Farm Management Deposit Offset Account

Just as seasons and prices fluctuate, so does farm income. To better manage risk and strengthen your financial future, our new FMD Offset Account works hard to give you more options to manage your farm finances.

This means you can now use your FMD balance to offset a farm term loan, which may reduce your interest costs.

If you’re an eligible primary producer with an eligible Rural Finance Variable Rate Term Loan, our Farm Management Deposit (FMD) Offset Account can help you 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. Plus the capital held in an FMD Offset Account can assist to reduce your primary production business funding costs.

Additional benefits of the Rural Finance FMD Offset Account include:

  • 100% of the FMD Offset Account balance will be offset against the linked Rural Finance Variable Rate Loan
  • No notice period if access to FMD funds is required
  • One low upfront linkage fee per FMD Offset  Account

All deposits are covered by the Australian Government Financial Claims Scheme^.

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.

FMD Offset eligibility criteria

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 Finance 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 Finance FMD Offset Account can only be linked to an eligible Rural Finance 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 Finance FMD Offset Accounts linked to eligible Rural Finance Variable Rate Term loans may exceed $1,000,000 per borrower upon agreement with Rural Finance.

Note, an FMD Offset Linkage fee will apply for each FMD Offset Account that is linked to an eligible Rural Finance Term Loan as outlined in our Schedule of Fees and Charges.

FMD Offset Interest Rates

Rural Finance FMD Offset Account Offset Type Discounted Offset Rate

The rate reduction that is applied to the eligible Term Loan interest rate when calculating the FMD Interest Offset Amount. The FMD Offset Amount is offset against the interest payable on the eligible Term Loan on the last day of each month.

This amount is calculated using the end of month FMD Offset Account balance multiplied by the applicable interest rate (the eligible Term Loan interest rate reduced by the Discounted Offset Rate).

For more information refer to clause 2.7.1 of the Rural Finance Farm Management Deposit Offset Account Terms and Conditions

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.

For further details please contact your local Rural Finance office.

We’re ready to help

We have a network of offices across regional Victoria operated by Agribusiness Relationship Managers and experienced people who understand farming and finance.

Contact your local Rural Finance office to learn more about our FMD Offset Account and loan products.

 

^Deposits with Rural Finance are covered by the Financial Claims Scheme. The account holder may be entitled to payment under the Financial Claims Scheme. Payments under the Scheme are subject to a limit for each depositor. Information about the Financial Claims Scheme can be obtained from the APRA website at www.fcs.gov.au and the APRA hotline on 1300 55 88 49.

Products are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879 and distributed by Rural Finance – A Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879. For Farm Management Deposit Offset Accounts, special legislative requirements must be adhered to and Rural Finance eligibility criteria applies. Before making any investment decision you should consider your situation, 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 Rural Finance Farm Terms and Conditions available by phoning the Rural Finance Customer Service Team on 1300 796 101, online at http://www.ruralfinance.com.au, or by contacting your local Agribusiness Relationship Manager.