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).