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08 May 07 Forestry managed investment schemes - trading of interests

The Government will allow trading of both existing and future interests in forestry managed investment schemes (MISs), subject to a minimum four year holding period for initial investors, with effect from 1 July 2007.

Currently, it is possible to trade interests in forestry schemes only in exceptional circumstances. General trading has not occurred owing to a view that investors’ contributions would not be deductible if there was evidence that the investor did not intend, at the time of entering the scheme, to carry on a business and remain in the scheme until harvest.

The measure will allow initial investors to trade their interests in a forestry MIS once they have been held for a period of at least four years. The four year restriction will apply only to the initial investors in a scheme. The trading of forestry MIS interests will be subject to a market value pricing rule for initial investors to reduce tax arbitrage opportunities. In addition, there will be specific rules for the income tax treatment of investors’ costs and proceeds to ensure tax symmetry.

The measure will apply to interests in a pre existing forestry MIS as well as future investment in newly established schemes. This will mean that taxpayers who invested in a forestry MIS prior to 1 July 2003 will be able to trade their interest as of 1 July 2007.

For a copy of the Minister for Revenue's press release, No 2007/52, 8 May 2007, go here

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