17 - Net farm management deposits or withdrawals 2012

This question is for primary producers only

Did you make Farm Management Deposits (FMD) or have repayments during 2011-12?

NO	Go to question 18 - Capital gains, or return to main menu Individual tax return instructions
YES	Read below.

Definitions

• An FMD provider is an institution that accepts farm management deposits.
• An FMD owner is a person who makes an eligible farm management deposit.

If you received a distribution of income as a beneficiary of a trust that carried on a business of primary production, you are considered to be carrying on a business of primary production and therefore eligible for the farm management deposit tax concessions.

If you are the beneficiary of a primary production trust that made a loss, you are considered to be in a business of primary production, and therefore eligible for the farm management deposit tax concessions, if:

• the trustee of the primary production trust nominated you as a chosen beneficiary, or
• you are the beneficiary of a fixed trust.

You need to know

There have been changes to the law in 2011-12 that affect FMD owners. From 1 July 2010, FMD owners can access their deposits early when affected by certain natural disasters, without losing their concessional tax treatment (see Natural disaster assistance below).

For more information about these changes go to Farm management deposits - early access for primary producers.

Deductible deposits

Your 2011-12 farm management deposits are deductible if all of the following are satisfied:

• Your 2011-12 taxable non-primary production income is $65,000 or less.
• You are carrying on a primary production business at the time of making the deposit.
• If you stopped carrying on a primary production business during the year, you recommenced carrying on the business within 120 days.
• Your individual deposits are not less than $1,000 and total deposits not more than $400,000.
• Your individual deposits do not cause your total FMDs to exceed the $400,000 account limit.
• Your individual deposits do not exceed the amount of your 2011-12 taxable primary production income.
• You held the deposits for at least 12 months or qualify for one of the early repayment exceptions below.

Non-deductible deposits

A deduction cannot be claimed for deposits made in the 2011-12 year if:

• the FMD owner became bankrupt or ceased to carry on a primary production business (including a business that was carried on in a partnership or as a beneficiary of a trust) for 120 days or more, or
• the FMD owner passed away.

If this applies to you or you are the executor of a deceased estate:

• All deposits must be repaid.
• Include as assessable income any repaid deductible deposits.
• Do not claim a deduction for deposits made after the business ceased or any deposits made in 2011-12 by the now deceased FMD owner.

Deposits repaid within 12 months

You cannot claim a deduction for any part of a deposit repaid within 12 months.

If you withdrew the deposits early (and don't qualify for one of the early repayment exceptions below) and made the deposit in this income year, do not include this amount as a deposit or repayment. If, however, you claimed the deduction in a prior income year, request an amendment of your assessment for that income year.

If you withdrew part of your deposit early, you may continue to claim a deduction for that part of the deposit that was held for a full 12 months or more (provided that your total deposits remain $1,000 or more).

Early repayment' exceptions

If you are eligible to claim the exceptional circumstances and/or the natural disaster exceptions (below), you can access your deposits early without losing your concessional tax treatment.

If you claim one of the exceptions below, you cannot claim a deduction for deposits you make in 2011-12 after the early repayment.

Exceptional circumstances (EC)

You may be eligible to claim this exception if you:

• made the original deposit before the relevant EC declaration was made
• were eligible to be issued an exceptional circumstances certificate relating to your primary production business, at the time of the deposit repayment,
• withdrew the deposit in the income year after you made the deposit
• obtained an EC certificate no later than three months after the end of the income year in which the repayment of the deposit was made.

For more information about exceptional circumstances or to find out whether your area was declared to be in exceptional circumstances:

• go to the website of the Department of AgricultureExternal Link
• 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.

Natural disaster assistance

You may be eligible to claim this exception if;

• you made the original deposit before a natural disaster declaration was made
• your primary production business received Natural Disaster Relief and Recovery Arrangements (NDRRA) Category C assistance, and
• you withdrew the FMD deposit early, after having received the assistance.

For more information about the natural disaster exception, go to Department of AgricultureExternal Link

To confirm that your business is eligible or has received this type of assistance, review your disaster assistance documents.

Repayments are assessable income

You must include as assessable income, in the year in which they are repaid, repayments of previously deducted deposits.

Do not include as assessable income repayments of deposits that you did not claim as a deduction.

When you receive a repayment, you are considered to have been repaid any non-deductible amounts first.

Transfers to a new provider

You do not need to return as assessable income transfers of the same deposit amount from one FMD provider to another. Examples include:

• electronic transfers from a liquidated authorised deposit-taking institution (ADI) to a new ADI
• transfers by the Australian Prudential Regulatory Authority under the Financial Claims Scheme.

If you have any questions about the tax consequences of farm management deposits or repayments, see Farm management deposits scheme or phone 13 28 66.

Answering this question

What you may need

• Your account statement from your FMD provider.
• Information for primary producers 2012 (NAT 1712)
• Farm management deposits scheme (NAT 8776)

Step 1

Add up deductible deposits you made in 2011-12.

Write the total at D item 17 on your tax return.

Step 2

Add up early repayments you withdrew during 2011-12 that qualify for an exceptional circumstances exception.

Write the total at C.

Step 3

Add up early repayments you withdrew during 2011-12 that qualify for a natural disaster exception.

Write the total at N.

If you made the deposit in this income year, ensure you have included this deposit at D above.

If you withdrew a deposit made in the last income year and claimed the deduction, you do not need to lodge an amendment.

Step 4

Add up FMDs you held for 12 months or more and were repaid during 2011-12. Write the total at R

Step 5

Add up the amounts you showed at C, N and R, and take away the amount you showed at D.

Write the answer at E. If the amount is negative (your deductible deposits exceed your total repayments), print L in the Loss box at E.

Record keeping

You will need to keep the following documents:

• statement of account from your FMD provider
• exceptional circumstances certificate
• proof that you received Natural Disaster Category C assistance for primary producers.

Where to go next go to question 18 - Capital gains. return to main menu Individual tax return instructions go back to 16 - Deferred non-commercial business losses