The Country Immunity

Let’s talk about tax.

Or more particularly let’s talk about private and domestic expenses for farmers.

One of the key reasons I spent the greater part of my working career in tax was that I was rarely bored. Challenged – often; frustrated -sometimes but bored rarely. Add in the sense that I was a small cog in a system that tried to make sure the tax rules applied to everyone and you get almost 2 decades of socially productive and largely personally satisfying work. 

The thing though about tax is that you could never drop your guard. You might think you have the answer but then find a transitional exemption; an unexpected definition or an obscure case could mean that the answer of Orange you gave from careful analysis was wrong and it should have been Pink.

Now I had thought that with blogging I would be relatively safe from that experience: I was choosing my topics and they were all pretty general. At worst I could invoke the ‘Not tax advice. Follow at your peril’ disclaimer.

But no.

After the recent post on private mortgage costs a reader pointed out to me a recent public consultation document from the technical side of Inland Revenue with the innocous title of Deductibility of Farmhouse Expenditure

Now there was nothing actually wrong in the OP – original post  look at me being all real blogger like  – as that post related to someone’s suburban house. However I extravagantly branched off and concluded that there was no ‘country immunity’ from the private and domestic test for deductibility of expenses.

Boy was I wrong.

Clearly I have spent far too long in international tax. As what that document makes clear was in the 60’s after ‘negotiation with the industry’ Inland Revenue allowed interest on private farmhouses to be fully deductible. 

Wow. Just wow. Mind blown.

Now I guess it isn’t as bad as it seems as then farms would have been massive and houses small in comparison. And like didn’t Mrs Farmer have to feed shearers and stuff which is business related. And apportionments are such a pain so close enough is near enough and let’s call it fully deductible.

Only thing is didn’t actually comply with the law; was a concession and would defo have been a tax expenditure if it had been legislated for.

But it is kind of a while ago and things are different now. In the sixties women weren’t paid the same as men; the Rugby Union was criticised for its lack of diverse perspectives and a National government was approaching its fourth term. So you know like completely different.

And while I could make a number of cheap shots like – seriously it has taken you 50 years to apply the law properly – I won’t. It would have required a high degree of intestinal fortitude to take the small farmers concession away. So nice one. Carry on Mrs Commissioner.

Only thing is while proposed change is a massive improvement, the practical compliance cost friendly option for large farms is still in your correspondent’s view unnecessarily concessionary. Particularly as there is no actual reduction in compliance costs.

So in terms of my dinner party companion’s comment: ‘This is the country  – we get tax deductions for all sorts of things…’ Yeah mate you do. Fewer than before and more than I realised. But yeah you do.


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