A financial institution can include a Farm Management Deposit (FMD) product in its product range if it meets the Australian Government's prudential requirements or is government-guaranteed. This includes most banks, credit unions and building societies.
Financial institutions offering FMDs must comply with the FMD Scheme’s terms and conditions under Division 393 of the Income Tax Assessment Act 1997, Subdivision 398-A of the Tax Administration Act 1953, Division 393 of the Income Tax Assessment Regulations 1997 and Part 7A of the Tax Administration Regulations 1976. Subdivision 393-B of the Income Tax Assessment Regulations 1997 defines a financial institution for the purposes of the FMD Scheme.
The Australian Prudential Regulation Authority (APRA)website has information on its prudential requirements, including a list of Authorised Deposit–taking Institutions.
When offering FMDs, financial institutions must provide clients with a mandatory statement on the scheme’s conditions (the statement is commonly included in the Product Disclosure Statement). Details that financial institutions must include in this statement can be found in Schedule 1C of the Income Tax Assessment Regulations 1997. Financial institutions also hold the responsibility for ensuring that the details in the statement are kept up to date.
Reporting on Farm Management Deposits to the Department of Agriculture and Water Resources
All financial institutions offering FMDs must report to the Department of Agriculture and Water Resources (the department) on their FMD holdings. A report for a month must be submitted within 10 days after the end of the month. For example, the report for May 2016 is due to the department no later than close of business on 10 June 2016.
If a financial institution ceases holding FMDs, it is no longer obliged to submit FMD reports to the department. However, the financial institution’s obligation to submit FMD reports will resume if it holds FMDs again in future.
Please contact us to request more information on the reporting requirements or for further information on the FMD Scheme.
Reporting Farm Management Deposits to the Australian Taxation Office in the Annual Investment Income Report
All financial institutions offering FMDs must submit details of those FMDs in an Annual Investment Income Report (AIIR) to the Australian Taxation Office (ATO) every financial year within four months of the end of that financial year (for example, the AIIR for 2015–16 must be submitted to the ATO by 31 October 2016).
The FMD details submitted in the AIIR, such as the PIN, the ANZSIC code, and the postcode, must exactly match the details submitted in the monthly FMD returns to the Department of Agriculture and Water Resources.
For more information about AIIR reporting obligations, visit the ATO website.
FMD Loan Offset Accounts
Primary producers can use their FMDs to offset farm business loans. Financial institutions that have chosen to offer FMD offset account products can determine how the accounts are set up and operated, subject to them meeting legislative requirements.
While the relevant legislation describes the character of an FMD account, it is up to financial institutions to design their FMD products according to their needs (as long as these meet any legislative requirements). The supporting explanatory memorandum to the legislation also provides information on the FMD loan offset arrangements. The ATO will be providing further guidance on appropriate FMD loan offset products and this webpage will provide a link to this information when it becomes available.
FMDs and the unclaimed moneys provisions
On 30 May 2014, FMDs were permanently exempted from the unclaimed moneys provisions contained in the Banking Act 1959. The exemption was enacted through the Tax Laws Amendment (2014 Measures No.1) Act 2014, which received Royal Assent on 30 May 2014.