On a day fixed by Proclamation or, if such a day is not fixed by the end of 6 months after the Bill receives the Royal Assent, on the day after the end of that period. Purpose To replace current income equalisation schemes available to primary producers with a new scheme that will be operated by the private sector. Deposits under the new scheme will be deductible in the year made and an amount equal to the deduction will be included in assessable income when the deposit is withdrawn. There will be a cap on the amount that will be subject to this concessional tax treatment. Both schemes aim to allow funds to be set aside in years of high income for use when income falls below average.
Deposits made under either scheme are tax deductible.
The investment income earns interest at the short-term Commonwealth Bond rate. Funds may be withdrawn within 12 months of deposit where the investor can demonstrate serious financial difficulties, death, bankruptcy or the depositor ceasing to be a primary producer, or after 12 months for other reasons. No interest is payable if the funds are withdrawn before the end of that year in which they are deposited or the taxpayer dies, becomes bankrupt or ceases to be a primary producer during the year. Withdrawals from a FMB may be made within 12 months of deposit if severe financial hardship can be shown or after this period without penalty if the taxpayer can show a significant fall in commodity prices that affects the enterprise or that drought, disease or other natural events have effected the business. The amount claimed as a deduction will be assessable income and so subject to tax in the year it which it is withdrawn.