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This is a Bill, not an Act. For current law, see the Acts databases.
1996-97-98
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Taxation Laws
Amendment (Farm Management Deposits) Bill
1998
No. ,
1998
(Treasury)
A Bill
for an Act to make provision in relation to farm management deposits, and
for related purposes
Contents
Part 1—Basic amendments 8tlafmh1.html
Part 2—Deductions from repayments of farm management
deposits 8tlafmh1.html
Part 3—Related
amendments 8tlafmh1.html
Farm Household Support Act
1992 8tlafmh1.html
Taxation Administration Act
1953 8tlafmh1.html
Taxation (Interest on Overpayments and Early Payments) Act
1983 8tlafmh1.html
A Bill for an Act to make provision in relation to farm
management deposits, and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the Taxation Laws Amendment (Farm Management
Deposits) Act 1998.
(1) Subject to subsection (2), this Act commences on a day to be fixed by
Proclamation.
(2) If this Act does not commence under subsection (1) within the period
of 6 months beginning on the day on which it receives the Royal Assent, it
commences on the first day after the end of that period.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
1 Before Schedule 3
Insert:
Table of Subdivisions
Guide to Division 393
393-A Tax consequences of farm management
deposits
393-B Farm management deposit and related
definitions
393-C How to work out your taxable primary production income
and your taxable non-primary production income
This Division allows you to deduct farm management deposits in the year of
income you make them and assesses you on the amount deducted when the deposits
are repaid to you in later years of income.
This Subdivision allows you to deduct a farm management deposit if certain
tests relating to your income etc. are met. The Subdivision assesses you when a
deposit is repaid, but only to the extent that the repayment involves an amount
previously deducted.
This Subdivision uses a number of terms relating to farm management
deposits that are defined in Subdivisions 393-B and 393-C.
Table of sections
Operative provisions
393-10 Deduction for making farm management
deposit
393-15 Assessability on repayment of
deposit
[This is the end of the Guide]
(1) If:
(a) you are the owner of a farm management deposit made in the year of
income; and
(b) your taxable non-primary production income for the year of income is
not more than $50,000; and
(c) you did not:
(i) become bankrupt during the year of income; or
(ii) cease to be a primary producer during the year of income for at least
120 days (whether or not falling entirely within the year of income);
you can deduct the amount of the deposit from your assessable income for
the year of income. However, there is no entitlement to the deduction if you die
during the year of income.
Note 1: Because of subsections 393-50(1) and (2), this
section will not apply if the making of the deposit arises because of the
extension of the term of the deposit or because the deposit is being immediately
reinvested as a farm management deposit with the same
institution.
Note 2: Because of subsection 393-50(5), this section will
not apply if the making of the deposit arises by way of transfer of the deposit
in accordance with a requirement of the agreement concerned as mentioned in
subsection 393-40(5).
Note 3: Because of paragraph 25B(3)(c) of the Loan
(Income Equalization Deposits) Act 1976, this section will not apply if the
making of the deposit arises by way of transfer of an IED scheme deposit to a
farm management deposit.
Sum of deductions not to exceed taxable primary production
income
(2) The sum of the deductions that you would otherwise be entitled to
under this section for farm management deposits made in the year of income must
not exceed your taxable primary production income for the year of
income.
Amounts to be deducted in order of deposits
(3) If subsection (2) prevents you deducting in full amounts in respect of
2 or more deposits, you can deduct the amounts in the order in which the
deposits were made until the limit imposed by that subsection is
reached.
Amount assessable if deposit fully repaid
(1) If you are the owner of a farm management deposit that is repaid in
full in the year of income, your assessable income for the year of income
includes the unrecouped FMD deduction (see subsection (3)) in respect of the
deposit immediately before the repayment.
Note 1: Because of subsections 393-50(1) and (2), this
section will not apply if the repayment arises because of the extension of the
term of the deposit or because the deposit is immediately reinvested as a farm
management deposit with the same institution.
Note 2: Because of subsection 393-50(5), this section will
not apply if the repayment arises by way of transfer of the deposit in
accordance with a requirement of the agreement concerned as mentioned in
subsection 393-40(5).
Amount assessable if deposit partly repaid
(2) If:
(a) you are the owner of a farm management deposit of which part only is
repaid in the year of income; and
(b) the unrecouped FMD deduction (see subsection (3)) in respect of the
deposit immediately before the repayment exceeds the amount (if any) of the
deposit that remains immediately after the repayment;
the amount of the excess is included in your assessable income for the year
of income.
Note: This provision ensures that, in a case where not all
of a deposit was deductible, withdrawal of the non-deductible part can take
place without the amount withdrawn being assessable. Once that part has been
withdrawn, the remainder will be assessable when it is withdrawn, in order to
recoup the deduction.
Unrecouped FMD deduction
(3) The unrecouped FMD deduction in respect of a farm
management deposit at a particular time is:
(a) if no part of the deposit has been repaid before that
time—either:
(i) if subparagraph (ii) does not apply—the amount of the deduction
under section 393-10 for making the deposit; or
(ii) if the deposit was made with a financial institution as a result of a
request to which section 25B of the Loan (Income Equalization Deposits) Act
1976 applied—the amount worked out in accordance with paragraph (3)(d)
of that section; or
(b) if one or more parts of the deposit have been repaid before that
time—the unrecouped FMD deduction in respect of the deposit immediately
before the most recent such repayment, reduced by any amount included in the
owner’s assessable income under this section as a result of that
repayment.
Example: Assume a deposit of $3,000 is made, all of which is
deductible. The deposit’s unrecouped FMD deduction
immediately before a later repayment of $1,000 will be the amount of the
deduction (i.e. $3,000—see subparagraph (3)(a)(i)). The deposit’s
unrecouped FMD deduction immediately before a second repayment of an amount will
be $2,000 (i.e. according to paragraph (3)(b), the unrecouped FMD deduction
immediately before the first repayment ($3,000) reduced by the $1,000 included
in assessable income as a result of the first repayment).
Deemed repayment because of death, bankruptcy etc.
(4) If you are the owner of a farm management deposit that becomes
repayable during the year of income in accordance with a requirement of the
agreement concerned to the effect mentioned in subsection 393-40(3) (which
covers death, bankruptcy and ceasing to be a primary producer), the deposit is
taken for the purposes of this section to have been repaid at the time it became
repayable, instead of when it is actually repaid.
Note 1: This will mean that it is assessable under this
section in the year of income when the death etc. occurs, rather than in any
later year in which it might be repaid.
Note 2: Under Division 6A of Part VI, a deduction will
nevertheless be required to be made from the actual repayment.
This Subdivision explains what a farm management deposit is, and defines a
number of related terms.
Table of sections
Operative provisions
393-25 Various definitions
393-30 Requirements for a farm management
deposit
393-35 Requirements whose contravention causes a loss of
farm management deposit status
393-40 Other requirements of agreement
393-45 Contraventions that deprive a deposit of its status
as a farm management deposit
393-50 Making and repaying etc. deposits
[This is the end of the Guide.]
In this Division:
deduction exemption certificate has the meaning given by
subsection 221ZXE(1).
depositor of a farm management deposit means:
(a) if paragraph (b) does not apply—the person who made the deposit;
or
(b) if the deposit was made by a person in the capacity of trustee of a
trust estate on behalf of a beneficiary who, when the deposit was made, was
under a legal disability:
(i) if the beneficiary is still under a legal disability—the
trustee; or
(ii) if not—the beneficiary.
farm management deposit has the meaning given by sections
393-30, 393-35, 393-40 and 393-45 and subsection 393-50(4).
financial institution means a person in respect of whom the
following are satisfied:
(a) the person carries on in Australia:
(i) the business of banking; or
(ii) a business that consists of or includes taking money on deposit;
and
(b) either:
(i) the activities of the person, so far as they consist of carrying on
the business of banking or taking money on deposit in Australia, are subject to
prudential supervision or regulation under a law of the Commonwealth, a State or
a Territory; or
(ii) the Commonwealth, a State or a Territory guarantees the repayment of
any deposit taken in the course of the business of banking or as mentioned in
subparagraph (a)(ii).
make a farm management deposit has a meaning affected by
section 393-50.
owner of a farm management deposit means:
(a) if paragraph (b) does not apply—the person who made or is making
the deposit; or
(b) in the case of a deposit made or being made by the trustee of a trust
estate on behalf of a beneficiary—the beneficiary.
primary producer means:
(a) an individual who carries on in Australia a primary production
business otherwise than as trustee of a trust estate; or
(b) a partner (not being a company) in a partnership that carries on in
Australia a primary production business; or
(c) a beneficiary (not being a company) who is presently entitled to a
share of the income of a trust estate where the trustee carries on in Australia
a primary production business.
primary production business has the meaning given by
subsection 995-1(1) of the Income Tax Assessment Act 1997.
repay a farm management deposit has a meaning affected by
section 393-50.
tax file number has the meaning given by section
202A.
(1) Subject to section 393-45, a deposit of money is a farm
management deposit if the requirements of this section are
satisfied.
Deposit to be made under agreement between depositor and financial
institution
(2) The deposit must be made with a financial institution under an
agreement between the financial institution and the depositor that:
(a) describes the deposit as a farm management deposit; and
(b) at all times while the deposit is with the financial institution,
contains requirements to the effect set out in sections 393-35 and 393-40. (The
agreement may also contain additional requirements that are not inconsistent
with those set out in those sections.)
Depositor to provide information in application form
(3) The depositor must have applied to the financial institution to make
the deposit by completing and signing a form that:
(a) permitted the depositor to state the owner’s tax file number in
the form; and
Note: If the owner chooses not to state his or her tax file
number and does not later quote it to the financial institution, the deduction
required under Division 6A of Part VI from any repayment of the deposit will be
at the highest marginal tax rate.
(b) required the depositor to provide any other information required by
regulations for the purposes of this paragraph; and
(c) contained any statements, required by regulations for the purposes of
this paragraph, that were to be read by the depositor when completing the
form.
Note: A depositor who makes a false or misleading statement
in such a form will commit an offence against section 8K, 8N or 8P of the
Taxation Administration Act 1953.
(1) This section sets out requirements, that must be contained in the
agreement mentioned in subsection 393-30(2), whose contravention will, under
section 393-45, result in the deposit, or some of the deposit, being taken not
to be, and (if appropriate) never to have been, a farm management
deposit.
Owner to be primary producer
(2) The owner must be a primary producer when the deposit is
made.
Deposit to be made by or on behalf of only one person
(3) The deposit must not be made by 2 or more persons jointly or be made
on behalf of 2 or more persons.
Deposit by trustee may only be made for a beneficiary under a legal
disability etc.
(4) The deposit must not be made:
(a) by the trustee of a trust estate on behalf of a beneficiary, unless
the beneficiary is presently entitled to a share of the income of the trust
estate and is under a legal disability; or
(b) otherwise by a person in his or her capacity as a trustee.
Deposit to be $1,000 or more
(5) The deposit must be $1,000 or more.
Deposit limit of $300,000
(6) The deposit must not be more than $300,000, and the sum of the
balances from time to time of the deposit and all other farm management deposits
of the owner with the financial institution must not be more than
$300,000.
Owner to have deposit with only one financial institution
(7) The owner must not, at any time while the deposit is with the
financial institution, have any farm management deposits with any other
financial institution.
Rights in respect of deposit not transferable
(8) Rights of the depositor in respect of the deposit must not be
transferable to another person.
Charges etc. not to be created over deposit
(9) A charge or other encumbrance must not be created over the deposit as
security for an amount payable by the depositor or any other person to the
financial institution or to any other person.
Mortgage offset accounts
(10) Amounts that would otherwise accrue as interest or other earnings on
the deposit must not reduce liabilities of the depositor to pay interest to the
financial institution in respect of loans or other debts of the
depositor.
Restriction on investment of interest
(11) 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.
Withdrawal of deposit in first 12 months
(12) No part of the deposit must be able to be repaid within 12 months
after the end of the applicable depositing day (see subsection (13)),
except:
(a) if the deposit becomes required to be repaid in accordance with
subsection 393-40(3) (which covers death, bankruptcy and loss of primary
producer status); or
Note: If the deposit is repaid within the 12 months other
than because of death, bankruptcy or loss of primary producer status, under
section 393-45 the deposit will not be a farm management deposit, therefore
there will be no income tax deduction. If the deposit is repaid within 12 months
because of death, bankruptcy or loss of primary producer status, the deposit
will still be a farm management deposit but there will only be an income tax
deduction if the death etc. occurs after the year of income in which the deposit
is made (see paragraph 393-10(1)(c)).
(b) by a transfer to another financial institution in accordance with a
requirement of the agreement concerned as mentioned in subsection
393-40(5).
(13) The applicable depositing day is:
(a) if none of the other paragraphs in this subsection applies—the
day on which the deposit is made with the financial institution; or
(b) if the deposit is made with the financial institution as a result of a
request to which section 25B of the Loan (Income Equalization Deposits) Act
1976 applied—the day on which the deposit under that Act, that was the
subject of the request, was made; or
(c) if the deposit is made with the financial institution as a result of
one or more transfers from other financial institutions in accordance with
requirements of agreements as mentioned in subsection 40(5), and paragraph (d)
does not apply—the day on which the deposit was made with the first of the
financial institutions; or
(d) if the deposit is made with the financial institution as a result of a
combination of a request as mentioned in paragraph (b) and one or more transfers
as mentioned in paragraph (c)—the day applicable under paragraph
(b).
(1) This section sets out other requirements that must be contained in the
agreement mentioned in subsection 393-30(2).
Withdrawal of deposit after 12 months
(2) The whole or any part of the deposit must be able to be withdrawn at
any time after the 12 months mentioned in subsection 393-35(12).
Deposit must be repaid where death, bankruptcy or loss of primary
producer status
(3) The deposit must be repaid if:
(a) the owner dies or becomes bankrupt; or
(b) the owner ceases to be a primary producer for at least 120
days.
Repayment to be $1,000 or more
(4) Except where the entire amount of the deposit is repaid, the amount of
any repayment of the deposit must be $1,000 or more.
Transfer of deposit between financial institutions
(5) The financial institution must, if requested in writing by the
depositor to do so and if given any information or other assistance from the
depositor necessary for the purpose, transfer the deposit by electronic means to
another financial institution that agrees to accept the deposit as a farm
management deposit.
Administration fees etc. not to be deducted from deposit
(6) The financial institution must not deduct from the deposit (whether at
the time it is made, while it is with the institution or at the time of its
repayment) any administration fee or other amount required by the financial
institution to be paid in respect of the deposit or otherwise.
(1) If, when it was accepted, the requirement set out in subsection
393-35(2), (3), (4), (5), (7) or (8) was contravened, the deposit is not a
farm management deposit.
(2) If, by accepting the deposit, the requirement set out in subsection
393-35(6) was contravened, so much of the deposit as caused that requirement to
be contravened is not a farm management deposit.
(3) If the requirement set out in subsection 393-35(9), (10), (11) or (12)
is contravened at any time in relation to the deposit, it is not, and is taken
never to have been, a farm management deposit.
Reinvesting a deposit
(1) If a farm management deposit is immediately reinvested as a farm
management deposit with the same financial institution, the reinvestment does
not involve the repayment of the farm management deposit or the
making of a farm management deposit.
Extending the term of a deposit
(2) If the term of a farm management deposit is extended, the extension
does not involve the repayment of the farm management deposit or
the making of a farm management deposit (even if other terms such
as those relating to interest payable are also varied).
Repay includes deal with as requested etc.
(3) Subject to subsections (1) and (2), the expression repay
a farm management deposit includes transfer or reinvest the deposit or otherwise
deal with the deposit on behalf of or at the request of the depositor.
Effect of partial repayment
(4) The expression farm management deposit means, if part of
the deposit has been repaid, the balance of the deposit after the
repayment.
Transferring a deposit to another financial institution
(5) If a financial institution (the transferor) transfers a
farm management deposit to another financial institution (the
transferee) in accordance with a requirement of the agreement
concerned as mentioned in subsection 393-40(5):
(a) for the purposes of sections 221ZXB, 221ZXD and 393-15, the transfer
does not constitute a repayment of the deposit by the transferor;
and
Note: This means that the transfer will not be subject to a
deduction under Division 6A of Part VI and the owner will not be assessed for
income tax purposes on the amount transferred.
(b) for the purposes of section 393-10, the transfer does not constitute
the making of a deposit with the transferee; and
Note: This means that the transfer will not give rise to an
income tax deduction.
(c) for the purposes of working out the unrecouped FMD deduction in
applying section 393-15 (including for the purposes of section 221ZXB) in
relation to any repayment of the whole or part of the deposit by the transferee,
or by any other transferee resulting from any other application of this section,
the transfer does not cause the deposit to be a different deposit.
Note: This ensures that the unrecouped FMD deduction (which
determines how much income tax is assessed, and how much of a deduction under
Division 6A of Part VI is required) in the event of a repayment will equal the
deduction for the original deposit, less any amount assessed beforehand while
the deposit was held by the original or any later financial
institution.
This Subdivision explains how to work out your taxable primary production
income and your taxable non-primary production income for a year of
income.
Table of sections
Operative provisions
393-60 Working out your taxable primary production
income
393-65 Working out your taxable non-primary production
income
[This is the end of the Guide.]
(1) Work out your taxable primary production income for the
year of income in this way:
Method statement
Step 1. Compare your assessable primary production income for the
year of income with your primary production deductions for the year of
income.
Step 2. If your assessable primary production income is larger than
your primary production deductions, your taxable primary production
income is the difference between them.
Step 3. If your primary production deductions are larger than (or
equal to) your assessable primary production income, your taxable primary
production income is nil.
Assessable primary production income
(2) Your assessable primary production income for the year
of income is the amount of your basic assessable income (see subsection (4)) for
the year of income that was derived (see subsection (3)) from or resulted from
your carrying on a primary production business.
Derive
(3) The expression derive has a meaning affected by
subsection 6-5(4) of the Income Tax Assessment Act 1997.
Basic assessable income
(4) Your basic assessable income for an income year is your
assessable income for the income year, less:
(a) any amount included in your assessable income under
subsection 27B(1A) or (3) (Assessable income to include certain
superannuation and kindred payments); and
(b) any net capital gain included in your assessable income under
Part IIIA (Capital gains and capital losses).
Primary production deductions
(5) Your primary production deductions for the year of
income are:
(a) any deductions allowed or allowable to you for the year of income that
relate exclusively to your assessable primary production income of a year of
income; and
(b) so much of any other deductions (other than apportionable deductions)
allowed or allowable to you for the year of income as, in the opinion of the
Commissioner, may appropriately be related to your assessable primary production
income of a year of income.
(1) Work out your taxable non-primary production income for
the year of income in this way:
Method statement
Step 1. Compare your assessable non-primary production income for
the year of income with your non-primary production deductions for the year of
income.
Step 2. If your assessable non-primary production income is larger
than your non-primary production deductions, your taxable non-primary
production income is the difference between them.
Step 3. If your non-primary production deductions are larger than
(or equal to) your assessable non-primary production income, your taxable
non-primary production income is nil.
Assessable non-primary production income
(2) Your assessable non-primary production income for the
year of income is the difference between:
(a) your basic assessable income (see subsection 393-60(4)) for the year
of income; and
(b) your assessable primary production income (see subsection 393-60(2))
for the year of income.
Non-primary production deductions
(3) Your non-primary production deductions for the year of
income are the difference between:
(a) the sum of your allowable deductions for the year of income;
and
(b) your primary production deductions (see subsection 393-60(5)) for the
year of income.
Part
2—Deductions from repayments
of farm management deposits
2 After Division 6 of Part
VI
Insert:
Note: In addition to the obligations imposed on financial
institutions in relation to farm management deposits under this Division, they
are required to report information about such deposits to the Department of
Primary Industries and Energy under section 264AA.
General
(1) Expressions used in this Division that are also used in Schedule 2G
have the same meanings as in that Schedule.
Assessable FMD amount
(2) The expression assessable FMD
amount in relation to the repayment of some or all of a farm management
deposit means:
(a) if paragraph (b) does not apply—the amount included in the
owner’s assessable income under section 393-15 of Schedule 2G as a result
of the repayment; or
(b) if the repayment results from the deposit becoming repayable under a
requirement in the agreement concerned as mentioned in subsection 393-40(3) of
Schedule 2G (which covers death, bankruptcy and ceasing to be a primary
producer)—the amount that would be included in the owner’s
assessable income under section 393-15 of that Schedule as a result of the
repayment if subsection (4) of that section were disregarded.
Note: Subsection 393-15(4) causes any previous income tax
deduction for the deposit to be recouped when the deposit becomes repayable on
the death etc. of the owner, rather than when the deposit is actually repaid. By
ignoring the subsection, a deduction under this Division will effectively be
required from the actual repayment, because its assessable FMD
amount is worked out as if the actual repayment (rather than the deposit
becoming repayable) caused the previous income tax deduction to be
recouped.
Quote a tax file number
(3) The expression quote a tax file number to a financial
institution in connection with a farm management deposit has the meaning given
by section 202DL.
When section applies
(1) This section applies if a financial institution repays some or all of
a farm management deposit, unless before the repayment is made the depositor
gives the financial institution:
(a) a copy of a deduction exemption certificate (see section 221ZXE) in
relation to the repayment; or
(b) a statement that there will be no assessable FMD amount in relation to
the repayment.
Note 1: Because of subsections 393-50(1) and (2) of Schedule
2G, this section will not apply if the repayment arises because of the extension
of the term of the deposit or because the deposit is immediately reinvested as a
farm management deposit with the same institution.
Note 2: Because of subsection 393-50(5) of Schedule 2G, this
section will not apply if the repayment arises by way of transfer of the deposit
in accordance with a term of the agreement concerned as mentioned in subsection
393-40(5) of that Schedule.
Deduction where assessable FMD amount statement
(2) If this section applies and, before the repayment is made, the
depositor gives the financial institution a statement in writing:
(a) that there will be an assessable FMD amount in respect of the
repayment that is less than the amount of the deposit; and
(b) that specifies what that assessable FMD amount will be;
the financial institution must, subject to subsection (4), deduct 20% of
the stated assessable FMD amount from the repayment.
Example 1: If the owner was not allowed a deduction for the
full amount of the deposit because he or she did not have sufficient primary
production income to support a full deduction (see subsection 393-10(2)), the
depositor would be able to specify an assessable FMD amount which was less than
the amount of the repayment and hence reduce the amount to be deducted under
this subsection.
Example 2: If no deduction was allowed because the owner
ceased to be a primary producer in the year of income in which the deposit was
made (see subparagraph 393-10(1)(c)(ii)), the depositor would be able to specify
that there was no assessable FMD amount and hence no deduction under this
subsection would be required.
Note: Giving an incorrect assessable FMD amount statement
without reasonable grounds etc. will constitute making a false or misleading
statement for the purpose of offences against sections 8K, 8N and 8P of the
Taxation Administration Act 1953: see subsection 8J(18) of that
Act.
Deduction where no assessable FMD amount statement
(3) If this section applies and, before the repayment is made, the
depositor does not give the financial institution such a statement, the
financial institution must, subject to subsection (4), deduct 20% of the
repayment.
Deduction percentage when tax file number not quoted
(4) If:
(a) apart from this subsection, a financial institution would be required
to deduct, under subsection (2), 20% of a stated assessable FMD amount from a
repayment or, under subsection (3), 20% of a repayment; and
(b) by the time the deduction is required to be made, the depositor has
not quoted the owner’s tax file number to the financial institution in
connection with the deposit;
then, instead of being required to deduct 20% of the amount or repayment,
the financial institution is required to deduct 48.5% or any other percentage
specified in regulations made for the purposes of this subsection.
Offence if failure to deduct
(5) If a financial institution, other than the Commonwealth, a State or a
Territory, contravenes subsection (2) or (3), it is guilty of an offence
punishable on conviction by a fine not exceeding 10 penalty units.
Effect of deduction on liability to depositor
(6) If a financial institution makes a deduction under this section, the
financial institution is discharged from any liability to pay or account for the
amount deducted to any person other than the Commissioner.
(1) A financial institution must send any amount deducted under section
221ZXB to the Commissioner before the end of 21 days after the end of the month
in which it is deducted.
Offence if failure to give deduction to Commissioner
(2) If a financial institution, other than the Commonwealth, a State or a
Territory, contravenes subsection (1), it is guilty of an offence punishable on
conviction by a fine not exceeding 50 penalty units.
(1) A financial institution must, before the end of 4 months after the end
of a financial year in which it repays some or all of a farm management deposit,
or within such further time as the Commissioner allows, give the Commissioner a
report setting out:
(a) if the owner’s tax file number was quoted in connection with the
deposit—the tax file number; and
(b) if the owner’s tax file number was not quoted in connection with
the deposit—a statement to that effect; and
(c) in any case:
(i) the depositor’s name and address (if known to the financial
institution); and
(ii) the amount of the repayment; and
(iii) the amount of any deduction under section 221ZXB from the repayment;
and
(iv) any other information required by the Commissioner in relation to the
repayment.
Form etc. of report
(2) The report must be in a form authorised by the Commissioner and be
signed on behalf of the financial institution.
Offence if failure to report
(3) If a financial institution, other than the Commonwealth, a State or a
Territory, contravenes this section, it is guilty of an offence punishable on
conviction by a fine not exceeding 10 penalty units.
Depositor may request deduction exemption certificate
(1) The depositor of a farm management deposit that is to be repaid in
whole or part may request the Secretary to the Department of Primary Industries
and Energy to issue a certificate (a deduction exemption
certificate) stating that no amount is to be deducted under section
221ZXB in relation to the repayment.
Ground for certificate
(2) The request may only be made on the ground that the owner is
experiencing serious financial difficulties.
Note: A depositor who makes a statement that is false or
misleading in a material particular in such a request will commit an offence
against section 8K, 8N or 8P of the Taxation Administration Act
1953.
Formal requirements
(3) The request must be in writing and be accompanied by evidence, of a
kind required by the Secretary, of the ground on which it is made.
Decision etc. within 1 month
(4) The Secretary must, within 1 month after the request is
made:
(a) decide whether or not to issue the certificate, according to whether
he or she considers the ground on which the request was made is established or
not; and
(b) either issue the certificate or advise the depositor in writing of his
or her decision not to issue the certificate.
Secretary to have regard to guidelines
(5) In making the decision whether or not to issue the certificate, the
Secretary must have regard to the guidelines formulated by the Minister for
Primary Industries and Energy under subsection 221ZXF(1).
AAT review
(6) The depositor may apply to the Administrative Appeals Tribunal for
review of a decision of the Secretary not to issue the certificate.
Refund of deduction under section 221ZXB
(7) If:
(a) the Administrative Appeals Tribunal decides, on the application, that
the Secretary should have issued the certificate; and
(b) the financial institution makes the repayment concerned before the
certificate issued as a result of the decision of the Tribunal is given to the
financial institution; and
(c) in accordance with subsection 221ZXB(2) or (3), the financial
institution deducts a percentage of the stated assessable FMD amount or of the
repayment; and
(d) the depositor gives the Commissioner a copy of the certificate issued
as a result of the decision of the Tribunal before the Commissioner has made, or
amended, an assessment in relation to the owner of the deposit, for the year of
income in which the repayment is made;
the following provisions apply:
(e) the Commissioner must refund to the depositor the amount deducted
under subsection 221ZXB(2) or (3);
(f) for the purposes of section 221ZXK, the amount refunded is taken never
to have been deducted under subsection 221ZXB(2) or (3).
Refund payable out of CRF
(8) The refund is payable out of the Consolidated Revenue Fund, which is
appropriated accordingly.
Delegation of deduction exemption certificate powers
(9) The Secretary may, by writing signed by the Secretary, delegate to an
officer of the Department of Primary Industries and Energy his or her powers
under this section in respect of certificates.
Minister to formulate guidelines
(1) The Minister for Primary Industries and Energy must, as soon as
practicable after the commencement of this section, formulate written guidelines
setting out matters to be taken into account by the Secretary in making
decisions under paragraph 221ZXE(4)(a).
Disallowable instruments
(2) The guidelines are disallowable instruments for the purposes of
section 46A of the Acts Interpretation Act 1901.
If:
(a) in a statement given to a financial institution, a depositor states
incorrectly that there will be no assessable FMD amount, or understates what the
assessable FMD amount will be, in relation to a repayment of some or all of a
farm management deposit; and
(b) as a result:
(i) the financial institution is not required to make any deduction under
section 221ZXB; or
(ii) the financial institution is required under that section to deduct
less than would have been required if there had been a statement of the correct
assessable FMD amount;
the depositor is liable to pay the Commissioner a penalty of 20% per annum
of:
(c) if subparagraph (b)(i) applies—the amount that would have been
required to be deducted if there had been a statement of the correct assessable
FMD amount; or
(d) if subparagraph (b)(ii) applies—the difference between the
amount required to be deducted and the amount that would have been required if
there had been a statement of the correct assessable FMD amount;
from the time of repayment until the time of making the owner’s
assessment for the year of income in which the repayment is made.
Request to remit penalty
(1) If a depositor is liable to pay a penalty under section 221ZXG, the
depositor may, in writing, request the Commissioner to remit the whole or a part
of the penalty.
Commissioner may remit penalty
(2) The Commissioner may, for reasons that he or she thinks sufficient,
remit the whole or a part of the penalty.
Commissioner to advise decision
(3) The Commissioner must advise the depositor in writing of his or her
decision on the request.
Depositor may object against decision
(4) If the depositor is dissatisfied with the decision, he or she may
object against it in the manner set out in Part IVC of the Taxation
Administration Act 1953.
(1) If an amount payable to the Commissioner by a financial institution
under subsection 221ZXC(1) (the principal amount) remains unpaid
after the end of the 21 days mentioned in that paragraph:
(a) the principal amount continues to be payable to the Commissioner;
and
(b) an additional amount is, in addition to any other penalty to which
that person may be liable, payable by the financial institution to the
Commissioner, by way of penalty, at the rate of 16% per annum on so much of the
principal amount as remains unpaid, worked out from the end of the 21
days.
Request to remit additional amount
(2) If an additional amount is payable by a financial institution under
paragraph (1)(b), the institution may, in writing, request the Commissioner to
remit the whole or a part of the additional amount.
Remission of additional amount
(3) If:
(a) the Commissioner is satisfied that:
(i) the circumstances that contributed to the delay in payment of the
principal amount were not due to, or caused directly or indirectly by, an act or
omission of the financial institution; and
(ii) the financial institution has taken reasonable action to mitigate, or
mitigate the effects of, those circumstances; or
(b) the Commissioner is satisfied that:
(i) the circumstances that contributed to the delay in payment of the
principal amount were due to, or caused directly or indirectly by, an act or
omission of the financial institution; and
(ii) the financial institution has taken reasonable action to mitigate, or
mitigate the effects of, those circumstances; and
(iii) having regard to the nature of those circumstances, it would be fair
and reasonable to remit the additional amount or part of the additional amount;
or
(c) the Commissioner is satisfied that there are special circumstances by
reason of which it would be fair and reasonable to remit the additional amount
or part of the additional amount;
the Commissioner may remit the additional amount or part of the additional
amount.
Commissioner to advise decision
(4) The Commissioner must advise the financial institution in writing of
his or her decision on the request.
Financial institution may object against decision
(5) If the financial institution is dissatisfied with the
Commissioner’s decision, it may object against the decision in the manner
set out in Part IVC of the Taxation Administration Act 1953.
Effect of court judgment on principal amount
(6) If judgment is given by, or entered in, a court for the payment
of:
(a) the whole or a part of a principal amount; or
(b) an amount that includes the whole or a part of a principal
amount;
then:
(c) the principal amount is not taken, for the purposes of paragraph
(1)(b), to have ceased to be due and payable by reason only of the giving or
entering of the judgment; and
(d) if the judgment debt carries interest, the amount that would, but for
this paragraph, be payable by virtue of paragraph (1)(b) in relation to the
principal amount or the part of the principal amount, is reduced by:
(i) in a case to which paragraph (a) applies—the amount of the
interest; or
(ii) in a case to which paragraph (b) applies—the amount worked out
using the formula:
(1) An amount payable to the Commissioner by a depositor under section
221ZXG or by a financial institution under section 221ZXI is a debt due to the
Commonwealth that is payable to the Commissioner, and:
(a) the amount may be sued for and recovered in a court of competent
jurisdiction by the Commissioner or a Deputy Commissioner suing in his or her
official name; and
(b) a court before which proceedings are taken against the depositor or
financial institution for an offence against section 221ZXG or 221ZXI may order
the depositor or institution to pay the amount to the Commissioner.
(2) Section 8ZL of the Taxation Administration Act 1953 applies in
proceedings for the recovery of an amount payable to the Commissioner under
section 221ZXG or 221ZXI of this Act in the same way as section 8ZL applies in
relation to a prosecution for a prescribed taxation offence within the meaning
of Part III of that Act.
(1) If:
(a) a financial institution has deducted an amount under section 221ZXB in
respect of the repayment of the whole or a part of a farm management deposit in
the year of income; and
(b) an amount is or would be included in the owner’s assessable
income:
(i) if subparagraph (ii) does not apply—for the year of income,
because of the repayment; or
(ii) if the repayment results from the deposit becoming repayable under a
requirement in the agreement concerned as mentioned in subsection 393-40(3) of
Schedule 2G (which covers death, bankruptcy and ceasing to be a primary
producer)—for the year of income or an earlier year of income, because of
the deposit becoming repayable; and
(c) an assessment has been made or amended in respect of the owner’s
income for the year of income or the earlier year of income;
the Commissioner must credit the amount so deducted in payment successively
of:
(d) any tax payable by the owner in respect of the year of income or the
earlier year of income, whether or not that tax is due for payment;
and
(e) any other liability of the owner to the Commonwealth arising under or
by virtue of this Act or any other Act of which the Commissioner has the general
administration.
(2) If any of the amount remains after that crediting, the Commissioner
must refund it to the owner.
A person who is or has been an officer of the Department of Primary
Industries and Energy must not, directly or indirectly, except for the purposes
of section 221ZXE, make a record of, or divulge or communicate to any person,
any information with respect to the affairs of another person acquired by the
person in the exercise of his or her powers, or the performance of his or her
duties or functions, under section 221ZXE.
Penalty: Imprisonment for 6 months.
3 Subsection 6(1) (definition of income from
personal exertion or income derived from personal
exertion)
Omit “159GD,”, insert “159GD or section 393-15 of
Schedule 2G,”.
4 Subsection 95(1) (definition of net
income)
After “Division 16C”, insert “or Schedule
2G”.
5 Paragraph 97A(1)(b)
After “scheme deposit”, insert “or the owner of a farm
management deposit”.
Note: The heading to section 97A is altered by adding at the
end “or farm management deposits”.
6 Paragraph 97A(1)(c)
After “eligible primary producer”, insert “or a primary
producer, as the case requires,”.
7 Paragraph 97A(1A)(b)
After “scheme deposit”, insert “or the owner of a farm
management deposit”.
8 Paragraph 97A(1A)(c)
After “eligible primary producer”, insert “or a primary
producer, as the case requires,”.
9 Subsection 97A(2)
Repeal the subsection, substitute:
(2) In this section:
eligible primary producer and owner of a current IED
scheme deposit have the same meanings as in Division 16C.
primary producer and owner of a farm management
deposit have the same meanings as in Schedule 2G.
10 At the end of section
101A
Add:
(4) This section does not apply in relation to any amount received by the
trustee of the estate of a deceased person if the amount is a farm management
deposit (within the meaning of Schedule 2G), of which the deceased person was
the owner, that has become repayable.
11 After subsection
159GC(2)
Insert:
(2A) Subsection (1) does not apply in relation to the making of a deposit
that is later deposited with a financial institution (within the meaning of
Schedule 2G) in accordance with a request under section 25B of the Deposits Act
if, in the year of income in which it is made, the taxpayer dies or becomes
bankrupt, or ceases to be an eligible primary producer without again becoming
one within 120 days after the day of so ceasing.
12 Subsection 163B(10) (definition of income
tax crediting amount)
Omit “or 221ZT”, substitute “, 221ZT or
221ZXK”.
13 Subsection 170(10)
Omit “or 2B”, substitute “, 2B or 2G”.
14 At the end of subsection
177B(2)
Add “or the operation of Schedule 2G”.
15 After Division 4 of Part
VA
Insert:
Expressions used in this Division that are also used in Schedule 2G have
the same meanings as in that Schedule.
A depositor of a farm management deposit quotes the
owner’s tax file number to the financial institution in connection with
the deposit by:
(a) stating the number in the form mentioned in subsection 393-30(3) of
Schedule 2G in relation to the deposit; or
(b) informing the financial institution of the number in any other manner
approved by the Commissioner in connection with the deposit.
Commissioner may notify financial institution of correct tax file
number
(1) If the Commissioner is satisfied:
(a) that the tax file number quoted to a financial institution in
connection with a farm management deposit:
(i) has been cancelled or withdrawn since it was quoted; or
(ii) is otherwise wrong; and
(b) that the owner has a tax file number;
the Commissioner may give the financial institution notice in writing of
the owner’s correct tax file number.
Owner taken to have notified financial institution
(2) If a notice is given under subsection (1), then, for the purposes of
section 221ZXB, the owner’s correct tax file number is taken as having
always been quoted in connection with the deposit.
Commissioner may notify financial institution if owner does not have a
tax file number etc.
(3) If:
(a) the Commissioner is satisfied that the tax file number quoted to a
financial institution in connection with a farm management deposit:
(i) has been cancelled since it was quoted; or
(ii) is for any other reason not the owner’s tax file number;
and
(b) the Commissioner is not satisfied that the owner has a tax file
number;
the Commissioner may give the financial institution notice in writing
accordingly.
Commissioner to give owner copy of notice
(4) If a notice is given under subsection (3), the Commissioner must give
the depositor a copy of the notice, together with a written statement of the
reasons for the decision to give the notice.
Notice takes effect when given to owner
(5) The notice takes effect on the day specified in the notice, being a
day not earlier than the day on which the copy of the notice is given to the
depositor.
Tax file number deemed not quoted
(6) On and from the day on which the notice takes effect, the depositor is
taken not to have quoted the owner’s tax file number in connection with
the deposit.
16 After paragraph
202F(1)(d)
Insert:
(da) a decision to give a notice under subsection 202DM(3);
17 Paragraph 221YA(5)(a)
Omit “Part III,”, substitute “Part III or the provisions
of Schedule 2G,”.
18 Paragraph 221YA(5)(a)
After “that Division”, insert “or
Schedule”.
19 At the end of paragraph
221YA(5)(c)
Add “or Schedule 2G”.
20 Paragraph 221YA(5)(e)
After “Part III”, insert “or the application of Schedule
2G”.
21 Paragraph 221YAB(1)(a) (subparagraph (ii) of
the definition of Credited amounts)
After “159GDA”, insert “or 221ZXK”.
22 Subparagraph
221YCAA(3)(a)(i)
After “Part III”, insert “, and Schedule
2G,”.
23 Sub-subparagraph
221YCAA(3)(a)(iii)(A)
After “Part III”, insert “, and Schedule
2G,”.
24 Subparagraph
221YCAA(3)(b)(i)
After “Part III”, insert “, and Schedule
2G,”.
25 After section 264
Insert:
Financial institution to provide quarterly information
(1) A financial institution that, at the end of any month in a quarter
beginning on 1 January, 1 April, 1 July or 1 October in any year (including a
quarter in which this section commences), holds any farm management deposit
must, within 60 days after the end of the quarter, give the information in
subsection (2) in writing to the Secretary to the Department of Primary
Industries and Energy.
Penalty: 10 penalty units.
Information required
(2) The information is:
(a) the number of farm management deposits held at the end of each month
in the quarter; and
(b) the number of depositors in respect of such deposits at the end of
each month in the quarter; and
(c) the sum of the balances of such deposits at the end of each month in
the quarter; and
(d) subject to subsection (3), any other information, in relation to farm
management deposits held by the institution at any time in the quarter, that is
required by the regulations for the purposes of this section.
Regulations not to require identity of depositor
(3) The regulations must not, for the purposes of this section, require
information that discloses the identity of a depositor or from which the
identity could reasonably be inferred.
(4) The expressions depositor, farm management
deposit and financial institution have the same meanings
as in Schedule 2G.
26 Paragraph 268-35(5)(i) of Schedule
2F
Repeal the paragraph (including the note after the paragraph),
substitute:
(i) deductions for Income Equalization Deposits;
See Division 16C of Part III of the Income
Tax Assessment Act 1936.
(j) deductions for Farm Management Deposits.
See Schedule 2G to the Income Tax
Assessment Act 1936.
1 After subsection 4(1)
Insert:
(1A) The Minister must not so accept a deposit more than 3 months after
the end of the day on which the Taxation Laws Amendment (Farm Management
Deposits) Act 1998 commences.
2 Subsection 4A(1)
Omit “section 4B”, substitute “sections 4B and
25D”.
3 At the end of section 4B
Add:
(7) This section does not apply to interest that becomes payable more than
3 months after the end of the day on which the Taxation Laws Amendment (Farm
Management Deposits) Act 1998 commences.
4 After section 23
Insert:
If, while a request under section 15A, 17 or 18A in relation to a deposit
or part of a deposit is pending, a request is duly made under section 25B in
respect of the deposit concerned, the request under section 15A, 17 or 18A
lapses.
5 After Part III
Insert:
In this Part:
farm management deposit has the meaning given by Schedule 2G
to the Assessment Act.
financial institution has the meaning given by Schedule 2G to
the Assessment Act.
(1) Subject to subsection (2), if:
(a) before the end of 30 November 1999, a depositor makes a request in
writing to the authorised person to re-deposit on behalf of the depositor, as
separate farm management deposits with a specified financial institution, every
deposit of the depositor; and
(b) the request is accompanied by any information, and the form, that the
authorised person requires for the purpose of making the deposits on behalf of
the depositor with the financial institution; and
(c) the financial institution accepts the deposits as farm management
deposits;
the authorised person must make the deposits in accordance with the
request, and the amount required for the authorised person to do so must be paid
out of moneys standing to the credit of the Income Equalization Deposits
Reserve.
(2) Subsection (1) does not apply to a deposit to the extent that it is
repayable because of a declaration under section 18B, 19 or 20.
(3) If the authorised person makes the deposits:
(a) each deposit or part ceases to be such under this Act; and
(b) for the purposes of section 20B, and section 159GD of the Assessment
Act, giving effect to the request does not involve a repayment of the deposit by
the authorised person; and
Note: This means that the transfer will not be subject to a
deduction under section 20B and the owner will not be assessed for income tax
purposes because of the transfer.
(c) for the purposes of section 393-10 of Schedule 2G to the Assessment
Act, giving effect to the request does not involve the making of a deposit with
the financial institution; and
Note: This means that the transfer will not give rise to an
income tax deduction.
(d) for the purposes of any application of section 221ZXB of the
Assessment Act, or section 393-15 of Schedule 2G to the Assessment Act, in
relation to the deposit (including the deposit as affected by paragraph
393-50(5)(c) of the Assessment Act) after it is made with the financial
institution, the unrecouped FMD deduction in respect of the deposit at any time
before the first or only repayment of any of the deposit is equal to the amount
of the unrecouped deduction (within the meaning of subsection 159GA(3) of the
Assessment Act) in respect of the deposit immediately before it ceased to be a
deposit under this Act.
Note: This means that the unrecouped deduction relating to
the deposit under this Act continues to apply (by becoming an unrecouped FMD
deduction) when the deposit is transferred to a financial institution as a farm
management deposit.
If the whole or a part of a deposit:
(a) has not been repaid, or become repayable, under this Act before the
end of 31 December 1999; or
(b) has not been requested to be re-deposited with a financial institution
in accordance with section 25B before the end of 30 November 1999;
the authorised person must declare that the whole or the part of the
deposit is repayable to the depositor, and upon the making of the declaration,
the amount concerned becomes repayable.
Interest is not payable in respect of a deposit, or a part of a deposit,
for any period after the end of 31 March 2000.
1 Section 10-5 (after table item headed
“environment”)
Insert:
|
farm management deposits |
|
|
repayments of
.................................................... |
393-1 of Schedule 2G |
2 Section 12-5 (after table item headed
“family”)
Insert:
|
farm management deposits |
|
|
see primary production |
|
3 Section 12-5 (table item headed “primary
production”)
After:
|
drought investment allowance, generally
.................................. |
625 to 684 |
insert:
|
farm management deposits
......................................................... |
393-1 to 393-65 of Schedule 2G |
4 Paragraph 26-55(2)(c)
After “Part III of”, insert “, or Schedule 2G (Farm
management deposits) to,”.
5 Paragraph 165-55(5)(i)
Repeal the paragraph (including the note after the paragraph),
substitute:
(i) deductions for Income Equalization Deposits;
See Division 16C of Part III of the Income
Tax Assessment Act 1936.
(j) deductions for Farm Management Deposits.
See Schedule 2G to the Income Tax
Assessment Act 1936.
6 Section 750-15 (after table item
5)
Insert:
|
6. |
Repayments of farm management deposits |
Division 6A |
1 The whole of the Act
Repeal the Act.
Farm
Household Support Act 1992
1 Subsection 3(2) (after paragraph (a) of the
definition of exempt livestock proceeds)
Insert:
or (aa) a farm management deposit (within the meaning of Schedule 2G to
the Income Tax Assessment Act 1936); or
Taxation
Administration Act 1953
2 At the end of section 8J
Add:
(18) If:
(a) a depositor gives a financial institution a statement that:
(i) there will be no assessable FMD amount in respect of the repayment of
a farm management deposit; or
(ii) there will be an assessable FMD amount in respect of the repayment of
a farm management deposit that is less than the amount of the deposit, where the
statement specifies what the assessable FMD amount will be; and
(b) the statement turns out to be incorrect; and
(c) the person believed, or had reasonable grounds for believing, that the
statement would turn out to be incorrect;
for the purposes of this Division, the statement is taken to be false or
misleading in a material particular.
(19) Expressions used in subsection (18) that are also used in Division 6A
of Part VI of the Income Tax Assessment Act 1936 have the same respective
meanings as in that Division.
Taxation
(Interest on Overpayments and Early Payments) Act 1983
3 Subsection 3(1) (paragraph (a) of the
definition of income tax crediting amount)
Omit “or 221ZT”, substitute “, 221ZT or
221ZXK”.