Australian Forestry Sector On The Up Following Tax Backflip

by Mary Swire, Tax-News.com, Hong Kong

12 October 2001

The Australian timber plantation sector has announced that it welcomes both the reinstatement of tax concessions for forestry investors and the distinction made by Tax Commissioner Michael Carmody earlier this month between legitimate and illegitimate investment opportunities.

The reinstatement of the so-called '13 month rule', whereby investors can receive tax deductions for investments in projects up to 30th June each financial year, before the plantations are actually established in the ensuing year, has meant that shares in the industry's two biggest players, Great Southern Plantations and Timbercorp, have risen more than 40% and 50% respectively from their September lows.

It has not been revealed when legislation detailing the new rules will be announced, but the policy proposed by Forestry Minister Wilson Tuckey has support accross the political spectrum, so no problems are foreseen.

The endorsement by the Tax Commissioner of legitimate agricultural investment products was also welcomed by the sector, and has had a beneficial effect, drawing back some potential investors scared off by the ATO's fierce crackdown on abusive forestry tax shelters.

Mr Carmody issued a statement at the beginning of October designed to 'redress the balance', and promised forestry investors that legitimate schemes would entitle them to tax benefits: 'Managed investments, including the forestry industry, that have a [Tax Office] product ruling are quite distinct from the mass-marketed, tax abusive schemes that the Tax Office has taken action against,' he explained.

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