Closure of the EC Interest Rate Subsidy
What was the decision?
The Exceptional Circumstances (EC) Interest Rate Subsidy will close on 30 June 2012.
Why has the Australian Government announced the decision now?
After years of drought, the improvement in seasonal conditions and favourable outlook for agriculture across Australia is very promising. The expiry of the last two EC declarations in Australia on 30 April 2012 means that no one is disadvantaged by the decision.
The Australian Government believes that now is the right time to implement the findings of the successive reviews of drought policy since 1997 and to begin a new approach to drought–related programs.
What other forms of assistance are available?
There are a range of measures to help farm businesses better prepare for droughts. The Australian Government provides ongoing access to the Farm Management Deposits (FMD) Scheme, which is a valuable risk management tool that assists primary producers to be more self reliant and better manage fluctuations in their income due to climate variability and market changes.
There are also a range of other special taxation provisions designed to help primary producers deal more effectively with fluctuations in their income and measures that recognise the unique aspects of operating a primary production business.
For more information
- Tax Office Business Tax Enquiries phone 13 28 66
- Tax Practitioners phone 13 72 86
- Farm Management Deposits scheme guide on the Tax Office website.
- Income Tax Assessment Act 1997
What assistance is available for farm families suffering hardship?
The Government will continue to support farmers experiencing hardship with a commitment to extend household support through the Transitional Farm Family Payment for two years, as part of the 2012–13 Budget.
The Transitional Farm Family Payment is available regardless of location or industry and succeeds the Transitional Income Support program. Through the Transitional Farm Family Payment, farming families can apply for up to 12 months of household support, paid at the same rate as the Newstart Allowance.
Importantly, household support will be combined with individualised case management assistance and activities to help farming families improve their long–term security.
More information is available at Transitional Farm Family Payment and on the Drought Assistance Hotline on 13 26 16.
Additionally, the Government funds the Rural Financial Counselling Service Program which provides grants to regional and state not–for–profit organisations to provide free financial counselling services to farmers, fishers and small rural businesses who are in financial hardship.
Rural financial counsellors aim to help clients understand their financial and business position and options; access information about available government, professional and industry assistance; and provide referrals to accountants, agricultural advisers and other relevant professionals needed to support them.
Rural financial counsellors can also help their clients access professionals for the succession planning, family support and personal (social and emotional) counselling needed to support their personal circumstances.
Further information is available on the website, including the locations and contact details for rural financial counsellors or by calling 1800 686 175.
What does the closure of the EC Interest Rate Subsidy mean for progressing national drought policy reform?
The closure of the EC Interest Rate Subsidy is a major step towards achieving reform of drought–related programs.
The Australian Government is committed to putting in place improved policies that assist farming families and communities to better manage risk and prepare for future challenges. The Australian Government will continue to work with key stakeholders on a new approach to drought–related programs.
Given a new drought policy has not been announced, what does the closure of the EC Interest Rate Subsidy mean for the existing EC arrangements?
The EC arrangements remain in place, should they be triggered again in the future.
Should there be an application for EC assistance, in response to a rare and severe one in 20 to 25 year drought event, and that application is successful, eligible farmers would be able to access the EC Relief Payment (household income support for farmers).
07 May 2012