Taxation Provisions and Important Changes to Farm Management Deposits Legislation

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

Important changes to farm management deposits legislation

Budget 2011-12 changes to the FMD Scheme

• Primary producers who have accessed natural disaster assistance can draw down on their FMD within 12 months of making a deposit [more information on eligibility requirements].
  
• Primary producers can hold FMDs with more than one Authorised Deposit-taking Institution (ADI), allowing them to shop around for the best return.
  
• From 1 July 2012, ADI’s will be required to submit reports to DAFF, detailing the deposits they hold each month, no later than 10 days after the end of that month.
  
• From 1 July 2012, ADIs will not have to report and forward to the Treasurer details of any FMD accounts which have not had activity (deposits or withdrawals) for seven years, unless the ADI has been unable to contact the FMD owner about those deposits after making reasonable efforts. The purpose of this change is to ensure that FMD holders do not risk losing their deposits under unclaimed moneys provisions applied to the majority of bank accounts. This change will apply to statements to be delivered after 31 December 2012.

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, a primary producer 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.