U Forestry managed investment scheme deduction

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This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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Show at U the total amount of deductible payments made to an FMIS.

The fund may be entitled to claim a deduction at U for payments made to an FMIS if:

• the fund currently holds a forestry interest in an FMIS, or held a forestry interest in an FMIS during the 2012–13 income year
• the fund paid an amount to a forestry manager of an FMIS under a formal agreement
• the forestry manager has advised the fund that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the ITAA 1997
• the fund does not have day to day control over the operation of the scheme
• there is more than one participant in the scheme or, the forestry manager or an associate of the forestry manager manages, arranges or promotes similar schemes
• the trees are established within 18 months of the end of the income year in which an amount is first paid under the FMIS by a participant in the scheme, and
• the deduction is claimed in the income year in which the payment is made.

If the fund is an initial participant in an FMIS it can claim a deduction for initial and ongoing payments at this item.

If the fund is a subsequent participant, it cannot claim a deduction for the amount paid to acquire the interest. The fund can only claim a deduction for ongoing payments.

Relevant terms are explained at X Forestry managed investment scheme income.

The fund cannot claim a deduction if it disposed of the forestry interest in an FMIS within four years after the end of the income year in which a payment was first made unless:

• the disposal occurred because of circumstances outside the fund's control, and
• when the fund acquired the interest the fund could not reasonably have foreseen the disposal happening.

Disposals that would generally be outside the fund's control include:

• compulsory acquisition
• insolvency of the fund or the scheme manager
• cancellation of the interest in the FMIS because of trees being destroyed by fire, flood or drought.

Excluded payments

The fund cannot claim a deduction at U for any of the following:

• payments for borrowing money
• payments of interest and payments in the nature of interest (such as a premium on repayment or redemption of a security, or a discount of a bill or bond)
• payments of stamp duty
• payments of GST
• payments that relate to the transportation and handling of felled trees after the earliest of the following
  • sale of the trees
  • arrival of the trees at the mill door
  • arrival of the trees at the port
  • arrival of the trees at the place of processing (other than where processing happens in-field)
   
• payments that relate to processing
• payments that relate to stockpiling (other than in-field stockpiling).