• 17 - Net farm management deposits or repayments 2013

    This question is for primary producers only

    Did you make Farm Management Deposits (FMD) or have repayments during 2012-13?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    No

     

    Yes

    Read below.

    Definitions

    • An FMD provider is an institution that accepts farm management deposits.
    • An FMD owner is a person who makes an eligible farm management deposit.

    If you received a distribution of income as a beneficiary of a trust that carried on a business of primary production, you are considered to be carrying on a business of primary production and therefore eligible for the farm management deposit tax concessions.

    If you are the beneficiary of a primary production trust that made a loss, you are considered to be in a business of primary production, and therefore eligible for the farm management deposit tax concessions, if:

    • the trustee of the primary production trust nominated you as a chosen beneficiary, or
    • you are the beneficiary of a fixed trust.

    You need to know

    FMD owners can access their deposits early when affected by certain natural disasters, without losing their concessional tax treatment (see Natural disaster assistance below).

    You can also go to Farm management deposits - early access for primary producers for more information.

    Deductible deposits

    Your 2012-13 farm management deposits are deductible if all of the following are satisfied:

    • Your 2012-13 taxable non-primary production income is $65,000 or less.
    • You are carrying on a primary production business at the time of making the deposit.
    • If you stopped carrying on a primary production business during the year, you recommenced carrying on the business within 120 days.
    • Your individual deposits are not less than $1,000 and total deposits not more than $400,000.
    • Your individual deposits do not cause your total FMDs to exceed the $400,000 account limit.
    • Your individual deposits do not exceed the amount of your 2012-13 taxable primary production income.
    • You held the deposits for at least 12 months or qualify for one of the early repayment exceptions below.

    Non-deductible deposits

    A deduction cannot be claimed for deposits made in the 2012-13 year if:

    • the FMD owner became bankrupt or ceased to carry on a primary production business (including a business that was carried on in a partnership or as a beneficiary of a trust) for 120 days or more, or
    • the FMD owner passed away.

    If this applies to you or you are the executor of a deceased estate:

    • All deposits must be repaid.
    • Include as assessable income any repaid deductible deposits.
    • Do not claim a deduction for deposits made after the business ceased or any deposits made in 2012-13 by the now deceased FMD owner.

    Deposits repaid within 12 months

    You cannot claim a deduction for any part of a deposit repaid within 12 months.

    If you withdrew the deposits early (and don't qualify for one of the early repayment exceptions below) and made the deposit in this income year, do not include this amount as a deposit or repayment. If, however, you claimed the deduction in a prior income year, request an amendment of your assessment for that income year.

    If you withdrew part of your deposit early, you may continue to claim a deduction for that part of the deposit that was held for a full 12 months or more (provided that your total deposits remain $1,000 or more).

    'Early repayment' exceptions

    If you are eligible to claim the exceptional circumstances and/or the natural disaster exceptions (below), you can access your deposits early without losing your concessional tax treatment.

    If you claim one of the exceptions below, you cannot claim a deduction for deposits you make in 2012-13 after the early repayment.

    Exceptional circumstances (EC)

    You may be eligible to claim this exception if you:

    • made the original deposit before the relevant EC declaration was made
    • were eligible to be issued an exceptional circumstances certificate relating to your primary production business, at the time of the deposit repayment,
    • withdrew the deposit in the income year after you made the deposit
    • obtained an EC certificate no later than three months after the end of the income year in which the repayment of the deposit was made.

    For more information about exceptional circumstances or to find out whether your area was declared to be in exceptional circumstances:

    • go to the website of the Department of Agriculture   
    • phone the Department of Human Services Drought Assistance Line on 13 23 16
    • phone the Australian Government Regional Information Service on 1800 026 222.

    If you need an exceptional circumstances certificate, phone the Department of Human Services Drought Assistance Line.

    Natural disaster assistance

    You may be eligible to claim this exception if;

    • you made the original deposit before a natural disaster declaration was made
    • your primary production business received Natural Disaster Relief and Recovery Arrangements (NDRRA) Category C assistance, and
    • you withdrew the FMD deposit early, after having received the assistance.

    For more information about the natural disaster exception, go to Department of Agriculture  

    To confirm that your business is eligible or has received this type of assistance, review your disaster assistance documents.

    Repayments are assessable income

    You must include as assessable income, in the year in which they are repaid, repayments of previously deducted deposits.

    Do not include as assessable income repayments of deposits that you did not claim as a deduction.

    When you receive a repayment, you are considered to have been repaid any non-deductible amounts first.

    Transfers to a new provider

    You do not need to return as assessable income transfers of the same deposit amount from one FMD provider to another. Examples include:

    • electronic transfers from a liquidated authorised deposit-taking institution (ADI) to a new ADI
    • transfers by the Australian Prudential Regulatory Authority under the Financial Claims Scheme.

    If you have any questions about the tax consequences of farm management deposits or repayments, see Farm management deposits scheme or phone 13 28 66.

    Attention

    Deceased estate

    If you are looking after the estate of someone who died in 2012-13, you cannot claim a deduction for any deposits they made in 2012-13. Any farm management deposits held at the time of death are assessable income in 2012-13 to the extent they have previously been claimed as a deduction.

    Deductions in earlier years are not affected even when the person dies within 12 months of making the deposit.

    End of attention

    Answering this question

    What you may need

    Step 1

    Add up deductible deposits you made in 2012-13.

    Write the total at D item 17 on your tax return.

    Step 2

    Add up early repayments you withdrew during 2012-13 that qualify for an exceptional circumstances exception.

    Write the total at C.

    Step 3

    Add up early repayments you withdrew during 2012-13 that qualify for a natural disaster exception.

    Write the total at N.

    If you made the deposit in this income year, ensure you have included this deposit at D above.

    If you withdrew a deposit made in the last income year and claimed the deduction, you do not need to lodge an amendment.

    Step 4

    Add up FMDs you held for 12 months or more and were repaid during 2012-13. Write the total at R

    Step 5

    Add up the amounts you showed at C, N and R, and take away the amount you showed at D.

    Write the answer at E. If the amount is negative (your deductible deposits exceed your total repayments), print L in the Loss box at E.

    Record keeping

    You will need to keep the following documents:

    • statement of account from your FMD provider
    • exceptional circumstances certificate
    • proof that you received Natural Disaster Category C assistance for primary producers.

    Where to go next

      Last modified: 28 May 2013QC 32411