The Governor-General last night gave Royal Assent to an amendment to the income tax laws to allow farmers in Exceptional Circumstances declared areas who access their Farm Management Deposits (FMD) within 12 months of the day their deposits were made to retain their tax benefits.
Minister for Revenue and Assistant Treasurer Senator Helen Coonan said the FMD scheme allowed eligible primary producers to set aside pre-tax income in profitable years to establish cash reserves to help meet costs in low-income years.
"An FMD is included in a farmer's assessable income in the year of income it is withdrawn," Senator Coonan said.
"FMDs complement other risk management strategies available to primary producers such as developing fodder and water reserves, financial planning and diversifying their production systems."
This is one of the initiatives announced by the Prime Minister on 27 November 2002 to assist rural communities cope with the current drought.
Federal Minister for Agriculture, Fisheries and Forestry Warren Truss said the Government's recent drought relief initiatives provided additional funding to meet a number of rural concerns including cash-flow for farmers, pest control, environmental protection and counselling.
"The Federal Government is committed to providing quick and timely relief to farmers and we now hope the states help even more farmers get access to Commonwealth assistance by directing resources to the preparation of Exceptional Circumstances relief applications.
"Today's amendments to the FMD legislation will help farmers manage the cash-flow impact of the drought and build on the significant funding already provided by the Commonwealth to managing the drought," Mr Truss said.
"Minor amendments have also been made to taxation laws to enhance the flexibility and operation of the FMD scheme."