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Edited version of private advice
Authorisation Number: 1051811077058
Date of advice: 10 March 2021
Ruling
Subject: Farm management deposit
Question
Are you required to include the repayment amount from your Farm Management Deposit (FMD) under Division 393 of Income Tax Assessment Act 1997 (ITAA 1997) in your 20XX-XX Income Tax Return (ITR)?
Answer
No.
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.
The amount is not required to be included in your 20XX-20XX ITR as the repayment was an error by an FMD provider. The FMD provider did not implement your instructions to extend the repayment beyond the 20XX-XX financial year to a date a few days later that would have made the following financial year. However, the repayment of the FMD is required to be included as assessable income in the 20XX-XX financial year.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are an individual carrying on a primary production business in Australia with your taxable non-primary production income being less than $100,000. You have not been declared bankrupt.
You held an FMD in your name with an FMD provider, due to a processing error the FMD provider did not enact your instructions resulting in the repayment in the incorrect financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 393-10
Income Tax Assessment Act 1997 Section 393-20
Income Tax Assessment Act 1997 Section 393-35
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