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Monday, 21 October 2002
Page: 5483

Senator WATSON (3:00 PM) —My question is also directed to Senator Coonan, the Minister for Revenue and the Assistant Treasurer. Will the minister update the Senate on what steps are being taken to assist Australians affected by the current drought?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you for this most important question. I acknowledge Senator Watson's longstanding interest in the welfare of Australians in rural and regional areas and, in particular, his interest in the welfare of families suffering because of the current drought. I am pleased to be able to inform the Senate that a range of responses is being taken to assist Australians who are struggling because of the drought, including some responses within the Treasury portfolios. We are now facing a situation where drought has been officially declared in more than 85 per cent of New South Wales and about one-quarter of Queensland, while 22 municipalities in Victoria have been drought declared.

The government is taking a broad view of what may be done for those people suffering the impact of drought. This includes assistance with taxation issues through the ATO and through tax-linked policies designed to assist farming families and the community. Specifically, I would like to inform the Senate and those who are listening to these proceedings about a recent announcement made by the tax commissioner, Mr Michael Carmody. In a move that I welcome wholeheartedly, the commissioner has said that anyone affected by the drought who believes that they may have a difficulty in meeting their tax obligations should contact the tax office as soon as possible to get help. Clearly the current drought could have a significant impact on some people's ability to meet their tax obligations on time, and the ATO recognises that.

I can assure the Senate that, like the government, the ATO is concerned about the impact the drought may be having on families in rural and regional Australia and wants to ensure that people know they can approach it to discuss their circumstances and to see if they are entitled to relief. I am informed that the tax office will take a sympathetic view and do everything possible to assist people who may not be able to meet their tax obligations as a result of the drought. Importantly, this applies not only to farmers and to people living on the land but also to people such as local business people whose income is derived from drought-affected areas. The ATO will look at circumstances on a case by case basis, as people from different regions and industries are being affected to different degrees.

Depending on how severe different financial circumstances are as a result of the drought, there are two forms of assistance possible. Firstly, people may be able to be given more time to pay tax debts, without interest charges. Secondly, some may be able to pay any tax debts by instalment, without interest charges. Arrangements will be made according to people's ability to pay. The tax office has a longstanding policy of assisting people whose inability to meet a tax obligation is directly attributable to a natural disaster such as drought. Taxpayers will also need to remember that, while they may be eligible to organise their tax affairs and payment arrangements to provide some financial relief at a difficult time, they do still need to keep up with their reporting obligations.

On the tax front, many senators would also be aware of the government's very successful Farm Management Deposit Scheme and how that is helping farmers in this terrible drought. The deposits were introduced by this government in April 1999. They are a tax-linked, risk management tool for primary producers which effectively allows farmers to set aside some of their pretax income in good years when their marginal tax rate is higher, deferring the tax payable income until they withdraw it in a low-income year. It is the kind of practical, commonsense approach that Australians expect from their federal government.

Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper.