Withdrawing or making a repayment
When you make a repayment from your FMD, the circumstances determine whether the amount is considered as part of your assessable income for the year. The most common repayment is a withdrawal of your deposit.
If your FMD contains both deductible and non-deductible deposits, when you receive a repayment, we consider you to have withdrawn any non-deductible amounts first.
Deductible deposits
If you previously claimed a deduction for the deposit, the repayment is considered assessable primary production income in the income year it is repaid. It is included in the tax averaging for primary producers calculations, unless you have ‘opted out’ of tax averaging.
Non-deductible deposits
A repayment of a non-deductible deposit is not considered assessable income.
Example 7: Deductible and non-deductible deposits
On 1 June 2015, Kate made a $20,000 deposit into an FMD account. In her 2015 income tax return, she claimed an FMD deduction of $10,000. Kate later made the following withdrawals:
- $5,000 on 1 October 2016
- $6,000 on 1 October 2017
- $9,000 on 1 October 2018.
As her non-deductible deposit is treated as having been withdrawn first, the first $10,000 that she withdraws is not assessable income.
Therefore, the first withdrawal of $5,000 is not assessable income and does not need to be included in her 2017 tax return.
Of the second withdrawal of $6,000, only $1,000 is included in her 2018 tax return as assessable income.
The third withdrawal of $9,000 is assessable income and, therefore, is included in her 2019 income tax return.
End of exampleDeemed repayments
FMDs are deemed to be repaid when an FMD owner:
- becomes bankrupt
- stops carrying on a primary production business for 120 days or more
- as an account holder, passes away.
The repayment will be:
- assessable income if a deduction was claimed when it was deposited, and
- included in the tax averaging for primary producers averaging calculations, unless you have ‘opted out’ of tax averaging.
Where an account holder passes away, the assessable income will be included in the averaging calculations for their final tax return unless they ‘opted out’ of tax averaging.
Example 8: FMD owner stops carrying on a business
Due to drought, Lindy sold her livestock on 20 June 2018 and ceased her primary production activities. She did not withdraw her FMDs at that time.
The law deems the deposits to have been repaid to her 120 days after she ceased her primary production business, unless she:
- withdrew them earlier
- has started carrying on a primary production business within those 120 days.
End of examplePay as you go instalment income
Deposits and repayments of FMDs will affect your pay as you go (PAYG) instalment income for the instalment period.
Deposits reduce your instalment income in the period when they are deposited. However, they can't reduce your income below zero.
Repayments are included in your instalment income in the period when the repayment occurs or is deemed to occur.