Super call for farm management deposit
Pastoralists and Graziers Association has called for farm management deposits to be rolled into superannuation at a reduced tax rate when a FMD holder retires from the agricultural industry.
PGA president Tony Seabrook said farmers, who are the least likely of all industries to invest in superannuation, needed extra incentive to invest for retirement.
The FMD Scheme assists primary producers to deal more efficiently with fluctuations in cash flows.
It is designed to increase the self-reliance of Australian primary producers by helping them manage their financial risk and meet their business costs in low-income years by building up cash reserves.
The scheme allows eligible primary producers to set aside pre-tax income from primary production in years of high income, which they can draw on in future years when they need it, such as for restocking or replanting when conditions start to improve.
Income deposited into an FMD account is non-taxable in the financial year the deposit is made. It becomes taxable income in the fiscal year in which it is withdrawn.
In 2016, extra incentives were put in place for farmers to set aside cash for a rainy day by a doubling of the cap on deposits from $400,000 to $800,000, allowing early access during times of drought and associated financial stress.
But Mr Seabrook said more incentive was needed to ensure retiring farmers were not a financial burden to their families.
“Superannuation is not well suited to farmers as it limits access to these funds and priority always must be given to saving money for the hard times most will encounter during their careers,” he said.
For York farmers David and Christine Boyle, the topic of how they plan to spend their retirement comes up frequently.
The Boyles, who run their mixed enterprise farm with their son Simon and daughter-in-law Carrie, said when it came time to retire, they did not want to have to be a financial burden to their children, who had the expenses of continuing to expand the farm business, as well as pay for their children’s education in the future.
Mr Boyle said the couple planned to move to the coast in their retirement and would like to have extra financial security when exiting the industry without disadvantaging the next generation.
“Retirement should be part of options factored into FMD rules because most farmers don’t have superannuation,” he said.
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