Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-J - Capital expenditure for the establishment of trees in carbon sink forests  

Operative provisions

SECTION 40-1005   Deduction for expenditure for establishing trees in carbon sink forests  

40-1005(1)  


You can deduct an amount for an income year if:


(a) you or another entity incurred capital expenditure that is covered under section 40-1010 in relation to particular trees; and


(b) you satisfy a condition in subsection (5) for the trees for at least part of the income year; and


(c) you are carrying on a *business in the income year; and


(d) you use the land occupied by the trees for the primary and principal purpose of *carbon sequestration by the trees (see section 40-1015 ); and


(e) your purposes in using the land occupied by the trees do not include any of the following:


(i) felling the trees;

(ii) using the trees for *commercial horticulture; and


(f) you do not use the land in connection with:


(i) a *managed investment scheme; or

(ii) a *forestry managed investment scheme.

40-1005(2)  


The amount of the deduction is worked out under this formula:


Establishment
expenditure
× Write-off
days in income year
365
× Write-off
rate

where:

establishment expenditure
is the amount of expenditure mentioned in subsection (1) .

write-off days in income year
is the number of days in the income year:


(a) that occur within the period:


(i) starting on the first day of the income year in which the trees are established; and

(ii) ending 14 years and 105 days after that day; and


(b) on which you use the land occupied by the trees for the primary and principal purpose of *carbon sequestration by the trees; and


(c) on which you satisfy a condition in subsection (5) for the trees.

write-off rate
is 7%.

40-1005(3)  


You cannot deduct more in total than the amount of capital expenditure incurred for establishing the trees up to the time at which they are established.

40-1005(4)  
(Repealed by No 38 of 2008 )

40-1005(5)  
The conditions are as follows:


Conditions for deduction for establishing trees in carbon sink forest
Item Condition
1 You own the trees and any holder of a lease, lesser interest or licence relating to the land occupied by the trees does not use the land for the primary and principal purpose of * carbon sequestration by the trees.
2 The trees occupy land you hold under a lease, or a * quasi-ownership right granted by an * exempt Australian government agency or an * exempt foreign government agency, and:
(a) the lease or quasi-ownership right enables you to use the land for the primary and principal purpose of * carbon sequestration by the trees; and
(b) any holder of a lesser interest or licence relating to the land does not use the land for the primary and principal purpose of carbon sequestration by the trees.
3 You:
(a) hold a licence relating to the land occupied by the trees; and
(b) use the land for the primary and principal purpose of *carbon sequestration by the trees, as a result of holding the licence.


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