Definitions relating to forestry managed investment scheme
A partnership is an initial participant in a forestry managed investment scheme (FMIS) if both:
- it gets its forestry interest in the FMIS from the forestry manager of the scheme
- its payment to get the forestry interest in an FMIS results in the establishment of trees.
A partnership is a subsequent participant if it gets an interest in an FMIS through secondary market trading. This means it acquires 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. For more information on amounts you can deduct, see item 17 Forestry managed investment scheme deduction.
The amount of the partnership’s incidental forestry scheme receipts is the total of all the amounts it receives from the FMIS in each income year it held its forestry interest, other than amounts it receives 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 2025.
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.
Participants in an FMIS – for an initial participant
As an initial participant in FMIS, consider:
- Thinning receipts
- Sale and harvest receipts – forestry interest no longer held
- Sale and harvest receipts – forestry interest still held
Thinning receipts
If the partnership receives thinning proceeds from its forestry interest, include the actual amount it receives 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 both of the following apply:
- a CGT event happens and the partnership ceases holding its forestry interest (because it sold its interest or it receives harvest proceeds)
- the partnership claims 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 pays an amount under the FMIS.
Sale and harvest receipts – forestry interest still held
Include the amount by which you reduce the market value of the forestry interest at label Q if both of the following apply:
- a CGT event happens and the partnership still held its forestry interest (because it sold part of its interest or there was a partial harvest)
- 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 pays an amount under the FMIS.
Participants in an FMIS – for a subsequent participant
As a subsequent participant in FMIS, consider:
- Thinning receipts
- Sale and harvest receipts – forestry interest no longer held
- Sale and harvest receipts – forestry interest still held
Thinning receipts
If the partnership receives thinning proceeds from its forestry interest, include the actual amount it receives at label Q.
Sale and harvest receipts – forestry interest no longer held
Include the amount you work out below in the total amount at label Q, if both of the following apply:
- a CGT event happens and the partnership ceases holding its forestry interest as a result of a CGT event (because it sold its interest or it receives harvest proceeds)
- the partnership deducts, or can deduct or could claim a deduction amount, if it pays the amount under the FMIS.
Work out in relation to the forestry interest the lesser of either the following 2 amounts:
- market value of the forestry interest at the time of the CGT event
- amount (if any) by which the total forestry scheme deductions exceed the incidental forestry scheme receipts.
Sale and harvest receipts – forestry interest still held
Include the amount you work out below in the total amount at label Q, if both of the following apply:
- a CGT event happens and the partnership still held its forestry interest (because it sold part of its interest or there was a partial harvest)
- the partnership deducts, can deduct or could claim a deduction amount it pays 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
- the amount (if any) by which the total forestry scheme deductions exceed the incidental forestry scheme receipts ('net deductions').
Use the lesser of the 2 amounts above in the following formula:
Lesser of 2 amounts above multiplied by (the decrease (if any) in the market value of the forestry interest (as a result of the CGT event) divided by the market value of the forestry interest just before the CGT event)
Include at label Q the amount you calculate 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 have already been shown at label Q.
Example 7: sale receipts – forestry interest no longer held
Cedar Partnership is a subsequent participant in an FMIS. It sold its forestry interest at the market value of $20,000. The sale of the forestry interest is a CGT event. The original cost base was $14,000.
In the time that Cedar Partnership held the forestry interest, it claims $4,000 in deductions (its total forestry scheme deductions) for lease fees, annual management fees and the cost of felling that it pays to the forestry manager. In the same period, it receives $1,500 from thinning proceeds (its incidental forestry scheme receipts).
Cedar Partnership will need to include $2,500 (that is, $4,000 − $1,500) at label Q, because this amount is less than the market value of its forestry interest at the time of the CGT event.
CGT notes:
- Cedar Partnership will take the amount that it includes at label Q into account when working out the partners' share of the capital gain relating to the CGT event.
- The capital gain the partners share would be $3,500, which is capital proceeds of $20,000 less cost base of $16,500 (that is made up of $14,000 plus $2,500 they include in assessable income).
Example 8: harvest receipts – forestry interest still held
Oakey Partnership is a subsequent participant in an FMIS. It will receive harvest proceeds over 2 income years. It receives the first harvest payment of $5,000 in 2024–25.
The market value of its forestry interest was $20,000 just before it receives its payment for the first harvest (which is a CGT event). After it receives this first harvest payment, the market value of its forestry interest reduces to $15,000. Its original cost base was $14,000.
In the time that it held its interest, Oakey Partnership claims $4,000 in deductions (its total forestry scheme deductions) for lease fees, annual management fees and the cost of felling that it paid to the forestry manager. In an earlier period, it receives $1,500 from thinning proceeds (its incidental forestry scheme receipts).
Step 1: The market value of the forestry interest (at the time of the CGT event) is $20,000.
The amount by which the total forestry scheme deductions exceed the incidental forestry scheme receipts is $2,500 (that is, $4,000 minus $1,500).
The amount to use in step 2 is $2,500.
Step 2: Using the formula
$2,500 × ($5,000 ÷ $20,000) = $625
When determining the amount to include in step 2 for any future income year in which the partnership receives harvest proceeds or sells the forestry interest, the $625 is disregarded. This is because the amount is already reflected in the assessable income for the income year.
Step 3: Oakey Partnership will need to include $625 at label Q.
CGT notes:
- Oakey Partnership disposes of 25% of its forestry interest. The partnership will take the amount that it includes at label Q into account when working out the partners' share of the capital gain relating to the CGT event.
- The capital gain the partners share would be $875, which is capital proceeds of $5,000 less apportioned original cost base of $4,125 (that is made up of $3,500 (25% of $14,000) plus $625 that they include in assessable income).
Continue to: 11 Gross interest
Return to: Instructions to complete the Partnership tax return 2025