Federated Farmers says it will engage openly with Inland Revenue on new rules for tax in relation to livestock.
Two issues papers, announced as part of May's Budget, were released yesterday for public consultation.
The papers provided options for making the tax system fairer in two areas: livestock valuation and mixed-use assets.
Present rules covering livestock valuation elections appeared "too loose", allowing farmers to switch between valuation methods and providing an unfair tax advantage, Revenue Minister Peter Dunne said in a statement.
Federated Farmers national president Bruce Wills, who stressed farmers understood the importance of paying their "fair share" of tax, said the rural lobby organisation would now examine Inland Revenue's proposals "for reasonableness and real-world workability".
There had been some concern at the ease with which farmers had switched between the herd scheme and the national standard cost scheme. That was especially the case when livestock values were extremely volatile.
"Broadly speaking, the herd scheme treats livestock as a capital asset using Inland Revenue's national average market values.
"The national standard cost scheme values purchased livestock at cost plus associated costs of husbandry," he said.
Federated Farmers would now start consulting its membership to develop a position to take back to Inland Revenue.
The paper on mixed-use assets provided options to address unfairness in the tax treatment of assets, such as holiday houses used for both private and income-earning purposes.
Unfairness arose when some owners claimed their house was available for rent during the significant periods of the year the house was empty, Mr Dunne said.
That provided them with a basis for claiming tax deductions for expenses relating to the period the property was empty.
Submissions on the two papers close on September 30.
Officials were also working on a third issues paper focusing on the tax and social assistance treatment of salary traded off for other benefits. That would be released separately once policy analysis was completed.
