Federal Register of Legislation - Australian Government

Primary content

SR 1998 No. 325 Regulations as amended, taking into account amendments up to SR 2000 No. 230
Registered 26 Mar 2010
Start Date 01 Sep 2000
End Date 05 Aug 2003
Date of repeal 18 Oct 2016
Repealed by Treasury Laws Amendment (2016 Measures No. 3) Regulation 2016

Income Tax (Farm Management Deposits) Regulations 1998

Statutory Rules 1998 No. 325 as amended

made under the

Income Tax Assessment Act 1936

This compilation was prepared on 1 September 2000
taking into account amendments up to SR 2000 No. 230

Prepared by the Office of Legislative Drafting,
Attorney-General’s Department, Canberra


Income Tax (Farm Management Deposits) Regulations 1998

Statutory Rules 1998 No. 325 as amended

made under the

 

 

 

Contents

Page

                        1  Name of regulations [see Note 1]                                         3

                        2  Commencement [see Note 1]                                              3

                        3  Definitions                                                                         3

                        4  Application form for a farm management deposit: information given by depositor 4

                        5  Application form for a farm management deposit: information given to depositor 4

                        6  Information to be given to Department                                  4

Schedule 1           Information to be provided by depositor                         6

Schedule 2           Statements to be read by depositors                               7

Schedule 3           Information to be given to the Secretary by financial institution      10

Notes                                                                                                       12

 


  

  

1              Name of regulations [see Note 1]

                These regulations are the Income Tax (Farm Management Deposits) Regulations 1998.

2              Commencement [see Note 1]

                These regulations commence on the day the Taxation Laws Amendment (Farm Management Deposits) Act 1998 commences.

3              Definitions

                In these regulations:

Act means the Income Tax Assessment Act 1936.

quarter means a quarter starting on 1 January, 1 April, 1 July or 1 October in any year, including the quarter in which section 264AA of the Act commences.

 

The farm management deposit scheme

Schedule 2G to the Act makes arrangements for farm management deposits, which are deposits made with financial institutions in the circumstances described in the Schedule.

Subdivision 393-B in the Schedule sets out the main circumstances.

The farm management deposits scheme is intended to allow certain primary producers to:

     (a)      make a deposit; and

     (b)      deduct the deposit from the depositor’s assessable income in the year of income when the deposit is made; and

     (c)      include the deduction in the depositor’s assessable income when the deposit is repaid in a later year of income.

 

4              Application form for a farm management deposit: information given by depositor

                For paragraph 393-30 (3) (b) in Schedule 2G to the Act, the information to be provided by a depositor is set out in Schedule 1.

Note   Subsection 393-30 (3) in Schedule 2G to the Act requires a depositor to apply to a financial institution to make a farm management deposit with the institution.

Under paragraph 393-30 (3) (b), the application form must require the depositor to provide any information required by regulations.

Under paragraph 393-30 (3) (a), the application form must also permit the depositor to state the owner’s tax file number in the form.

5              Application form for a farm management deposit: information given to depositor

                For paragraph 393-30 (3) (c) in Schedule 2G to the Act, the statements that are to be read by a depositor are set out in Schedule 2.

Note   Subsection 393-30 (3) in Schedule 2G to the Act requires a depositor to apply to a financial institution to make a farm management deposit with the institution.

Under paragraph 393-30 (3) (c), the application form must include any statements, required by regulations, that are to be read by the depositor when completing the form.

6              Information to be given to Department

                For paragraph 264AA (2) (d) of the Act, the information that a financial institution must give to the Secretary to the Department of Agriculture, Fisheries and Forestry is set out in Schedule 3.

Note   Section 264AA of the Act requires a financial institution that holds a farm management deposit at the end of any month in a quarter to give information in writing to the Secretary to the Department of Agriculture, Fisheries and Forestry.

The information is described in subsection 264AA (2), and includes any other information, in relation to farm management deposits held by the institution, that is required by the regulations.

Under subsection 264AA (3) of the Act, the regulations must not require information that discloses the depositor’s identity or from which the depositor’s identity could be reasonably inferred.


Schedule 1        Information to be provided by depositor

(regulation 4)

  

1        Depositor’s name, address and telephone number.

2        Amount of deposit.

3        Description of major commodity or commodities produced in the year of deposit.

4        If the depositor is not the owner of the deposit — the owner’s name, address and date of birth.

Schedule 2        Statements to be read by depositors

(regulation 5)

  

An application form must include the following statements:

Purpose of farm management deposit scheme

The farm management deposits scheme is designed to allow primary producers with a taxable non-primary production income of not over $50,000 to shift before-tax income from years when they need it least to years when it is most needed, to help them manage their exposure to adverse economic events and seasonal fluctuations.

Eligibility criteria apply to primary producers under the scheme.

Tax consequences of farm management deposits

The scheme allows primary producers to deduct the amount of any farm management deposit they own from their assessable income for the income year in which the deposit is made.  However, the amount of the deductions cannot exceed the owner’s taxable primary production income for the year.

Under the Pay As You Go system, owners may reduce their instalment income for an instalment period by the amount of farm management deposits made during that period.  The reduction is limited to the amount that the owners can reasonably expect to deduct for the deposit for the income year in which the deposit is made. However, the instalment income for the period cannot be reduced below nil.

When an owner withdraws funds from a farm management deposit in an instalment period, the instalment income of the period will include the amount of the withdrawal.  But the owner’s instalment income will only include so much of the withdrawal as will be included in the owner’s assessable income for the income year in which the withdrawal is made. If neither the owner’s tax file number nor Australian Business Number have been quoted to the financial institution that holds the deposit, the amount withdrawn will also be subject to withholding at a rate of 48.5%.

Important requirements for farm management deposits

Some of the requirements for farm management deposits are summarised below. There are also other requirements set out in the Income Tax Assessment Act 1936. A breach of some of the requirements will result in the deposit not being treated as a farm management deposit, and the tax benefits will be lost.

·               The owner of the deposit must be a primary producer when the deposit is made.

·               The deposit must be made by only one person and on behalf of only one person.

·               The deposit must be at least $1,000 and not more than $300,000, at any time in any year of income.

·               A person can own more than one deposit, but they must all be with the same financial institution, and must not total more than $300,000.

·               Rights of the depositor are not, and must not be, transferable to another person.

·               The deposit must not be used as security for any amount owed to the financial institution or any other person by the depositor or any other person.

·               The deposit must not be used, as a mortgage offset account or otherwise, to reduce the depositor’s liability to pay interest on other debts to the financial institution.

·               Interest or other earnings on the deposit must not be invested as a farm management deposit with the financial institution without having first been paid to the depositor.

·               If the depositor requests, the financial institution must electronically transfer the deposit to another financial institution that agrees to accept it as a farm management deposit.

·               The financial institution must not deduct any fees from the principal of a farm management deposit. However, it may charge fees on the deposit.

Repayment of farm management deposits

To retain the tax benefits, no part of the deposit can be withdrawn in the first 12 months after it is deposited. However, the deposit must be repaid if the owner:

·               dies; or

·               becomes bankrupt; or

·               ceases to be a primary producer for 120 days or more.

The amount of any repayment of the deposit must be at least $1,000, except where the entire amount of the deposit is repaid.

Schedule 3        Information to be given to the Secretary by financial institution

(regulation 6)

  

Note   This information is additional to the information that a financial institution must give to the Secretary under paragraphs 264AA (2) (a), (b) and (c) of the Income Tax Assessment Act 1936.

1        The number of depositors whose farm management deposits held by the financial institution at the end of each month have the following total values:

          (a)     $1,000 to $10,000 inclusive;

          (b)     more than $10,000 but not more than $20,000;

          (c)     more than $20,000 but not more than $30,000;

          (d)     more than $30,000 but not more than $40,000;

          (e)     more than $40,000 but not more than $50,000;

           (f)     more than $50,000 but not more than $75,000;

          (g)     more than $75,000 but not more than $100,000;

          (h)     more than $100,000 but not more than $150,000;

           (i)     more than $150,000 but not more than $200,000;

           (j)     more than $200,000 but not more than $250,000;

          (k)     more than $250,000 but not more than $300,000.

2        For farm management deposits made to the financial institution in a month in the quarter, the following information for each of the values mentioned in item 1:

          (a)     the number of farm management deposits;

          (b)     the number of depositors;

          (c)     the sum of the balances of the farm management deposits.

3        For farm management deposits repaid by the financial institution in a month in the quarter, the following information for each of the values mentioned in item 1:

          (a)     the number of farm management deposits;

          (b)     the number of depositors;

          (c)     the sum of the balances of the farm management deposits.

4        For each industry (grouped using the Australian and New Zealand Standard Industry Classification Code or the Australian Standard Industry Classification Code) in each State and Territory:

          (a)     the number of depositors in respect of farm management deposits held by the financial institution at the end of each month in the quarter; and

          (b)     the sum of the balances of all farm management deposits held by the financial institution at the end of each month in the quarter.


Notes to the Income Tax (Farm Management Deposits) Regulations 1998

Note 1

The Income Tax (Farm Management Deposits) Regulations 1998 (in force under the Income Tax Assessment Act 1936) as shown in this compilation comprise Statutory Rules 1998 No. 325 amended as indicated in the Tables below.

Table of Statutory Rules

Year and
number

Date of notification
in Gazette

Date of
commencement

Application, saving or
transitional provisions

1998 No. 325

9 Dec 1998

2 Jan 1999 (see r. 2)

 

2000 No. 230

17 Aug 2000

1 Sept 2000

Table of Amendments

ad. = added or inserted      am. = amended      rep. = repealed      rs. = repealed and substituted

Provision affected

How affected

Schedule 2.............................

am. 2000 No. 230