Private ruling: Farm Management Deposits
Date of advice: 17 January 2017
Published: June 2017
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 June 2014

Ruling: Q1: Are you required to include in your taxable income for the year ended 30 June 2015 a repayment mistakenly made from a farm management deposit and later corrected? | A1: No

Relevant facts and circumstances: In the year ended 30 June 201X you made a Farm Management Deposit of $XY with a bank. In autumn 201X you withdrew $X from this account and instructed the bank to leave the remaining $Y in a Farm Management Deposit. On the same date the $Y balance was deposited into another account that was not a 'Farm Management Deposit'. You were not aware of this at the time of the withdrawal. You did not notice the error and thought that the bank had followed your instructions. It did not come to your notice until your tax agent was preparing your 201X income tax return. When the bank was made aware of this error they corrected the account to a Farm Management Deposit.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 393-10 | Income Tax Assessment Act 1997 Division 393

Reasons for decision: Summary: Section 393-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that your assessable income includes (subject to certain conditions) repayments of Farm Management Deposits. Subsection 393-10(3) of the ITAA 1997 states that transfers, reinvestments or other dealings with a FMD are to be treated as repayments if (i) you are the depositor; and (ii) the transfer, reinvestment or other dealing is on your behalf or at your request. You had only authorised the withdrawal of $X from the FMD. In your circumstances the transfer of $Y from the FMD is not taken to be a repayment of your FMD at your request. Consequently, the $Y transferred in early-mid 201X does not form part of your assessable income for the 2014-15 income year.