Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 2/11)
Character Range: 5476841–5479681

the extent of the permanent reduction, disregard a reduction in *basic taxable income to the extent that it results from a change of assets from which assessable income was *derived into assets from which you derive income that is not assessable income.

Division 393—Farm management deposits

Table of Subdivisions
 Guide to Division 393
393‑A Tax consequences of farm management deposits
393‑B Meaning of farm management deposit and owner
393‑C Special rules relating to financial claims scheme for account‑holders with insolvent ADIs

Guide to Division 393

393‑1  What this Division is about
      You can deduct a farm management deposit you make, if:

                (a) you are an individual carrying on a primary production business (including a primary production business you carry on as a partner in a partnership or as a beneficiary of a trust); and
                (b) you hold the deposit for at least 12 months; and
                (c) you meet some other tests.

      The amount of the deposit withdrawn is included in your assessable income in the income year in which it is repaid. Special rules apply if the deposit is repaid in the event of a severe drought or an applicable natural disaster.
      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.
                  Note: An FMD provider must, every calendar month, give certain information to the Agriculture Secretary about farm management deposits: see section 398‑5 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision 393‑A—Tax consequences of farm management deposits

Table of sections
393‑5 Deduction for making farm management deposit
393‑10 Assessability on repayment of deposit
393‑15 Transactions to which the deduction, assessment and 12 month rules have modified application
393‑16 Consolidation of farm management deposits
393‑17 Tax consequences of liabilities reducing because of farm management deposits

393‑5  Deduction for making farm management deposit

Entitlement to deduction
 (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