Federated Farmers has welcomed a Government proposal to axe gift duty, saying it will make it easier for farmers to hand their farms down to their children.
The revenue minister, Peter Dunne, says a strong case has emerged for repealing the duty, which is applied when assets worth more than $27,000 a year are gifted.
He says the tax costs a lot to administer and generates relatively little revenue.
Revenue from gift duty is $1.5 million per year, and the tax costs more than $400,000 to administer.
Federated Farmers describes the duty as "arcane" and says it is widely seen among farmers as an "envy tax".
It says it can take farmers decades to gift their farm to their children, because they are forced to use accountants and lawyers to progressively gift the properties each year.
Mr Dunne says a strong case has emerged for ending the duty. He says people are selling assets through trusts in exchange for a debt that they repay bit by bit, in order to dodge the duty.
He says as well as the $400,000 adminstration duty, high compliance costs are also incurred.
Mr Dunne says there will be further consultation before a decision is made in November about whether to repeal the tax.
Farmers say will
Federated Farmers says the proposal will improve family farm successions.
Economics and commerce spokesperson Philip York says says succession and farming for generations is a major issue in modern farming, so the proposal to end gift duty is a major step forward.
Mr York says the axing of the tax will also improve the overall transparency of the tax system.