Taxation Laws Amendment (Earlier Access to Farm Management Deposits) Act 2002

(138 of 2002)

An Act to amend the law relating to taxation, and for related purposes

[Assented to 19 December 2002]

The Parliament of Australia enacts:

1   Short title

This Act may be cited as the Taxation Laws Amendment (Earlier Access to Farm Management Deposits) Act 2002.

2   Commencement

(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table.

Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.

(2) Column 3 of the table is for additional information that is not part of this Act. This information may be included in any published version of this Act.

3   Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

4   Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment made before the commencement of this section for the purpose of giving effect to this Act.

Schedule 1   Income Tax Assessment Act 1936

Part 1   Amendments that are taken to have commenced on 2 January 1999

1   Section 393-25 of Schedule 2G (definition of farm management deposit )

After “, 393-35”, insert “, 393-37”.

2   After subsection 393-30(2) of Schedule 2G

Insert:

Deposit not to be repaid within first 12 months

(2A) The deposit must comply with section 393-37.

3   Subsections 393-35(12) and (13) of Schedule 2G

Repeal the subsections.

4   After section 393-35 of Schedule 2G

Insert:

393-37 Deposit not to be repaid within first 12 months

(1) No part of the deposit must be repaid within 12 months after the end of the applicable depositing day (see subsection (2)), 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).

(2) 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 393-40(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).

5   Subsection 393-40(2) of Schedule 2G

Repeal the subsection.

6   Subsection 393-45(3) of Schedule 2G

Omit “, (11) or (12)”, substitute “or (11) or section 393-37”.

Part 2   Amendments that are taken to have commenced on 1 July 2002

7   At the end of subsection 393-10(1) of Schedule 2G

Add:

Note 4: Subdivision B contains other rules that affect the extent to which a deposit can be a farm management deposit.

8   At the end of subsection 393-15(1) of Schedule 2G

Add:

Note 3: Subdivision B contains other rules that affect the extent to which a withdrawal is a repayment of a farm management deposit.

9   Subsection 393-15(2) of Schedule 2G (note)

Omit “Note”, substitute “Note 1”.

10   At the end of subsection 393-15(2) of Schedule 2G

Add:

Note 2: Subdivision B contains rules that affect the extent to which a withdrawal is a repayment of a farm management deposit.

11   Subsection 393-30(1) of Schedule 2G

Omit “section 393-45”, substitute “sections 393-37 and 393-45”.

12   Subsection 393-30(2A) of Schedule 2G

Repeal the subsection.

13   Section 393-37 of Schedule 2G

Repeal the section, substitute:

393-37 Withdrawal of deposit within first 12 months

Partial withdrawal within first 12 months

(1) If:

(a) part of the deposit is withdrawn within the 12 months after the end of the applicable depositing day (see subsection (7)); and

(b) the withdrawal is not covered by subsection (3), (5) or (6);

then the amount withdrawn is not, and is taken never to have been, part of a farm management deposit .

Note: If the withdrawal is covered by subsection (3), (5) or (6) then the normal rules in sections 393-10, 393-15 and 393-50 apply.

Deposit not to be reduced to less than $1,000 within first 12 months

(2) If the amount of the deposit is reduced to less than $1,000 because of one or more withdrawals made within the 12 months after the end of the applicable depositing day that are not withdrawals covered by subsection (3), (5) or (6), then the deposit is not, and is taken never to have been, a farm management deposit .

Note: If any of the withdrawals are covered by subsection (3), (5) or (6), this subsection does not apply.

Withdrawal in exceptional circumstances

(3) If the whole or a part of the deposit is withdrawn by, or on behalf of, the owner of the deposit in the following circumstances, the withdrawal is not a withdrawal to which subsections (1) and (2) apply:

(a) the withdrawal is made in the year of income following the year of income in which the applicable depositing day occurs;

(b) at the time of the withdrawal, a primary production business of that owner is carried on wholly or partly in an area that is covered by a declaration of exceptional circumstances (as referred to in paragraph 8(c) of the Rural Adjustment Act 1992) that was not in force when the deposit was made;

(c) at the time of the withdrawal, or within 3 months after the end of the year of income in which the withdrawal is made, an exceptional circumstances certificate (within the meaning of subsection 8A(2) of the Farm Household Support Act 1992) is issued in respect of that owner.

(4) Any subsequent deposit that is made by, or on behalf of, that owner in the year of income in which the withdrawal referred to in subsection (3) is made is not, and is taken never to have been, a farm management deposit .

Withdrawal in the case of death, bankruptcy or loss of primary producer status

(5) A repayment of a deposit that is required in accordance with subsection 393-40(3) (which covers death, bankruptcy and loss of primary producer status) is not a withdrawal to which subsections (1) and (2) apply.

Transfers to other financial institutions

(6) A transfer of a deposit to another financial institution, in accordance with a requirement of the agreement concerned, as mentioned in subsection 393-40(5) is not a withdrawal to which subsections (1) and (2) apply.

Definition of applicable depositing day

(7) 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 393-40(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).