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SR 1998 No. 325 Regulations as amended, taking into account amendments up to Treasury Laws Amendment (2015 Measures No. 1) Regulation 2015
Administered by: Treasury
Registered 24 Aug 2015
Start Date 01 Jul 2015
Date of repeal 18 Oct 2016
Repealed by Treasury Laws Amendment (2016 Measures No. 3) Regulation 2016
Table of contents.

Income Tax (Farm Management Deposits) Regulations 1998

Statutory Rules No. 325, 1998

made under the

Income Tax Assessment Act 1936

Compilation No. 5

Compilation date:                              1 July 2015

Includes amendments up to:            SLI No. 39, 2015

Registered:                                         24 August 2015

 

About this compilation

This compilation

This is a compilation of the Income Tax (Farm Management Deposits) Regulations 1998 that shows the text of the law as amended and in force on 1 July 2015 (the compilation date).

This compilation was prepared on 17 August 2015.

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on ComLaw (www.comlaw.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on ComLaw for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on ComLaw for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

1............ Name of regulations............................................................................ 1

2............ Commencement................................................................................... 1

3............ Definitions.......................................................................................... 1

4............ Application form for a farm management deposit: information given by depositor  2

5............ Application form for a farm management deposit: information given to depositor   2

6............ Information to be given to Department................................................ 3

7............ Repayment of farm management deposit in the event of a natural disaster               3

Schedule 1—Information to be provided by depositor         5

Schedule 2—Statements to be read by depositors                       6

Part 1—Statements                                                                                                                6

Part 2—Required statements                                                                                          7

Part 3—Additional information                                                                                  10

Schedule 3—Information to be given to the Secretary by FMD provider             11

Endnotes                                                                                                                                    12

Endnote 1—About the endnotes                                                                            12

Endnote 2—Abbreviation key                                                                                13

Endnote 3—Legislation history                                                                             14

Endnote 4—Amendment history                                                                           15


1  Name of regulations

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

2  Commencement

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

3  Definitions

                   In these Regulations:

1953 Act means the Taxation Administration Act 1953.

1997 Act means the Income Tax Assessment Act 1997.

FMD provider has the meaning given by subsection 393‑20(3) of the 1997 Act.

The farm management deposits scheme

Division 393 of the 1997 Act makes arrangements for farm management deposits, which are deposits made with FMD providers in the circumstances described in the Division.

You can deduct a farm management deposit you make if:

               (a)     you are an individual carrying on a primary production business (including a primary production business you carry on as a partner in a partnership or as a beneficiary of a trust); and

              (b)     you hold the deposit for at least 12 months; and

               (c)     you meet some other tests.

The amount of the deposit repaid is included in your assessable income in the income year in which it is repaid. Special rules apply if the deposit is repaid in the event of an applicable natural disaster.

Farm management deposits allow you to carry over income from years of good cash flow and to draw down on that income in years when you need the cash. This enables you to defer the income tax on your taxable primary production income from the income year in which you make the deposit until the income year in which the deposit is repaid.

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

                   For paragraph 393‑20(2)(b) of the 1997 Act, Schedule 1 sets out the information to be provided by a depositor.

Note:          Subsection 393‑20(2) of the 1997 Act requires a depositor to apply to an FMD provider to make a farm management deposit with the FMD provider.

                   Under paragraph 393‑20(2)(b) of the 1997 Act, the application form must require the depositor to provide any information required by regulations.

                   Under paragraph 393‑20(2)(a) of the 1997 Act, 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 393‑20(2)(c) of the 1997 Act, the form used to apply to an FMD provider to make a farm management deposit must contain:

                     (a)  either of the statements set out in Part 1 of Schedule 2; and

                     (b)  the statements set out in Part 2 of Schedule 2; and

                     (c)  statements of the information required by Part 3 of Schedule 2.

Note:          Subsection 393‑20(2) of the 1997 Act requires a depositor to apply to an FMD provider to make a farm management deposit with the FMD provider.

                   Under paragraph 393‑20(2)(c) of the 1997 Act, 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 398‑5(3)(d) in Schedule 1 to the 1953 Act, Schedule 3 sets out the information that an FMD provider must give to the Secretary to the Department of Agriculture, Fisheries and Forestry.

Note:          Section 398‑5 in Schedule 1 to the 1953 Act requires an FMD provider that holds an FMD at the end of a month to give information in writing to the Secretary to the Department of Agriculture, Fisheries and Forestry. The information is described in subsection 398‑5(3) in Schedule 1 to the 1953 Act, and includes any other information, in relation to farm management deposits held by the FMD provider, that is required by the regulations.

                   Under subsection 398‑5(4) in Schedule 1 to the 1953 Act, the regulations must not require information that discloses the depositor’s identity or from which the depositor’s identity could be reasonably inferred.

7  Repayment of farm management deposit in the event of a natural disaster

             (1)  For paragraph 393‑40(3A)(b) of the 1997 Act, this regulation sets out the circumstances that are to be satisfied in relation to a repayment of the whole or a part of a farm management deposit.

Note:          Paragraph 393‑40(3A)(b) relates to a repayment if natural disaster relief and recovery arrangements made by or on behalf of the Commonwealth apply.

             (2)  Recovery assistance has been provided:

                     (a)  as a Category C measure, as defined in the Natural Disaster Relief and Recovery Arrangements determined by the Attorney‑General on 21 March 2011; and

                     (b)  in the form of a recovery grant for a primary producer, as described in those Arrangements.

             (3)  The recovery assistance was first provided during the 12 month period mentioned in subsection 393‑40(1) of the 1997 Act.

             (4)  The farm management deposit was repaid after the recovery assistance was first provided.


Schedule 1Information to be provided by depositor

(regulation 4)

  

1        Depositor’s name, address, date of birth 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 2Statements to be read by depositors

(regulation 5)

Part 1Statements

1          Authorised deposit‑taking institution

The FMD provider issuing this application form is an authorised deposit‑taking institution for the purposes of the Banking Act 1959.

2          Commonwealth, State or Territory guarantee

The Commonwealth, a State or a Territory guarantees the repayment of any deposit taken by the FMD provider issuing this application form in the course of the business of banking or in the course of a business that consists of or includes taking money on deposit.

Part 2Required statements

1          Purpose of farm management deposits scheme

The farm management deposits scheme is designed to allow individuals carrying on a primary production business in Australia, with taxable non‑primary production income, to shift before‑tax income from years when they need it least to years when it is most needed. The scheme helps those individuals to manage their exposure to adverse economic events and seasonal fluctuations.

Eligibility criteria apply to individuals carrying on a primary production business in Australia under the scheme.

Note:       Primary production business and carrying on a primary production business are explained in subsection 995‑1(1) of the 1997 Act.

2          Tax consequences of farm management deposits

The scheme allows individuals carrying on a primary production business in Australia 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 income 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 a farm management deposit is repaid to an owner in an instalment period, the instalment income of the period will include the amount of the repayment. But the owner’s instalment income will only include so much of the repayment as will be included in the owner’s assessable income for the income year in which the repayment is made.

If neither the owner’s tax file number nor Australian Business Number has been quoted to the FMD provider that holds the deposit, the amount repaid will also be subject to withholding at a rate equal to the sum of the top marginal tax rate and the Medicare levy.

3          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 1997 Act. 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 must be an individual who is carrying on a primary production business in Australia when the deposit is made.

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

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

·                The deposit must not be used as security for any amount owed to the FMD provider or any other entity by the depositor or any other entity.

·                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 FMD provider.

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

·                If the depositor requests in writing, the FMD provider must electronically transfer the deposit, or part of the deposit, to another FMD provider that agrees to accept it as a farm management deposit.

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

4          Repayment of farm management deposits

The tax benefits are not retained for deposit amounts repaid within the first 12 months after the deposit was made, unless the repayment is made:

             (b)  because the owner:

                      (i)  dies; or

                     (ii)  becomes bankrupt; or

                    (iii)  ceases to carry on a primary production business in Australia and does not start carrying on such a business again within 120 days; or

                    (iv)  has requested the deposit, or part of the deposit, to be transferred to another FMD provider; or

             (c)  because the circumstances specified in regulation 7 of the Income Tax (Farm Management Deposits) Regulations 1998, relating to repayment in the event of a natural disaster, exist.

Part 3Additional information

               1  The minimum deposit threshold is the amount stated in item 4 of the table in section 393‑35 of the 1997 Act.

               2  The maximum deposit limit, which is the amount stated in item 10 of the table in section 393‑35 of the 1997 Act.

               3  An individual can own more than one farm management deposit, and can own farm management deposits with different FMD providers, but the sum of the balances of all of the farm management deposits of an owner must not be more than the maximum deposit limit.

               4  The amount of any repayment of the deposit must be at least the amount stated in item 12 of the table in section 393‑35 of the 1997 Act, except where the entire amount of the deposit is repaid.

               5  The taxable non‑primary production income for the year of income must not exceed the amount stated in paragraph 393‑5(1)(d) of the 1997 Act.

               6  If the depositor has provided neither the depositor’s tax file number nor the depositor’s Australian Business Number, any repayment will be subject to the withholding rate, which is the sum of:

                     (a)  the top marginal tax rate for the income year in the year of deposit; and

                     (b)  the Medicare levy.

Notes for item 6

1                 The top marginal tax rate is the maximum rate specified in column 3 of the table in Part 1 of Schedule 7 to the Income Tax Rates Act 1986.

2                 The Medicare levy is specified in subsection 6(1) of the Medicare Levy Act 1986.

Note for Part 3:              Under paragraph 5(c), an FMD provider is required to insert the figures that are stated in the provisions mentioned in Part 3.

Schedule 3Information to be given to the Secretary by FMD provider

(regulation 6)

  

Note:          This information is additional to the information that an FMD provider must give to the Secretary under paragraphs 398‑5(3)(a), (b) and (c) in Schedule 1 to the 1953 Act.

               1  The month being reported.

               2  In relation to each farm management deposit:

                     (a)  the industry code for the depositor, by reference to the Australian and New Zealand Standard Industrial Classification Code; and

                     (b)  an account number that:

                              (i)  is modified by the FMD provider to prevent the disclosure of the identity of the depositor, the owner or both; and

                             (ii)  remains the same while the owner holds the farm management deposit; and

                     (c)  a personal identification number that:

                              (i)  is modified by the FMD provider to prevent the disclosure of the identity of the depositor, the owner or both; and

                             (ii)  remains the same while the owner holds any farm management deposits; and

                     (d)  the closing balance of the farm management deposit at the end of the month to which the report relates; and

                     (e)  the State or Territory of the residence of the owner; and

                      (f)  the year of birth of the owner of the farm management deposit; and

                     (g)  the year of deposit; and

                     (h)  the month of deposit.


Endnotes

Endnote 1—About the endnotes

The endnotes provide information about this compilation and the compiled law.

The following endnotes are included in every compilation:

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Endnotes about misdescribed amendments and other matters are included in a compilation only as necessary.

Abbreviation key—Endnote 2

The abbreviation key sets out abbreviations that may be used in the endnotes.

Legislation history and amendment history—Endnotes 3 and 4

Amending laws are annotated in the legislation history and amendment history.

The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation.

The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law.

Misdescribed amendments

A misdescribed amendment is an amendment that does not accurately describe the amendment to be made. If, despite the misdescription, the amendment can be given effect as intended, the amendment is incorporated into the compiled law and the abbreviation “(md)” added to the details of the amendment included in the amendment history.

If a misdescribed amendment cannot be given effect as intended, the abbreviation “(md not incorp)” is added to the details of the amendment included in the amendment history.

Endnote 2—Abbreviation key

 

A = Act

o = order(s)

ad = added or inserted

Ord = Ordinance

am = amended

orig = original

amdt = amendment

par = paragraph(s)/subparagraph(s)

c = clause(s)

    /sub‑subparagraph(s)

C[x] = Compilation No. x

pres = present

Ch = Chapter(s)

prev = previous

def = definition(s)

(prev…) = previously

Dict = Dictionary

Pt = Part(s)

disallowed = disallowed by Parliament

r = regulation(s)/rule(s)

Div = Division(s)

Reg = Regulation/Regulations

exp = expires/expired or ceases/ceased to have

reloc = relocated

    effect

renum = renumbered

F = Federal Register of Legislative Instruments

rep = repealed

gaz = gazette

rs = repealed and substituted

LI = Legislative Instrument

s = section(s)/subsection(s)

LIA = Legislative Instruments Act 2003

Sch = Schedule(s)

(md) = misdescribed amendment can be given

Sdiv = Subdivision(s)

    effect

SLI = Select Legislative Instrument

(md not incorp) = misdescribed amendment

SR = Statutory Rules

    cannot be given effect

Sub‑Ch = Sub‑Chapter(s)

mod = modified/modification

SubPt = Subpart(s)

No. = Number(s)

underlining = whole or part not

 

    commenced or to be commenced

 

Endnote 3—Legislation history

 

Number and year

FRLI registration or gazettal

Commencement

Application, saving and transitional provisions

325, 1998

9 Dec 1998

2 Jan 1999 (r 2)

 

230, 2000

17 Aug 2000

1 Sept 2000 (r 2)

205, 2003

6 Aug 2003

6 Aug 2003 (r 2)

19, 2007

16 Feb 2007 (F2007L00300)

17 Feb 2007 (r 2)

276, 2011

15 Dec 2011 (F2011L02690)

15 Dec 2011 (r 2)

39, 2015

30 Mar 2015 (F2015L00367)

Sch 1 (items 10, 11): 1 July 2015 (s 2 item 2)

 

Endnote 4—Amendment history

 

Provision affected

How affected

r 3........................................

rs No 276, 2011

 

am No 39, 2015

r 4........................................

rs No 276, 2011

r 5........................................

am No 19, 2007

 

rs No 276, 2011

r 6........................................

rs No 276, 2011

r 7........................................

ad No 276, 2011

Schedule 1

 

Schedule 1............................

am No 276, 2011

Schedule 2

 

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

am No 230, 2000; No 205, 2003

 

rs No 19, 2007; No 276, 2011

 

am No 39, 2015

Schedule 3

 

Schedule 3............................

rs No 19, 2007; No 276, 2011