Farm Management Deposits (FMD) Scheme: Who Qualifies and What You Get
Learn how the FMD scheme helps primary producers build a financial buffer by setting aside pre-tax income to manage cash flow during difficult years.
The Farm Management Deposits (FMD) Scheme is a way for primary producers to set aside income during profitable years to help cover costs during leaner times. It acts as a financial buffer to help manage the natural ups and downs of farm life.
Who it's for
This scheme is available to primary producers. To qualify, your taxable non-primary production income must be under $100,000.
What you get
The scheme allows you to set aside pre-tax income during years when your farm is doing well. This money is stored in a way that allows you to draw on it during bad years, helping you manage the volatility of the market and the impacts of extreme weather.
What it costs you
To receive the tax benefits provided by the scheme, you must follow specific rules regarding how long you hold the funds. You must ensure your money remains in the account for the required period set by the government to maintain the tax advantages.
The catch to know
The main thing to keep in mind is that withdrawing your funds early can trigger a tax liability. You should plan your withdrawals carefully to ensure you do not lose the tax benefits you intended to gain.
How to apply
- Verify that your taxable non-primary production income falls within the allowed limit.
- Check with your financial institution to see how they facilitate these specific deposits.
- Deposit your pre-tax income during profitable years to build your drought fund.
- Visit the official portal for more details: https://www.agriculture.gov.au/agriculture-land/farm-food-drought/drought/managing-farm-risk/fmd