FARMERS will again be forced to compete on an uneven playing field after the Federal Court ruled that investments in non-forestry Managed Investment Schemes are deductible under existing tax laws.
Victorian Farmers Federation president, Simon Ramsay, said the VFF was disappointed with the outcome of the case and the group would lobby the Federal Government to close the loop hole.
"The concerns that have been raised by the farm sector in the past in regard to MIS have been well founded,” Mr Ramsay said.
"These concerns have focussed on the distortions that the growth of this form of business structure are having on rural land and irrigation water markets, and the commercial sustainability of commodity prices.
"The reality is that investment decisions in MIS companies are overwhelmingly based on upfront tax deductibility. Once taxpayer dollar refunds on MIS investments are removed there is often little, if anything, to attract investors.
"The continuation of these schemes will see investors continuing to base their decisions on the tax deductibility of the investment rather than the sustainability of the agricultural sector. MIS are rarely genuine long term investments.
"While farmers support investment in agriculture, short term tax gains are not the correct formula for long term success.”
He said the VFF had submitted evidence to the ATO's review of non-forestry MIS outlining the problems with these types of investment vehicles.
"The VFF will continue to call for the Federal Government to address the distortions caused by MIS across all agricultural industries,” Mr Ramsay said.
