By Jodi Bradley BCom CA, Director, Porters CA, Albany. Reviewed 28 September 2026.
Farm management deposits (FMDs) let primary producers set aside income in a good year and bring it back into their tax return in a leaner one. The deposit is tax deductible in the year you make it, as long as it stays on deposit for at least 12 months, and is taxed in the year you withdraw it. Used well, FMDs let you bank the benefit of a good season, save tax and build a safety net for difficult years.
You place the money on deposit with an authorised deposit-taking institution. Your business banker should be able to set this up, but opening the account can take time, so plan ahead.
The deposit is deductible in the year you make it. If you withdraw it within 12 months, you lose the deduction for that amount unless an exception applies (see below). After 12 months, withdrawals are included in your assessable income in the year you take the money out.
That lets you move income from a strong year into a year when you need the funds, for example:
Primary producer income averaging also smooths your tax, but FMDs give you far more control over timing.
Tip: when you withdraw, consider leaving a small balance so the account stays open for next time. It saves the frustration of opening a new account.
Sometimes your circumstances or the tax law will change, and it makes sense to withdraw early or not claim the deduction. We can model that with you before you decide.
To make a deductible deposit, you must:
The $100,000 non-primary production income test is a common barrier for farmers who also earn contracting, employment or investment income, so check it before you deposit.
If you stop carrying on a primary production business for more than 120 days, your FMDs have to be repaid. Plan for this if you are thinking of selling or leasing out your whole farming operation.
Yes, but you generally lose the tax deduction for the amount withdrawn. The ATO allows early access without losing the deduction in some situations, including:
Yes, if your bank offers it. An FMD can be linked to an eligible primary production business loan held by you, or by a partnership you are a partner in, through an offset arrangement. The offset works against one loan at a time, and both accounts must be with the same institution.
An offset lets you keep the tax benefit of the FMD while the balance reduces the interest charged on the linked farm loan. When you negotiate with your lender, ask them to take your FMD balance into account in assessing your financial position.
Both are valuable wealth and tax management tools, and many farmers use both.
Superannuation is a long-term way to reduce tax permanently and build wealth, but the money is locked away until retirement. Concessional (deductible) contributions are capped at $32,500 for the 2026–27 year, and unused cap amounts from earlier years may be available in some circumstances.
FMDs are a shorter-term but larger tool for managing the timing of your farm income. You can hold up to $800,000 per person and choose when to draw on it, so the planning window is wide.
The guidance above is general in nature. We recommend getting advice before you deposit and again before you withdraw. Our farming clients are looked after by Jodi Bradley from our Albany office, and we would be pleased to take you through how FMDs could help you save tax, manage risk and build wealth.
Book an initial consultation, call our Albany office on (08) 9842 2511, or read more about our services for farm and regional clients. The ATO has more detail on the farm management deposits scheme.
This article is general information based on the law as at 28 September 2026. You should seek advice specific to your circumstances.