Income Tax (Farm Management Deposits) Regulations 1998 (Cth)
made under the
This is a compilation of the
This compilation was prepared on 17 August 2015.
The notes at the end of this compilation
(the
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 ( 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.
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.
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.
If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.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
These regulations are the
Income Tax (Farm Management Deposits) Regulations 1998 .
These regulations commence on the day the
Taxation Laws Amendment (Farm Management Deposits) Act 1998 commences.
In these Regulations:
1953 Act means theTaxation Administration Act 1953 .
1997 Act means theIncome 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.
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.
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.
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.
(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.
(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.
(regulation 5)
1
The FMD
provider issuing this application form is an authorised deposit‑taking
institution for the purposes of the
2
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.
1
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
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
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
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.
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.
(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.
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.
The abbreviation key sets out abbreviations that may be used in the endnotes.
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.
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.
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
= | 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) | |
commenced or to be commenced |
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) | — |
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.............................. | am No 276, 2011 |
Schedule 2.............................. | am No 230, 2000; No 205, 2003 |
rs No 19, 2007; No 276, 2011 | |
am No 39, 2015 | |
Schedule 3.............................. | rs No 19, 2007; No 276, 2011 |
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