Both Farm Management Deposits and term deposits work in similar ways in that you are offered a fixed rate of interest for a set period (the term). You can watch your interest grow, but you can’t touch it.
However, a Farm Management Deposit (FMD) has some distinct differences:
Eligibility: FMD’s are only for individuals engaged in primary production, with the ATO determining what is considered primary production and other eligibility criteria.
Tax benefits: Funds held in a FMD account will be deducted from your assessable income in the year in which the deposit is made. Withdrawals will be considered assessable income for that year's tax return. Please note that deposits in the FMD account must be kept for at least 12 months to be eligible for tax benefits. If you want to take advantage of the tax benefits that an FMD may provide, you must take out this product specifically.
Interest: Interest earned on an FMD can only be paid to the individuals transaction or savings account, it cannot be paid directly into the FMD.
For more information and full eligibility criteria, please refer to the Australian Tax Office (ATO) Farm Management Deposits Scheme.