Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP and the Minister for Primary Industries and Energy, the Hon John Anderson, MP)General outline and finanical impact
Farm management deposits
Amends the income tax law to provide for a farm management deposit scheme replacing the present system of income equalization deposits (and farm management bonds). Subject to eligibility conditions, primary producers will deduct the amount of any farm management deposit they own that is made in a year from their assessable income of the year. The whole before-tax amount will earn interest (or other returns), on terms provided by competing financial institutions; deposits are not made with the Government. The owner of the deposit will be assessed when the deductible amount of the deposit is withdrawn, and on any gains. The scheme is designed to allow primary producers to shift before-tax income from years when they need it least to years when it is most needed, to help them manage their exposure to adverse economic events and seasonal fluctuations.
Date of effect: These measures commence on a day to be fixed by Proclamation, or 6 months from Royal Assent, whichever is the sooner.
Proposal announced: The Prime Minister and Minister for Primary Industries and Energy on 14 September 1997 in launching the Agriculture Advancing Australia package.
Financial impact: The cost to the revenue is estimated at $12 million in 1998-99 and $24 million per annum thereafter.
Compliance cost impact: A Regulation Impact Statement is contained at the end of Chapter 1.
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