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  • Government to Provide Tax Certainty to Investors

    2010 - 02.15

    Good news from Australia. The assistant treasurer Senator Nick Sherry has announced that the government will amend the tax law in order to protect 19,000 forestry investors from an adverse tax outcome.

    Last year the liquidation of Timbercorp and Great Southern lead to a number of forestry MIS being wound up and/or restructured. This caused a large percentage of investors to fail the requirement of having held their interest in the MIS for four years as a condition of the up front tax deduction.

    The Australian government has decided to amend this four year holding period rule for forestry MIS to ensure that an investor does not lose out due to reason genuinely outside their control.

    “Under current law, investors in forestry MIS managed by Timbercorp and Great Southern may have previous years’ deductions clawed back because they haven’t held their interests for four years,” Senator Sherry said.

    “The four-year holding rules were introduced in 2007 as part of a package to regulate secondary trading of forestry interests. Many of the investments in question were made before this holding requirement was put in place – at the time they decided to invest, these investors had no way of knowing that their deductions were at risk. The Rudd Government doesn’t consider that to be a desirable outcome, as it unduly penalises investors for events outside their control. Accordingly, we will amend the tax law to allow an investor’s deduction to stand where the four-year holding rule is failed due to events beyond the control of the investor. These events include insolvency of the MIS manager, the death of the investor or where an MIS interest is cancelled, for example because of trees being destroyed by fire, flood or drought.”

    A draft of this legislation will be made available from the government for comment.

    More information on the tax implications for forestry investors can be found at the Australian Taxation Office website: www.ato.gov.au.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    One Response to “Government to Provide Tax Certainty to Investors”

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