More drought aid for farmers and banks
The Australian government's latest package of assistance for farmers in drought-affected areas has a couple of ramifications for banks. The government said it would be increasing the deposit cap on the “farm management deposits” to $400,000, and increasing the non-primary production income test from $50,000 to $65,000. Farm management deposits enable farmers to build financial reserves in dedicated accounts, with income tax paid at the time the reserves are drawn down rather than at the time they are earned. The government will also extend interest rate subsidies by removing the requirement that farmers applying for subsidies must have operated without government support for two of the past five years.