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Income Equalisation Deposits Laws Amendment Act 1992

Authoritative Version
  • - C2004A04529
  • In force - Latest Version
Act No. 238 of 1992 as made
An Act to amend the Loan (Income Equalization Deposits) Act 1976 and the Income Tax Assessment Act 1936, and for related purposes
Administered by: Treasury
Date of Assent 24 Dec 1992

 

 

Income Equalisation Deposits Laws

Amendment Act 1992

No. 238 of 1992

TABLE OF PROVISIONS

PART 1—PRELIMINARY

Section

 

1.

Short title

2.

Commencement

 

PART 2—AMENDMENT OF THE LOAN (INCOME EQUALIZATION DEPOSITS) ACT 1976

3.

Principal Act

4.

Interpretation

5.

Borrowings by accepting deposits

6.

Interest payable in respect of deposits

7.

Insertion of new section:

 

4B.         Reinvestment of interest in respect of deposits

8.

Loan moneys to be paid into Trust Account etc.

9.

Insertion of new sections:

 

15.         Farm management bonds

 

15A.      Requests for repayment of farm management bonds

10.

Repayment within 12 months where financial difficulties

11.

Repayment after 12 months

12.

Request under section 15A, 16 or 17 to include statement of assessable amount

etc.

13.

Repayment where no assessable amount

14.

Insertion of new section:

 

18B.       Repayment where deposits exceed taxable primary production income

15.

Repayment where owner not eligible primary producer

16.

Repayment where death or bankruptcy


TABLE OF PROVISIONScontinued

 

Section

 

17.

Deposits repayable only in certain amounts

18.

Review of decisions

19.

Certain requests pending after 12 months

20.

Form of requests etc.

21.

Lodging of deposits etc.

 

PART 3—AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

22.

Principal Act

23.

Interpretation

24.

Deductions in respect of income equalisation deposits

25.

Unrecouped deduction included in assessable income on deposit becoming repayable

26.

Application


 

 

Income Equalisation Deposits Laws

Amendment Act 1992

No. 238 of 1992

An Act to amend the Loan (Income Equalization Deposits) Act 1976 and the Income Tax Assessment Act 1936, and for related purposes

[Assented to 24 December 1992]

The Parliament of Australia enacts:

 

PART 1—PRELIMINARY

Short title

1.  This Act may be cited as the Income Equalisation Deposits Laws Amendment Act 1992.

Commencement

2.  This Act is taken to have commenced on 19 August 1992.


PART 2—AMENDMENT OF THE LOAN (INCOME EQUALIZATION DEPOSITS) ACT 1976

Principal Act

3.  In this Part, “Principal Act” means the Loan (Income Equalization Deposits) Act 19761.

Interpretation

4.  Section 3 of the Principal Act is amended:

(a)    by inserting “ 15A,” before “ 16” in the definition of “request”;

(b)    by omitting the definition of “investment component” and substituting the following definition:

‘investment component’ means:

(a)     in relation to the whole of a deposit, or a part, that is a farm management bond—the farm management bond percentage of the whole or the part; or

(b)    in relation to the whole of a deposit, or a part, that is not a farm management bond—the ordinary IED percentage of the whole or the part;”;

(c)  by inserting the following definitions:

‘farm management bond’ has the meaning given by section 15;

‘farm management bond percentage’ means 80% or such other percentage as may be prescribed for the purposes of this definition;

‘ordinary IED percentage’ means 61% or such other percentage as may be prescribed for the purposes of this definition;

‘taxable non-primary-production income’ has the meaning given by section 159GA of the Assessment Act;”.

Borrowings by accepting deposits

5.  Section 4 of the Principal Act is amended:

(a)     by omitting from subsection (5) “$5,000” and substituting “$1,000”;

(b)     by inserting after subsection (5) the following subsections:

“(5A) The Minister is not to accept a deposit if, before the deposit is accepted, the total of the balances of all deposits in relation to the owner is $300,000 or more.

“(5B) If, by accepting a deposit, the total of the balances of all deposits in relation to the owner would exceed $300,000, the Minister is only to accept so much of the deposit as causes the total to equal $300,000.”;

(c)  by adding at the end the following subsection:


“(7) If a depositor wishes to make a deposit by giving the Minister a cheque for an amount in excess of the amount that may be accepted:

(a)     the Minister must accept the cheque; and

(b)    when the cheque is cleared, the authorised person must pay the excess to the depositor; and

(c)     for the purposes of section 8, but not for the purpose of any other provision of this Act or of the Assessment Act:

(i) when the cheque is cleared, the excess is taken to be a deposit; and

(ii) the payment of the excess to the depositor is taken to be the repayment of a deposit that has become repayable.”.

Interest payable in respect of deposits

6.  Section 4A of the Principal Act is amended:

(a)    by omitting from subsection (1) “Interest” and substituting “Subject to section 4B, interest”;

(b)    by omitting subsection (2) and substituting the following subsection:

“(2) The interest is only payable on:

(a)     if the deposit is partly a farm management bond—the sum of the investment component, from time to time, of the part that is a farm management bond and the investment component, from time to time, of the remainder; and

(b)    in any other case—the investment component, from time to time, of the deposit.”.

7.  After section 4A of the Principal Act the following section is inserted:

Reinvestment of interest in respect of deposits

“4B.(1) If, in the application in respect of a deposit, the depositor elects that he or she wishes interest on the deposit to be reinvested, this section applies to any interest that becomes payable on the deposit.

“(2) If the depositor in respect of a deposit for which the application was lodged before the commencement of this section elects, at any time, that he or she wishes interest on a specified deposit or specified deposits to be reinvested, this section also applies to any interest that becomes payable on any such deposit after the election is made.

“(3) If this section applies to any interest, the interest is not to be paid to the person otherwise entitled to it, but is instead to be paid


into the Income Equalization Deposits Trust Account, where it is to be added to the balance of the deposit to which it relates.

“(4) Subject to paragraph 15A(9)(c) and subsection 18B(3), interest added to the balance is taken for all purposes of this Act (other than the liability to pay interest in respect of any period before it was added to the balance) to be, and always to have been, part of the deposit to which it relates. (For example, this will mean that a request under section 17 can be made in respect of the whole deposit even if the interest was added less than 12 months before.)

“(5) To the extent that the interest relates to the investment component of a farm management bond, the adding of the interest to the balance of the deposit also increases the farm management bond by the same amount. However, this only happens to the extent that it does not cause the total of the balances of all farm management bonds of the owner to be more than $80,000.

“(6) Subsection (3) does not apply to the interest to the extent that, if it were added to the deposit, the total of the balances of all deposits in relation to the owner would be more than $300,000.”.

Loan moneys to be paid into Trust Account etc.

8.    Section 8 of the Principal Act is amended by omitting from subsection (2) “Moneys borrowed under this Act shall, when the moneys become repayable,” and substituting “A deposit or part of a deposit that becomes repayable must”.

9.    After section 14 of the Principal Act the following sections are inserted:

Farm management bonds

“15.(1) Subject to this section, when making a deposit on or after 1 October 1992, the depositor may elect in the application form that the deposit, or a specified part of the deposit, is to be a farm management bond.

“(2) Subject to this section, the depositor in respect of a deposit made before 1 October 1992 may, at any time, elect that the deposit, or a specified part of the deposit, is, after the election is made, to be a farm management bond.

“(3) If the depositor specifies a part of a deposit, the part must be $1,000 or a multiple of $1,000.

“(4) An election under this section does not have effect:

(a) unless the taxable non-primary-production income of the owner of the deposit for the year of income in which the election is made is less than $50,000; and


(b)    to the extent that it results in the total of the balances of all farm management bonds of the owner being more than $80,000; and

(c)     to the extent that the amount of the deposit or the part is not allowable under section 159GC of the Assessment Act as a deduction from the assessable income of the owner.

“(5) If the authorised person is satisfied that an election was not effective because paragraph (4)(a) or (b) was not satisfied, the authorised person must:

(a)     advise the depositor in writing of the fact; and

(b)    in the advice, ask whether the depositor wishes to request repayment of the deposit or the part of the deposit concerned under any provision of this Act that may be applicable.

“(6) If a deposit that consists partly of a farm management bond is repaid in part, the repayment is taken to be made first from the part that is not a farm management bond.

Requests for repayment of farm management bonds

“15A.(1) The depositor in respect of a deposit that is wholly or partly a farm management bond may, in accordance with this section, request the authorised person to declare so much of the farm management bond as is specified in the request to be repayable.

“(2) The depositor may, at any time, make the request on the ground that:

(a)     if the depositor is a trustee who made the deposit on behalf of a beneficiary—the beneficiary; or

(b)    in any other case—the depositor;

is experiencing serious financial difficulties because of a significant fall in commodity prices, or because of drought, disease, fire, flood or similar natural events, affecting the business of primary production concerned.

“(3) If a request under subsection (2) is made on the ground of serious financial difficulties caused by a substantial fall in commodity prices affecting a business of primary production:

(a) the authorised person must not accept the request unless it is accompanied by evidence of the prices received by the business for sales of commodities comprising the major part of the beneficiary’s or depositor’s income for:

(i) the year (‘the application year’) ending at the time the request is made; and

(ii) each of the 3 years before the application year;

together with any other evidence of the ground required by the authorised person; and


(b) unless the authorised person considers that there are special circumstances relating to the beneficiary or depositor or the commodities concerned, in order for the authorised person to be satisfied of the ground, the average of the prices received for the sales for the application year must be at least 25% below the average for the total period of 3 years before that year.

“(4) Subsection (3) is not intended to affect the evidence, information or (except as mentioned in paragraph (3)(b)) considerations to be taken into account by the authorised person in deciding whether the ground is made out.

“(5) The depositor may, within 12 months after the date on which the deposit was made, make the request on the ground that:

(a)  if the depositor is a trustee who made the deposit on behalf of a beneficiary—the beneficiary; or

(b)  in any other case—the depositor;

is experiencing serious financial difficulties that did not result from:

(c)  the matters set out in subsection (2); or

(d)  circumstances that were in existence when the deposit was made.

“(6) To be effective in a subsection (5) case, the request must be accompanied by evidence, of a kind required by the authorised person, of the ground on which it is made.

“(7) If the depositor makes the request under subsection (2) or (5) and the authorised person is satisfied that the ground in the request is made out, he or she must, in writing, declare that the deposit, to the extent that it consists of the part of the farm management bond specified, is repayable. Once the declaration is made, the deposit, to that extent, becomes repayable.

“(8) The depositor may, at any time after 12 months have passed since the date on which the deposit was made, make the request without specifying any ground. If so, the deposit, to the extent that it consists of the part of the farm management bond specified, is repayable on the day on which the request is made.

“(9) If the deposit or part of the deposit becomes repayable in a case where subsection (5) or (8) applies:

(a)  the deposit or part is taken for the purposes of this Act never to have been a farm management bond; and

(b)  any interest that, because of paragraph (a), should not have been paid to a person is, for the purposes of section 27B, an amount that exceeds the amount properly payable; and

(c)  any amount that, because of paragraph (a), should not have been paid into the Income Equalization Deposits Trust Account


and added to the balance of a deposit is taken for the purposes of this Act not to have been so paid and added.”.

Repayment within 12 months where financial difficulties

10.  Section 16 of the Principal Act is amended:

(a)  by inserting after subsection (2) the following subsection:

“(3) To be effective, a request must be accompanied by evidence, of a kind required by the authorised person, of the ground on which it is made.”;

(b)  by adding at the end the following subsection:

“(5) This section does not apply to a deposit to the extent that it consists of a farm management bond.”.

Repayment after 12 months

11.  Section 17 of the Principal Act is amended by adding at the end the following subsection:

“(4) This section does not apply to a deposit to the extent that it consists of a farm management bond.”.

Request under section 15A, 16 or 17 to include statement of assessable amount etc.

12.  Section 18 of the Principal Act is amended by inserting “15A,” before “16”.

Repayment where no assessable amount

13.  Section 18A of the Principal Act is amended by adding at the end the following subsection:

“(5) This section does not apply to a deposit to the extent that it consists of a farm management bond.”.

14.  After section 18A of the Principal Act the following section is inserted:

Repayment where deposits exceed taxable primary production income

“18B.(1) If the authorised person is satisfied that the amount of a deposit or a part of a deposit is not, because of subsection 159GC(3) of the Assessment Act, allowable as a deduction from the assessable income of the owner, then the authorised person must declare in writing that the deposit or the part is repayable.

“(2) The deposit or the part becomes repayable once the declaration is made.

“(3) For the purposes of this section, interest added to the balance of a deposit in accordance with subsection 4B(3) of this Act is taken to be a separate deposit.”.


Repayment where owner not eligible primary producer

15.  Section 19 of the Principal Act is amended by inserting in subsection (2) “15A,” before “17”.

Repayment where death or bankruptcy

16.  Section 20 of the Principal Act is amended by inserting in subsection (2) “15A,” before “17”.

Deposits repayable only in certain amounts

17.  Section 21 of the Principal Act is amended:

(a)    by inserting “15A,” before “16”;

(b)    by omitting from paragraphs (a) and (b) “$5,000” and substituting “$1,000”.

Review of decisions

18.  Section 22 of the Principal Act is amended:

(a)    by inserting in subsections (1) and (2) “subsection 15A(1) (on the ground in subsection 15A(2) or (5)) or” after “under”;

(b)    by omitting from subsection (2) “or to a period of 2 months after the making of the request, whichever period first expires”.

Certain requests pending after 12 months

19.  Section 24 of the Principal Act is amended:

(a)    by inserting in subsection (1) “subsection 15A(1) (on the ground in subsection 15A(5)) or” after “under”;

(b)    by omitting from paragraph (2)(b) “request under section 17.” and substituting:

“request under:

(i) in the case of a subsection 15A(1) request—that subsection in a case to which subsection 15A(8) applies; or

(ii) in the case of a section 16 request—section 17.”;

(c)  by omitting from subsection (4) “section 16” and substituting “subsection 15A(7) or section 16, as the case requires,”.

Form of requests etc.

20.  Section 25 of the Principal Act is amended:

(a)     by inserting in subsection (1) “, election” after “statement” (wherever occurring);

(b)     by inserting in subsections (2) and (3) “or election” after “request” (wherever occurring).

Lodging of deposits etc.

21.  Section 26 of the Principal Act is amended by inserting “, election” after “statement”.


PART 3—AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Principal Act

22.  In this Part, “Principal Act” means the Income Tax Assessment Act 19362.

Interpretation

23.  Section 159GA of the Principal Act is amended:

(a)    by inserting “, subject to subsection (5),” after “means” in the definition of “current IED scheme deposit” in subsection (1);

(b)    by inserting “, subject to subsection (5),” after “has” in the definition of “first IED scheme deposit” in subsection (1);

(c)     by inserting in subsection (1) the following definition:

‘taxable non-primary-production income’, in relation to a taxpayer in relation to a year of income, means the amount (if any) by which:

(a)  the taxable income of the taxpayer of the year of income, worked out disregarding any application of Part IIIA (including, in a case where the taxpayer’s assessable income includes a share of the net income of a trust estate, in working out that net income);

exceeds:

(b)  the taxable primary production income of the taxpayer of the year of income;”;

(d)  by adding at the end the following subsections:

“(5) Subject to paragraph (6)(a), subsections 4B(3) and (4) of the Deposits Act (which provide that interest on a deposit is in certain circumstances to be added to the balance of the deposit and to be taken always to have been part of the deposit) have effect for the purposes of this Division.

“(6) If interest is added to the balance of a deposit in accordance with those provisions of the Deposits Act:

(a)     section 159GC applies as if the interest added were a separate current IED scheme deposit of the owner; and

(b)    the remainder of this Division applies to the deposit (as increased by the interest in accordance with subsection (5)) as if any deduction under subsection 159GC(1) in respect of the interest were instead in respect of the deposit.”.

Deductions in respect of income equalisation deposits

24.  Section 159GC of the Principal Act is amended:

(a) by inserting in paragraph (2)(a) “15A or” before “16”;


(b) by omitting from subsection (3) all the words after “is not to exceed” and substituting “the taxable primary production income of the taxpayer of the year of income.”.

Unrecouped deduction included in assessable income on deposit becoming repayable

25.  Section 159GD of the Principal Act is amended:

(a)     by inserting in subparagraph (1)(a)(i) “15A or” before “16”;

(b)     by inserting in subparagraph (1)(a)(ii) “subsection 15A(1) (where subsection 15A(8) applies) or” before “section”.

Application

26.  The amendment made by paragraph 24(b) does not apply to any year of income ending before the amendment was made.

NOTES

1.   No. 206, 1976, as amended. For previous amendments, see No. 148, 1979; No. 173, 1984; and Nos. 56 and 107, 1989.

2.   No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No. 5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69, 1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37, 1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48, 1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No. 43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65, 1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960; Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46, 68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos. 19, 38, 76 and 85, 1967; Nos. 4, 70, 87 and 148, 1968; Nos. 18, 93 and 101, 1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85, 1972; Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20, 1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143, 165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171 and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24, 57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and 175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49, 51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984; No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 168 and 174, 1985; No. 173, 1985 (as amended by No. 49, 1986); Nos. 41, 46, 48, 51, 109, 112 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); No. 52, 1986 (as amended by No. 141, 1987); No. 90, 1986 (as amended by No. 141, 1987); Nos. 23, 58, 61, 120, 145 and 163, 1987; No. 62, 1987 (as amended by No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); No. 138, 1987 (as amended by No. 11, 1988); No. 139, 1987 (as amended by Nos. 11 and 78, 1988); Nos. 8, 11, 59, 75, 78, 80, 87, 95, 97, 127 and 153, 1988; Nos. 2, 11, 56, 70, 73, 105, 107, 129, 163 and 167, 1989; No. 97, 1989


NOTES—continued

(as amended by No. 105, 1989); Nos. 20, 35, 45, 57, 58, 60, 61, 87, 119 and 135, 1990; Nos. 4, 5, 6, 48, 55, 100, 203, 208 and 216, 1991; and Nos. 3, 35, 70, 80, 81, 92, 98 and 101, 1992.

[Minister’s second reading speech made in

House of Representatives on 3 November 1992

Senate on 11 November 1992]