David Littlerpoud MP David Littlerpoud

Tax changes for farmers to bolster land stewardship

March 21, 2022

As part of our plan for a stronger future, the Morrison Government will apply concessional tax treatment to primary producers that generate revenue from the sale of Australian Carbon Credit Units (ACCUs) and biodiversity certificates. This will encourage carbon abatement activities and help Australia deliver on its net zero emissions target by 2050.

These changes will provide farmers with an estimated $100 million benefit through the tax system over the forward estimates.

Under the new tax regime, farmers will treat revenue from the sale of ACCUs as primary production income, providing access to income tax averaging arrangements and the Farm Management Deposit scheme. Revenue from ACCUs will be recognised in the year of sale to support cash flow. The treatment of biodiversity certificates will be aligned with the new tax regime for ACCUs.

Minister for Agriculture and Northern Australia, David Littleproud MP, said today’s announcement will further encourage carbon abatement and biodiversity activities, while providing primary producers with a diversified source of on-farm income.

“We want to give genuine farmers more options when deciding to hold or sell their credits—whether for investment purposes or to enhance the environmental credentials of their operations—without being penalised,” Minister Littleproud said.

“This is removing barriers for farmers who want to do the right thing by their farm and the changes are expected to deliver $100 million to their bottom line over the next four years.”

Minister for Industry, Energy and Emissions Reduction Angus Taylor MP said the changes would encourage more farmers to take part in the Emissions Reduction Fund and earn revenue from ERF projects.

“The government is ensuring Australian farmers are rewarded for bringing down emissions,” Minister Taylor said.

“The new tax changes mean farmers will get an even greater benefit from the income they earn selling Australian Carbon Credit Units.”

“Labor’s Safeguard Mechanism carbon tax will increase the cost of running an energy-intensive business in Australia – hitting everything from fuel refineries to fertiliser plants. That means higher costs and lower productivity for Australian farming operations.”

Assistant Treasurer, Michael Sukkar MP, said this announcement is another practical step by the Government to reduce emissions.

“A core element of the Morrison Government’s Economic Plan is to put in place incentives for a private sector led economic recovery and target higher value add activities which will deliver productivity growth,” Minister Sukkar said.

“The tax changes announced today will encourage farmers to undertake critical investment in carbon abatement while also providing Australia’s innovative agriculture sector with ongoing cash flow support.”

Through technology and lower taxes, the Morrison Government is ensuring that farmers and primary producers both benefit from and drive Australia’s clean energy future.

When Labor was last in power, they partnered with the Greens to roll out a carbon tax and at the last election, proposed $387 billion in higher taxes.

The Morrison Government has delivered lower taxes, more jobs and a stronger economy. Labor’s high spending and taxing agenda will put this all at risk.