The Tax and Superannuation Laws Amendment (2016 Measures No 1) Bill 2016 amending the farm management deposit scheme received Royal Assent on 5 May 2016. Farm management deposits (FMD) are a risk-management tool to help farmers deal with uneven annual income.
From 1 July 2016:
- there will be a new cap of $800,000 that can be held in FMDs by farmers (the cap is currently $400,000);
- some drought affected farmers may access their funds held in FMDs at an earlier time without incurring penalties; and
- some amounts held in FMDs may offset a loan or other primary production business debt — resulting in lower interest being charged on the original loan.
The scheme allows primary producers to:
- make FMDs
- claim a tax deduction for FMDs they make in the income year they made them provided the FMD is not withdrawn within 12 months.
If they withdraw an FMD, the amount of the deduction they claimed is included in their assessable income in the income year the deposit is repaid to them.
