Farm Management Deposits

The Farm Management Deposits Scheme is a tax-linked risk management tool that helps primary producers to be more self reliant and better manage fluctuations in their income due to climate variability and market changes. Farm Management Deposits provide tax benefits if kept for at least 12 months, as tax is not payable on the income until the financial year it is withdrawn, when primary producers may benefit from a lower marginal tax rate.  The FMD Scheme encourages individual farmers to set aside pre tax income in good years for use in low-income years.

The cap on deposits is $400,000 and the non-primary production income test is $65,000.

Eligible farmers in Exceptional Circumstances-declared areas or who are receiving primary producer Category C recovery assistance following a natural disaster under the Natural Disaster Relief and Recovery Arrangements (NDRRA), may be able to access their FMDs within 12 months while retaining the tax benefits of the scheme (see below).

For details of recent improvements made to the FMD Scheme, including early access after natural disasters, and holding FMDs with more than one ADI, visit Taxation Provisions and Important Changes to Farm Management Deposits Legislation - DAFF.

Eligibility requirements for withdrawal within 12 months for primary producers in EC declared areas

• The deposit must have been made before the EC declaration for the FMD holder’s area came into force.
• To confirm their EC status, the FMD holder must obtain an EC certificate from Centrelink no later than three months after the end of the income year in which the withdrawal is made.
• The amount of the withdrawal is assessable in the income year in which the withdrawal is made and you cannot claim a deduction for any subsequent deposits made in the same income year.

Eligibility requirements for withdrawal within 12 months for primary producers affected by natural disasters

As announced in the 2011-12 Budget, eligible primary producers affected by natural disasters can withdraw their FMDs within the first 12 months of deposit without losing their taxation benefits if they are currently accessing, or have accessed, primary production Category C recovery assistance. Visit the Australian Government Disaster Assist website for more information on assistance available following natural disasters and to check the status of your Local Government Area.

To be eligible, primary producers must:

• On or after 1 July 2010, be affected by certain natural disasters and have received assistance through an NDRRA primary producer Category C measure recovery grant.
• Have deposited the funds into an FMD account prior to accessing the primary producer Category C measure recovery grant.
• Withdraw the funds from the FMD account after accessing the primary producer Category C measure recovery grant. The amount of the withdrawal is taxable income in the income year in which the withdrawal is made.
• The amount of the withdrawal is assessable in the income year in which the withdrawal is made and you cannot claim a deduction for any subsequent deposits made in the same income year.

FMD Statistics

Latest quarterly FMD Statistics and detailed state/territory and industry totals.

For more information

• Tax Office Business Tax Enquiries phone 13 28 66
• Tax Practitioners phone 13 72 86
• Farm Management Deposits scheme guide on the Tax Office website 
• Income Tax Assessment Act 1997