The move could pose a dilemma for MPs who own farms, including the Opposition Leader, who owns properties at Rossgole and Scotts Creek in NSW's Hunter Valley, and Opposition Treasury spokesman Joe Hockey, who owns a farm at Malanda, in Queensland's far north.

Mr Turnbull's spokesman would not be drawn on unconfirmed reports hobby farms could face a tax crackdown. The Opposition Leader's pecuniary interest register details his ownership of working farms that run sheep, cattle and horses.

The Treasurer also refused to comment on suggestions he would tighten the tax rules for hobby farms and lifestyle properties in next month's budget.

Mounting speculation he would do so alarmed the National Farmers Federation, which said it would take up its concerns with the Government.

NFF economics and trade manager Charlie McElhone said genuine farmers could get caught up in any changes.

"It's very difficult to get the correct definition, especially because off-farm businesses have become such a critical part of farmers' incomes," he said.

"We've got to make sure that any policy decision, especially surrounding regional land use, doesn't have unintended consequences around land values, for instance."

Mr McElhone said that could affect farmers' ability to access credit.

Non-commercial loss provisions already prevent the rich using tax breaks for hobby farms, but a deduction can be claimed if a property is worth more than $500,000, and the farm turned a profit for three of the past five years and meets other criteria.

The Liberals' Sophie Mirabella and Sharman Stone (jointly with her husband), and Nationals leader Warren Truss also own farms, as do a number of backbenchers.

Nationals senate leader Barnaby Joyce, who owns a 1000-hectare farm at Baradine, in northern NSW, slammed the potential crackdown. "I invest the money I get from my political career into that community," he said. "Through the drought, as crazy as it is, we lost money because we didn't get a crop."

Senator Joyce said regional communities relied on investment from people in urban areas "wanting to make a go of it on the land", and without financial incentives, they wouldn't invest.

"You have to form policies to encourage investment in regional areas. The alternative is you bring about the demise of regional economies," he said.

Nationals senator Fiona Nash, who owns a 600-hectare farm, feared farmers on marginal land would be hurt by moves to close tax loopholes.