Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX (FARM MANAGEMENT DEPOSITS) REGULATIONS 1998 1998 NO. 325

STATUTORY RULES 1998 NO. 325

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax (Farm Management Deposits) Regulations 1998

Section 266 of the Income Tax Assessment Act 1936 provides that the Governor-General may make regulations for the purposes of the Act.

The Regulations specify the information required to be given by farm management depositors to financial institutions; information required to be given by financial institutions to depositors., and information required to be given by financial institutions to the Secretary to the Department of Agriculture, Fisheries and Forestry in relation to Farm Management Deposits.

The Farm Management Deposits Scheme is established by amendment to the Income Tax Assessment Act 1936 by the Taxation Laws Amendment (Farm Management Deposits) Act 1998. Farm Management Deposits will be made with financial institutions, and will be deductible from taxable income in the year of deposit and assessable on the date of withdrawal. They are designed to allow primary producers to reduce their tax burden and provide a savings incentive in good years, and provide for withdrawal in years of low cash flow. The Scheme will assist primary producers to manage their exposure to adverse economic events and seasonal fluctuations.

Details of the Regulations are as follows:

*       Schedule 1 (under subsection 393-30 (3) (b) to the Act) requires that depositors provide financial institutions with their name, address, telephone number, amount of the deposit and a description of the major commodities produced in the year of deposit. Where the deposit is not made by its owner, the depositor is required to provide the owner's name, address and birth date.

*       Schedule 2 (subsection 393-30 (3) (c)) requires that financial institutions provide depositors with a description of the purpose of the Farm Management Deposits Scheme, the taxation consequences of the Scheme and details of requirements for deposits and for repayment of deposits. Financial institutions are to use the text specified in the Schedule.

*       Schedule 3 (section 264 AA) requires that financial institutions provide the Secretary to the Department of Agriculture, Fisheries and Forestry with the number of deposits and depositors, grouped according to the value of deposits; details of farm management deposits repaid; and the number and value of deposits by industry classification. Monthly data is to be provided on a quarterly basis.