This question is for primary producers only.
The law on farm management deposits has changed, as have the terms used. An institution which accepts farm management deposits is an 'FMD provider'. When you withdraw from the account, the FMD provider 'repays' you; 'repayment' replaces 'withdrawal'.End of danger
Did you deposit into or have funds repaid from your Farm Management Deposits Scheme account during 2010-11?
You need to know
You can claim a deduction for farm management deposits made during 2010-11 at this item unless in 2010-11:
- your taxable non-primary production income exceeded $65,000
- you became bankrupt, or
- before the end of the year you ceased to carry on a primary production business for 120 days or more.
The government has legislated to:
- enable beneficiaries to continue to hold farm management deposits in years where a primary production trust reports a loss
- allow a farm management deposit holder affected by natural disaster to withdraw their deposits within the 12 month qualifying period and keep the tax deduction.
For more information, refer to Farm management deposits and beneficiaries of primary production trusts.
These changes may also affect your eligibility for income averaging.End of danger
Any deduction you claim cannot be more than your taxable primary production income for 2010-11. You cannot claim a deduction for deposits which cause your total farm management deposits to exceed the $400,000 account limit.
You cannot claim a deduction for any part of a farm management deposit that is repaid within 12 months of the deposit except in situations outlined in the following paragraphs. Where this affects a deduction you claimed in the prior income year, you need to request an amendment of your assessment for that income year. You are still entitled to your deduction for the part of the deposit not repaid provided the original deposit was not reduced to less than $1,000 within 12 months of the deposit as a result of repayments.
A farm management deposit may be repaid within 12 months after it was made and still be tax deductible if:
- the repayment occurred in the income year after the deposit was made
- at the time of the repayment, you were eligible to be issued an exceptional circumstances certificate relating to your primary production business, and
- when the deposit was made an exceptional circumstances declaration made by the Minister for Agriculture, Fisheries and Forestry was not in force for your primary production business.
However, the amount of the repayment is assessable in the year in which it was made and you cannot claim a deduction for any subsequent deposits you made in that income year. You need to get an exceptional circumstances certificate from Centrelink no later than three months after the end of the income year in which the repayment was made.
To find out whether your area was declared to be in exceptional circumstances:
- visit the website of the Department of AgricultureExternal Link
- enter 'Farm Management Deposits' in the 'Search for' box at the top of this page. Look for the reference to 'Natural disaster relief'
- phone the Centrelink 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 Centrelink Drought Assistance Line.
If in 2010-11 you became bankrupt or ceased to carry on a primary production business for at least 120 days, all remaining deposits are assessable income in 2010-11 to the extent that you previously claimed them as a deduction. Your deductions in earlier years are not affected even where such a repayment is within 12 months of making the deposit.
Where you have your farm management deposit electronically transferred to another FMD provider, the transfer is not treated as a repayment or the making of another deposit. This also applies to farm management deposits made by the Australian Prudential Regulatory Authority (APRA) under the Financial Claims Scheme or by a liquidator where the farm management deposit was held with a failed authorised deposit-taking institution.
Repayments of the deposits are assessable income to the extent that you previously claimed them as a deduction. If your farm management deposit contained both deductible and non-deductible deposits, only the repayments of deductible deposits are assessable income. When you receive a repayment you are considered to have been repaid any non-deductible amounts first.
If you have any questions about the tax consequences of farm management deposits or repayments, visit our website or phone 13 28 66.
If you are looking after the estate of someone who died in 2010-11, you cannot claim a deduction for any deposits they made in 2010-11. Any farm management deposits held at the time of death are assessable income in 2010-11 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
What you may need
- Your account statement from your FMD provider
- The publications Information for primary producers 2011 (NAT 1712) and Farm management deposits scheme (NAT 8776)
Completing this item
Take away the total amount of the deductible deposits you made in 2010-11 from the total amount of your 2010-11 repayments that are assessable income.
Write the answer at E item 17 on page 14 of your tax return; and if the amount of your deductible deposits exceed the amount of your assessable repayments, print L in the LOSS box at the right of E.
Check that you have . . .
- taken the total amount of deductible deposits away from the total amount of assessable repayments and written the answer on your tax return
- printed L in the LOSS box if your deductible deposits exceed your assessable repayments
- kept your statement of account from your FMD provider with your other tax records
Where to go next