Call to Parliamentarians: Protect Family Farms and Small Businesses from Harmful ‘Super Tax’

By Robert Heyward

Farmers and small business owners are joining forces to express serious concerns about the Government’s proposed superannuation changes, warning that these changes could have devastating impacts on thousands of hardworking Australian families and small businesses.

The National Farmers’ Federation (NFF), representing the agricultural sector, and the Council of Small Business Organisations Australia (COSBOA), which advocates for 2.5 million small businesses across the country, are urging Parliament to amend the legislation sensibly.

NFF President David Jochinke emphasized that with the right amendments, the Bill* could achieve its intended goals without causing unnecessary harm to small businesses.

“Farmers and small business owners are united in our view that this Bill will have unintended consequences on the operations and succession planning of small businesses across the country, particularly for those who structure their businesses through a Self-Managed Superannuation Fund (SMSF),” Jochinke said. He explained that in agriculture and small business, older farmers or business owners often hold their assets in an SMSF and lease operations to their children. This arrangement provides retirement income for the older generation while offering the next generation an entry into the business.

The peak bodies are particularly concerned about the Bill’s proposed taxation of ‘unrealised gains’ on holdings, which could impose signifcant fnancial burdens on thousands of small businesses.

Luke Achterstraat, CEO of COSBOA, highlighted the potential negative impact on small business owners nationwide. “We urge parliamentarians to consider the real-world impact of these tax changes. Our small business owners deserve policies that support, not hinder, their hard work and contributions to the economy,” Achterstraat said.

He warned that the new tax on unrealised gains could result in tax obligations that could consume a signifcant portion of an owner’s annual income or even exceed it. “This could leave the older generation in a diffcult position where they might have to sell their assets to meet this new tax obligation or raise lease rates so much that their children’s businesses become unviable,” he added.

The Government has claimed that this Bill targets the wealthiest individuals with substantial superannuation accounts, not family-run small businesses. However, these concerns have been echoed by other groups providing fnancial services and advice to small businesses and farming families, including The Tax Institute, The Financial Advice Association of Australia, and The Institute of Financial Professionals Australia.

The NFF and COSBOA are calling on the Government and parliamentarians to address these concerns, work together, and make sensible amendments to the Bill to ensure that Australian families and small businesses are not adversely affected.

Additional Background on SMSF Self-Managed Superannuation Funds (SMSFs) are commonly used in small businesses, particularly in managing assets and business succession.

In agriculture, older farmers often hold their assets in an SMSF and lease the operations to their children, providing retirement income while facilitating the next generation’s entry into farming.

Evidence provided to the Senate Economics Committee Inquiry into the Bill by the SMSF Association estimated that over 17,000 SMSF accounts in 2021/22 held farming land, with over 3,500 of these accounts immediately impacted by the new tax. Without indexation to the base threshold, many more are likely to be affected in the coming years. When considering SMSFs with assets used in other small businesses beyond farming, the number of affected individuals could be signifcantly higher.