INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VI - COLLECTION AND RECOVERY OF TAX  

Division 6A - Deductions from certain repayments of farm management deposits  

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 .

SECTION 221ZXB   DEDUCTION OF AMOUNT FROM REPAID DEPOSITS  

221ZXB(1)   When section applies.  

This section applies if, before 1 July 2000, 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.

221ZXB(2)   Deduction where assessable FMD amount statement.  

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.

221ZXB(3)   Deduction where no assessable FMD amount statement.  

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.

221ZXB(4)   Deduction percentage when tax file number not quoted.  

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.

221ZXB(5)   Offence if failure to deduct.  

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.

221ZXB(6)   Effect of deduction on liability to depositor.  

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.