IN ANY business, cash flow is key and in any seasonal industry, maintaining a stable cash flow during periods of economic fluctuation is a challenge that requires good management and planning.
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"Fortunately there are ways those in the agriculture industry can manage their long-term financial risk," said Suncorp Bank national head of agribusiness Greg Leahy.
Farm management deposit accounts were introduced by the federal government to assist primary producers with cash flow management by encouraging the preservation of surplus cash for times when it is needed most.
These accounts offer tax incentives for depositing surplus revenue to help producers better manage their highly variable incomes, Mr Leahy said.
Those deposits can be used to set aside pre-tax income in profitable years to establish cash reserves to better manage through the leaner years.
They also allow for the deduction of the amount of deposits from assessable income, with interest paid on 100 per cent of eligible deposits.
"Eligible primary producers can shift their pre-tax dollars (surplus funds) from higher income years to lower income years, thereby reducing their exposure to adverse seasonal and economic fluctuations," he said.
Mr Leahy said farm management deposit accounts offered a number of benefits, including fixed or variable rates; high interest on pre-tax income; managed exposure to seasonal and commodity fluctuations; interest payment frequency on fixed terms could be selected; interest could be paid annually and deposits could be withdrawn in low-tax years to reduce the tax burden; and, no fees.
Visit agribusiness.suncorpbank.com.au or contact 13 11 75.
