The National Farmers Federation is calling for the Federal Government to make changes to legislation regarding Managed Investment Schemes.
Last week the Federal Court of Australia found that investor contributions for MIS are eligible for a tax deduction.
However, NFF Vice President Charles Burke said the NFF's concern was not whether MIS was lawful, but whether it was appropriate.
He said the Australian government had to make decisions about whether to change the laws relating to investor tax deductions.
“Despite the law as it stands, few dispute the reality that investment decisions in MIS companies and their activities are overwhelmingly based on one thing, upfront tax deductibility," Mr Burke said.
"Remove this taxpayer funded rebate on MIS investments and there is often little, if anything, to attract investors."
Mr Burke said MIS primarily focussed on industries with a high proportion of upfront expenses, with little, regard to generating output returns.
He said there were rarely genuine long-term investments.
“While this highly questionable practice persists, genuine investment decisions in regional Australia are skewing land use and resource allocations, while distorting property values.
“Therefore, the Federal Court’s ruling has no bearing on the real issue, which is that the MIS mechanism does often not promote sound investment decisions in regional Australia."
Mr Burke said the NFF would continue to work with the Australian Government, through its review of agribusiness MIS, to argue the case that while farmers supported investment in agriculture, MIS was not the most appropriate vehicle for regional Australia, particularly when fundamental land use decisions were involved.
“Australian farmers are actively engaging in the Government’s review of non-forestry MIS, which is taking an evidence-based approach to whether these schemes are appropriate for attracting investment into regional Australia.”
