions were drafted decades ago when farming asset bases were much smaller.
Based off ABARES and ABS data, the VFF estimates that an average farm asset base would have increased about six-fold since 2007.
“The average broad acre farm return on capital was just 0.6 per cent in 2023-24," Mr Star said.
“A farming family operating on margins like that simply cannot absorb the kind of CGT liabilities now arising when transferring a farm to the next generation.”
The VFF is proposing revised concession thresholds, starting with an increase of the retirement exemption cap from $500,000 to $2 million.
They are also calling for an increase in the aggregated turnover test from $4 million to $5 million, and an increase of the maximum net asset value test from $6 million to $20 million.
