Assessing the Implications of Emerging Farm Income Streams for Primary Producer Tax Policy

Australian farm businesses are increasingly diversifying their income sources. Alongside traditional earnings from commodities such as crops and livestock, many now generate revenue from carbon and biodiversity credits, renewable energy hosting, agritourism, and land leasing. These activities often provide more stable returns, yet current primary producer tax mechanisms – including income averaging and Farm Management Deposits – were designed for highly seasonal, variable incomes.

As income profiles change, there is a risk these mechanisms may no longer meet their original objectives or may inadvertently disadvantage producers adopting innovative models, despite their continued exposure to climatic, biosecurity, and market risks.

This project will review existing tax policies and examine how they interact with emerging income streams. It will draw on a literature and policy review, supported by targeted engagement with government agencies, industry bodies, producers, and rural tax advisers, to ensure multiple perspectives are captured.

The findings will be presented in an independent, evidence-based report outlining non-directional policy options. Tailored communication outputs will share results with government, industry, and the broader community to support informed, constructive discussion on tax settings that are equitable, future-focused, and supportive of agricultural resilience.