Treasury Laws Amendment (2016 Measures No. 3) Regulation 2016 (F2016L01625)

Schedule 2 Farm management deposits

Part 1 Amendments

Income Tax Assessment Regulations 1997

2 After Part 3

Insert:

Part 3A - Rules for particular industries and occupations

Division 393 - Farm management deposits

393-1 Simplified outline of the farm management deposits scheme

Division 393 of the Act establishes the farm management deposits scheme, which are deposits made with FMD providers in the circumstances described in that 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

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 a severe drought or 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.

393-5 Application form for a farm management deposit: information given by depositor

For paragraph 393-20(2)(b) of the Act, the following information is to be provided by a depositor to an FMD provider:

(a) the depositor's name, address, date of birth and telephone number;

(b) the amount of the deposit;

(d) if the depositor is not the owner of the deposit - the owner's name, address and date of birth.

Note: Subsection 393-20(2) of the 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 Act, the application form must require the depositor to provide any information required by regulations.

Under paragraph 393-20(2)(a) of the Act, the application form must also permit the depositor to state the owner's tax file number in the form.

393-10 Application form for a farm management deposit: information given to depositor

For paragraph 393-20(2)(c) of the 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 1C; and

(b) the statements set out in Part 2 of Schedule 1C; and

Note: Subsection 393-20(2) of the 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 Act, the application form must include any statements, required by regulations, that are to be read by the depositor when completing the form.

393-15 Repayment of farm management deposit in the event of a natural disaster

For paragraph 393-40(3A)(b) of the Act, the circumstances that are to be satisfied in relation to a repayment of the whole or a part of a farm management deposit are:

(a) recovery assistance has been provided:

(i) as a Category C measure, as defined in the Natural Disaster Relief and Recovery Determination Version 2.0 determined by the Minister for Justice on 29 October 2015; and

(ii) in the form of a recovery grant for a primary producer, as described in that Determination; and

(b) the recovery assistance was first provided during the 12 month period mentioned in subsection 393-40(1) of the Act; and

Note: Paragraph 393-40(3A)(b) of the Act relates to a repayment if natural disaster relief and recovery arrangements made by or on behalf of the Commonwealth apply.