PRIMARY producers are being encouraged by NAB to mark 28 June as a critical date if they’re considering, or already using, farm management deposits as part of their tax planning this financial year.
The FMD scheme is designed to enable primary producers to set aside pre-tax income when they’re experiencing prosperous years and use it as a cashflow management tool for financially challenging years.
NAB’s FMD volumes grew 27 per cent in 2023 as agribusiness customers sought to build business resilience.
Growth in most states was strong, led by Western Australia with 48 per cent growth, followed by NSW with 33 per cent and Victoria with 29 per cent.
Latest reporting from the Department of Agriculture, Fisheries and Forestry showed total holdings in the scheme across Australia were about $5.97 billion at the end of February, up from $5.84 billion reported a year earlier.
NAB executive for regional and agribusiness Khan Horne told North West Farmer said June 28 was an important date.
“Any deposit made into a FMD after that date will fall into the 2024-25 financial year,” Mr Horne said.
“An FMD allows primary producers to claim a tax deduction for production income deposited into a FMD in the income year they have earned it.
“On the flipside, when you withdraw funds from an FMD, that’s treated as taxable income in the year you withdraw it.
“The FMD scheme is an income smoothing tool unique to Australian agriculture. FMDs can be made and withdrawn in any increment ranging from $1000 to $800,000.”
Mr Horne said with the end of financial year fast approaching, producers were encouraged to start tax planning early and discuss their position with their professional advisers including bankers.
“Whether it be FMD planning or equipment finance drawdowns for delivery of equipment, end of financial year is such a crucial time to plan for. Get in early, be prepared, and don’t leave it to the last week of June.”
