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Taxation Provisions and Important Changes to Farm Management Deposits Legislation
The ATO administers (and interprets) farm management deposit tax provisions. For more information call the ATO’s business enquiry line 13 28 66 or see the ATO guide to the Farm Management Deposits Scheme.
Important changes to farm management deposits legislation
Amendments to the Income Tax Assessment Act 1936: Tax Laws Amendment (2006 Measures No.7) Act 2007 No. 55
Former Minister for Agriculture, Fisheries and Forestry, announced in October 2006 that the deposit cap on the Farm Management Deposits Scheme would increase from $300 000 to $400 000, and the non-primary production income threshold would increase from $50 000 to $65 000. These changes were enacted under Tax Laws Amendment (2006 Measures No.7) Act 2007 No.55 which received Royal Assent on 12 April 2007.
Following this legislative amendment, the deposit cap that applies to deposits made in the 2006-07 and subsequent financial years is $400 000. Similarly, the non-primary production income threshold that applies to deposits made in the 2006-07 and subsequent financial years is $65 000.
Taxation Laws Amendment (Earlier Access to Farm Management Deposits) Act 2002 No.138
The Taxation Laws Amendment (Earlier Access to Farm Management Deposits) Act 2002 No.138 amended the farm management deposits scheme to include:
- Early access to farm management deposits for farmers in Exceptional Circumstances (EC) declared areas. This allows an exception to the 12 month waiting period without the loss of tax benefits. Farmers in EC areas will pay tax on the withdrawal in the year of withdrawal rather than having to submit an amended tax return for the previous year.
- Clarification of the term for pricing. As long as farm management deposits are not withdrawn within the minimum 12-month period, they should be considered eligible, regardless of the term over which the product is priced.
- Partial withdrawal of deposit within the first 12 months. This allows primary producers to retain farm management deposit status on that part of the deposit that is not withdrawn within the initial 12 month period.
Amendments to the Income Tax (Farm Management Deposits) Regulations 1998
Income Tax (Farm Management Deposits) Amendment Regulations 2007 (No.1)
This amendment made changes to the information, including the mandatory statement, that must be provided to depositors and reporting requirements of Financial Institutions to the Secretary of the Department of Agriculture, Fisheries and Forestry.
Mandatory Statement
Changes were made to the wording relating to the top marginal tax rate and the Medicare levy, and greater detail is to be provided on deposits and withdrawal in relation to exceptional circumstances. The amended regulations provide that financial institutions must insert into the Mandatory Statement details of the cap on total deposits and the non-primary production income threshold that holders must comply with.
Reporting requirements
New reporting requirements were developed in conjunction with financial institutions in 2006. The inclusion of the revised reporting requirements in the Regulations allowed for formalisation of the agreement that the Department had developed with financial institutions.
The amended Regulations were registered on Thursday 15 February 2007 and are now in effect.