New legislation to help farmers manage tough times
20 March 2016
The Coalition Government recently announced a new legislation delivering on a key Agricultural White Paper initiative to strengthen the Farm Management Deposit (FMD) scheme, enabling farmers to better manage during periods of uncertainty.
The FMD scheme is designed to enable primary producers to deal with uneven income flows. The scheme allows you to make tax deductible deposits during prosperous years that you can redraw (and pay tax on) during less prosperous years.
The proposed changes (pending parliament passing the legislation) to come into effect on 1 July 2016 will double the deposit limit for FMDs from $400,000 to $800,000, allow financial institutions to offer FMDs as farm business loan offset accounts to primary production businesses carried on either directly as a sole trader or through a partnership (but not for loans through a trust) and re-establish early access provisions in times of severe drought.
These amendments, originally announced as part of the Agricultural Competitiveness White Paper, will allow farmers greater flexibility in managing and accessing their own funds when they're needed, as well as improving cash flows.
For more information on FMDs contact your local Boyce accountant.
The Hon. Barnaby Joyce MP Deputy Prime Minister and Minister for Agriculture -http://minister.agriculture.gov.au/joyce/Pages/Media-Releases/new-leg-helps-farmers-manage-tough-times-fmd.aspx
Australian Tax Office - https://www.ato.gov.au/Business/Primary-producers/Managing-uneven-income-flow/Farm-management-deposits-scheme/