Fed: Govt reviews tax breaks on tree planting

AAP General News (Australia)
12-21-2006
Fed: Govt reviews tax breaks on tree planting

CANBERRA, Dec 21 AAP - Investors in forest plantations can now receive a tax break
on all upfront expenditure, the federal government has announced following an 18-month
industry review.

The new arrangements would provide greater certainty for investors in so-called managed
investment schemes (MIS), Assistant Treasurer Peter Dutton and Forestry and Conservation
Minister Eric Abetz said today in a joint statement.

They said the new arrangements would ensure a continued expansion of the country's
plantation forestry, reducing a reliance on native forest and imports, and cut greenhouse
gases.

From July 1, 2007, investors in forestry MIS will be entitled to immediate "upfront
deductibility" for all expenditure provided that at least 70 per cent of this expenditure
is directly related to developing forestry.

This includes expenditure on planting, tending and harvesting of trees at any time
over the life of the investment, and the annual cost of the land used to develop forestry,
whether in rental or lease payments.

The forestry industry welcomed the review outcome.

"Rural communities and the environment are clear winners from this decision," said
National Association of Forest Industries chief executive officer Catherine Murphy.

"As tree plantations are major carbon stores, the environment will benefit significantly
through the sequestration of greenhouse gases.

"This means Australia can move towards being an `emissions conscious' economy by encouraging
investment in a greenhouse friendly industry."

Tree Plantations Australia chief executive officer Allan Hansard said research shows
that the establishment of plantations can have benefits for rural and regional areas which
have been suffering long-term rural decline.

The government said it will review the development of a secondary forestry MIS market
by mid-2009.

It will also consider the issue of taxation arrangements for non-forestry agribusiness
MIS in the new year.

AAP cb/sb/jt/nf

KEYWORD: PLANTATION

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