A new report has proposed a 150% tax break on multi-peril crop insurance, which it argued would be a “strategic investment” for the federal government.
The report from an accountancy and advisory firm comes as the grains industry and the Federal Department of Agriculture are rethinking how to increase MPCI uptake after the failure of the existing $2,500 rebate scheme, which saw a mere 60 applications and $107,000 worth of rebates allocated since its introduction in March last year until May this year, despite $20.2 million being available over four years.
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The Williams Hall Chadwick (WHC) report has found that a research and development-style tax deduction on insurance premiums would provide the government a seven-to-one return while protecting farmers, The Weekly Times reported.
The 150% tax break was first suggested in 2015 by Grain Producers Australia (GPA), but was not supported by the government after consultations on the agriculture white paper, said a spokeswoman for agriculture minister Barnaby Joyce.
The idea was raised again this July by Australian Farm Institute head Mick Geogh, which led WHC director Andrew Perkins to model the concept.
The study suggested that a 150% tax deduction would bring more certainty to the grains industry, leading to increased productivity that, in turn, would yield more tax revenue for the government, balancing out the tax break, the report said.
GPA and GrainGrowers both agreed that the tax break policy should be viewed as a longer-term prospect.
GPA chairman Andrew said farmers should first be further educated in financial skills and in considering existing MPCI products. GrainGrowers GM David McKeon said the differing stamp duty of state governments was a “real inhibitor” distorting the fledgling MPCI market in the country.
A spokeswoman for the agriculture minister said the department was working with the industry to potentially include “additional options” to improve MPCI uptake, and that the rebate scheme will continue until June 2019, the report said.
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