Proposed changes for Mycoplasma bovis

The Government intends to introduce legislation to ensure that farmers whose herds were culled in response to the Mycoplasma eradication programme will not face an undue tax burden.

The proposed changes will be included in a future tax bill and would apply from the 2018 income year, as culls began in late 2017. As the proposals have not yet been through the Parliamentary process, they are subject to change.

For more information see the Minister of Revenue's media statement and fact sheet.*

* Update - 5 June 2020: The proposed changes were included in the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Bill, introduced to Parliament on 4 June 2020.

Hon Stuart Nash
Minister of Revenue

27 March 2020

Media statement

Tax relief for Mycoplasma Bovis farmers

Farmers whose herds were culled in response to the outbreak of Mycoplasma bovis will be able to minimise the tax treatment of their income in some circumstances.

Revenue Minister Stuart Nash says Cabinet has agreed to change the law. It means farmers may be eligible to spread their income over several years to avoid an undue tax burden.

“Farmers, like the rest of the primary sector, are facing much uncertainty from the impact of the COVID19 outbreak around the world,” said Mr Nash.

“On top of this, many have already had to deal with the hardship of the M. Bovis outbreak. The decision to offer tax relief for payments related to M.Bovis losses will help alleviate some of those concerns.

“As part of our plan to try to eradicate M. Bovis, stock had to be culled on farms where the organism was found.

“Farmers received compensation for the difference between the normal market value of the stock and the amount received when the stock was culled. They could then restock their farms to replace the culled animals.

“A number of affected farmers are using certain cost schemes to value their breeding stock, which means a significant tax bill can arise in the year they receive a compensation payment.

“Following discussions with Federated Farmers and Chartered Accountants of Australia and New Zealand we’ve agreed the best immediate solution. We will change the law to allow the additional income to be evenly spread over the following six years, subject to some conditions.

“It will require legislation which is yet to go through Parliament. However it will apply retrospectively, from the 2017/18 income year. This should help farmers to deal with their tax obligation in what is an already stressful time,” says Mr Nash.

Affected farmers, or their tax agents, can find technical information on Inland Revenue’s website, at https://taxpolicy.ird.govt.nz/bovis