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17 Jan 07 Review of the taxation of Plantation Forestry

In a joint press release issued on 21 December 2006, the Forestry and Conservation Minister, Senator Eric Abetz, and the Minister for Revenue and Assistant Treasurer, Peter Dutton, announced new arrangements for the taxation of investments in forestry managed investment schemes (MIS).  

The Government has decided that, with effect from 1 July 2007, investors in forestry MIS will be entitled to immediate upfront deductibility for all expenditure provided that at least 70% of the expenditure is expenditure directly related to developing forestry ("direct forestry expenditure").  Direct forestry expenditure comprises:

(a) expenditures associated with planting, tending and harvesting of trees at any time over the life of the investment; and

(b) annual costs of the land used to develop forestry, whether that be effective rental costs or lease payments for land.  

The deduction will be provided by way of a separate statutory provision. It will not be necessary for taxpayers to demonstrate that they are carrying on a business in order to access the statutory deduction. The Government will not remove deductibility under the general deduction provision - section 8-1 of ITAA 1997 - for contributions to forestry MIS.  However, under the general prohibition against double deductions (ITAA 1997 section 8-10), the forestry MIS investor will not be able to claim a deduction under both provisions.  

For a copy of the Ministers' press release, No 2006/097, 21 December 2006, go here

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