Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:4_2:p1
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 4 cl 2 (pt 1/7)
Character Range: 168314–171131

2  After Division 392
Insert:

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      The amount of the deposit withdrawn is included in your assessable income in the income year in which it is repaid.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 exceptional circumstances.
      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 quarter, 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

393‑5  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 not more than $65,000; and
 (e) you do not die or become bankrupt during the year.

Note 1: This section does not apply if a deposit is reinvested, the term of a deposit is extended, or a deposit is transferred at the depositor's request: see section 393‑15.

Note 2: This Division applies to certain partners and beneficiaries as if they were individuals who carried