• U Forestry managed investment scheme deduction

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    Show at U the total amount of deductible payments made to an FMIS.

    The fund may be entitled to claim a deduction at U for payments made to an FMIS if:

    • the fund currently holds a forestry interest in an FMIS, or held a forestry interest in an FMIS during the 2012–13 income year
    • the fund paid an amount to a forestry manager of an FMIS under a formal agreement
    • the forestry manager has advised the fund that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the ITAA 1997
    • the fund does not have day to day control over the operation of the scheme
    • there is more than one participant in the scheme or, the forestry manager or an associate of the forestry manager manages, arranges or promotes similar schemes
    • the trees are established within 18 months of the end of the income year in which an amount is first paid under the FMIS by a participant in the scheme, and
    • the deduction is claimed in the income year in which the payment is made.

    If the fund is an initial participant in an FMIS it can claim a deduction for initial and ongoing payments at this item.

    If the fund is a subsequent participant, it cannot claim a deduction for the amount paid to acquire the interest. The fund can only claim a deduction for ongoing payments.

    Relevant terms are explained at X Forestry managed investment scheme income.

    The fund cannot claim a deduction if it disposed of the forestry interest in an FMIS within four years after the end of the income year in which a payment was first made unless:

    • the disposal occurred because of circumstances outside the fund's control, and
    • when the fund acquired the interest the fund could not reasonably have foreseen the disposal happening.

    Disposals that would generally be outside the fund's control include:

    • compulsory acquisition
    • insolvency of the fund or the scheme manager
    • cancellation of the interest in the FMIS because of trees being destroyed by fire, flood or drought.

    Excluded payments

    The fund cannot claim a deduction at U for any of the following:

    • payments for borrowing money
    • payments of interest and payments in the nature of interest (such as a premium on repayment or redemption of a security, or a discount of a bill or bond)
    • payments of stamp duty
    • payments of GST
    • payments that relate to the 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).
    Last modified: 02 Jun 2014QC 35420