Farm Management Deposit accounts (FMD) are a type of business bank account available to primary producers in Australia. These accounts can help farmers manage their finances more effectively and cope with the unpredictable nature of agricultural income.

As part of the Farm Management Deposit Scheme by the Australian Government, FMDs are designed to help Australian primary producers become more self-sufficient in managing their money while dealing with financial difficulties during years with lower income.

When you open an FMD account with Suncorp Bank, you deposit a sum of your farming income (between $1,000 and $800,000). These funds are then kept in your FMD account, and the amount is deducted from your taxable income for that financial year.

While keeping funds in your FMD account, you’re also earning interest. This can help your FMD cash reserve grow over time.

Our FMD accounts can help primary producers tax-effectively move income from good to bad financial years to help with seasonal fluctuations and adverse events that affect cash flow (i.e., natural disasters, demand issues and weather events).

When you’re experiencing a tougher financial year for your farm, you can withdraw the money from the account to help keep it profitable.

This is done by depositing money into your FMD account. If the deposit is kept in the account for 12 months or more, the amount is no longer part of your taxable income for the financial year you made the deposit. The amount becomes part of your taxable income for the following year.

In short, you’re moving taxable income from this year to another, which can help keep cash flow manageable between more profitable years and those with lower income. 

With your FMD account, you can withdraw money in less profitable years to help you manage your cash flow.

With an At Call account, this can be done at any time. With a fixed Term Deposit account, withdrawal can be made at the end of the specified period.  

In both cases, it’s worth noting that once you withdraw the funds from your FMD account, they become taxable for the financial year where the withdrawal takes place.

In other words, if you withdrew funds within the first 12 months of when you deposited them, they will then be added back onto your taxable income. This means that you’re essentially missing out on the tax benefits during this time. 

According to the law, you need to keep the deposit for at least 12 months for it to count as an FMD. This lets you get the tax benefits and delay paying the taxes until you take out the FMD.

There are exceptions. Subject to meeting the full eligibility requirements, you could possibly access your FMD funds before the 12-month mark without affecting the tax benefits if:

• You've experienced a natural disaster and received special assistance for farmers affected by that disaster.
• You've been dealing with a severe lack of rainfall for six consecutive months, meaning your property is in the lowest five per cent of recorded rainfall during that period. For this, you must be able to show that the land affected is where you carry out your primary production business.
• You demonstrate that you are not solely carrying on one or more of the primary production businesses:
  o    commercial fishing
  o    pearling and related activities
  o    tree felling and transporting trees that you logged for milling or processing.

If you have an eligible Variable Rate Agribusiness Loan with Suncorp Bank, you can use your Suncorp Bank At Call FMD account to offset and save interest on the loan. It’s important to note that interest is not earned on this account when it is in offset mode.

This only applies if you're a sole trader or a partner in a partnership involved in primary production.

To be eligible for an FMD with offset:

• You must hold an Eligible Loan in the name of the FMDA owner or a partnership that includes the FMDA owner.
• Your FMDA must be linked to your Eligible Loan through an offset arrangement.
• You must conduct a primary production business as either a sole trader or in partnership.
• The Eligible Loan being offset must relate wholly to your primary production business.
• You must hold an Eligible Loan with Suncorp Bank.
• All relevant FMD scheme conditions set by law and the ATO must continue to be met.

If you breach a condition, the ATO can impose significant penalties.

Only an individual person who is a primary producer can open an FMD account.

However, if you’re managing your primary production business with someone else (such as your partner), you can both open separate FMD accounts as individuals, between $1,000 and $800,000 in each.

Companies and trusts cannot open an FMD account. If you are a beneficiary of a primary production trust, you can deposit the money you’re paid by them into an FMD account if you’re eligible. 

For more information about Farm Management Deposit Accounts, you can visit the Farm Management Deposits page on the Australian Government’s website.