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Monday, 16 June 2003
Page: 11506


Senator O'Brien asked the Minister representing the Minister for Agriculture, Fisheries and Forestry, upon notice, on 21 November 2002:

(1) On what date did the department first become aware that some Farm Management Deposit (FMD) products may not comply with legislation applicable to the Government's FMD scheme.

(2) What was the source of this information; and (b) in what form was this information conveyed, for example, correspondence, e-mail, telephone conversation or direct conversation.

(3) What was the nature of the problem specifically identified in this information.

(4) On what date did the department inform the Minister, or his office, of this problem.

(5) Did the Minister, or his office, receive advice about this problem from a source other than the Minister's department; if so: (a) on what date was this information first received; (b) what was the source of this information; (c) in what form was this information conveyed; and (d) what was the nature of the problem specifically identified in this information.

(6) (a) On what date, or dates, did the department take action in response to this identified problem; and (b) what action did the department take.

(7) (a) What departments, agencies, banks or non-bank financial institutions did the department communicate with in relation to this matter; (b) on what date, or dates, did that communication occur; and (c) what form did that communication take.

(8) (a) What responses, if any, has the department received in respect to those communications; (b) in what form have those responses been received; and (c) what was the content of those responses.

(9) What action has the department taken in response to communications from departments, agencies, banks or non-bank financial institutions.


Senator Ian Macdonald (Minister for Fisheries, Forestry and Conservation) —The Minister for Agriculture, Fisheries and Forestry has provided the following answer to the honourable senator's question:

(1) The Commonwealth Department of Agriculture, Fisheries and Forestry - Australia (AFFA) received a request for clarification of the term for pricing of Farm Management Deposits (FMD) in July 2001.

(2) A financial institution raised the issue via email.

(3) The financial institution sought clarification of the term for pricing of FMD's.

(4) The issue was included in advice to the Minister on 28 June 2002.

(5) Information received about short term pricing issues, other than that provided by AFFA, was through media reports on 20/21 November 2002.

(6) - (8) Issues of interpretation of taxation legislation are the responsibility of the Australian Taxation Office (ATO) and communication by AFFA on the issue was through email and telephone discussion with the ATO. AFFA referred the matter to the ATO in July 2001.

Following an email response from the ATO in August 2001 a teleconference was held between AFFA and the ATO to clarify the ATO's initial interpretation of the term for pricing issue. In early November 2001 I am advised that the ATO provided its interpretation of the term for pricing sections of the legislation to the financial institution that raised the issue. The ATO advised AFFA by telephone that no further action would be taken, as the ATO was not aware of any other institution experiencing the same interpretive issue.

In early March 2002 AFFA commissioned a comprehensive evaluation of the FMD Scheme, which was completed in June 2002. The review noted that an ATO ruling on this issue was a matter of urgency and that such a ruling had been requested by AFFA. On 7 November 2002 the ATO advised AFFA that it was reviewing its previous interpretation and was preparing to issue a formal response.

(9) On 27 November 2002 the Prime Minister issued a press release in relation to new drought measures, including changes to the FMD legislation. The Taxation Laws Amendment (Early Access to Farm Management Deposits) Act 2002, was given royal assent on 19 December 2002. The Act has addressed the issue.