(Australian Associated Press)
A scheme that helps farmers deal with peaks and troughs in what they earn could be better run, according to the auditor-general.
The Farm Management Deposits Scheme – which has been running since 1999 – allows agricultural producers to set aside cash reserves during high-income years, for use in low-income ones.
It gives them an advantage as they can defer and potentially reduce their tax liability for the money they tuck away.
But the Australian National Audit Office has found the administration of the scheme has “not been fully effective”.
That’s because compliance arrangements and risk assessment processes have not fully captured elements of the scheme’s design.
There also hasn’t been much take up of changes to the policy made in 2016.
The changes increased the deposit limit for farmers and gave those in drought-affected areas the chance to withdraw their cash within a year without losing tax concessions.
They also allowed farmers to offset debts relating to their business.
“Current data indicates that take-up rates of the three policy measures have been low, especially for the loan offset measure,” the ANAO found.
The scheme is managed by the Australian Taxation Office and the Department of Agriculture, and the auditor-general has recommended the latter go ahead with a planned review of it within two years.
It has also recommended a big picture risk assessment, review of data used for the scheme and improved compliance processes.
The ATO said in response that it will refine its approach to running the scheme with the agriculture department.