Farmers call for stamp duty consistency on multi-peril

Farmers call for stamp duty consistency on multi-peril | Insurance Business Australia

Farmers call for stamp duty consistency on multi-peril

Farmers are calling for stamp duty consistency on multi-peril crop insurance (MPCI) so they could manage their risks better.

The stamp duty paid on MPCI differ in each state, with farmers in South Australia facing the highest stamp duty on insurance premiums at 11 per cent, and NSW the lowest at 2.5 per cent, according to The Weekly Times.

In Victoria, farmers are offered an exemption from the 10 per cent stamp duty rate on hail insurance policies for cereal crops, but no exemption for other perils such as drought or flood. To complicate things further, they were also not given stamp duty relief against hail for their high-value canola or legume crops, the report said.

In Western Australia, meanwhile, farmers pay a 10 per cent stamp duty on MPCI and regular crop insurance.

In addition, farmers are paying stamp duty on the GST amount as stamp duty is applied after GST in all states, The Weekly Times said.

According to a recent Independent Pricing and Regulatory Tribunal multi-peril crop insurance review, farmers could spend $25,000 to $50,000 a year on MPCI policies. On a $50,000 MPCI policy premium, for instance, the difference between the stamp duty paid in SA and NSW would be about $5,000.

Niall Blair, NSW primary industries minister, who reportedly is planning to offer MPCI premium subsidies following the recent review, did not offer comments on duty relief and a spokeswoman said they were still studying the tribunal’s final report.

Darren Arney, Grain Producers of South Australia chief executive, said they were lobbying for stamp duty exemption on MPCI products as “a way of mitigating against droughts and floods.”

The Liberal Party plans to abolish stamp duty on MPCI policies if elected in 2018, said SA state opposition agriculture spokesman David Ridgway.

“Farmers take the burden off taxpayers in a drought [with multi-peril policies]. It seems a bit of a no-brainer to exempt stamp duty,” he said.

Ridgway said that last year, NSW farmers paid three and a half times more in MPCI premiums than SA growers, but SA growers paid more in stamp duty on those policies.

A spokesman for SA treasurer Tom Koutsantonis identified the very high premiums on MPCI policies and minimal benefit of the Liberal proposal to those who take out the insurance as the reasons why very few farmers had taken up MPCI, the report said.

Koutstantonis said the Labor Government had introduced other measures including the abolishment of stamp duty on plant and equipment and stamp duty exemption for farms transferred between family members.

In WA, Tony York, WA Farmers Federation president, said they were actively pushing for the government to exempt stamp duty on MPCI products, citing the move as a form of risk management.

Darryl McCrae, director of multi-peril provider SureSeason Australia, said that for MPCI products to mature, there is a need for consistency across the states.

“For multi-peril [insurance] to be a success in Australia there is risk to the insurers, and we have to have geographical spread,” McCrae said.

David Jochinke, Victorian Farmers Federation president, said the existence of the stamp duty itself was a problem.

“When GST came in, we thought stamp duty would be a thing of the past along with payroll tax,” he told The Weekly Times.

Prior to the introduction of GST in 2000, the states and the federal government agreed to eliminate “a number of existing inefficient taxes which are impeding economic activity” and “review the need for retention” of stamp duties in exchange for GST revenue, the report said.

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