PRIME Minister John Howard has flagged a reconsideration of last week's controversial decision to close off tax breaks for new managed investment schemes in agriculture, following increasing backbench pressure.
Mr Howard told Channel Nine's Sunday program yesterday that he would talk with his colleagues about the decision, which has threatened the future of projects in the pipeline throughout Australia.
Industry players have written to the Prime Minister urging him to allow a three-year transition period before the Australian Taxation Office shuts the gate on tax breaks for new managed investment schemes in agriculture.
Assistant Treasurer Peter Dutton announced last Tuesday a cut-off of June 30 for the Tax Office to issue product rulings allowing tax breaks for managed investment schemes — except in forest plantations, where they will continue to be allowed to deduct all investment costs upfront.
Mr Howard defended the Tax Office decision, saying the Government did not want to give tax breaks to such schemes, but would leave intact existing arrangements with agricultural schemes that already have product rulings from the ATO.
"I think what people are most concerned about is the transitional impact of the Taxation Office withdrawing from giving particular product rulings," Mr Howard said.
"I'll talk to me colleagues about it. I'm a reasonable man on these things.
"I'm not promising anything, but I always listen to what my colleagues have got to say, because they have a lot of wisdom."
A three-year delay in implementation would allow projects now in the pipeline to go ahead.
Supporters claim some have spent considerable sums already on the assumption of the rules remaining unchanged.
Opponents argue that competition from tax-privileged managed investment schemes is driving up the cost of farmland and water.
Coalition MPs and ministers are sharply divided on the issue, and Treasurer Peter Costello last week strongly endorsed the Tax Office crackdown.
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