Tax concession escalates on farm management deposits
The country’s most profitable farmers avoided paying tax on another $494 million that they tipped into farm management deposits before the end of the 2003/04 tax year. Some 43,300 farmers now have $2.62 billion on deposit with banks offering FMD accounts, according to figures from the Department of Agriculture, Fisheries and Forestry. An FMD is fully tax-deductible when it is made and farmers earn, and pay tax on, market rates of interest during the life of the deposit. When it is withdrawn, a FMD forms part of a farmer’s taxable income that year and the effect is to defer taxable income from good years to bad ones. The number of farmers using the scheme has risen from 7,500 in June 1999 to 43,309 in June 2004, and total deposits have increased from $280 million to $2.62 billion. Total deposits have continued to increase steadily through the drought from $2.1 billion in June 2002, to $2.48 billion in June 2003 and to $2.62 billion this year. The Productivity Commission estimate the value of the tax concession to farmers at $500 million.