By Lauren Henry

Ahead of a farmers forum last week in St Arnaud, The Nationals leader Matt Canavan announced a Coalition government plan to scrap Labor’s capital gains tax changes to protect Australian farmers.

Mr Canavan, a Queensland-based senator, was in the Mallee electorate last week on the invitation of local MP Anne Webster, who organised a farmers forum at St Arnaud Town Hall.

Shadow agricultural minister Darren Chester and Nationals Victorian leader Danny O’Brien were also in attendance at the forum, which attracted more than 150 people – mostly farmers from across the region.

At a media conference prior to the forum, St Arnaud accountant Peter Knights joined Mr Canavan and Dr Webster to discuss the impact of increased taxes on farmers and regional communities.

Mr Canavan said a future Coalition government would immediately stop many of Labor’s taxes, including changes made to the capital gains tax, CGT, which would also impact farmers who were not made exempt.

He said the recent Federal Budget was built on a ‘mountain of ignorance’ and did not understand the impact it would have on people, especially those in regional Australia.

Mr Canavan said the Coalition  called on the government to undertake ‘a proper parliamentary inquiry into the changes’ to the various taxes proposed in the Budget.

“Returns for Australian farmers are skewed towards capital gain, not income, and so any increase in the taxation of capital gains is going to hit Australian farmers the hardest,” he said.

“Farming will be one of the industries hit most, particularly by the changes to capital gains taxation. 

“The government says they’re moving from just a nominal system to a real system and the treasurer is tying himself in wraps to say that some industries have been over-taxed and others under-taxed. 

“The situation is for Australian farming and farmers is that they do generate most of their returns through capital gains.”

Mr Canavan said according to ABARES data, the average broadacre farm made a rate of return on capital of 0.6 per cent in 2023-24, but the average broadacre farm had increased by 9.8 per cent per year, on average, over the past decade.

“Because of that skew towards capital gains, the government’s own calculations, the modelling the government released earlier this week, show that farmers, based on those numbers, based on historical returns, would face an increase in their capital gains tax rate from 23 per cent to 36 per cent under the government’s changes, and they will be one of the hardest hit industries.”

Mr Knights, of Knights Norfolk Accounting, said it could not be understated how much of a negative impact CGT changes would have on farming families.

“As far as it being a death tax, I know CGT’s not paid on death, but it’s paid certainly on the transfer by the beneficiaries through to the next lot, and we have to make those pathways easier to the next generation coming through so they can put the productive assets in the productive hands,” he said.

“There’s an old saying, you can’t eat bricks and mortar – well, you certainly can’t eat land.

“When we transfer assets, we don’t release any cash – no money comes from that process if we’re transferring it through a multi-generational process and moving those assets through to maintain them as family farms.

“We don’t want to see a return to the days of probate where family farms had to be sold to be able to pay the tax.”

Mr Knights, also a farmer, said his father was still shaken by the impact of the probate regime in the 1960s and 1970s, and having to borrow money to continue farming. 

“Whilst small business CGT concessions remain unchanged in this Budget, the eligibility rules are also unchanged for 20 years and fast losing relevance and effect to ensure families stay farming. If nothing else these concessions need modernising,” he said.

“From a farming industry point of view, we have to make sure we can take assets through to the next generation, to those most capable of enterprising, leveraging assets and hard work, producing for the benefit of everyone else.

“When times are tough, traditionally, family farms still show up, but corporate farming must answer to shareholders. 

“This is a productivity issue. If we increase tax barriers to transfer of farmland, it puts that business at risk and stability of food production at risk.”

Mr Knights said farmers were under a lot of threats and pressures – from the impact of the net-zero, renewables and VNI West projects and ‘ridiculously’ placed Renewable Energy Zones – as well as government taxes.

“And as far as trust changes, there’s a lot more in the detail and we don’t use trusts for tax minimalisation – forget that – we do it to make sure we’ve got the right structure to make sure our businesses can move through generations, and are protected,” he said.

“We protect our assets so we have sustainable businesses, not to avoid tax.”

Mr Chester said if not scrapped, the CGT changes would also be a hammer blow to many young farmers stressed about whether they could take on debt, as well as the risk and frustration inherent in farming life.

“Our farmers might suffer low annual returns but can keep going through a drought, knowing that their land value will probably increase,” he said.

“If the government is going to consult the start-up industry on its tax changes, it should consult with Australian farmers as well, who are equally affected.

“In regional Australia we grow great food, we grow great fibre and we grow great kids. But they need to see a future for them in our world-class agricultural sector, and not a future filled with higher Labor taxes.”

The entire May 27, 2026 edition of The Weekly Advertiser is available online. READ IT HERE!

The entire May 27, 2026 edition of AgLife is available online. READ IT HERE!