The Federal Government has announced changes to the Farm Management Deposits (FMD) Scheme, which come into place from 1 July 2016. Key changes include doubling the amount that may be held in FMDs and allowing the use of FMDs as a farm business loan offset.
Enhancements to the FMD Scheme include:
- Doubling the FMD cap from $400,000 to $800,000
- Re-establishing an early access trigger during times of drought
- Removing the law that prevents FMDs being used as offset accounts against primary production business debt
Read more about changes to the Farm Management Deposits Scheme.
The Farm Management Deposits Scheme was established to help farmers manage tough times and assist primary producers to more effectively deal with fluctuations in cash flow. It aims to help Australian primary producers by helping them manage financial risk and cover expenses in low income years through building up cash reserves.
Eligible producers can take advantage of tax efficiencies by setting aside pre-tax income (in years of high income), which can be accessed in years of low income.
Income deposited into a Farm Management Deposit Account is tax deductible in the financial year when deposits are made and withdrawals are taxable income in the financial year in which they are withdrawn from the account.
If you would like to discuss the changes to the Farm Management Deposits Scheme and how they impact on your situation, I encourage you to give me a call.
Phillip Dibben is a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
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