This article first appeared in The Land newspaper on 03.09.26
By Jane Hegarty, Chair of the NSW Farmers Business, Economics and Trade Committee
With more farms diversifying their income to increase productivity and economic viability, there is a need for government legislation to keep pace with this change.
Current Land Tax legislation states that land used for primary production is exempt. However, today's modern farms are being limited by this definition.
For example, if you are a farmer in the horticulture industry and pay an employee to pick your fruit, which is then sold to a wholesaler to be marketed, it is considered primary production. However, if you operate a pick-your-own fruit business and sell the fruit picked by the customer, who has provided the labour, this may not be considered primary production income.
Small-scale value-adding activities, such as packaging, processing and agritourism, are being interpreted as competing uses of land for primary production under current rules, even though farming has evolved as producers manage risk and innovate in different ways to ensure they can continue producing food and fibre.
The inconsistencies in the current legislation mean that a number of farmers are being asked to prove their status as a primary producer through a rigorous audit process by Revenue NSW, which can result in farmers having to pay hundreds of thousands of dollars in Land Tax.
The current legislation disadvantages producers in NSW who have incorporated value-adding activities into their businesses compared with counterparts in other states, such as Victoria. Farmers are receiving mixed messages, as both state and federal overnments have been encouraging diversification as a safety net to mitigate risks such as extreme weather events outside their control, while also managing income volatility and changing market conditions.
The NSW Farmers Business, Economics and Trade Committee is currently asking the State Government to review its definition of primary production to reflect modern farm businesses.
The Committee is also calling for a pause on current compliance audits until the definition is reviewed and these issues are resolved.
