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  • Making a deposit

    If you are eligible for an FMD, you may claim a deduction for the amount you deposit in that income year. The deposit amounts:

    • can't be more than your taxable primary production income for the income year
    • can't cause your total FMD account balances to be more than $800,000.

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    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    You can't claim a deduction for a deposit withdrawn within 12 months unless an exception occurs – see 12 month rule.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. It is your responsibility as the FMD owner to keep track of the different amounts in your FMD. The law deems that your non-deductible components of a deposit are 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 exceptions 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 Because this amount was withdrawn within 12 months, and there were no exceptional circumstances, the $5,000 she withdrew does not qualify as an FMD deduction.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

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      Last modified: 08 Nov 2019QC 27154