Tax deductions for primary producer deposits
The Farm Management Deposits (FMD) Scheme allows eligible primary producers to set aside pre-tax income in an authorised deposit account and claim a tax deduction in the year the deposit is made.
Deposited income becomes taxable when withdrawn; special early withdrawal rules apply for natural disasters and drought (subject to conditions).
To be eligible for the FMD scheme, you must be:
- carrying on a primary production business at the time you make a deposit
- an individual (either as a sole trader, a partner in a partnership or a beneficiary of a primary production trust) – companies and trusts are not eligible (Note: FMDs cannot be made jointly with another person or people)
- and have taxable non-primary production income not exceeding $100,000 in the income year you make the deposit
Additional settings:
- a primary producer may hold up to a maximum of $800,000 in FMDs
- a primary producer can have any number of accounts with multiple Authorised Deposit-taking Institutions (ADIs)
- the deduction claimed for an FMD in the financial year it is made cannot exceed the primary producer’s taxable primary production income for that year
- to retain the taxation benefits an FMD must be held for at least 12 months with an ADI
Exemptions to the 12-month rule apply where a primary producer has received Category C natural disaster recovery assistance or is affected by a rainfall deficiency for at least six consecutive months (subject to specified criteria and evidence, e.g.
FMD Rainfall Analyser/Rainfall Deficiency Report).
The Australian Taxation Office administers FMD tax provisions.
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Last updated: 12 February 2026