Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig, and Assistant Treasurer, Senator Mark Arbib, have welcomed the passing of legislative changes to the Farm Management Deposits (FMD) Scheme that will provide additional assistance to Australian primary producers affected by natural disasters, including those hit by the devastating 2011 summer floods and Cyclone Yasi.
Through the FMD Scheme, individual primary producers are encouraged to set aside pre-tax income in good years for use in low-income years. FMDs provide primary producers with tax benefits if kept for at least 12 months, as tax is not payable on the income until the financial year it is withdrawn, when primary producers may benefit from a lower marginal tax rate.
Minister Ludwig said the changes to the FMD Scheme will mean that eligible primary producers can access their FMDs early when they have been affected by a natural disaster, without losing their taxation benefit, to help with the rebuilding of their business.
"Eligible primary producers, who are accessing recovery assistance under a Natural Disaster Relief and Recovery Arrangements primary producer Category C measure, will now be able to withdraw their FMD early and retain their taxation benefit," Minister Ludwig said.
"This change will apply to FMDs withdrawn on or after 1 July 2010, which will enable those primary producers hit hard by Cyclone Yasi and the floods that affected numerous communities across Australia earlier this year, to benefit from this change."
Other changes to the FMD Scheme will allow primary producers to hold FMDs simultaneously with more than one provider, allowing primary producers to receive the most competitive return on their FMDs.
"This is good news for primary producers experiencing improved seasonal conditions, who wish to get the best rate for their FMDs," Minister Ludwig said.
"As with all tax matters, I encourage people to consult the Australian Taxation Office or their tax adviser to confirm eligibility."
Assistant Treasurer Mark Arbib said ordinarily, financial institutions forward unclaimed moneys to the Commonwealth when a deposit has been left untouched for seven years.
"These amendments mean that the moneys in a FMD are only forwarded to the Commonwealth in such circumstances where the financial institution is unable to contact the primary producer," Mr Arbib said.
For more information about the FMD Scheme and the legislative changes visit the Department of Agriculture, Fisheries and Forestry website at www.daff.gov.au/fmds
For more information on the tax treatment of these changes visit the Australian Taxation Office website at www.ato.gov.au