The Federal Government will amend the Farm Management Deposits (FMD) scheme to protect primary producers who have made deposits with ineligible financial institutions offering products described as FMD, the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, announced today.
Senator Coonan said deposits made with an ineligible financial institution before 1 July 2003 will be deemed to be FMD, provided they are transferred to a FMD with an authorised deposit-taking institution (ADI) or institution with a State or Territory guarantee within a transfer period.
The transfer period will extend to 30 June 2004 for all deposits. For fixed term deposits with a term to maturity exceeding twelve months as at 30 June 2003, depositors will be granted an additional period to transfer the deposit.
Senator Coonan said the amendment will protect primary producers who have, in good faith, made deposits with institutions that are not ADIs and are not government guaranteed.
"The tax status of deposits made before 1 July 2003 will be protected. In addition, there will be no requirement for depositors to transfer their deposits until 30 June 2004 in order to maintain the FMD tax benefit," Senator Coonan said.
Deposits made with an ineligible financial institution after 1 July 2003 will not be FMD.
To improve certainty about the eligibility criteria going forward, the legislation will be amended to state that FMD may only be made with ADIs or with financial institutions that have a State or Territory guarantee. This amendment will take effect from 1 July 2003.
The FMD regulations will also be amended to require financial institutions offering FMD to make a declaration to depositors that they are either an ADI or have a State or Territory guarantee.
"These changes will make it easier for primary producers to be certain that the financial institution they are dealing with is eligible to accept FMD." Senator Coonan explained.
ADIs are prudentially regulated by the Australian Prudential Regulation Authority. All banks, building societies and credit unions are ADIs.
Additional detail is provided as an attachment to this press release on the Treasury website at www.treasury.gov.au under Published Information.