Tax shields : their implications for farm project investment, risk and return

Abstract

The main objectives of this study were to outline recent past and current tax shields available in New Zealand farming and to explore their implications for the nature, expected return and riskiness of farm investments. The study method comprised a combination of a literature review and computer model analysis. The model results also showed that in most cases where a farm is in a profit situation, farm investment is more advantageous under the present form of taxation regime than under the pre 1984 regime. The report concludes by outlining some implications of the study findings for both government policy and farm management. A number of recommendations for further research are also elucidated.