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PM invites Windsor to supply more information: FOI on water payments needed.



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Further information contact Tony Windsor, Ph (02) 6761 3080 or 0427 66 8868

1 March 2006

PM invites Windsor to supply more information - FOI on water payments needed Independent Member for New England, Tony Windsor will be filing a Freedom of Information request for all documents relating to the granting of government funds to the Longpoint Irrigation Channel granted under the Namoi Valley Structural Adjustment Package and the $100m Achieving Sustainable Groundwater Entitlements program. Mr Windsor’s action follows an answer given by Prime Minister John Howard in Parliament on 14th February 2006 about the tax treatment of structural adjustment monies for the Namoi Valley Structural Adjustment Package. In addition, Mr Windsor received a letter from the Prime Minister dated 27th February 2006 where the Prime Minister has indicated that with more information, the Tax Commissioner may be able to clarify the different treatment of Government funds from two structural adjustment programs. Mr Windsor has raised the issue with the Prime Minister on a number of occasions highlighting that even though the compensation provided for in the Achieving Sustainable Groundwater Entitlements Package was for the loss of a capital asset, it was to be assessed as income by the Australian Tax Office. “It seems that compensation for the loss of water entitlements will be taxed whilst the granting of funds to provide for the construction of the Longpoint Channel near Carroll to alleviate the loss of water entitlement would not be assessed as taxable income. The question remains, why should some irrigators be treated differently under the Tax Act when the government funds in both programs are to overcome the same problem? The Prime Minister’s invitation to provide more information will require the release of all documents relating to the granting of those funds to make representations to the Commissioner for Taxation. The matter becomes more complicated by the fact that the Commissioner’s view on the treatment of the ‘Achieving Sustainable Groundwater Entitlements Package’ as assessable income was based on a ‘long standing general principal that bounties and subsidies for businesses are assessable income’. These payments are not bounties or subsidies - they are for a loss in capital asset forced upon the groundwater users by a change in government policy and as a result the value of the groundwater users assets have been reduced and their ability to get a return on their investment - earn a living, has likewise been reduced. The tax treatment of these payments should therefore be different from a bounty or subsidy. If this tax precedent is set for these groundwater users, it will be used against any farmers in the future who have their entitlements or property rights impinged upon,” Mr Windsor said. TONY WINDSOR MP

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