Document ID: chunk:federal_register_of_legislation:C2007A00079:clause:8_2:p1
Version: federal_register_of_legislation:C2007A00079
Segment Type: clause
Provision Reference: sch 8 cl 2 (pt 1/7)
Character Range: 48527–51365

2  After Division 392
Insert:

Division 394—Forestry managed investment schemes

Guide to Division 394

394‑1  What this Division is about

      This Division sets out rules about deductions for contributions to forestry managed investment schemes. It also sets out the tax treatment of proceeds from the sale of interests in such schemes, and of proceeds from harvesting trees under such schemes.

Table of sections

394‑5 Object of this Division
394‑10 Deduction for amounts paid under forestry managed investment schemes
394‑15 Forestry managed investment schemes and related concepts
394‑20 Payments on behalf of participant in forestry managed investment scheme
394‑25 CGT event in relation to forestry interest in forestry managed investment scheme—initial participant
394‑30 CGT event in relation to forestry interest in forestry managed investment scheme—subsequent participant
394‑35 70% DFE rule
394‑40 Payments under forestry managed investment scheme
394‑45 Direct forestry expenditure

394‑5  Object of this Division

  The object of this Division is to encourage the expansion of commercial plantation forestry in Australia through the establishment and tending of new plantations for felling. This is achieved by:
 (a) permitting investors to deduct amounts paid under a forestry scheme in the year of payment, if certain conditions are met (for example, that it is reasonable to expect that the manager of the scheme will spend at least 70% of investors' contributions, on a market value basis, on activities that establish, tend, fell and harvest trees); and
 (b) allowing secondary market trading of interests in such schemes, while minimising tax arbitrage and providing tax certainty for investors.

394‑10  Deduction for amounts paid under forestry managed investment schemes

 (1) You can deduct an amount if:
 (a) you hold a *forestry interest in a *forestry managed investment scheme; and
 (b) you pay the amount under the scheme; and
 (c) the scheme satisfies the *70% DFE rule (see section 394‑35) on 30 June in the income year in which a *participant in the scheme first pays an amount under the scheme; and
 (d) you do not have day to day control over the operation of the scheme (whether or not you have the right to be consulted or give directions); and
 (e) at least one of these conditions is satisfied:
 (i) there is more than one participant in the scheme;
 (ii) the *forestry manager of the scheme, or an *associate of the forestry manager, manages, arranges or promotes similar schemes; and
 (f) the condition in subsection (4) is satisfied.

 (2) You deduct the amount for the income year in which you pay it.

 (3) For the purposes of this Division, do not treat an amount as being paid under a *forestry managed investment scheme if:
 (a) you pay the amount in connection with a *CGT event in