Minister for Rural Finance David Littleproud has called on banks to deliver on their promise to allow farmers to use their Farm Management Deposits as an offset account.
Farm Management Deposits are an account in which farmers deposit money during good years. The money deposited is removed from the farmers’ taxable income for that year. When the money is later drawn out, it is then treated as taxable income that year. At the end of February 2019, there were just less than 50,000 FMDs in Australia holding a total of $5.376 billion. Offsetting has the potential to save farmers thousands of dollars each year in interest.
“I argued long and hard for the money held in Farm Management Deposits to be counted as an offset against farmers’ borrowings, and finally last year the banks agreed to do this,” Minister Littleproud said.
“Now as we come up to the end of the financial year, farmers are making important decisions and we need to know what products are on offer and how the offsets will work.
“What do these products look like? What have the banks done?
“Some banks have come out with offers, which is fantastic, and some have not.
“For the farmers out there who have had a reasonable season, and for those who are suffering during drought and will draw down on their deposits, this is crucial information.
“Farmers need to know what these offers are now so they can plan for the coming year.”
Background: For further statistics on Farm Management Deposits, see here http://www.agriculture.gov.au/ag-farm-food/drought/assistance/fmd/statistics#2019