Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Earlier access to farm management deposits
This bill amends the farm management deposits (FMD) conditions in the Income Tax Assessment Act 1936 (ITAA 1936) to provide an exception to the 12-month waiting rule for persons in 'exceptional circumstances' areas. These persons will be able to withdraw funds early and still retain the tax benefit.
Furthermore minor amendments will enhance the flexibility and operation of the FMD scheme.
Date of effect: From 1 July 2002 persons in 'exceptional circumstances' areas at the time the withdrawal is made are eligible to maintain the tax concession if they access FMD funds early. The restriction on partial withdrawals will also be removed with effect from this date.
Removal of term deposit requirements will apply from 2 January 1999 (commencement of the FMD provisions).
Proposal announced: By the Prime Minister on 27 November 2002.
Financial impact: Apart from a timing effect, the overall cost of FMDs in the forward estimates will not be affected.
There will be no financial impact for the minor additional amendments, which simply clarify the operations of the current law.
Compliance cost impact: There will be no additional compliance costs for persons.