10 Forestry managed investment scheme income

What to include and exclude at item 10

Print at label Q Forestry managed investment scheme income the total income from the forestry interests that the trust holds in a forestry managed investment scheme (FMIS). The amount you show at label Q will depend on the points below.

Do not include capital gains from an FMIS; show these at item 21 Capital gain – label A Net capital gain. For more information on the CGT treatment of the trust’s forestry interests, see Guide to capital gains tax 2023.

For information on calculating your income and deductions if the trust is a member of a collapsed agribusiness managed investment scheme, see Collapse and restructure of agribusiness managed investment schemes – participant information.

Definitions relating to forestry managed investment scheme

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 forestry manager of an FMIS is the entity that manages, arranges or promotes the FMIS.

A trust is an initial participant in a 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 trust is a subsequent participant in an FMIS if it acquired its interest 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 amount of the trust’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 the trust can deduct, see item 17 Forestry managed investment scheme deduction.

The amount of the trust’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.

Participants in an FMIS - for an initial participant

Thinning receipts

If the trust 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 trust:

• ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
• has claimed a deduction, or 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 trust first pays an amount under the FMIS.

Sale and harvest receipts – forestry interest still held

Include at label Q the amount by which the market value of the forestry interest was reduced as a result of the CGT event if:

• a CGT event happened and the trust still held its forestry interest (because it sold part of its interest or there was a partial harvest), and
• the trust has claimed a deduction, or 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 trust first pays an amount under the FMIS.

Participants in an FMIS – for a subsequent participant

Thinning receipts

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

Sale and harvest receipts – forestry interest no longer held

If the trust:

• ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
• has deducted, or can deduct, or could have deducted, an amount if the trust had paid the amount under the scheme in relation to the forestry interest

then include at label Q the lesser of

• 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.

Example 6 shows how to calculate the amount to include at label Q where the trust sold its forestry interest.

Sale and harvest receipts – forestry interest still held

If:

• a CGT event happened and the trust still held its forestry interest (because it sold part of its interest or there was a partial harvest), and
• the trust has deducted, or could have deducted, an amount if the trust had paid the amount under the FMIS in relation to the forestry interest

work out:

• 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 exceeded the incidental forestry scheme receipts ('net deductions').

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

Lesser of 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 formula.

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

Example 7 shows how to calculate the amount to include at label Q where there is a harvest payment made and the trust still holds the forestry interest.

To complete this item

Add up all the amounts you worked out for the trust’s FMIS income. Print the total at label Q.

See examples 6 and 7 for how to calculate the amount you show at label Q where the trust is a subsequent participant that holds the forestry interest on capital account.

For more information on the CGT treatment of a trust’s forestry interest acquired as a subsequent participant, see Guide to capital gains tax 2023.

Continue to: 11 Gross interest

Return to: Instructions to complete the Trust tax return 2023