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17 Net farm management deposits or repayments 2023

Complete question 17 to report net farm management deposits and withdrawals. Primary producers only.

Last updated 24 May 2023

Things you need to know

This question is for primary producers only.

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 either:

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

A farm management deposit (FMD) provider is an institution that accepts farm management deposits.

An FMD owner is a person who makes an eligible farm management deposit.

FMD owners can access their deposits early when affected by certain natural disasters or drought, without losing their concessional tax treatment.

Find out about:

For further information see Farm management deposits scheme.

Deductible deposits

Your 2022–23 farm management deposits are deductible if you satisfy all of the following:

  • your 2022–23 taxable non-primary production income is $100,000 or less
  • you were 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 such a business within 120 days
  • your individual deposits were not less than $1,000 and total deposits not more than $800,000
  • your individual deposits did not cause your total FMDs to exceed the $800,000 account limit
  • your individual deposits did not exceed the amount of your 2022–23 taxable primary production income
  • you held the deposits for at least 12 months or qualify for the early repayment exceptions.

Non-deductible deposits

You can't claim a deduction for deposits made in 2022–23 if during the year the FMD owner:

  • became bankrupt or ceased to carry on a primary production business (including a business that was carried on by a partnership or by a trust) for 120 days or more, or
  • died.

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 deposits that were previously deducted
  • do not claim a deduction for deposits you either
    • made after the business ceased
    • made in 2022–23 by the now deceased FMD owner.
     

Deposits repaid within 12 months

You can't claim a deduction for that part of a deposit repaid within 12 months.

If you withdrew a deposit early (and don't qualify for either of the early repayment exceptions) 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).

Natural disaster assistance and 'early repayment'

You can access your deposits early, without losing your concessional tax treatment, if you are eligible to claim the natural disaster assistance exception. That is, 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 you received the NDRRA Category C assistance.

To confirm that your business is eligible, or has received this type of assistance, review your disaster assistance documents. For more information about this natural disaster exception, see Farm management depositsExternal Link.

If you claim the exception, you cannot claim a deduction for deposits you made in 2022–23 after the early repayment.

Drought and 'early repayment'

You can access your deposits early, without losing your concessional tax treatment, if you are eligible to claim the drought exception. You are able to claim this exemption if:

  • for 6 consecutive months an area of your primary production property has been affected by rainfall that is within the lowest 5% of recorded rainfall for that area of your property
  • publicly available rainfall records held by the Bureau of Meteorology confirm this low rainfall for the period of 6 consecutive months preceding the month in which the repayment is made, and
  • for that 6 month period
    • you held the deposit
    • you are not involved solely in primary production industries like fishing, pearling, tree felling or tree transporting.
     

You can determine if your primary production property meets the rainfall requirements at a particular time by using the FMD Rainfall AnalyserExternal Link on the Department of Agriculture, Fisheries and Forestry website.

To obtain your concessional tax treatment you need to ensure that any repayment of your deposit occurs before the end of the month immediately following that 6 month drought period.

If you claim the exception, you cannot claim a deduction for deposits you made in 2022–23 after the early repayment.

Repayments are assessable income

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

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.

Reinvesting, extending, or transferring deposits

You do not need to include as assessable income:

  • reinvested deposits, or extensions of the term of deposits with the same provider
  • merged deposits provided certain conditions are met
  • transfers of the same deposit amount from one FMD provider to another; examples of this 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.
     

Deceased estate

If you are looking after the estate of someone who died in 2022–23, you cannot claim a deduction for any deposits they made in 2022–23. Any farm management deposits held at the time of death are assessable income in 2022–23 to the extent they were previously claimed as a deduction.

Deductions in earlier years are not affected even when the person dies within 12 months of making the deposit.

For further information see Farm management deposits scheme or contact us.

Did you make farm management deposits (FMD) or have repayments during 2022–23?

No

Go to question 18 Capital gains 2023, or return to main menu Individual tax return instructions 2023.

Yes

Read on.

What you need to answer this question

You will need the following to answer this question:

Completing your supplementary tax return

To complete this question, follow the steps below.

Step 1

Add up deductible deposits you made in 2022–23.

Write the total at question 17– label D in your tax return.

Step 2

Add up early repayments you withdrew during 2022–23 that qualify for the natural disaster or drought exception. Write the total at label N.

If you made the deposit in 2022–23, ensure you have included this deposit at question 17 – label D above.

If you withdrew in 2022–23 a deposit you made in 2021–22 for which you claimed the deduction, you do not need to lodge an amendment to your 2021–22 tax return.

Step 3

Add up the FMDs that you held for 12 months or more and that were repaid during 2022–23. Write the total at label R.

Step 4

Add up the amounts you showed at labels N and R, and subtract the amount you showed at label D.

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

Small business income tax offset

If any part of the amount you show at label E relates to a business you carry on as a sole trader and you are a small business entity, you may be entitled to the small business income tax offset. See instructions at question P8 Small business income tax offset, Business income and expenses in the Business and professional items 2023.

If any part of the amount you show at labels N or R relates to a partnership or trust that is a small business entity, you may be entitled to the small business income tax offset. See instructions at question 13 Partnerships and trusts 2023.

We use these amounts to work out your entitlement to the small business income tax offset.

Where to go next

QC71994