Income excluding foreign income – items 10 to 15

Instructions to complete items 10 to 15 in the tax return relating to income excluding foreign income.

10. Forestry managed investment scheme income

Instructions to complete item 10 in the tax return relating to forestry managed investment scheme income.

Definitions

A partnership is an initial participant in a forestry managed investment scheme (FMIS) if:

• it obtained its forestry interest in the FMIS from the forestry manager of the scheme, and
• its payment to obtain the forestry interest in an FMIS results in the establishment of trees.

A 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.

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 FMIS, whether the right is actual, prospective or contingent, and whether it is enforceable or not.

The amount of the partnership’s total forestry scheme deductions is the total of all the amounts it can deduct or has deducted for each income year it held its forestry interest. See item 17 Forestry managed investment scheme deduction for more information on amounts you can deduct.

The amount of the partnership’s incidental forestry scheme receipts is the total of all the amounts it has received from the FMIS in each income year it held its forestry interest, other than amounts received because of a CGT event. Write at item 10 – label Q the total income from the following activities for each FMIS in which the partnership holds a forestry interest.

For information on the CGT treatment of the partnership’s forestry interests, see Guide to capital gains tax 2023. If the partnership is a member of a collapsed agribusiness managed investment scheme, for information on calculating your income and deductions, see Collapse and restructure of agribusiness managed investment schemes – participant information.

For an initial participant in an FMIS

Thinning receipts

If the partnership received thinning proceeds from its forestry interest, include the actual amount received at label Q.

Sale and harvest receipts – forestry interest no longer held

Include the market value of the forestry interest at the time of the CGT event at label Q if the following applies:

• a CGT event happened and the partnership ceased holding its forestry interest (because it sold its interest or it received harvest proceeds), and
• the partnership has claimed a deduction, can claim a deduction, or would be entitled to deduct such amounts, but for a CGT event happening within 4 years after the end of the income year in which the partnership first paid an amount under the FMIS.

Sale and harvest receipts – forestry interest still held

Include the amount by which the market value of the forestry interest was reduced at label Q if the following applies:

• a CGT event happened and the partnership still held its forestry interest (because it sold part of its interest or there was a partial harvest), and
• the partnership has claimed a deduction, can claim a deduction, or would be entitled to deduct such amounts, but for a CGT event happening within 4 years after the end of the income year in which the partnership first paid an amount under the FMIS.

For a subsequent participant in an FMIS

Thinning receipts

If the partnership received thinning proceeds from its forestry interest, include the actual amount received at label Q.

Sale and harvest receipts – forestry interest no longer held

Include the amount worked out below in the total amount at label Q if the following applies:

• a CGT event happened and the partnership ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
• the partnership has deducted, or can deduct or could have deducted an amount, if it paid the amount under the FMIS.

Work out in relation to the forestry interest the lesser of the following 2 amounts:

• the market value of the forestry interest at the time of the CGT event, or
• the amount (if any) by which the total forestry scheme deductions exceeded the incidental forestry scheme receipts.

Sale and harvest receipts – forestry interest still held

Include the amount worked out below in the total amount at label Q if the following applies:

• a CGT event happened and the partnership still held its forestry interest (because it sold part of its interest or there was a partial harvest), and
• the partnership has deducted, can deduct or could have deducted an amount it had paid the amount under the FMIS.

Work out the lesser of the following 2 amounts, in relation to the forestry interest:

• the market value of the forestry interest at the time of the CGT event, and
• the amount (if any) by which the total forestry scheme deductions exceeded the incidental forestry scheme receipts ('net deductions').

Use the lesser of the 2 amounts above in the following formula:

the lesser of the 2 amounts above × the decrease (if any in the market value of the forestry interest as a result of the CGT event ÷ the market value of the forestry interest just before the CGT event

Include at label Q the amount calculated using the above formula.

In a future income year (a year in which the partnership receives further proceeds from a harvest or the sale of its forestry interest), disregard the amount of the 'net deductions' that has already been shown at label Q.

 

Continue to: 11. Gross interest