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