Farm Management Deposits


A Farm Management Deposit (FMD) is  a risk-management tool to help primary producers deal with uneven profit and is a bank account similar to a term deposit. FMDs are available for use by individuals who receive income from a business carrying on a primary production enterprise and that individual has non-primary production (off farm) income of less than $100,000. The total amount of funds that can be held in an FMD at one time is $800,000 per individual and separate deposits of differing amounts can be held with multiple banking institutions.

An FMD must be held on deposit for a minimum of 12 months for a tax deduction to be claimed in the name of the individual holder. Deposits can be withdrawn after the 12 months have elapsed, and will be assessable as primary production income on withdrawal. 

Why use FMD's

FMDs are a useful tax planning tool that can be used to delay tax liabilities in the year the deposit is made until the year the deposit is withdrawn. The tool allows the income made in a good year to be carried over into a year that the funds may be needed.


FMDs are a useful tax planning tool that can be used to delay tax liabilities in the year the deposit is made until the year the deposit is withdrawn.

Another advantage of holding an FMD is that it allows the primary producer to smooth their taxable income over the years and can be used to control an individuals level of average income for primary production averaging purposes.

As amounts held in an FMD are an asset, this contributes to an individual's wealth. These can be used as equity to allow the individual to gain access to finance, where the institution allows.

Using FMDs can be beneficial for the younger generations as unlike superannuation, the other common tax saving tool , as condition of release on FMDs is a much shorter timeframe therefore access to the funds can be sought when required. 


From 1 July 2016, FMDs can be used as offset accounts against primary production business debt. The business debt must be an eligible loan that is held by the FMD owner or a partnership they are a partner in and must be directly in relation to their primary production business.

The offset can only be used against one loan at a time and both accounts must be held within the same institution. 

Not all institutions are offering this offset account.

Where to make Deposits

You make your deposits with an FMD provider that is an authorised deposit-taking institution, or an entity that has a Commonwealth, state or territory guarantee for deposits.

All banks, building societies and credit unions are authorised deposit-taking institutes. They are regulated by the Australian Prudential Regulation Authority (APRA).

Cancelling your deduction

You must cancel your deduction claim if the deposit is repaid to you in the next year and within 12 months after it was made, unless your deposit was repaid to you because:

  • of certain natural disasters
  • of you experiencing severe drought
  • you
      - die
      - become bankrupt
      - stop carrying on a primary production business for 120 days or more.

If your deduction must be cancelled, you must request an amendment of your assessment for that previous income year. Penalty and interest charges may apply.

Managing Cash Flow

The graph below illustrates how consistent deposits and withdrawals can result in the deduction advancing each year but still using the deposit to assist the farms cash flow



If you have any questions on FMDs please contact a member of the Brentnalls SA Agribusiness team.

If you would like to print this information please click here for PDF format

The information provided in this information sheet does not constitute advice.  The information is of a general nature only and does not take into account your individual situation.  It should not be used, relied upon, or treated as a substitute for specific professional advice.  We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.

Industry Focus

We are not just your accountant, we are your business advisor, here to support you and your business. We specialise within the following industries:

Agribusiness Services
Construction, Building & Allied Services
Medical & Allied Health Services


Please click on one of the following links to access additional resources: 

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