AUS: Farm Management Deposits Scheme

Australian Tax Office

The FMD Scheme assists primary producers to deal more effectively with fluctuations in cash flows. It is designed to increase the self-reliance of Australian primary producers by helping them manage their financial risk and meet their business costs in low-income years by building up cash reserves.

The scheme allows eligible primary producers to set aside pre-tax income from primary production in years of high income, which they can draw on in future years when they need it, such as for restocking or replanting when conditions start to improve.

Income deposited into an FMD account is tax deductible in the financial year the deposit is made. It becomes taxable income in the financial year in which it is withdrawn.

The Australian Taxation Office (ATO) administers (and interprets) FMD tax provisions. For more information call the ATO’s business enquiry line on 13 28 66 or visit the ATO Website.

Key Criteria:

Current FMD Scheme eligibility settings

The following conditions apply:

  1. a primary producer’s non–primary production income must be less than $100,000 in the financial year they make the deposit
  2. a primary producer may hold up to a maximum of $800,000 in FMDs
  3. a primary producer can have any number of accounts with multiple Authorised Deposit-taking Institutions (for example a bank, credit union or building society), authorised under the Banking Act 1959 (Cwlth)
  4. the deduction claimed for an FMD in the financial year it is made cannot exceed the primary producer’s taxable primary production income for that year
  5. to retain the taxation benefits an FMD must be held for at least 12 months with an Authorised Deposit-taking Institution
  6. a primary producer may be exempt from this 12 month rule if they:
    • have received primary producer Category C recovery assistance following a natural disaster under the Natural Disaster Relief and Recovery Arrangements (see below); or
    • are affected by a rainfall deficiency for at least six consecutive months (see below).
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