The Farm Management Deposit (FMD) scheme which allows farmers to set aside up to $800,000 of pre-tax income per year will undergo a review to consider if the scheme had made farmers more resilient or if it’s being used for tax planning. Agriculture minister David Littleproud said the review of the scheme is part of a wider evaluation of the federal government’s drought response.
The minister suggested the review could find the scheme needed to be amplified at the expense of other government-funded drought programs. In 2015, the scheme’s deposit cap was raised from $400,000 to $800,000, however, the deposit threshold is not being considered in this review. Since 2015, the number of FMD accounts has risen by around 2,200 while the value of deposits rose from $3.6bn in the quarter to March 2015 to $5.3bn in the December 2020 quarter.
The National Farmers’ Federation is calling on as many farmers as possible to participate in the review, calling the scheme “a vital risk management tool” while others have called FMDs a tax shelter. The review is the sixth federal review of the scheme since 2006.