FHA off-farm income offset

​​​What is off-farm income?

Off-farm income is any amount earned, derived or received that was not produced by an activity of the farm enterprise.

Examples of off-farm income include (but are not limited to)

  • contracting such as harvesting or fencing
  • off-farm employment
  • agistment income
  • interest payments
  • rental income.

One exception is income from compensation payments which cannot be included in the offset.

Generally, DHS will assess each source of income separately.

See the Agistment Income Factsheet for more information.

Don’t self assess! Call DHS on the Farmer Assistance Hotline: 132 316

The Australian Government Department of Human Services (DHS) processes FHA applications and can help you to assess your situation.

Farm Household Allowance (FHA) assists eligible farmers and their partners who are experiencing financial hardship to improve their long-term financial situation. FHA provides up to three years of income support, which is designed to help recipients meet basic household needs and is an opportunity to take steps to improve their circumstances.

FHA is paid fortnightly at a rate equivalent to Newstart Allowance (or Youth Allowance for those under 22 years of age).

Eligibility Basics

You must:

  • be a farmer* or the partner of a farmer
  • meet an income and assets test
  • meet residence requirements
  • be willing to undertake a Farm Financial Assessment
  • be willing to enter into a Financial Improvement Agreement to help you improve your financial circumstances.

*If you are the farmer you must contribute a significant part of your labour and capital to the farm enterprise based on specific criteria.

Income assessment

The amount of income you earn will determine your rate of FHA. To receive FHA, your income must be below the allowable
income limits set for Newstart Allowance.

If you earn off-farm income, you may be eligible for the off-farm income offset.

The off-farm income offset

The off-farm income offset recognises that farmers experiencing financial hardship are often forced to rely on off-farm income to
support the farm enterprise rather than using that income for their own support.

In these circumstances, the interest component of farm losses can be used to offset an individual’s off-farm income where they
meet certain criteria.

When can the offset be used?

Off-farm income can be excluded from the income assessment where you meet the following requirements:

  • interest is payable on a loan related to the farm enterprise
  • the loan is with a commercial lender (e.g. a bank) and payable under a written contract
  • the loan was entered into at least one year prior to claiming FHA
  • the lender is independent from you and your partner and holds a farm asset of the farm enterprise as security for the loan
  • the ordinary income of the farm enterprise for the financial year is less than zero
  • you can demonstrate that your loan contract cannot be renegotiated.

What is the maximum allowable deduction?

The amount of off-farm income which can be offset against interest repayments is called the ‘allowable deduction’. The maximum allowable deduction is $80,000 for a tax year. If you and your partner both apply for FHA, you can both claim a portion of the deduction, but the total between you cannot exceed $80,000.

The allowable deduction is also limited by the total of the farm enterprise loss and the amount of interest owing. The interest portion cannot include an amount for the repayment of the principal.

How do I apply for the offset?

You do not need to apply for the offset.

DHS will automatically assess your circumstances based on the information you have provided in your FHA claim form and contact you if you need to provide further information.

If you think you may be eligible, you can contact DHS on the Farmer Assistance Hotline 132 316.

What documents do I need?

After you submit your FHA claim form, DHS will request particular documents to support your application as relevant to your particular circumstances.

To use the off-farm income offset you will need evidence that you cannot renegotiate the amount of interest payable during the tax year – such as (but not limited to):

  • a written document from the commercial lender indicating:
    • a lower interest amount could not be negotiated
    • that you are under farm debt mediation, business debt mediation or asset management, or
    • default and/or threatening foreclosure
  • a statement from your financial adviser or counsellor that a negotiation has taken place with the commercial lender and the lowest possible repayments are in place.

Need more information or help?

  • Call the Farmer Assistance Hotline: 132 316
  • Speak to your Financial Advisor or Rural Financial Counsellor
  • FHA Guidelines are available at agriculture.gov.au/fha

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