15th February 2007Groundwater irrigators in NSW who were compensated for cutbacks to their entitlements will face an income tax bill on the payments after all.
Prime Minister John Howard has confirmed the payments will be treated as taxable income, prompting accusations from Independent MP, Tony Windsor, that Mr Howard has previously misled Parliament over the issue.
Mr Howard has confirmed that the Intergovernmental Agreement signed by the Commonwealth and NSW Government “had in fact been structured and made in an environment where they were not intended to provide compensation for any perceived loss to farmers”.
“In those circumstances, they fell to be taxed as income,” Mr Howard said.
In Question Time yesterday, Mr Howard took the Prime Minister to task over comments made by him in the Parliament in September and October 2006.
“The Prime Minister said in answer to my questions on September 6 and October 30 last year that ‘the NSW Government had represented to us (The Commonwealth Government) that they want the payment treated as income’,” Mr Windsor said.
“Freedom of Information documents received on the matter from the NSW Government clearly indicate that the NSW Government had in fact been pleading the case that the payments should not be taxed as income but rather come under the capital gains tax arrangements.
“This would mean that in most cases tax liability would be nil, whilst if treated under the Income Tax Act, the liability would be up to 47pc of the compensation.”
Mr Windsor said the Prime Minister compounded his misrepresentation in Question Time today where he now agrees that “if we are ever going to settle this water thing, we will have to take back entitlements and people will be entitled to some compensation”.
The statement has raised further fears among irrigators about the Government’s $10 billion plan for the Murray Darling, which includes $3B in ‘structural adjustment’ for irrigators whose entitlements are cut.
SOURCE: Rural Press National News Bureau, Parliament House, Canberra.
