Home > Farmers to benefit majorly from changes to FMD scheme

Farmers to benefit majorly from changes to FMD scheme

Supplier News

Agribusiness banking specialist Rabobank says primary producers in Australia will benefit in a ‘big way’ from the Farm Management Deposits (FMD) Scheme subsequent to amendments being planned for the scheme.

The Australian Government is moving to amend the provisions of the legislation to allow farmers with multiple eligible FMDs (held with different or same financial institutions) to consolidate them into a single deposit without facing adverse tax consequences of withdrawing and immediately re-depositing FMDs. The proposed legislative changes to the Farm Management Deposit Scheme, if passed are scheduled to take effect from July 1.

The amendments will also increase the amount of taxable off-farm income that an individual can earn in a tax year from $65,000 to $100,000 before they are prevented from accessing the FMD tax concessions. This is expected to increase the number of primary producers able to access the FMD Scheme. The Australian Government will also be exempting FMDs from the unclaimed moneys provisions.

Rabobank senior manager for deposits Carlos Vieco says these proposed legislative changes to the Farm Management Deposit Scheme will provide numerous advantages to farmers who will be able to consolidate their deposits into one account, rather than have them managed separately. These amendments are also likely to see a strong increase in the amount of funds invested in FMDs this year.

Mr Vieco explains that under the existing provisions, each year when a farmer opens a Farm Management Deposit account, it is run individually based on the original start date. Under the new rules, provided the FMDs have been held for one year or more and meet appropriate tax deductible status, taxpayers will be allowed to consolidate multiple FMDs that they might hold with their banking service providers and run those under the one account, without facing adverse tax consequences. Farmers benefit from lesser administrative effort and fewer costs as well as a more simplified accounting system from having to review only one deposit account.

Farm management deposits are designed to help primary producers smooth out the ‘ups and downs’ associated with agribusiness.

Newsletter sign-up

The latest products and news delivered to your inbox