Just as seasons and prices fluctuate, so does farm income. Better manage risk, and strengthen your financial future, with our FMD Offset account.
Features of our Farm Management Deposit Offset Account
Manage your exposure to natural disasters, climate and market variability by allowing you to set aside pre-tax income from primary production in years of high income which can be drawn on in future years when most needed.
The FMD Offset Account balance will be offset against the eligible Rural Bank Variable Rate Loan.
The capital held in an FMD Offset Account can assist to reduce your primary production business funding costs.
No notice period if access to FMD funds is required.
One low upfront linkage fee per FMD Offset Account.
Eligible to primary producers with a Rural Bank Variable Rate Term Loan. Eligibility criteria apply.
How do I apply or find out more?
Farm Management Deposit
With our fixed rate and variable rate Farm Management Deposit (FMD), you can set aside pre-tax income from your profitable years and earn interest on it – so you can have it available when you most need it.
The following interest rate is used to calculate the discounted interest on eligible Term Loan accounts that are linked to a Rural Bank FMD Offset Account. For more information refer to clause 23.4 of the Rural Bank Banking Accounts Terms and Conditions.
|Offset type||Interest rate|
|Full offset*||0.00% p.a.|
*The term loan being offset must have a variable rate and the purpose for which must relate wholly to a primary production business carried on by the FMD owner either directly as a sole trader or through a partnership.
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Some of the key requirements are summarised below. For further information on FMD Offset eligibility criteria and conditions refer to the Australian Government Department of Agriculture and Water Resources and also the Australian Taxation Office.
- The FMD owner must be an individual carrying on a primary production business in Australia with an off-farm taxable income of less than $100,000 in the financial year they make the deposit.
- The FMD Offset Account can only be opened in the name of one individual and on behalf of only one individual.
- The total of all FMD’s held in the FMD owner’s name (with Rural Bank and other FMD providers) must not exceed $800,000.
- An FMD must be deposited for a minimum of 12 months to receive or retain any applicable taxation benefit unless the primary producer:
- Has received primary producer Category C recovery assistance following a natural disaster under the National Disaster and Recovery Arrangements; or
- Is affected by a rainfall deficiency (severe drought) for at least six consecutive months.
Specific FMD Offset legislative criteria
- The FMD Offset Account can only be linked to an eligible loan of the FMD owner or their partnership (excludes companies, trusts or a person who is not the FMD owner) where the linked loan is used wholly for the purpose of the primary production business.
- If the FMD Offset Account is linked to a loan that does not wholly relate to a primary production business that the FMD owner (or a partnership of which the owner is a partner) carries on, the FMD owner is liable to an administrative penalty of up to 200% of the offset benefit.
- An FMD Offset Account can only be linked to one loan at any particular time.
Specific FMD Offset Rural Bank criteria
Clients must seek independent financial advice to ensure they meet the legislative requirements and understand their obligations to comply and the applicable penalties for non-compliance and wider taxation implications.
A Rural Bank FMD Offset Account can only be linked to an eligible Rural Bank Variable Rate Term Loan where the loan purpose must be wholly related to a primary product business carried on by the FMD owner either directly as a sole trader or through a partnership.
The combined value of Rural Bank FMD Offset Accounts may not exceed the lower of (i) 50% of the Borrower's Term Loans’ facility limit; or (ii) $1,000,000 per Borrower; without agreement from Rural Bank.
Note, an FMD Offset Linkage fee will apply for each FMD Offset Account that is linked to an eligible Rural Bank Term Loan as outlined in our Schedule of Fees and Charges.
Things you should know
Primary producers should be aware that using your FMDs to offset your farm business debt may have wider taxation implications, such as reducing the level of tax deduction that can be claimed against the interest expenses on farm business loans. It is highly recommended you speak to the Australian Taxation Office or a suitably qualified financial adviser or accountant when considering your options.
For FMD Offset Accounts, interest rates quoted are subject to change without notice. Special legislative requirements must be adhered to and Rural Bank eligibility criteria applies. Before applying for a Rural Bank FMD Offset Account you should consult your taxation adviser to ensure you meet legislative requirements, understand your obligation to comply and the applicable penalties for non-compliance and wider taxation implications and read the Banking Accounts Terms and Conditions. Terms, conditions, fees and charges apply. Full details are available on application by phoning our Customer Service Centre on 1300 660 115, online or by visiting your local branch. All information is subject to change. Products are issued by Rural Bank.