Income Tax Assessment Act 1936
(Repealed by No 79 of 2010 )
View history note
Hide history noteS 393-35(6) amended by No 55 of 2007 .
Sch 2G repealed by No 79 of 2010 , s 3 and Sch 4 item 1, applicable to assessments for: (a) the 2010-11 income year; and (b) later income years. Sch 2G formerly read:
SCHEDULE 2G - FARM MANAGEMENT DEPOSITS
Division 393 - Farm management deposits
SECTION 393-1 WHAT THIS DIVISION IS ABOUTHistoryDiv 393 inserted by No 85 of 1998.
This Division allows you to deduct farm management deposits in the year of income you make them and assesses you on the amount deducted when the deposits are repaid to you in later years of income.
HistoryS 393-1 inserted by No 85 of 1998.
Subdivision 393-A - Tax consequences of farm management deposits
SECTION 393-5 WHAT THIS SUBDIVISION IS ABOUTHistorySubdiv 393-A inserted by No 85 of 1998.
This Subdivision allows you to deduct a farm management deposit if certain tests relating to your income etc. are met. The Subdivision assesses you when a deposit is repaid, but only to the extent that the repayment involves an amount previously deducted.
HistoryS 393-5 inserted by No 85 of 1998.
SECTION 393-7 SECTION 393-7 DEFINITIONS OF TERMS
393-7
This Subdivision uses a number of terms relating to farm management deposits that are defined in Subdivisions 393-B and 393-C .Operative provisionsHistoryS 393-7 inserted by No 85 of 1998.
SECTION 393-10 DEDUCTION FOR MAKING FARM MANAGEMENT DEPOSIT
393-10(1)
If:
(a) you are the owner of a farm management deposit made in the year of income; and
(b) your taxable non-primary production income for the year of income is not more than $65,000; and
(c) you did not:
(i) become bankrupt during the year of income; or
(ii) cease to be a primary producer during the year of income for at least 120 days (whether or not falling entirely within the year of income);you can deduct the amount of the deposit from your assessable income for the year of income. However, there is no entitlement to the deduction if you die during the year of income.
Note 1:
Because of subsections 393-50(1) and (2) , this section will not apply if the making of the deposit arises because of the extension of the term of the deposit or because the deposit is being immediately reinvested as a farm management deposit with the same institution.
Note 2:
Because of subsection 393-50(5) , this section will not apply if the making of the deposit arises by way of transfer of the deposit in accordance with a requirement of the agreement concerned as mentioned in subsection 393-40(5) .
Note 3:
Because of paragraph 25B(3)(c) of the Loan (Income Equalization Deposits) Act 1976 , this section will not apply if the making of the deposit arises by way of transfer of an IED scheme deposit to a farm management deposit.
Note 4:
Subdivision B contains other rules that affect the extent to which a deposit can be a farm management deposit.
HistoryS 393-10(1) amended by No 55 of 2007 , s 3 and Sch 6 item 1, by inserting " $65,000 " for " $50,000 " , applicable to assessments for the 2006-07 income year and later years of income.
S 393-10(1) amended by No 138 of 2002.
Sum of deductions not to exceed taxable primary production income
393-10(2)
The sum of the deductions that you would otherwise be entitled to under this section for farm management deposits made in the year of income must not exceed your taxable primary production income for the year of income.
Amounts to be deducted in order of deposits
393-10(3)
If subsection (2) prevents you deducting in full amounts in respect of 2 or more deposits, you can deduct the amounts in the order in which the deposits were made until the limit imposed by that subsection is reached.
SECTION 393-15 ASSESSABILITY ON REPAYMENT OF DEPOSITHistoryS 393-10 inserted by No 85 of 1998.
Amount assessable if deposit fully repaid
393-15(1)
If you are the owner of a farm management deposit that is repaid in full in the year of income, your assessable income for the year of income includes the unrecouped FMD deduction (see subsection (3)) in respect of the deposit immediately before the repayment.Note 1:
Because of subsections 393-50(1) and (2) , this section will not apply if the repayment arises because of the extension of the term of the deposit or because the deposit is immediately reinvested as a farm management deposit with the same institution.
Note 2:
Because of subsection 393-50(5) , this section will not apply if the repayment arises by way of transfer of the deposit in accordance with a requirement of the agreement concerned as mentioned in subsection 393-40(5) .
Note 3:
Subdivision B contains other rules that affect the extent to which a withdrawal is a repayment of a farm management deposit.
HistoryS 393-15(1) amended by No 138 of 2002.
Amount assessable if deposit partly repaid
393-15(2)
If:
(a) you are the owner of a farm management deposit of which part only is repaid in the year of income; and
(b) the unrecouped FMD deduction (see subsection (3)) in respect of the deposit immediately before the repayment exceeds the amount (if any) of the deposit that remains immediately after the repayment;the amount of the excess is included in your assessable income for the year of income.
Note 1:
This provision ensures that, in a case where not all of a deposit was deductible, withdrawal of the non-deductible part can take place without the amount withdrawn being assessable. Once that part has been withdrawn, the remainder will be assessable when it is withdrawn, in order to recoup the deduction.
Note 2:
Subdivision B contains rules that affect the extent to which a withdrawal is a repayment of a farm management deposit.
HistoryS 393-15(2) amended by No 138 of 2002.
Unrecouped FMD deduction
393-15(3)
The unrecouped FMD deduction in respect of a farm management deposit at a particular time is:
(a) if no part of the deposit has been repaid before that time - either:
(i) if subparagraph (ii) does not apply - the amount of the deduction under section 393-10 for making the deposit; or
(ii) if the deposit was made with a financial institution as a result of a request to which section 25B of the Loan (Income Equalization Deposits) Act 1976 applied - the amount worked out in accordance with paragraph (3)(d) of that section; or
(b) if one or more parts of the deposit have been repaid before that time - the unrecouped FMD deduction in respect of the deposit immediately before the most recent such repayment, reduced by any amount included in the owner's assessable income under this section as a result of that repayment.Example:
Assume a deposit of $3,000 is made, all of which is deductible. The deposit's unrecouped FMD deduction immediately before a later repayment of $1,000 will be the amount of the deduction (i.e. $3,000 - see subparagraph (3)(a)(i)). The deposit's unrecouped FMD deduction immediately before a second repayment of an amount will be $2,000 (i.e. according to paragraph (3)(b), the unrecouped FMD deduction immediately before the first repayment ($3,000) reduced by the $1,000 included in assessable income as a result of the first repayment).
Note:
Section 393-80 affects the unrecouped FMD deduction of a new deposit linked to an old farm management deposit in relation to which there arose an entitlement under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 .
HistoryS 393-15(3) amended by No 42 of 2009, s 3 and Sch 1 item 11, by inserting the note at the end, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
Deemed repayment because of death, bankruptcy, etc
393-15(4)
If you are the owner of a farm management deposit that becomes repayable during the year of income in accordance with a requirement of the agreement concerned to the effect mentioned in subsection 393-40(3) (which covers death, bankruptcy and ceasing to be a primary producer), the deposit is taken for the purposes of this section to have been repaid at the time it became repayable, instead of when it is actually repaid.Note 1:
This will mean that it is assessable under this section in the year of income when the death etc. occurs, rather than in any later year in which it might be repaid.
Note 2:
Under Part 2-5 in Schedule 1 to the Taxation Administration Act 1953 (about pay as you go withholding), a deduction may nevertheless be required to be made from the actual payment.
Note 3:
Section 393-85 limits the operation of subsection (4) of this section if:
(a) the farm management deposit is with an ADI that becomes a declared ADI under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 ; and
(b) an amount equal to the deposit has not been paid to you as an entitlement under that Division, or in liquidation of the ADI, by the end of the year of income.
Archived:
S 393-15(4) (Note 2) substituted by No 101 of 2006 , s 3 and Sch 2 item547, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
HistoryS 393-15(4) amended by No 42 of 2009, s 3 and Sch 1 item 12, by inserting note 3 at the end, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
HistoryS 393-15 inserted by No 85 of 1998.
Subdivision 393-B - Farm management deposit and related terms
SECTION 393-20 WHAT THIS SUBDIVISION IS ABOUTHistorySubdiv 393-B inserted by No 85 of 1998.
This Subdivision explains what a farm management deposit is, and defines a number of related terms.
Operative provisionsHistoryS 393-20 inserted by No 85 of 1998.
SECTION 393-25 SECTION 393-25 VARIOUS DEFINITIONS
393-25
In this Division:ADI
has the same meaning as in the Banking Act 1959 .HistoryDefinition of " ADI " inserted by No 42 of 2009, s 3 and Sch 1 item 13, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
depositor
of a farm management deposit means:
(a) if paragraph (b) does not apply - the person who made the deposit; or
(b) if the deposit was made by a person in the capacity of trustee of a trust estate on behalf of a beneficiary who, when the deposit was made, was under a legal disability:
(i) if the beneficiary is still under a legal disability - the trustee; or
(ii) if not - the beneficiary.entity
has the same meaning as in the Income Tax Assessment Act 1997 .HistoryDefinition of " entity " inserted by No 107 of 2003.
farm management deposit
has the meaning given by sections 393-30 , 393-35 , 393-37 , 393-40 and 393-45 and subsection 393-50(4) .HistoryDefinition of " farm management deposit " amended by No 138 of 2002.
financial institution
means an entity that:
(a) is an ADI; or
(b) carries on in Australia the business of banking, so long as a State or a Territory guarantees the repayment of any deposit taken in the course of that business; or
(c) carries on in Australia a business that consists of or includes taking money on deposit, so long as a State or a Territory guarantees the repayment of any deposit taken in the course of that business.Note:
An entity can also be a financial institution for the purposes of this Subdivision in the limited circumstances described in section 393-52 .
HistoryDefinition of " financial institution " amended by No 42 of 2009, s 3 and Sch 1 item 14, by omitting " (authorised deposit-taking institution) for the purposes of the Banking Act 1959 " after " is an ADI " in para (a), applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
Definition of " financial institution " substituted by No 107 of 2003.
make
a farm management deposit has a meaning affected by section 393-50 .owner
of a farm management deposit means:
(a) if paragraph (b) does not apply - the person who made or is making the deposit; or
(b) in the case of a deposit made or being made by the trustee of a trust estate on behalf of a beneficiary - the beneficiary.primary producer
means:
(a) an individual who carries on in Australia a primary production business otherwise than as trustee of a trust estate; or
(b) a partner (not being a company) in a partnership that carries on in Australia a primary production business; or
(c) a beneficiary (not being a company) who is presently entitled to a share of the income of a trust estate where the trustee carries on in Australia a primary production business.primary production business
has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 .repay
a farm management deposit has a meaning affected by section 393-50 .tax file number
has the meaning given by section 202A .Archived:
S 393-25 (definition of " deduction exemption certificate " ) repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 198, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
SECTION 393-30 REQUIREMENTS FOR A FARM MANAGEMENT DEPOSITHistoryS 393-25 inserted by No 85 of 1998.
393-30(1)
Subject to sections 393-37 and 393-45 , a deposit of money is a farm management deposit if the requirements of this section are satisfied.HistoryS 393-30(1) amended by No 138 of 2002.
Deposit to be made under agreement between depositor and financial institution
393-30(2)
The deposit must be made with a financial institution under an agreement between the financial institution and the depositor that:
(a) describes the deposit as a farm management deposit; and
(b) at all times while the deposit is with the financial institution, contains requirements to the effect set out in sections 393-35 and 393-40 . (The agreement may also contain additional requirements that are not inconsistent with those set out in those sections.)
393-30(2A)
(Repealed by No 138 of 2002)HistoryS 393-30(2A) inserted by No 138 of 2002.
Depositor to provide information in application form
393-30(3)
The depositor must have applied to the financial institution to make the deposit by completing and signing a form that:
(a) permitted the depositor to state the owner's tax file number in the form; andNote:
If the owner chooses not to state his or her tax file number and does not later quote it to the financial institution, the deduction required under section 12-140 in Schedule 1 to the Taxation Administration Act 1953 from any repayment of the deposit will be at the highest marginal tax rate.
(b) required the depositor to provide any other information required by regulations for the purposes of this paragraph; and
(c) contained any statements, required by regulations for the purposes of this paragraph, that were to be read by the depositor when completing the form.Note:
A depositor who makes a false or misleading statement in such a form will commit an offence against section 8K or 8N of the Taxation Administration Act 1953 .
HistoryS 393-30(3) Note amended by No 101 of 2006 , s 3 and Sch 2 item 548, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .
S 393-30 inserted by No 85 of 1998 and amended by No 146 of 2001.
SECTION 393-35 REQUIREMENTS WHOSE CONTRAVENTION CAUSES A LOSS OF FARM MANAGEMENT DEPOSIT STATUS
393-35(1)
This section sets out requirements, that must be contained in the agreement mentioned in subsection 393-30(2) , whose contravention will, under section 393-45 , result in the deposit, or some of the deposit, being taken not to be, and (if appropriate) never to have been, a farm management deposit .
Owner to be primary producer
393-35(2)
The owner must be a primary producer when the deposit is made.
Deposit to be made by or on behalf of only one person
393-35(3)
The deposit must not be made by 2 or more persons jointly or be made on behalf of 2 or more persons.
Deposit by trustee may only be made for a beneficiary under a legal disability etc.
393-35(4)
The deposit must not be made:
(a) by the trustee of a trust estate on behalf of a beneficiary, unless the beneficiary is presently entitled to a share of the income of the trust estate and is under a legal disability; or
(b) otherwise by a person in his or her capacity as a trustee.
Deposit to be $1,000 or more
393-35(5)
The deposit must be $1,000 or more.
Deposit limit of $400,000
393-35(6)
The deposit must not be more than $400,000, and the sum of the balances from time to time of the deposit and all other farm management deposits of the owner with the financial institution must not be more than $400,000.HistoryS 393-35(6) amended by No 55 of 2007 , s 3 and Sch 6 items 2 and 3, by substituting the heading and substituting " $400,000 " for " $300,000 " (wherever occuring), applicable to assessments for the 2006-07 income year and later years of income.
Owner to have deposit with only one financial institution
393-35(7)
The owner must not, at any time while the deposit is with the financial institution, have any farm management deposits with any other financial institution.
Rights in respect of deposit not transferable
393-35(8)
Rights of the depositor in respect of the deposit must not be transferable to another person.
Charges etc. not to be created over deposit
393-35(9)
A charge or other encumbrance must not be created over the deposit as security for an amount payable by the depositor or any other person to the financial institution or to any other person.
Mortgage offset accounts
393-35(10)
Amounts that would otherwise accrue as interest or other earnings on the deposit must not reduce liabilities of the depositor to pay interest to the financial institution in respect of loans or other debts of the depositor.
Restriction on investment of interest
393-35(11)
Interest or other earnings on the deposit must not be invested as a farm management deposit with the financial institution without having first been paid to the depositor.
393-35(12) - (13)
(Repealed by No 138 of 2002)
SECTION 393-37 WITHDRAWAL OF DEPOSIT WITHIN FIRST 12 MONTHSHistoryS 393-35 inserted by No 85 of 1998.
Partial withdrawal within first 12 months
393-37(1)
If:
(a) part of the deposit is withdrawn within the 12 months after the end of the applicable depositing day (see subsection (7)); and
(b) the withdrawal is not covered by subsection (3), (5) or (6);then the amount withdrawn is not, and is taken never to have been, part of a farm management deposit .
Note:
If the withdrawal is covered by subsection (3), (5) or (6) then the normal rules in sections 393-10 , 393-15 and 393-50 apply.
Deposit not to be reduced to less than $1,000 within first 12 months
393-37(2)
If the amount of the deposit is reduced to less than $1,000 because of one or more withdrawals made within the 12 months after the end of the applicable depositing day that are not withdrawals covered by subsection (3), (5) or (6), then the deposit is not, and is taken never to have been, a farm management deposit .Note:
If any of the withdrawals are covered by subsection (3), (5) or (6), this subsection does not apply.
Withdrawal in exceptional circumstances
393-37(3)
If the whole or a part of the deposit is withdrawn by, or on behalf of, the owner of the deposit in the following circumstances, the withdrawal is not a withdrawal to which subsections (1) and (2) apply:
(a) the withdrawal is made in the year of income following the year of income in which the applicable depositing day occurs;
(b) at the time of the withdrawal, that owner is eligible for the issue of an exceptional circumstances certificate (within the meaning of subsection 8A(2) of the Farm Household Support Act 1992 ) that relates to a primary production business of that owner;
(c) by the end of 3 months after the end of the year of income in which the withdrawal is made, such an exceptional circumstances certificate is issued in respect of that owner;
(d) a declaration of exceptional circumstances (as referred to in paragraph 8(c) of the Rural Adjustment Act 1992 ) was not in force in relation to that primary production business when the deposit was made.HistoryS 393-37(3) amended by No 38 of 2008, s 3 and Sch 11 item 1, by substituting paras (b), (c) and (d) for paras (b) and (c), applicable to assessments for the 2002-03 year of income and later years of income. Paras (b) and (c) formerly read:
(b) at the time of the withdrawal, a primary production business of that owner is carried on wholly or partly in an area that is covered by a declaration of exceptional circumstances (as referred to in paragraph 8(c) of the Rural Adjustment Act 1992 ) that was not in force when the deposit was made; (c) at the time of the withdrawal, or within 3 months after the end of the year of income in which the withdrawal is made, an exceptional circumstances certificate (within the meaning of subsection 8A(2) of the Farm Household Support Act 1992 ) is issued in respect of that owner.
393-37(4)
Any subsequent deposit that is made by, or on behalf of, that owner in the year of income in which the withdrawal referred to in subsection (3) is made is not, and is taken never to have been, a farm management deposit .
Withdrawal in the case of death, bankruptcy or loss of primary producer status
393-37(5)
A repayment of a deposit that is required in accordance with subsection 393-40(3) (which covers death, bankruptcy and loss of primary producer status) is not a withdrawal to which subsections (1) and (2) apply:
Transfers to other financial institutions
393-37(6)
A transfer of a deposit to another financial institution, in accordance with a requirement of the agreement concerned, as mentioned in subsection 393-40(5) is not a withdrawal to which subsections (1) and (2) apply.
Definition of applicable depositing day
393-37(7)
The applicable depositing day is:
(a) if none of the other paragraphs in this subsection applies - the day on which the deposit is made with the financial institution; or
(b) if the deposit is made with the financial institution as a result of a request to which section 25B of the Loan (Income Equalization Deposits) Act 1976 applied - the day on which the deposit under that Act, that was the subject of the request, was made; or
(c) if the deposit is made with the financial institution as a result of one or more transfers from other financial institutions in accordance with requirements of agreements as mentioned in subsection 393-40(5) , and paragraph (d) does not apply - the day on which the deposit was made with the first of the financial institutions; or
(d) if the deposit is made with the financial institution as a result of a combination of a request as mentioned in paragraph (b) and one or more transfers as mentioned in paragraph (c) - the day applicable under paragraph (b).HistoryS 393-37 substituted and inserted by No 138 of 2002.
SECTION 393-40 OTHER REQUIREMENTS OF AGREEMENT
393-40(1)
This section sets out other requirements that must be contained in the agreement mentioned in subsection 393-30(2) .
393-40(2)
(Repealed by No 138 of 2002)
Deposit must be repaid where death, bankruptcy or loss of primary producer status
393-40(3)
The deposit must be repaid if:
(a) the owner dies or becomes bankrupt; or
(b) the owner ceases to be a primary producer for at least 120 days.
Repayment to be $1,000 or more
393-40(4)
Except where the entire amount of the deposit is repaid, the amount of any repayment of the deposit must be $1,000 or more.
Transfer of deposit between financial institutions
393-40(5)
The financial institution must, if requested in writing by the depositor to do so and if given any information or other assistance from the depositor necessary for the purpose, transfer the deposit by electronic means to another financial institution that agrees to accept the deposit as a farm management deposit.
Administration fees etc. not to be deducted from deposit
393-40(6)
The financial institution must not deduct from the deposit (whether at the time it is made, while it is with the institution or at the time of its repayment) any administration fee or other amount required by the financial institution to be paid in respect of the deposit or otherwise.
SECTION 393-45 CONTRAVENTIONS THAT DEPRIVE A DEPOSIT OF ITS STATUS AS A FARM MANAGEMENT DEPOSITHistoryS 393-40 inserted by No 85 of 1998.
393-45(1)
If, when it was accepted, the requirement set out in subsection 393-35(2), (3), (4), (5), (7) or (8) was contravened, the deposit is not a farm management deposit .
393-45(2)
If, by accepting the deposit, the requirement set out in subsection 393-35(6) was contravened, so much of the deposit as caused that requirement to be contravened is not a farm management deposit .
393-45(3)
If the requirement set out in subsection 393-35(9), (10) or (11) or section 393-37 is contravened at any time in relation to the deposit, it is not, and is taken never to have been, a farm management deposit .HistoryS 393-45(3) amended by No 138 of 2002.
S 393-45 inserted by No 85 of 1998.
SECTION 393-50 MAKING AND REPAYING ETC. DEPOSITS
Reinvesting a deposit
393-50(1)
If a farm management deposit is immediately reinvested as a farm management deposit with the same financial institution, the reinvestment does not involve the repayment of the farm management deposit or the making of a farm management deposit.
Extending the term of a deposit
393-50(2)
If the term of a farm management deposit is extended, the extension does not involve the repayment of the farm management deposit or the making of a farm management deposit (even if other terms such as those relating to interest payable are also varied).
Repay includes deal with as requested etc
393-50(3)
Subject to subsections (1) and (2), the expression repay a farm management deposit includes transfer or reinvest the deposit or otherwise deal with the deposit on behalf of or at the request of the depositor.
Effect of partial repayment
393-50(4)
The expression farm management deposit means, if part of the deposit has been repaid, the balance of the deposit after the repayment.
Transferring a deposit to another financial institution
393-50(5)
If a financial institution (the transferor ) transfers a farm management deposit to another financial institution (the transferee ) in accordance with a requirement of the agreement concerned as mentioned in subsection 393-40(5) :
(a) for the purposes of section 393-15 , the transfer does not constitute a repayment of the deposit by the transferor; andNote:
This means that the owner will not be assessed for income tax purposes on the amount transferred.
(b) for the purposes of section 393-10 , the transfer does not constitute the making of a deposit with the transferee; andNote:
This means that the transfer will not give rise to an income tax deduction.
(c) for the purposes of working out the unrecouped FMD deduction in applying section 393-15 in relation to any repayment of the whole or part of the deposit by the transferee, or by any other transferee resulting from any other application of this section, the transfer does not cause the deposit to be a different deposit.Note:
This ensures that the unrecouped FMD deduction (which determines how much income tax is assessed) in the event of a repayment will equal the deduction for the original deposit, less any amount assessed beforehand while the deposit was held by the original or any later financial institution.
HistoryS 393-50(5) and Notes amended by No 101 of 2006 , s 3 and Sch 2 items 549 to 552, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .
S 393-50 inserted by No 85 of 1998.
SECTION 393-52 CERTAIN ENTITIES TAKEN TO BE FINANCIAL INSTITUTIONS FOR PRE-1 JULY 2003 DEPOSITS AND TRANSFERS
Scope
393-52(1)
This section applies if the condition in subsection (2) or (3) is satisfied.
393-52(2)
The condition in this subsection is satisfied if:
(a) a deposit (the eligible deposit ) of money was made before 1 July 2003 with an entity (the non-complying entity ) that was not a financial institution; and
(b) if the deposit was made after 17 June 2003:
(i) the deposit was made in accordance with an agreement of a particular kind; and
(ii) on 17 June 2003, the non-complying entity was offering to enter into agreements of that kind; and
(iii) the agreements mentioned in subparagraph (ii) described such a deposit as a farm management deposit; and
(c) the deposit was made in good faith.
393-52(3)
The condition in this subsection is satisfied if:
(a) the depositor of a farm management deposit made a written request before 1 July 2003 to the financial institution with which the deposit was made to transfer the deposit to an entity (the non-complying entity ); and
(b) the financial institution transferred the deposit to the non-complying entity within a reasonable period after the request; and
(c) the non-complying entity was not a financial institution when the deposit was transferred; and
(d) the condition in subsection (2) is not satisfied in relation to the deposit (the eligible deposit ) arising from the transfer to the non-complying entity; and
(e) if the request was made after 17 June 2003:
(i) the eligible deposit was made in accordance with an agreement of a particular kind; and
(ii) on 17 June 2003, the non-complying entity was offering to enter into agreements of that kind; and
(iii) the agreements mentioned in subparagraph (ii) described such a deposit as a farm management deposit; and
(f) the request was made in good faith.
Non-complying entity taken to be financial institution
393-52(4)
This Subdivision (other than this section) applies in relation to the eligible deposit as if the non-complying entity were a financial institution throughout the period:
(a) beginning:
(i) if the condition in subsection (2) is satisfied - when the eligible deposit was made; or
(ii) if the condition in subsection (3) is satisfied - when the eligible deposit was transferred as mentioned in paragraph (3)(b); and
(b) ending:
(i) if the depositor makes, before the deadline mentioned in subsection (6), a written request to the non-complying entity to transfer the eligible deposit to a financial institution, and that transfer is made within a reasonable period after the request - at the time the transfer is made; or
(ii) if subparagraph (i) does not apply and the eligible deposit was repaid in full before that deadline - at the time the eligible deposit was repaid; or
(iii) in any other case - immediately before that deadline.
Deposit taken to be repaid in certain circumstances
393-52(5)
If:
(a) the depositor fails, before the deadline mentioned in subsection (6), to make a written request to the non-complying entity to transfer the eligible deposit to a financial institution; or
(b) if such a request is made - the non-complying entity fails to transfer the eligible deposit to that financial institution within a reasonable period after the request;the eligible deposit is taken for the purposes of section 393-15 to have been repaid immediately before that deadline (to the extent that it was not actually repaid before that deadline).
Note:
This will mean that it is assessable under section 393-15 (as that section applies because of subsection (4)) in the year of income when the eligible deposit is taken to be repaid, rather than in any later year in which it might be actually repaid.
Deadline
393-52(6)
The deadline is:
(a) if the term of the eligible deposit:
(i) is longer than 12 months; andthe earlier of:
(ii) ends after 1 July 2004;
(iii) the day on which the term of the eligible deposit ends; or
(iv) 1 July 2007; or
(b) in any other case - 1 July 2004.
Deposit with non-complying entity and other deposit with a financial institution
393-52(7)
Ignore subsection (4) in deciding, for the purposes of subsection 393-45(1) , whether the requirement in subsection 393-35(7) has been contravened.
HistoryS 393-52 inserted by No 107 of 2003.
Subdivision 393-C - How to work out your taxable primary production income and your taxable non-primary production income
SECTION 393-55 WHAT THIS SUBDIVISION IS ABOUTHistorySubdiv 393-C inserted by No 85 of 1998.
This Subdivision explains how to work out your taxable primary production income and your taxable non-primary production income for a year of income.
Operative provisionsHistoryS 393-55 inserted by No 85 of 1998.
SECTION 393-60 WORKING OUT YOUR TAXABLE PRIMARY PRODUCTION INCOME
393-60(1)
Work out your taxable primary production income for the year of income in this way: Method statement
Step 1.Compare your assessable primary production income for the year of income with your primary production deductions for the year of income.
Step 2.If your assessable primary production income is larger than your primary production deductions, your taxable primary production income is the difference between them.
Step 3.If your primary production deductions are larger than (or equal to) your assessable primary production income, your taxable primary production income is nil.
Assessable primary production income
393-60(2)
Your assessable primary production income for the year of income is the amount of your basic assessable income (see subsection (4)) for the year of income that was derived (see subsection (3)) from or resulted from your carrying on a primary production business.
Derive
393-60(3)
The expression derive has a meaning affected by subsection 6-5(4) of the Income Tax Assessment Act 1997 .
Basic assessable income
393-60(4)
Your basic assessable income for an income year is your assessable income for the income year, less:
(a) any amount included in your assessable income under section 82-65 , 82-70 or 302-145 of the Income Tax Assessment Act 1997 (certain superannuation benefits and employment termination payments); and
(b) any net capital gain included in your assessable income.HistoryS 393-60(4) amended by No 15 of 2007 , s 3 and Sch 1 item 149, by substituting " section 82-65, 82-70 or 302-145 of the Income Tax Assessment Act 1997 " for " subsection 27B(1A) or (3) (Assessable income to include certain superannuation and kindred payments) " in para (a), applicable on or after 1 July 2007.
S 393-60(4) amended by No 101 of 2006 , s 3 and Sch 2 item 553, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .
Primary production deductions
393-60(5)
Your primary production deductions for the year of income are:
(a) any deductions allowed or allowable to you for the year of income that relate exclusively to your assessable primary production income of a year of income; and
(b) so much of any other deductions (other than apportionable deductions) allowed or allowable to you for the year of income as, in the opinion of the Commissioner, may appropriately be related to your assessable primary production income of a year of income.
SECTION 393-65 WORKING OUT YOUR TAXABLE NON-PRIMARY PRODUCTION INCOMEHistoryS 393-60 inserted by No 85 of 1998.
393-65(1)
Work out your taxable non-primary production income for the year of income in this way: Method statement
Step 1.Compare your assessable non-primary production income for the year of income with your non-primary production deductions for the year of income.
Step 2.If your assessable non-primary production income is larger than your non-primary production deductions, your taxable non-primary production income is the difference between them.
Step 3.If your non-primary production deductions are larger than (or equal to) your assessable non-primary production income, your taxable non-primary production income is nil.
Assessable non-primary production income
393-65(2)
Your assessable non-primary production income for the year of income is the difference between:
(a) your basic assessable income (see subsection 393-60(4) ) for the year of income; and
(b) your assessable primary production income (see subsection 393-60(2) ) for the year of income.
Non-primary production deductions
393-65(3)
Your non-primary production deductions for the year of income are the difference between:
(a) the sum of your allowable deductions for the year of income; and
(b) your primary production deductions (see subsection 393-60(5) ) for the year of income.
HistoryS 393-65 inserted by No 85 of 1998.
Subdivision 393-D - Special rules relating to financial claims scheme for account-holders with insolvent ADIs
Guide to Subdivision 393-DHistorySubdiv 393-D inserted by No 42 of 2009, s 3 and Sch 1 item 15, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
SECTION 393-75 WHAT THIS SUBDIVISION IS ABOUT
393-75
A deposit (the new deposit ) arising from:
(a) an entitlement under Division 2AA of Part II of the Banking Act 1959 relating to a farm management deposit with an ADI; or (b) a distribution from liquidation of the ADI that is attributable to a farm management deposit; is treated as a transfer of the farm management deposit that does not give rise to new assessable income or deductions.
Operative provisionsHistoryS 393-75 inserted by No 42 of 2009, s 3 and Sch 1 item 15, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
SECTION 393-80 FARM MANAGEMENT DEPOSITS ARISING FROM FARM MANAGEMENT DEPOSITS WITH ADIs SUBJECT TO FINANCIAL CLAIMS SCHEME
Application
393-80(1)
This section applies if an entitlement arises under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 in connection with an account containing a farm management deposit (the old farm management deposit ) with an ADI (the old ADI ) and either:
(a) an amount (the new deposit ) is deposited into one of the following to meet, in whole or part, so much of the entitlement as relates to the old farm management deposit:
(i) an existing account for a farm management deposit;
(ii) an account established under section 16AH of that Act for the purposes of meeting (wholly or partly) the entitlement; or
(b) an amount (also the new deposit ) is deposited by a liquidator of the old ADI into one of the following as so much of a distribution from the liquidation of the old ADI as relates to the old farm management deposit:
(i) an existing account for a farm management deposit;
(ii) an account established under section 16AR of that Act for the payment of the distribution.Note:
If an amount is deposited in connection with an account with the old ADI containing 2 or more old farm management deposits, the amount is to be apportioned between each old farm management deposit, so that so much of the amount as is attributable to a particular old farm management deposit is regarded as a distinct new deposit relating to that old farm management deposit.
New deposit is a farm management deposit
393-80(2)
This Division (except this section) applies to the new deposit as if it were a transfer of the old farm management deposit in accordance with a requirement of the agreement for the old farm management deposit as mentioned in subsection 393-40(5) . To avoid doubt, this Division applies in that way as if the amount transferred were the amount of the new deposit, even if that is more or less than the amount of the old farm management deposit.Note 1:
The effects of this include the following:
(a) the applicable depositing day for the old farm management deposit is maintained under paragraph 393-37(7)(c) or (d) for the new deposit (which affects whether a withdrawal of the new deposit prevents it from being a farm management deposit);
(b) the new deposit is not regarded as a repayment of the old farm management deposit that is assessable income (see subsection 393-50(5) );
(c) the making of the new deposit does not give rise to a deduction (see subsection 393-50(5) ).
Note 2:
Also, the unrecouped FMD deduction in respect of the new deposit is the same as the unrecouped FMD deduction in respect of the old farm management deposit (see subsection 393-50(5) ), unless subsection (6) or (7) of this section applies because the new deposit is less than the old farm management deposit.
393-80(3)
Subsection 393-35(5) does not apply in relation to either of the following to prevent it from being a farm management deposit:
(a) the new deposit;
(b) a deposit made later directly by the transfer of the new deposit in accordance with a requirement of the agreement for the new deposit as mentioned in subsection 393-40(5) .Note:
This means that the new deposit, or a deposit made as a direct result of the transfer of the new deposit, can be a farm management deposit (despite subsection 393-45(1) ) even if it is less than $1,000.
393-80(4)
For the purposes of subsection 393-35(7) , disregard the old farm management deposit in determining whether a deposit made after the entitlement arises is a farm management deposit.Note:
This means that a deposit made with a financial institution other than the old ADI after the entitlement arises can be a farm management deposit (despite subsection 393-45(1) ) even though the owner of the deposit still has the old farm management deposit with the old ADI.
393-80(5)
Subsection 393-35(7) does not apply to the new deposit to prevent it from being a farm management deposit.Note:
This ensures that the new deposit can be a farm management deposit (despite subsection 393-45(1) ) even though the owner of the new deposit has other farm management deposits with other financial institutions when the new deposit is made.
Unrecouped FMD deduction for new deposit less than old farm management deposit
393-80(6)
Despite subsection (2) and paragraph 393-50(5)(c) , if the new deposit is less than the old farm management deposit at the time (the declaration time ) the old ADI became a declared ADI under the Banking Act 1959 , the unrecouped FMD deduction in respect of the new deposit is the amount worked out using the formula:
Unrecouped FMD deduction in respect of old farm management deposit just before declaration time x New deposit Old farm management deposit just before declaration time Note:
The new deposit could be less than the old farm management deposit if the entitlement is paid in instalments (each of which will be a separate new deposit).
393-80(7)
However, if the amount worked out under subsection (6) is more than the difference (if any) between:
(a) the unrecouped FMD deduction in respect of the old farm management deposit just before the declaration time; and
(b) the total of the amounts worked out under all previous applications of subsection (6) in relation to that old farm management deposit;the unrecouped FMD deduction in respect of the new deposit is equal to the difference (if any).
Note:
This ensures that when new deposits linked to the old farm management deposit are repaid, the total amount included in assessable income will not exceed the unrecouped FMD deduction in respect of the old farm management deposit.
Relationship with other provisions
393-80(8)
This section has effect despite Division 253 of the Income Tax Assessment Act 1997 (which is about tax treatment of entitlements under the financial claims scheme for insolvent ADIs).
SECTION 393-85 REPAYMENT IF OWNER OF FARM MANAGEMENT DEPOSIT WITH INSOLVENT ADI DIES, IS BANKRUPT OR CEASES TO BE A PRIMARY PRODUCERHistoryS 393-80 inserted by No 42 of 2009, s 3 and Sch 1 item 15, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
393-85(1)
This section applies if:
(a) you are the owner of a farm management deposit with an ADI that becomes repayable during a year of income in accordance with a requirement of the agreement concerned to the effect mentioned in subsection 393-40(3) (which covers death, bankruptcy and ceasing to be a primary producer); and
(b) during the year of income the ADI becomes a declared ADI under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 ; and
(c) at the end of the year of income, you have either or both of the following:
(i) an unmet entitlement under that Division connected with the account for the farm management deposit;
(ii) an unmet claim against the ADI, or an unpaid debt owed to you by the ADI, in the winding up of the ADI that is a claim or debt that is connected with the account for the farm management deposit.
393-85(2)
Subsection 393-15(4) does not apply in relation to so much of the farm management deposit as is equal to the sum of the amounts described in subparagraphs (1)(c)(i) and (ii).
HistoryS 393-85 inserted by No 42 of 2009, s 3 and Sch 1 item 15, applicable to assessments for the year of income including 18 October 2008 and later years of income. Note: Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 commenced on 18 October 2008.
Sch 2G inserted by No 85 of 1998.
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