How would you feel if you woke up one day to find your business was bust?
That’s what happened to over 3,000 kiwifruit orchardists in the Te Puke region of New Zealand in 2010, when they were hit with a vine-eating disease called PSA.
To stop it from spreading further, the orchardists were left with no choice but to cut out their infected vines. This meant literally rebuilding their businesses from the ground up, and in some cases going five years without an income as the new vines matured to fruit-bearing age.
Making matters much worse, the farms they had worked years to build were now next to worthless.
Just like that, a billion-dollar industry was thrown into crisis. Until a Chartered Accountant stepped in to save the day.
When local resident and Fellow Chartered Accountant Trudi Ballantyne heard about the agricultural catastrophe unfolding around her, she wasted no time in taking action.
At a meeting with other local accountants, she laid out the most pressing issue to Jim Gordon, a senior technical tax advisor to New Zealand’s Inland Revenue Department (IRD).
“Normally when you lose an asset, you get a tax deduction”, Gordon explains, but Ballantyne pointed out that the tax laws at the time didn’t allow for ripping out the PSA-infected kiwifruit vineyards or cutting them back to rootstock.
“If you spend money, you’ve either got an expense or an asset — an asset being something that gives you future benefit,” Gordon says.
“But ripping out an old vineyard doesn’t give you future benefit, it creates expenditure. So, Ballantyne’s request was: can we make that tax deductible?”
There were two parts to Ballantyne’s response to the crisis. The first was promoting an essential law change that would make pulling out the vines tax deductible.
This seemingly small change would help thousands of orchardists get by financially as they rebuilt their businesses from scratch.
“It was Trudi who led the charge for suggesting politely that we needed to revisit that tax law and change it,” Gordon says.
“To be fair, I was surprised it wasn’t deductible already — but we both read the tax act together and concluded very quickly that, yes, there was a real problem there.”
So Gordon promised to take Ballantyne’s recommendation back to the government, which immediately came back in favour of the change.
“In New Zealand it’s often relatively easy to get that sort of technical law corrected,” Gordon says. “We pride ourselves on being nimble, and in this case the government just fell over themselves to do it which was helpful.”
Ballantyne not only led the local accountants in their appeal to the government, she also drove an awareness campaign to let the still-reeling orchardists know about their options.
This involved working with Gordon’s team at the IRD to create fact sheets which outlined the issues from a tax perspective and provided a tax analysis on them.
“In other words telling them: ‘These are the issues we think you’ll have, and these are the tax technical ways to address those issues — if you receive this as compensation, it’s taxable; if you do that to your vineyard, it’s deductible,’” Gordon says.
“We also have an income smoothing mechanism here called income equalisation deposits, so we talked to the group of accountants about that at length, which was very helpful to them and their clients.
“To do all this we had to understand the facts to start with, and Trudi was very, very good at leading us through that.”
As a Chartered Accountant, Ballantyne’s unique commitment to local business, detailed technical expertise, innovative problem-solving and leadership skills were just what the region needed to help it recover and rebuild after PSA hit.
These days, she is still heavily involved in the local kiwifruit industry, which she was so instrumental in bringing back from the brink just over a decade ago.
“I think Trudi’s leadership was the single biggest difference,” Gordon says. “Trudi did far more than the tax.”
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Chartered Accountants Australia & New Zealand (CA ANZ) represents over 128,000 members globally.
