Rudd's move on hobby farms

[Jovial Monk]

Hmmmm buy a holiday home but one with 10-20 acres (5-10Ha) land attached to it. Buy a cow or sheep to graze on it, register a business name or $2 company--and hey presto you are a primary producer! So the interest on the mortgage is now a business expense, deduct it! Buy a ride on mower--business expense! Petrol to drive to hol, errrr farm is now a business expense. Hmmm country, oh need a 4wheel drive and, you guessed it, that is a business expense as are lease or finance costs!

Of course, the 'business' never makes any money but think of all those GST and PAYE tax deductions! States used to offer cheaper registration for people in country areas and suddenly the hobby farm is your main address and you save on each of the cars you, your spouse and kids drive. You could also rent the house out, cash basis, for friends to stay in occasionally.

A hobby farm is one with less than say 50Ha and continually fails to produce any income.

There will be a million perks like this to find and close to make the tax system fairer and more equitable--our previous Treasurer was a lazy sod who did fuck all and complained about his workload.

[mantra.]

There were complaints about this years ago. Rich investors could have shareholdings in more than one of these farms and it would wipe out all their tax. When they've had enough - various councils or state governments are bribed and there you go - the farms are subdivided and a huge profit is made. Great private enterprise, but unfair to ordinary taxpayers who have to pay for it at both ends.

It doesn't apply to those who live and own their own farms as their main source of living.

[Jovial Monk]

Sooner or later negative gearing will have to be addressed to make more room for homebuyers: negative gearing means lots of investors are buying up houses to rent mainly to offset other income elsewhere. Will have to be handled very carefully.

The FHO grants will cut out in June--not sure that is a good move but can't subsidise forever I guess.

[Jovial Monk]

Exactly Mantra. A boondoggle swindling the tax payers!

[skippy]

From what ive seen I think this is a good idea( see that noiq) as I live on my place I doubt its going to affect me too much and I have two of these pit street farmers on my road who are screwing the system in the very way described.
I'll be interested to see what it does to the price of rural real estate tho, if all these blokes are offloading their farms there'll be some bargains but it will also mean my place will drop in value.

[mantra.]

Yes Skippy I saw IQ's remark - he got it wrong again. But this rort has been going on for ages. I noticed Celetina said something about the wealthy will always find ways to rort the system - and this is true unfortunately - although they will have to start getting a bit trickier.

Yes negative gearing is an even bigger rort by pushing house prices up. During the coalitions hay day punters were buying a dozen or more houses up at a time and not paying a cent in tax. At the end they could clean up and again ordinary taxpayers subsidised their profits.

As it's now predicted by the IMF that Australia is going to go into this recession harder and faster than many countries - although Glen Stevens is saying the opposite - we should use this as an opportunity to get back to basics and hopefully Rudd will have the good sense to start closing a lot more loopholes.

[Jovial Monk]

Not only will they be closing loopholes they will be tougher on corporate misbehavior. Not many people have heard of Chris Bowen our Assistant Treasurer but he is busy introducing the regulation and laws against corporate misbehavior Tip was too lazy (or didn't want to hurt his big mates) to do. Decade long backlog of this stuff but Bowen is working hard on it--and it is harder to do this in a recession than in a boom.

[Jovial Monk]

Sheepy has officially left earth for some other strange planet.

A recession we didn't have to have????? We are a trading nation and the nations we trade with are reeling from a worldwide recession. That means they don't buy our stuff no more. Now on that strange planet Sheepy resides on that doesn't mean we are affected! Voodoo economics indeed!

Sheepy would be well advised to steer away from commenting on the economy or finance as he has no idea on either.

[Jovial Monk]

If a few Pitt St farmers sell their hobby farm (and I don't think they will) plenty of retirees etc looking to buy a house and small piece of land to be self sustaining.

[Jovial Monk]

A big 'courageous' move would be to start rolling back Howard's overgenerous gestures to self funded retirees. These were Howard's biggest support base (as were pensioners generally) so he shamelessly outright bought their vote. People on $80,000pa can claim the pension, a staggering amount of property can be owned and you still get the pension. And on slightly more income/property you might get part pension or other benefits. This makes increasing the pension significantly more difficult.