The Farm Management Deposits (FMD) scheme allows eligible primary producers to move income from a year in which they don’t need it, to a later year when they need the income. This is achieved by allowing the primary producer a deduction in the financial year in which they make an eligible deposit to the FMD account (which is a special bank account with an institution that accepts farm management deposits).
When the primary producer withdraws funds from the FMD account, that income is assessable and is included in their tax return as income.
Farm management deposits are deductible if all of the following are satisfied:
- The taxable non-primary production income is less than $100,000.
- The taxpayer is carrying on a primary production business at the time of making the deposit.
- The individual deposits are not less than $1,000 and total deposits not more than $400,000.
- Individual deposits do not exceed the amount of the taxpayer’s taxable primary production income.
- The deposits are held for at least 12 months or qualify for one of the early repayment exemptions.
- If the taxpayer stopped carrying on a primary production business during the year, they recommenced carrying on the business within 120 days.
- The taxpayer is not deceased.