Farm depreciation tax ‘too tough’

Press, 4 February 1986, Page 4

Farm depreciation tax ‘too tough’

PA Wellington The Government has set tougher tax rules on depreciation for farming than for other businesses, says the Opposition spokesman on agriculture, Mr lan McLean. Mr McLean was referring to proposed changes to the land development expenditure scheme. Under the proposals, spending on clearing, grassing, and reading will be subject to a zero depreciation rate. Any losses on the sale of such assets will be partly tax deductible in the year of sale. Full deduction will be permitted, in some cases, for the cost of the assets in the year for which they are scrapped. Mr McLean said the proposals were unfair, im-

practicable and discrimb natory.

If assets were to be treated as capital when they were created, they must also be capital when they were scrapped or sold, he said. Land prices were falling and it was impossible to distinguish such loss of value from depreciation of assets. Businesses based on buildings and machines could claim depreciation yearly even if values actually increased, whereas farmers had to wait until the land was sold or the assets scrapped to get the benefit of depreciation.

Mr McLean said that instead of the proposals, the Minister of Finance, Mr Douglas, should introduce a business tax system which encouraged investment equally in all sectors.