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  • Making a deposit

    If you're eligible for an FMD, you may claim a deduction for the amount you deposit in that income year.

    The deposit amounts must not:

    • be more than your taxable primary production income for the income year
    • cause your total FMD account balances to be more than $800,000.

    Non-deductible deposits

    You can't claim a deduction for a deposit withdrawn within 12 months unless an exception occurs – see 12 month rule.

    If your deposit is a reinvestment or consolidation it will not treated be as a deductible deposit.

    Your FMDs may contain both deductible and non-deductible deposits. As the FMD owner, it is your responsibility to keep track of the different amounts in your FMD.

    Under the law, the non-deductible components of your deposit must be repaid first.

    12-month rule

    If you withdraw any part of a deposit within 12 months, you can't claim a tax deduction for that amount, unless any of the following apply:

    If you receive a repayment from an FMD in one of these situations, we treat it as assessable income.

    If you have already claimed a tax deduction to which you are no longer entitled, you must lodge an amended assessment to cancel the deduction.

    Example 2: Deposit partly repaid within 12 months

    On 1 November 2017, Angela made an $8,000 deposit into an FMD account.

    In the income year that ended 30 June 2018, Angela claimed an FMD deduction of $8,000.

    On 1 October 2018, Angela withdrew $5,000 from her FMD account. Because this amount was withdrawn within 12 months and there were no exceptional circumstances, the $5,000 she withdrew does not qualify as an FMD deduction.

    Angela must lodge an amendment to her 2018 income tax return to reduce her FMD deduction claim by $5,000.

    End of example

    Consolidating multiple deposits

    You may consolidate two or more FMDs into a single FMD.

    The withdrawals involved in consolidating the accounts will not be counted as assessable income if the following conditions are met:

    • The original FMDs only contain amounts for which deductions have been claimed.
    • The original FMDs are immediately reinvested into a single FMD. This can be with the same FMD provider or a new FMD provider.
    • After merging, the consolidated FMD only contains amounts that you have    
      • held for at least 12 months
      • claimed a tax deduction for.
       

    You can't claim a deduction when you consolidate deposits.

    Consolidated deposits are considered to have been made on the same day as the most recent of the original deposits.

      Last modified: 08 Sep 2022QC 27154