Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1936
1 Section 393 - 25 of Schedule 2G
Insert:
"entity" has the same meaning as in the Income Tax Assessment Act 1997 .
2 Section 393 - 25 of Schedule 2G (definition of financial institution )
Repeal the definition, substitute:
"financial institution" means an entity that:
(a) is an ADI (authorised deposit - taking institution) for the purposes of the Banking Act 1959 ; or
(b) carries on in Australia the business of banking, so long as a State or a Territory guarantees the repayment of any deposit taken in the course of that business; or
(c) carries on in Australia a business that consists of or includes taking money on deposit, so long as a State or a Territory guarantees the repayment of any deposit taken in the course of that business.
Note: An entity can also be a financial institution for the purposes of this Subdivision in the limited circumstances described in section 393 - 52.
3 Application
The amendment of the Income Tax Assessment Act 1936 made by item 2 of this Schedule applies to deposits and transfers made on or after 1 July 2003.
4 At the end of Subdivision 393 - B of Schedule 2G
Add:
Scope
(1) This section applies if the condition in subsection (2) or (3) is satisfied.
(2) The condition in this subsection is satisfied if:
(a) a deposit (the eligible deposit ) of money was made before 1 July 2003 with an entity (the non - complying entity ) that was not a financial institution; and
(b) if the deposit was made after 17 June 2003:
(i) the deposit was made in accordance with an agreement of a particular kind; and
(ii) on 17 June 2003, the non - complying entity was offering to enter into agreements of that kind; and
(iii) the agreements mentioned in subparagraph (ii) described such a deposit as a farm management deposit; and
(c) the deposit was made in good faith.
(3) The condition in this subsection is satisfied if:
(a) the depositor of a farm management deposit made a written request before 1 July 2003 to the financial institution with which the deposit was made to transfer the deposit to an entity (the non - complying entity ); and
(b) the financial institution transferred the deposit to the non - complying entity within a reasonable period after the request; and
(c) the non - complying entity was not a financial institution when the deposit was transferred; and
(d) the condition in subsection (2) is not satisfied in relation to the deposit (the eligible deposit ) arising from the transfer to the non - complying entity; and
(e) if the request was made after 17 June 2003:
(i) the eligible deposit was made in accordance with an agreement of a particular kind; and
(ii) on 17 June 2003, the non - complying entity was offering to enter into agreements of that kind; and
(iii) the agreements mentioned in subparagraph (ii) described such a deposit as a farm management deposit; and
(f) the request was made in good faith.
Non - complying entity taken to be financial institution
(4) This Subdivision (other than this section) applies in relation to the eligible deposit as if the non - complying entity were a financial institution throughout the period:
(a) beginning:
(i) if the condition in subsection (2) is satisfied--when the eligible deposit was made; or
(ii) if the condition in subsection (3) is satisfied--when the eligible deposit was transferred as mentioned in paragraph (3)(b); and
(b) ending:
(i) if the depositor makes, before the deadline mentioned in subsection (6), a written request to the non - complying entity to transfer the eligible deposit to a financial institution, and that transfer is made within a reasonable period after the request--at the time the transfer is made; or
(ii) if subparagraph (i) does not apply and the eligible deposit was repaid in full before that deadline--at the time the eligible deposit was repaid; or
(iii) in any other case--immediately before that deadline.
Deposit taken to be repaid in certain circumstances
(5) If:
(a) the depositor fails, before the deadline mentioned in subsection (6), to make a written request to the non - complying entity to transfer the eligible deposit to a financial institution; or
(b) if such a request is made--the non - complying entity fails to transfer the eligible deposit to that financial institution within a reasonable period after the request;
the eligible deposit is taken for the purposes of section 393 - 15 to have been repaid immediately before that deadline (to the extent that it was not actually repaid before that deadline).
Note: This will mean that it is assessable under section 393 - 15 (as that section applies because of subsection (4)) in the year of income when the eligible deposit is taken to be repaid, rather than in any later year in which it might be actually repaid.
Deadline
(6) The deadline is:
(a) if the term of the eligible deposit:
(i) is longer than 12 months; and
(ii) ends after 1 July 2004;
the earlier of:
(iii) the day on which the term of the eligible deposit ends; or
(iv) 1 July 2007; or
(b) in any other case--1 July 2004.
Deposit with non - complying entity and other deposit with a financial institution
(7) Ignore subsection (4) in deciding, for the purposes of subsection 393 - 45(1), whether the requirement in subsection 393 - 35(7) has been contravened.