A 150 per cent tax break on multi-peril crop insurance would be a “strategic investment” for the Federal Government, a new report argues.
The report, from accountancy and advisory firm Williams Hall Chadwick, has found a research and development-style tax deduction on insurance premiums would give a 7:1 return to the Government while protecting farmers.
It comes as the grains industry and Federal Department of Agriculture rethink how to encourage more farmers to take up multi-peril crop insurance.
The Government’s existing scheme, which offers $2500 rebates to cover the costs of applying for and securing crop insurance, has flopped, despite $20.2 million being available over four years.
Just 60 applications nationwide were made and $107,000 worth of rebates allocated between the scheme’s introduction in March last year and May this year.
Grain Producers Australia first suggested a 150 per cent tax break in 2015. A spokeswoman for Agriculture Minister Barnaby Joyce said the suggestion was not supported by the Government following consultations on the agriculture white paper.
But the idea was raised again this July by Australian Farm Institute head Mick Keogh, prompting WHC director Andrew Perkins to model the concept.
He found a 150 per cent tax deduction would lead to increased productivity due to more certainty — meaning more tax revenue for the Government, balancing out the tax break.
GPA and GrainGrowers Ltd, who met with the Department on the issue last month, say a tax break policy should be viewed as a longer-term prospect.
GPA chairman Andrew Weidemann said further educating farmers in financial skills and looking at existing multi-peril crop insurance products was the first step.
GrainGrowers general manager David McKeon said state governments’ differing stamp duty on premiums was a “real inhibitor” distorting the market, which was still in its early stages in Australia.
A spokeswoman for Agriculture Minister Barnaby Joyce said the Department was working with industry to potentially include “additional options” to drive uptake of crop insurance.
She said the $2500 rebate scheme will continue until June 2019.
Source – http://www.weeklytimesnow.com.au