The Farm Management Deposits scheme commenced on 2 January 1999, and replaced the income equalisation deposits scheme.
The Farm Management Deposits (FMD) scheme enables primary producers to deal with uneven income flows by making tax deductible deposits during prosperous years and receiving taxable repayments during less prosperous years.
From 1 July 2016:
Three changes to the Farm Management Deposits (FMD) Scheme, commenced on 1 July 2016:
- doubling of the cap on deposits from $400 000 to $800 000
- re-establishment of an early access trigger during times of drought
- allowing FMDs to be used to offset the interest costs on primary production business debt.
From 1 July 2014:
FMD owners are allowed to consolidate their existing accounts that have been held for longer than 12 months, without triggering tax liabilities.
How much to deposit
If you are eligible to make a farm management deposit you need to make sure that deposits are:
> at least $1,000, and
> no more than $400,000 in total at any one time (increased from $300,000 for the year of income ended 30 June 2007).
Claiming deductions
Deposits are deductible in the income year they were made. You cannot claim a deduction for deposits if your taxable non-primary production income for the financial year exceeds:
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$100,000
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From 1 July 2014
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$65,000
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From 1 July 2006 to 30 June 2014
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$50,000
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Pre 1 July 2006
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Any deduction you claim cannot exceed:
> the deposits you made, or
> your taxable primary production income for the financial year.
From 10 May 2011 eligible primary producers can:
- Access their farm management deposits (FMDs) within 12 months of making those deposits, when affected by certain natural disasters, without losing their taxation benefit
- Hold FMDs with more than one FMD provider (total deposits must not exceed the $400,000 cap).