Newish Tax Concession For Farmers

The Government has released draft legislation that makes certain tax concessions available to farmers even better than they currently are.

In the draft legislation, the Government proposes to make the following changes to the Farm Managed Deposit scheme (and a reminder for those city slickers, the FMD scheme allows farmers to claim a tax deduction for deposits into their FMD bank account, and this means they only pay tax in the income in the year they take it out of the FMD account):

  • Increase the maximum amount that can be held in FMDs to $800,000. As many farmers are already at the $400,000 cap, this means they can take $400,000 from next years income, put it into their FMD and pay not tax on it in that year;
  • Allow primary producers experiencing severe drought conditions to withdraw an amount held in an FMD within 12 months of deposit in the income year following deposit without affecting the income tax treatment of the FMD in the earlier income year; and
  • Allow amounts held in an FMD to offset (ie. reduce the interest charged on) a loan or other debt relating to the FMD owner’s primary production business. That effectively means a farmer can decrease the interest on THEIR PRIMARY PRODUCTION BUSINESS loan (not other loans) at the cost of the meagre interest they were getting on their FMD.

This all starts on 1 July 2016 so it is worth farmers who already have a $400,000 FMD to start warehousing income so they can get the additional $400,000 deductions they can get by increasing their FMD balance to $800,000.

Also, it is worth getting ready to use the FMD as an offset from 1 July 2016.

Advertisements

About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
This entry was posted in Income Tax, Legislation, Planning Idea, Planning Stuff. Bookmark the permalink.

One Response to Newish Tax Concession For Farmers

  1. Pingback: What are we waiting for… | Tax Rambling

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s