Federal Register of Legislation - Australian Government

Primary content

Regulations as made
This regulation amends the A New Tax System (Goods and Services Tax) Regulations 1999 to recognise the Queensland Home Warranty Scheme as a statutory compensation scheme. It also remakes the Farm Management Deposit regulations by incorporating them into the Income Tax Assessment 1997 and Taxation Administration 1976 Regulations, and to update them to take recent law changes into account.
Administered by: Treasury
Registered 17 Oct 2016
Tabling HistoryDate
Tabled HR19-Oct-2016
Tabled Senate07-Nov-2016
Date of repeal 29 Oct 2016
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003
Table of contents.

 

Treasury Laws Amendment (2016 Measures No. 3) Regulation 2016

I, General the Honourable Sir Peter Cosgrove AK MC (Ret’d), Governor‑General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following regulation.

Dated 13 October 2016

Peter Cosgrove

Governor‑General

By His Excellency’s Command

Kelly O’Dwyer

Minister for Revenue and Financial Services

 

 

 

 

  

  


Contents

1............ Name............................................................................................................................. 1

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

3............ Authority....................................................................................................................... 1

4............ Schedules...................................................................................................................... 1

Schedule 1—Queensland home warranty scheme                                                                        2

A New Tax System (Goods and Services Tax) Regulations 1999                                                  2

Schedule 2—Farm management deposits                                                                                          3

Part 1—Amendments                                                                                                                              3

Banking Regulations 1966                                                                                                                  3

Income Tax Assessment Regulations 1997                                                                                        3

Taxation Administration Regulations 1976                                                                                     7

Part 2—Repeals                                                                                                                                          9

Income Tax (Farm Management Deposits) Regulations 1998                                                      9

 


1  Name

                   This is the Treasury Laws Amendment (2016 Measures No. 3) Regulation 2016.

2  Commencement

             (1)  Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1.  Sections 1 to 4 and anything in this instrument not elsewhere covered by this table

The day after this instrument is registered.

18 October 2016

2.  Schedule 1

The later of:

(a) the day after this instrument is registered; and

(b) the day that section 36 of the Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld) commences.

However, the provisions do not commence at all if the event mentioned in paragraph (b) does not occur.

28 October 2016 (paragraph (b) applies)

3.  Schedule 2

The day after this instrument is registered.

18 October 2016

Note:          This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

             (2)  Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3  Authority

                   This instrument is made under the following:

                     (a)  the A New Tax System (Goods and Services Tax) Act 1999;

                     (b)  the Banking Act 1959;

                     (c)  the Income Tax Assessment Act 1936;

                     (d)  the Income Tax Assessment Act 1997;

                     (e)  the Taxation Administration Act 1953.

4  Schedules

                   Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1Queensland home warranty scheme

  

A New Tax System (Goods and Services Tax) Regulations 1999

1  Schedule 10 (after table item 9)

Insert:

10

Statutory insurance scheme

Queensland Building and Construction Commission Act 1991 (Qld)

Schedule 2Farm management deposits

Part 1Amendments

Banking Regulations 1966

1  Paragraph 10(e)

Omit “Schedule 1 to the Income Tax (Farm Management Deposits) Regulations 1998”, substitute “regulation 393‑5 of the Income Tax Assessment Regulations 1997”.

Income Tax Assessment Regulations 1997

2  After Part 3

Insert:

Part 3ARules for particular industries and occupations

Division 393Farm management deposits

393‑1  Simplified outline of the farm management deposits scheme

Division 393 of the Act establishes the farm management deposits scheme, which are deposits made with FMD providers in the circumstances described in that 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 requirements.

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 a severe drought or 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.

393‑5  Application form for a farm management deposit: information given by depositor

                   For paragraph 393‑20(2)(b) of the Act, the following information is to be provided by a depositor to an FMD provider:

                     (a)  the depositor’s name, address, date of birth and telephone number;

                     (b)  the amount of the deposit;

                     (c)  a description of the major commodity or commodities produced in the year of the deposit;

                     (d)  if the depositor is not the owner of the deposit—the owner’s name, address and date of birth.

Note:          Subsection 393‑20(2) of the 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 Act, the application form must require the depositor to provide any information required by regulations.

                   Under paragraph 393‑20(2)(a) of the Act, the application form must also permit the depositor to state the owner’s tax file number in the form.

393‑10  Application form for a farm management deposit: information given to depositor

                   For paragraph 393‑20(2)(c) of the 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 1C; and

                     (b)  the statements set out in Part 2 of Schedule 1C; and

                     (c)  the additional information required by Part 3 of Schedule 1C.

Note:          Subsection 393‑20(2) of the 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 Act, the application form must include any statements, required by regulations, that are to be read by the depositor when completing the form.

393‑15  Repayment of farm management deposit in the event of a natural disaster

                   For paragraph 393‑40(3A)(b) of the Act, the circumstances that are to be satisfied in relation to a repayment of the whole or a part of a farm management deposit are:

                     (a)  recovery assistance has been provided:

                              (i)  as a Category C measure, as defined in the Natural Disaster Relief and Recovery Determination Version 2.0 determined by the Minister for Justice on 29 October 2015; and

                             (ii)  in the form of a recovery grant for a primary producer, as described in that Determination; and

                     (b)  the recovery assistance was first provided during the 12 month period mentioned in subsection 393‑40(1) of the Act; and

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

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

3  After Schedule 1B

Insert:

Schedule 1CFarm management deposits: statements to be read by depositors

(regulation 393‑10)

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          Financial Claims Scheme

The account holder may be entitled to payment under the Financial Claims Scheme. Payments under the Financial Claims Scheme are subject to a limit for each depositor in respect of total deposits held by that depositor at a locally incorporated authorised deposit‑taking institution. For further information contact the Australian Prudential Regulation Authority or visit www.fcs.gov.au.

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 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 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 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 must not be transferable to another entity.

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

·                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:

                     (a)  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 and the repayment relates to the transfer; or

                     (b)  because the circumstances specified in subsection 393‑40(3) of the Act or in regulations made for the purposes of that subsection, relating to repayment in the event of severe drought, exist; or

                     (c)  because the circumstances specified in regulation 393‑15, relating to repayment in the event of a natural disaster, exist.

Part 3Additional information

Note:          Under paragraph 393‑10(1)(c) of the Act, an FMD provider is required to insert the figures that are stated in the provisions mentioned in this Part.

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

               2  The maximum deposit limit is the amount stated in item 10 of the table in section 393‑35 of the 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 claimed as a deduction 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 Act, except where the entire amount of the deposit is repaid.

               5  The deposit will not be deductible if taxable non‑primary production income for the year of income exceeds the amount stated in paragraph 393‑5(1)(d) of the Act.

               6  If neither the owner’s tax file number nor Australian Business Number has been quoted to the FMD provider, 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.

Note 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.

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

               7  If the deposit is used to offset a liability to pay interest on debts to the FMD provider that do not wholly relate to a primary production business that the owner (or a partnership of which the owner is a partner) carries on, the owner is liable to an administrative penalty of up to 200% of that offset.

Taxation Administration Regulations 1976

4  Regulation 2

Insert:

Agriculture Secretary has the meaning given in subsection 995‑1(1) of the Income Tax Assessment Act 1997.

FMD provider has the meaning given in subsection 995‑1(1) of the Income Tax Assessment Act 1997.

5  After Part 7

Insert:

Part 7AFarm management deposits

  

63A  Information to be given to Agriculture Secretary

                   For paragraph 398‑5(3)(d) in Schedule 1 to the Act, an FMD provider must give the following information to the Agriculture Secretary:

                     (a)  the month being reported;

                     (b)  in relation to each farm management deposit:

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

                             (ii)  an account number that is modified by the FMD provider to prevent the disclosure of the identity of the depositor and the identity of the owner (if the owner is not the depositor), and that remains the same while the owner holds the farm management deposit; and

                            (iii)  a personal identification number that is modified by the FMD provider to prevent the disclosure of the identity of the depositor and the identity of the owner (if the owner is not the depositor), and that remains the same while the owner holds any farm management deposits with the FMD provider; and

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

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

                            (vi)  the year of birth of the owner; and

                           (vii)  the year and month of the deposit.

Note 1:       Section 398‑5 in Schedule 1 to the Act requires an FMD provider that holds an FMD at the end of a month to give information in writing, before the 11th day after the end of that month, to the Agriculture Secretary. The information is described in subsection 398‑5(3) in Schedule 1 to the 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 Act, the regulations must not require information that discloses the depositor’s identity or from which the depositor’s identity could be reasonably inferred.

Note 2:       This information is additional to the information that an FMD provider must give to the Agriculture Secretary under paragraphs 398‑5(3)(a), (b) and (c) in Schedule 1 to the Act.

Part 2Repeals

Income Tax (Farm Management Deposits) Regulations 1998

6  The whole of the Regulations

Repeal the Regulations.