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Monday, 2 June 2003
Page: 15696


Mr Kelvin Thomson asked the Treasurer, upon notice, on 4 February 2003:

(1) Are the main tax concessions for farmers to promote sustainable land use (a) accelerated depreciation for water management costs, with full depreciation over three years, (b) the Landcare deduction for conservation related capital works, with full deduction in the year that the expense was incurred and (c) the Landcare offset conservation related capital works rebate if not eligible for the Landcare deduction.

(2) Is the cost of these concessions around $20m per annum; if not what is the cost of these concessions.

(3) Has any assessment or monitoring of the environmental benefit of these concessions being carried out; if so, what has been its conclusion.

(4) Has he considered any alternative funding arrangements or tax concessions to promote sustainable land use; if so, what alternative ideas has he considered.

(5) Can he provide an estimate of the cost to revenue of taxing farmer's income based on the proportion of their land which is cleared, for example, farmers whose land is 90% cleared pay tax on 90% of their income, and farmers whose land is 10% cleared pay tax on 10% of their income.


Mr Costello (Treasurer) —The answer to the honourable member's question is as follows:

(1) The main tax concessions for farmers to promote sustainable land use are:

(a) a three-year write-off for the cost of facilities to conserve and convey water, such as dams

(b) an immediate deduction for capital expenditure on landcare operations, such as preventing land degradation, and

(c) the landcare and water facility tax offset. However, the offset was only available for eligible expenditure incurred between 1 July 1997 and 30 June 2001. The water facility offset was allowable in equal parts over three years and claims will still be made in the 2002 and 2003 financial years for eligible expenditure incurred prior to 30th June 2001. This offset was an alternative to the deductions which otherwise would have been allowable and provided low-income taxpayers with a greater tax benefit than the equivalent tax deduction.

(2) Yes.

(3) Not by the Australian Taxation Office.

(4) The Government is making a significant contribution to promoting sustainable land use in addition to these tax concessions. Both the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality promote sustainable land use. Total Commonwealth investment in the Natural Heritage Trust is more than $2.5 billion. The Commonwealth has also provided $700 million towards the $1.4 billion National Action Plan for Salinity and Water Quality. The 2002-03 Budget announced funding of up to $25 million to support eligible primary producers in adopting Environmental Management Systems.

(5) An estimate of the cost of providing such a concession to farmers cannot be made by the ATO and work done by the Australian Bureau of Agricultural and Resource Economics (ABARE) doesn't collect the detailed information needed to answer this question.