National Australia Bank (NAB), Media Release, 22 April 2024
NAB is encouraging primary producers to mark 28 June as a critical date if they’re considering or already utilising Farm Management Deposits (FMDs) as part of their tax planning this financial year.
The FMD Scheme is designed to enable primary producers to set aside pre-tax income when they’re experiencing prosperous years and use it as a cashflow management tool for financially challenging years.
NAB’s FMD volumes grew 27 per cent in 2023 as agribusiness customers sought to build business resilience. Growth in most states was strong, led by Western Australia with 48 per cent growth, followed by New South Wales with 33 per cent growth, and Victoria with 29 per cent growth.
Latest reporting from the Department of Agriculture, Fisheries and Forestry (DAFF) shows total holdings in the FMD Scheme across Australia were around $5.97 billion at 29 February 2024, up from $5.84 billion reported in February 2023.
NAB has launched a digital rollover feature for customers with FMDs. It enables customers to manage their rollover online within seven days inclusive of maturity date through Internet Banking or the NAB app. The feature allows customers to modify their term or add and withdraw funds securely with just a few clicks.
NAB’s Executive for Regional and Agribusiness Khan Horne said Friday, 28 June, is the final business day to deposit into a FMD account for the 2023-24 financial year.
“Any deposit made into a FMD after that date will fall into the 2024-25 financial year,” Mr Horne said.
“An FMD allows primary producers to claim a tax deduction for production income deposited into a FMD in the income year they have earned it. On the flipside, when you withdraw funds from an FMD, that’s treated as taxable income in the year you withdraw it.
“The FMD scheme is an income smoothing tool that is unique to Australian agriculture. FMDs can be made and withdrawn in any increment ranging from $1,000 to $800,000.”
Mr Horne said with the end of financial year fast approaching, producers are encouraged to start tax planning early and discuss their position with their professional advisers including bankers.
“Whether it be FMD planning or equipment finance drawdowns for delivery of equipment, end of financial year is such a crucial time to plan for. Get in early, be prepared, and don’t leave it to the last week of June.”
FMDs and EOFY planning are the focus of NAB’s latest Regional and Agribusiness podcast, listen here: https://business.nab.com.au/new-ra-outlook-podcast-making-the-most-of-farm-management-deposits/.
For more information about FMDs visit: https://www.nab.com.au/business/business-bank-accounts/specialised-accounts/nab-farm-management-deposit.
