9 July 2004
This message has been issued by The Co-operative Federation of Western Australia as part of its Member Services and Business Awareness programs.
ITAA 120 loans getting closer
The Federation is very pleased that the Minister for Agriculture has obtained Cabinet approval as outlined in the following media release.
The CFWA has made representations to the Minister to ensure legislation is presented to Parliament as a matter of high priority. The Federation has also made representations for re-financing to be included in the section 120 loan scheme to ensure the WA co-operative sector is treated fairly and equitably.
of Western Australia
The Hon. Kim Chance MLC
Regional WA to benefit from tax break for primary produce co-operatives
State Cabinet has approved the creation of a loan facility for Western Australian primary produce co-operatives.
Agriculture, Forestry and Fisheries Minister Kim Chance made the announcement today, following a regional Cabinet meeting in Harvey.
The loan facility will provide important tax relief for co-operative businesses in their efforts to create more employment and economic activity in regional areas.
They also provide indirect regional benefits when the co-operatives distribute their profit back to their members.
Mr Chance said Eastern-States' experience had shown the dairy industry was one production area that particularly benefited from such a facility.
"Establishing the loan facility was a key recommendation of the Legislative Assembly Economics and Industry Standing Committee inquiry into the sustainability of the dairy industry in WA," he said.
"The committee recognised this facility would provide an opportunity for existing and prospective dairy co-operatives to leverage their inherent value and provide greater benefits to their members and the broader WA dairy industry."
The Government loan facility will give eligible co-operatives the ability to deduct the loan repayments against their taxable income, as allowed under section 120(1)(c) of the Australian Government's Income Tax Assessment Act 1936.
Western Australia has approximately 55 co-operatives, with large groups involved in dairy, meat, grains and fisheries marketing and processing.
"Many existing co-operatives are keen to take up the new loan facility and other groups are looking at forming co-operatives to better process and market their member's products," Mr Chance said.
The loan facility will be available to all co-operatives that satisfy the eligibility criteria in the Australian tax legislation.
"Co-operatives will also have to provide an unconditional bank guarantee to the Government when applying for a loan so that the co-operative carries the financial risk of the loan, not the Government," the Minister said.
The loan facility will be operated by the Department of Agriculture and be funded through the interest rate paid on loans to eligible co-operatives.
The department will also provide guidance to groups interested in establishing co-operatives to better value add and market their products.
Mr Chance said the State Government would establish the loan facility as soon as possible.
Farmers and co-operatives wanting more information about the Co-operative Loans Facility or establishing co-operative structures should contact Stuart Clarke at Department of Agriculture by calling 9368 3199.
Minister's office: 9213 6700