| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051844195914
Date of advice: 27 May 2021
Ruling
Subject: Farm management deposit scheme repayment
Question
Will the amount you withdraw from the Farm management deposit (FMD) in the 2021 income year be assessable?
Answer
Yes
This ruling applies for the following:
Year ending 30 June 2021
The scheme commences on:
1 July 2020
Relevant facts and circumstances
You sold your farming property in 2015 due to the affects of the drought and the fact that your severely autistic son was leaving school and it was necessary for you to be near the services required for his ongoing care.
You deposited $400,000 into a Farm Management Deposit Scheme (FMD) with the understanding you could withdraw funds at a later time to purchase livestock.
In 2015-16 income year you had an abnormally high income due to a complete herd disposal as opposed to the usual yearly cattle sale numbers.
You have purchased another farming property and would like to access the funds from the FMD to purchase breeding cattle.
Relevant legislative provisions
Income Assessment Act 1997 Subsection 393-5
Income Assessment Act 1997 Section 393-10
Reasons for decision
Farm Management Deposit Scheme
Subsection 393-5 of the ITAA 1997 states:
(1) You can deduct the amount of a farm management deposit for an income year if
(a) You are the owner of the deposit: and
(b) The deposit is made at a time during the year when you are an individual carrying on a primary production business in Australia; and
(c) if during the year, at a time after the deposit was made, you stopped carrying on a primary production business in Australia--you started carrying on such a business again within 120 days (whether or not during the year); and
(d) Your • taxable non-primary production income for the year is not more than $100,000; and
(e) You do not die or become bankrupt during the year.
Section 393-10of the ITAA 1997 considers the assessability on repayment of a deposit.
Amount assessable
(1) Your assessable income for an income year includes the amount worked out using the following formula, if:
(a) You are the owner of a farm management deposit; and
(b) The deposit is repaid in full or in part in the year; and
(c) The amount worked out using the formula is greater than nil:
Summary
In your case, the assessable amount is calculated as the amount of the deduction in the 2015-16 income year. Therefore, the amount repaid (withdrawn) from your farm management deposit is assessable in the 2020-21 income year.
There is not any discretion provided to the Commissioner within the provisions relating to farm management deposits to allow any exceptions to the rules within those provisions.