Finance Minister Katy Gallagher, Prime Minister Anthony Albanese and Treasurer Jim Chalmers.

VICTORIA’S peak farming body is hoping there is still time to achieve increases in small business capital gains tax concession thresholds to suit modern farming, despite last week’s Federal Budget not recommending any changes.

The Victorian Farmers Federation has called on the Federal Government to modernise the thresholds, warning outdated settings are putting family farm succession at risk across Australia.

The VFF is calling on the government to reset and index the key concession thresholds, proposing increasing:

• maximum net asset value test from $6 million to $20M;
• the aggregated turnover test from $2M to $5M, and;
• retirement exemption lifetime cap from $500,000 to $2M.

In a letter to Federal Treasurer Jim Chalmers, the VFF said it has welcomed aspects of the 2026-27 Federal Budget, including the exemption of primary production income from the new minimum tax on discretionary trusts, while urging the government to address the erosion of small business CGT concession thresholds that have remained unchanged for nearly two decades.

More CGT discussions to be had: VFF

VFF chief executive officer Charles Thomas said the thresholds are also on the NFF’s agenda with the Federal Government and the federation has raised it with Treasurer Chalmers before the budget.

“He obviously chose not to do much with that, but he did act on the trust stuff so I think he is half-listening.”

Mr Thomas pointed to comments from Mr Chalmers that he would consult on elements of the trust tax and CGT to refine the government’s position before bringing these measures to parliament as indicating it was not too late to argue for increased concession thresholds.

“He said he would consult on how primary production could be separated from other income types in discretionary trusts, and he said he would consult with the tech sector about the CGT changes and how to make it less impactful on them.

“He hasn’t said he will talk to us about CGT on farms, but we figure, since he is talking to us about trust and he is talking to others about CGT, there is a window here…”

Mr Thomas also cited the involvement of the cross-bench on superannuation.

“There is scope, even if the government doesn’t want to talk about it, I think we will have an audience in parliament to potentially get some movement as well.

“We’ve spoken to the Coalition in the last 24 hours on it.”

The National Farmers Federation, in its submission to the Senate Select Committee on productivity earlier this year, encouraged consideration of lifting the small business entity threshold, in particular, the asset test. It also submitted that the current limits have been held at the same rates since 2007, whereas the income generation and asset bases of small businesses have grown since then by simple virtue of CPI growth.

The NFF also said it supported reconsideration of some of the associated criteria required to access exemptions, including age eligibility and the timeframe of asset ownership.

VFF acting president Peter Star said current concession thresholds no longer reflected the reality of modern farming businesses.

“Family farms are being locked out of concessions that were specifically designed to help them transition between generations.

“Farmland values have increased dramatically over the past 20 years, but the thresholds governing access to CGT concessions have stayed frozen in time,” he said.

“We’re working off a framework that is no longer relevant.”

The VFF said the $6 million maximum net asset value test and $2 million aggregated turnover test were introduced in 2007, while the $500,000 retirement exemption cap has not changed since 1999.

Family farm asset-base increase

Using ABARES and ABS data, the VFF has estimated the asset base of a typical family farm has increased around six-fold since 2007, driven by rising land values and ongoing consolidation required to maintain commercial viability.

At the same time, farm profitability has remained extremely low.

“The average broadacre farm return on capital was just 0.6 percent in 2023-24.”

“A farming family operating on margins like that simply cannot absorb the kind of CGT liabilities now arising when transferring a farm to the next generation,” Mr Star said.

The VFF said the proposed figures represented a moderate and practical recalibration based on published economic data and should be indexed annually into the future.

“This is not about creating new concessions.”

“It’s about restoring the original intent of the law so genuine family farming businesses are not penalised simply because land values have risen over time.”

Mr Star said reform was essential to support farm succession, regional communities and long-term food and fibre production.

“We appreciate the government’s willingness to consult on these reforms and we look forward to working constructively with the Treasurer and his office on practical solutions.”

According to a Grains Research and Development Corporation farm business fact sheet, work by AgProfit with a continuous group of broadacre Wimmera-Mallee family farms from 2013 to 2023, showed that the average net assets of the group increased more than 400pc during the period due to a combination of farm expansion and rising land, water and machinery values.

The group now operates with average net farm assets of close to $30 million.