A partnership may be able to claim a deduction at this item for payments made to a forestry managed investment scheme (FMIS) if it:
- currently holds a forestry interest in an FMIS, or held a forestry interest in an FMIS during the income year, and
- paid an amount to a forestry manager of an FMIS under a formal agreement.
The partnership can only claim a deduction at this item if the forestry manager has advised you that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the Income Tax Assessment Act 1997.
The partnership is an initial participant in an FMIS if:
- it obtained the forestry interest in the FMIS from the forestry manager of the scheme, and
- the payment to obtain the forestry interest results in the establishment of trees.
The partnership is a subsequent participant if it obtains an interest in an FMIS through secondary market trading. This means it acquired its interest other than as an initial participant, usually by purchasing that interest from an initial participant in the scheme.
If the partnership is an initial participant, it cannot claim a deduction if it has disposed of its forestry interest in an FMIS within four years after the end of the income year in which it first made a payment. However the deduction will be allowed if the disposal occurs because of circumstances outside of the partnership's control, provided the partners could not have reasonably foreseen the disposal happening when they acquired the interest. Disposals that would generally be outside the partnership's control may include compulsory acquisition, insolvency of one or more of the partners or the scheme manager, or cancellation of the interest due to fire, flood or drought. For more information, see Forestry Managed Investment Schemes - minor amendments to holding period rules.
If the partnership is a subsequent participant, it cannot claim a deduction for the amount paid for acquiring the interest. The partnership can only claim a deduction for ongoing payments.
The forestry manager of an FMIS is the entity that manages, arranges or promotes the FMIS.
A forestry interest in an FMIS is a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not).
Initial participants can claim at this item initial and ongoing payments made under an FMIS were made as an initial participant of the FMIS.
Subsequent participants can claim at this item ongoing payments made under an FMIS were made as a subsequent participant of the FMIS.
Excluded payments
Direct forestry expenditure does not include, amongst other things, any of the following payments made under FMIS (see section 394-10 and 394-40 of the ITAA 1997):
- payments for borrowing money
- interest and payments in the nature of interest
- payments of stamp duty
- payments of goods and services tax (GST)
- payments that relate to 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)
- marketing and sale of forestry produce.
Show at D the total amount of deductible payments made to an FMIS.
To complete this item, if the partnership's interests in FMIS are covered by a product ruling, then:
- print PR at ACode
- write the year of the product ruling at B Year
- write the product ruling number at C Number (do not include the year of the product ruling or the slash at C).
Alternatively, if the partnership's interests in FMIS are covered by a private ruling, then to complete this item:
- print AN at A Code
- leave B blank at Year
- write the authorisation number that was printed on the front page of your notice of private ruling, at C Number.