• X Forestry managed investment scheme income

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    Show at X the total income from the forestry interests that the fund holds in FMISs. The amount you show at X will depend on the points below.

    See also:

    Forestry managed investment schemes

    Definitions

    The fund is an initial participant in an FMIS if:

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

    The fund is a subsequent participant in an FMIS if it acquired its interest other than as an initial participant, such as through secondary market trading.

    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 the benefits produced by the FMIS (whether the right is actual, prospective or contingent and whether or not it is enforceable).

    The amount of the fund’s total forestry scheme deductions is the total of all the amounts that it can deduct or has deducted for each income year that it held its forestry interest. See U Forestry managed investment scheme deduction item 11 for more information on amounts that the fund can deduct.

    The amount of the fund’s incidental forestry scheme receipts is the total of all the amounts that it received from the FMIS in each income year that it held its forestry interest, other than amounts received because of a CGT event, that is, a sale or a harvest.

    Harvests and sales are CGT events because these events result in the fund no longer holding some or all of its forestry interest.

    For an initial participant in an FMIS

    Thinning receipts

    If the fund received thinning proceeds from its forestry interest, include at X the actual amount received.

    Sale and harvest receipts: forestry interest no longer held

    If the fund ceased holding its forestry interest as a result of a CGT event (because it sold its interest or there was a harvest), and the fund had claimed a deduction for the amounts invested under the FMIS, include at X the market value of the forestry interest at the time of the CGT event.

    Sale and harvest receipts: forestry interest still held

    If a CGT event happened and the fund still holds its forestry interest (because it sold part of its interest or there was a partial harvest), and the fund had claimed a deduction for the amounts invested under the FMIS, include at X the amount by which the market value of the forestry interest was reduced as a result of the CGT event.

    For a subsequent participant in an FMIS

    Thinning receipts

    If the fund received thinning proceeds from its forestry interest, include at X the actual amount received.

    Sale and harvest receipts: forestry interest no longer held

    If the fund ceased holding its forestry interest as a result of a CGT event (because it sold its interest or there was a harvest), and the fund has deducted or could have deducted an amount in relation to the forestry interest, include at X the lesser of the following two amounts:

    • 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').

    Example 1 shows how to calculate the amount to include at X where the fund sold its forestry interest.

    Sale and harvest receipts: forestry interest still held

    If a CGT event happened and the fund still holds its forestry interest (because it sold part of its interest or there was a partial harvest), and the fund has deducted or could have deducted an amount in relation to the forestry interest, work out the lesser of the following two amounts:

    • 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 two amounts in the following formula:

    Lesser of the two amounts worked out 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

    Use this formula to calculate the amount which is included in assessable income to the extent that the sale or harvest payment matches 'net deductions'.

    Include at X the amount calculated using the formula.

    Example 2 shows how to calculate the amount to include at X where there is a harvest payment made and the fund still holds the forestry interest.

    To complete this item

    Add up all the amounts you worked out for the fund’s FMIS income and write the total at X.

    For more information on the CGT treatment of the fund’s forestry interest acquired as a subsequent participant, see the Guide to capital gains tax 2013.

    Example 1: Sale receipts: forestry interest no longer held

    Cedar Superannuation Fund 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 the fund held the forestry interest, it claimed $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.

    During an earlier period, it received $1,500 from thinning proceeds (its incidental forestry scheme receipts).

    Cedar Superannuation Fund will need to include $2,500 (that is, $4,000 minus $1,500) at X, because this amount is less than the market value of its forestry interest at the time of the CGT event.

    The fund will take the amount that it included at X into account when working out the amount to include at A net capital gain. See the Guide to capital gains tax 2013.

    Example 2: Harvest receipts: forestry interest still held

    Oakey Superannuation Fund is a subsequent participant in an FMIS. It received harvest proceeds payment of $5,000 in the 2012–13 income year. Oakey Superannuation Fund's interest has been reduced by 25%.

    The market value of its forestry interest was $20,000 just before it received its payment for the harvest (which is a CGT event). After it received this harvest payment, the market value of its forestry interest was reduced to $15,000. Its original cost base was $14,000.

    During the time it held its interest, Oakey Superannuation Fund claimed $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 also received $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) was $20,000.

    The amount by which the total forestry scheme deductions exceeded the incidental forestry scheme receipts was $2,500 (that is, $4,000 minus $1,500 for the net deductions).

    The amount used in step 2 is $2,500.

    Step 2

    Using the formula above:

     

    $2,500

    x

    $5,000
    $20,000

    =

    $625

    Step 3

    As the amount calculated at step 2 is less than the amount calculated at step 1, the Oakey Superannuation Fund will need to include $625 at X in its 2013 tax return.

    Step 4

    Oakey Superannuation Fund will need to include the remainder from step 2 of $1,875 (that is, $2,500 minus $625) at X in its 2014 tax return.

     

    End of example

    See also:

    Guide to capital gains tax 2013

    Last modified: 02 Jun 2014QC 35420