FARMERS adversely affected by drought conditions will benefit from planned changes to the Farm Management Deposit (FMD) scheme.
The aim of FMDs is to help farmers smooth their income and, as a result, more effectively manage the amount of income tax they pay. The proposed changes will deliver substantially more flexibility.
Farmers will be allowed to withdraw part of an FMD within 12 months of making a deposit without loss of tax benefits for the remaining amount. Previously, no part of the deposit could be withdrawn within 12 months.
Farmers in declared ‘exceptional circumstances’ areas, such as those affected by drought, will be allowed to withdraw deposits early and still retain the tax benefit in the year in which the deposit was made.
A third change will
allow FMDs to be held in accounts with any term.
Accounting firm Bentleys MRI says the bill to make the changes to the FMD scheme was introduced to parliament in December 2002 but has not yet been passed.
The latest data from the Department of Agriculture, Fisheries and Forestry showed that about 40 per cent of Australian farmers use FMDs.
In September 2002, 41,921 farmers across Australia had $1,971 million in FMDs. That equated to an average deposit of $47,000.
It was notable that the number of farmers with FMDs, and the amount of money deposited in these accounts, fell between June 2002 and September 2002.
© Business News 2017. You may share content using the tools provided but do not copy and redistribute.