Private ruling: Deductions
Date of advice: 17 June 2025
Published: 11 August 2025
Ruling period: Year ended DD MM 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Are you entitled to a deduction in the relevant income year for the full amount of the farm management deposit (FMD) under Division 393 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Having considered your circumstances and the relevant facts, it is accepted that you requested an FMD in the relevant income year and that you met the conditions of a 'farm management deposit' and all relevant requirements outlined in the table in section 393-35 of the ITAA 1997. The Commissioner will allow a deduction in the relevant income year for the amount of the deposit.

Relevant facts and circumstances: You are an individual and beneficiary of a trust which carries on a business of primary production in Australia. You received a trust distribution comprising of primary production income for the relevant income year. You earned less than $100,000 in other non-primary production income during the income year. You did not hold any other FMD prior to the relevant income year. On DD MM 20XX, you applied to a FMD provider to open a FMD. The deposit application form was completed in full and submitted on same date. The FMD provider attempted to direct debit the funds for the FMD from an external account, but the transaction was dishonoured due to insufficient funds. You intended for the funds to be drawn from your account held with the FMD provider. They did not correct the error until the next income year. The FMD provider wrote to you in a letter advising of the error and explaining that they were not able to backdate the commencement of the FMD to the relevant income year. They advised that as the funds were received in the income year, the commencement date would be in that income year. You provided a copy of the letter with your application.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 393-5 | Income Tax Assessment Act 1997 section 393-20 | Income Tax Assessment Act 1997 section 393-35