Assessing the Implications of Emerging Farm Income Streams for Primary Producer Tax Policy

Summary

This project will assess whether Australia’s current primary producer tax mechanisms remain fit-for-purpose in light of increasingly diversified farm income streams. Traditional tools like income averaging and Farm Management Deposits (FMDs) were designed to manage seasonal variability in farming income. However, many producers are now generating more stable income from activities such as carbon and biodiversity credits, renewable energy hosting, agritourism, and land leasing, raising questions about the alignment between tax policy and modern farm business realities.

The project will review existing tax policy principles and mechanisms, analyse the characteristics and scale of both traditional and emerging income streams, and assess whether current policy objectives—particularly managing income variability and building resilience—are supported or hindered by diversification. It will also identify unintended disincentives or exclusions in current eligibility rules.

Findings will inform a non-advocacy options paper presenting evidence-based scenarios for consideration in future policy discussions, followed by a final report tailored for government and industry. Targeted communication materials—including briefings, a media explainer, an industry presentation, and a webinar and factsheet—will support engagement with policymakers, industry leaders, advisors, and the broader agricultural sector.

Program

National Rural Issues

Research Organisation

Corporate Value Associates